CMC FUND TRUST, 497, 2000-10-19

CMC FUND TRUST
497, 2000-10-19

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File No. 33-30394
Under Rule 497(c) of Regulation C

PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION

[Bird Logo]
Columbia

CMC SMALL CAP FUND
CMC SMALL/MID CAP FUND
CMC INTERNATIONAL STOCK FUND

CMC Small Cap Fund, CMC Small/Mid Cap Fund, and CMC International Stock
Fund (each a "Fund" and together the "Funds") are portfolios of CMC Fund Trust.
The Small Cap Fund and the Small/Mid Cap Fund seek to provide investors with
long-term capital appreciation. The Small Cap Fund will invest primarily in
smaller capitalization companies, and the Small/Mid Cap Fund will invest
primarily in companies with small to medium market capitalizations. The
International Stock Fund also seeks to provide investors with long-term capital
appreciation by investing primarily in international stocks.

As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed on the adequacy of this
Prospectus. Any representation to the contrary is a criminal offense.

October 17, 2000

<PAGE>

--------------------------------------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------------------------------------

Risk/Return Summary..........................................................3
Overview................................................................3
Investment Strategy.....................................................3
Risks of Investing in Common Stock......................................3
Information About the Funds.............................................4
CMC Small Cap Fund......................................................4
Goal...............................................................4
Strategy...........................................................4
Risk Factors.......................................................4
Historical Performance.............................................5
Expenses...........................................................7
Financial Highlights...............................................8
CMC SMALL/MID CAP FUND..................................................9
Goal...............................................................9
Strategy...........................................................9
Risk Factors.......................................................9
Historical Performance.............................................10
Expenses...........................................................10
Financial Highlights...............................................12
CMC INTERNATIONAL STOCK FUND............................................12
Goal...............................................................12
Strategy...........................................................12
Risk Factors.......................................................12
Historical Performance.............................................13
Expenses...........................................................14
Financial Highlights...............................................16
MANAGEMENT...................................................................16
INFORMATION ABOUT YOUR INVESTMENT............................................17
Your Account............................................................17
Buying Shares......................................................17
Selling Shares.....................................................18
Pricing of Shares..................................................18
Distribution and Taxes..................................................19
Income and Capital Gains Distributions.............................19
Tax Effect of Distributions and Transactions.......................19
MORE ABOUT THE FUNDS.........................................................20
Investment Strategy.....................................................20
Small Cap Fund and Small/Mid Cap Fund..............................20
International Stock Fund...........................................21
Changes to Investment Objective and Temporary Investments..........22
Portfolio Turnover.................................................22
Other Risks.............................................................23
Foreign Securities.................................................23
Conversion to Euro.................................................23
FOR MORE INFORMATION.........................................................24

<PAGE>
--------------------------------------------------------------------------------
RISK/RETURN SUMMARY
--------------------------------------------------------------------------------

OVERVIEW
--------

This section introduces the Funds offered by this Prospectus.
For your convenience, concise descriptions of each Fund begin on the
next page. The descriptions provide the following information about
each Fund:

o GOAL
o STRATEGY
o RISK FACTORS
o HISTORICAL PERFORMANCE
o EXPENSES
o FINANCIAL HIGHLIGHTS

INVESTMENT STRATEGY
-------------------

Columbia Management Co., the investment adviser for the Funds
("CMC" or "Adviser"), takes a unique approach to investing, where all
Funds are managed using the expertise of the entire investment team.
Through this team effort, individual analysts and portfolio managers
have responsibility for tracking specific sectors or industries of the
market, identifying securities within those areas that are expected to
reward shareholders. Through this process the Adviser is able to
determine the emphasis to be placed on different industries and
selection of individual stocks in which the Funds may invest. In the
case of the International Stock Fund, this process enables the Adviser
to identify attractive regions, countries and industries in which to
invest. This approach is intended to uncover opportunities that offer
long-term financial reward. In building each Fund's portfolio, the
Adviser combines this top down approach with intensive bottom up
research of individual securities issues. The Small Cap and Small/Mid
Cap Funds focus on investment in small capitalization stocks and
securities, and in the case of the Small/Mid Cap Fund, both small
capitalization and medium capitalization stocks. Accordingly, these
Funds place a greater emphasis on bottom up research. Both types of
analysis, however, play an integral role in the investment process and
are explained in greater detail under "MORE ABOUT THE FUNDS, INVESTMENT
STRATEGY" in this Prospectus.

RISKS OF INVESTING IN COMMON STOCK
----------------------------------

Because the Funds invest primarily in common stocks, they are
subject to the risks associated with stock investing. Although common
stocks have historically provided long-term returns that are greater
than other types of investments, stock returns have also been volatile
over shorter periods of time. Consequently, the Funds' portfolios - and
likewise your investment in the Funds -

3
<PAGE>

will fluctuate in value in response to changes in the economy and the
activities, financial prospects and results of the individual companies
whose stock is held by the Funds.

INFORMATION ABOUT THE FUNDS
---------------------------

CMC SMALL CAP FUND

GOAL
----

What is the Fund's Investment Goal?

The Fund seeks to provide investors long-term capital
appreciation.

STRATEGY
--------

What investment strategies does the Fund use to pursue this goal?

Under normal market conditions, the Fund invests at least 65%
of its total asset value in common stocks of companies with market
capitalizations of less than 250% of the dollar-weighted median market
capitalization of the S&P Small Cap 600 Index. As of September 30,
2000, under the above definition, companies with a market
capitalization of $2.3 billion or less would be considered small cap.

RISK FACTORS
------------

What are the principal risks of investing in the Fund?

In addition to the risks of investing in common stocks
described above under "RISKS OF INVESTING IN COMMON STOCK", investment
in small cap stocks present additional investment risks. This is
because small cap companies:

o May have limited operating histories, fewer financial
resources, and inexperienced management

o May be dependent on a small number of products or
services

o May have low trading volumes, making it difficult for
the Fund to sell a particular security, resulting in
erratic or abrupt price movements

4
<PAGE>

The Fund invests in small cap companies in the technology
market sector. The risks of investing in technology related stocks may
be greater than investing in other market sectors because of:

o Competitive pressures among technology companies that
result in aggressive pricing of their products or
services

o Short product cycles due to accelerated rate of
technological developments

o Varying investor enthusiasm for technology and
technology-related stocks

The price of technology stocks will likely fluctuate more than
securities of companies not dependent upon or associated with
technology because technology companies are affected by scientific and
technological developments and advancements and may be subject to
government regulation, including approval of their products.

You could lose money as a result of your investment in the
Fund. Additionally, the Fund could underperform other investments if
any of the above risks occur. You should invest in this Fund only if
you are willing to assume substantial risks of significant fluctuations
in the value of your investment. An investment in this Fund should be
part of a balanced investment program.

See "MORE ABOUT THE FUNDS" in this Prospectus and the Fund's
Statement of Additional Information for more information regarding the
Fund's investment strategy and risks.

HISTORICAL PERFORMANCE
----------------------

How has the Fund historically performed?

The bar chart and table on the following page illustrate the
Small Cap Fund's annual returns as well as its long term performance.
The bar chart shows how the Fund's performance has varied from year to
year. The table compares the Fund's performance over time to that of
the Russell 2000 Index, a widely recognized unmanaged index used as a
benchmark for small cap stock performance. The bar chart and table
assumes the reinvestment of dividends and distributions. The Funds'
historical performance does not indicate how the Fund will perform in
the future.

5
<PAGE>

Small Cap Fund

Year-By-Year Total Return As Of 12/31 Each Year

[BAR CHART OMITTED]

1990 -11.56%
1991 45.44%
1992 12.31%
1993 16.33%
1994 1.70%
1995 36.39%
1996 21.82%
1997 21.93%
1998 -1.05%
1999 60.00%

Best Quarter: 1Q '91 25.69%
Worst Quarter: 3Q '90 -28.29%
------------------- -------- ----------

Average Annual Total Returns As Of 12/31/99

1 Year 5 Year 10 Year
------------------ ------- ------- -------
CMC Small Cap Fund 60.00% 26.25% 18.55%
Russell 2000 Index 21.26% 16.69% 13.40%

The Fund's total return for the six month period ended 6/30/2000 was
18.10%.

6
<PAGE>

EXPENSES
--------

What expenses do I pay as an investor in the Fund?

The table below describes the fees and expenses that you may
pay if you buy and hold shares of the Fund. As a shareholder, you pay
no transaction fees in connection with your investment in the Fund.
Annual fund operating expenses described in the table are paid out of
the Fund's assets and are therefore reflected in the share price and
total return on the Fund.

|------------------------------------------------------------------|
| The Fund does not charge a sales load or 12b-1 distribution fee. |
|------------------------------------------------------------------|

----------------------------------------------------------------------
Fee Table

Shareholder transaction fees (fees paid directly None
from your investment)

Annual Fund Operating Expenses
(expenses that are paid out of Fund assets)

Management Fees 0.75%
Distribution and/or Service (12b-1) Fees None
Other Expenses 0.04%

Total Fund Operating Expenses 0.79%

---------------------------------------------------------------------

Expense Examples

These examples are intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The
examples assume that you invest $10,000 in the Fund for the time
periods indicated and then sell all of your shares at the end of those
periods. The examples also assume that your investment has a 5% return
each year and that the Fund's operating expenses remain constant as a
percentage of net assets. Your actual costs may be higher or lower, but
based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$81 $252 $439 $978

7
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------

The financial highlights tables are intended to help you understand the
Fund's financial performance for the past five years. Certain information
reflects financial results for a single fund share. The total returns in each
table represent the rate of return an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
whose report, along with the Fund's financial statements, are included in the
Statement of Additional Information under "Financial Statements."
<TABLE>
<CAPTION>
Small Cap Fund
Fiscal Year Ended October 31,
-----------------------------------------------------
1999 1998 1997 1996 1995
----- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year............... $9.96 $13.60 $13.01 $14.00 $12.34
----- ------ ------ ------ ------
Income from investment operations:
Net investment income (loss)..................... (0.04) (0.03) (0.01) (0.02) 0.06
Net realized and unrealized gains (losses)
on investments................................. 3.69 (2.21) 3.52 4.20 2.71
---- ------ ---- ---- ----
Total from investment operations............. 3.65 (2.24) 3.51 4.18 2.77
---- ------ ---- ---- ----

Less distributions:
Dividends from net investment income............. - - - - (0.04)
Distributions from net capital gains............. (0.02) (1.40) (2.92) (5.17) (1.07)
------ ------ ------ ------ ------
Total distributions.......................... (0.02) (1.40) (2.92) (5.17) (1.11)
------ ------ ------ ------ ------

Net asset value, end of year..................... $13.59 $9.96 $13.60 $13.01 $14.00
====== ===== ====== ====== ======

Total return..................................... 36.70% -16.49% 26.98% 30.30% 22.55%

Ratios/Supplemental data
Net assets, end of year
(in thousands) ................................ $240,129 $267,789 $521,770 $522,408 $537,167
Ratio of expenses to average net assets.......... 0.79% 0.77% 0.76% 0.78% 0.77%
Ratio of net income (loss) to average
net (0.33)% (0.20)% (0.08)% (0.14)% 0.43%
assets.....................................
Portfolio turnover rate.......................... 186.07% 158.98% 168.72% 147.77% 125.80%
</TABLE>

NOTE: Per share amounts have been adjusted to retroactively reflect a 4 for 1
share split effective September 1, 1999.

8
<PAGE>

CMC SMALL/MID CAP FUND

GOAL
----

What is the Fund's Investment Goal?

The Fund seeks to provide investors long-term capital
appreciation.

STRATEGY
--------

What investment strategies does the Fund use to pursue this goal?

The Small/Mid Cap Fund's investment objective is to provide
long term growth of capital by investing primarily in common stocks of
companies with small and medium sized market capitalizations Under
normal market conditions, the Fund will invest at least 65% of its
assets in companies with a market capitalization equal to or less than
300 percent of the dollar weighted median market capitalization of the
S&P Mid Cap 400 Index. As of September 30, 2000, securities of a
company with a market capitalization of $10 billion or less would be
eligible for purchase by the Fund under this definition.

RISK FACTORS

What are the principal risks of investing in the Fund?

In addition to the risks of investing in common stocks
described above under "RISKS OF INVESTING IN COMMON STOCK", investment
in small/mid cap stocks present additional investment risks. This is
because small/mid cap companies:

o May have limited operating histories, fewer financial
resources, and inexperienced management

o May be dependent on a small number of products or
services

o May have low trading volumes, making it difficult for
the Fund to sell a particular security, resulting in
erratic or abrupt price movements

The Fund invests in small cap companies in the technology
market sector. The risks of investing in technology related stocks may
be greater than investing in other market sectors because of:

9
<PAGE>

o Competitive pressures among technology companies that
result in aggressive pricing of their products or
services

o Short product cycles due to accelerated rate of
technological developments

o Varying investor enthusiasm for technology and
technology-related stocks

See "MORE ABOUT THE FUNDS" in this Prospectus and the Fund's
Statement of Additional Information for more information regarding the
Fund's investment strategy and risks.

HISTORICAL PERFORMANCE
----------------------

How has the Fund historically performed?

Because the Small/Mid Cap Fund is new, no historical performance is
presented.

EXPENSES
--------

What expenses do I pay as an investor in the Fund?

The table below describes the fees and expenses that you may
pay if you buy and hold shares of the Fund. As a shareholder, you pay
no transaction fees in connection with your investment in the Fund. The
Fund is new, so the annual fund operating expenses for the Fund are
based on estimates for the current first fiscal year. In the future,
the amount of fees and expenses will depend on the actual average net
assets of the Fund during those years and a number of other factors.

10
<PAGE>

--------------------------------------------------------------------------------
Fee Table

Shareholder transaction fees (fees paid directly None
from your investment)

Annual Fund Operating Expenses
(expenses that are paid out of Fund assets)

Management Fees 0. 75%
Distribution and/or Service (12b-1) Fees None
Other Expenses 0.10%(1)

Total Fund Operating Expenses 0. 85%
Expense Reimbursement 0. 05%(2)
Net Expenses 0. 80%

(1) "Other Expenses" are based on the estimated expenses that
the Fund expects to incur in its first fiscal period of
operation.

(2) For the fiscal year ending October 31, 2001, and for the
fiscal years ending October 31, 2002 and 2003, CMC has
agreed to reimburse the Fund for all ordinary expenses of
the Fund to the extent necessary to maintain the Fund's
Total Annual Fund Operating Expenses at 0.80%.

Expense Examples

These examples are intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The
examples assume that you invest $10,000 in the Fund for the time
periods indicated and then sell all of your shares at the end of those
periods. The examples also assume that your investment has a 5% return
each year and that the Fund's operating expenses set forth above remain
constant as a percentage of net assets. Your actual costs may be higher
or lower, but based on these assumptions your costs would be:

1 Year 3 Years
------ -------
$82 $255

11
<PAGE>

FINANCIAL HIGHLIGHTS
--------------------

Because the Small/Mid Cap Fund is new, no financial information is
presented.

CMC INTERNATIONAL STOCK FUND

GOAL
----

What is the Fund's Investment Goal?

The Fund seeks to provide investors long-term capital
appreciation.

STRATEGY
--------

What investment strategies does the Fund use to pursue its goal?

Under normal market conditions, the Fund will invest at least
65% of its assets in equity securities of companies from at least three
countries other than the United States and may invest in companies
located anywhere in the world. While the Fund's investments are not
limited as to market capitalization, the Fund intends to invest
primarily in companies considered to be large and well-established,
based on standards of the applicable country or foreign market.

RISK FACTORS
------------

In addition to the risks of investing in common stocks
described above under "RISKS OF INVESTING IN COMMON STOCK", investment
in foreign securities present additional investment risks. The risks
associated with foreign investing include:

o Foreign securities may be subject to greater
fluctuations in price than domestic securities

o The price of foreign securities are affected by changes
in currency exchange rates

o Foreign taxes may reduce a foreign investment's
effective yield

o A foreign security may be affected by potential
political or economic instability of the country of the
issuer, especially in emerging or developing countries

o Foreign companies are generally not subject to uniform
accounting, auditing, and financial reporting standards,
and have less governmental regulation and oversight than
U.S. companies

12
<PAGE>

o There is generally less public information available
about foreign companies

o Foreign securities are generally less liquid than U.S.
securities

You could lose money as a result of your investment in the
Fund. Additionally, the Fund could underperform other investments if
any of the above risks occur. You should invest in this Fund only if
you are willing to assume substantial risks of significant fluctuations
in your investment. An investment in this Fund should be part of a
balanced investment program.

See "MORE ABOUT THE FUNDS" in this Prospectus and the Fund's
Statement of Additional Information for more information regarding the
Fund's investment strategy and risks.

HISTORICAL PERFORMANCE
----------------------

How has the Fund historically performed?

The bar chart and table on the following page illustrates the
International Stock Fund's annual returns as well as its long term
performance. The bar chart shows how the Fund's performance has varied
from year to year. The table compares the International Stock Fund's
performance to that of the Morgan Stanley Capital Index (MSCI) EAFE, an
unmanaged index which reflects the movement of stock markets in Europe,
Australasia, and the Far East by representing a broad selection of
domestically listed companies within each market. The bar chart and
table assume the reinvestment of dividends and distributions. The
Fund's historical performance does not indicate how the Fund will
perform in the future.

13
<PAGE>

International Stock Fund

Year-By-Year Total Return As Of 12/31 Each Year

[BAR CHART OMITTED]

1995 5.52%
1996 16.77%
1997 10.18%
1998 12.17%
1999 59.02%

Best Quarter: 4Q '98 20.17%
Worst Quarter: 3Q '98 -18.24%
------------------- -------- ----------

Average Annual Total Returns As Of 12/31/99

Inception
1 Year 5 Year (2/1/94)
---------------------------- ------ ------ ----------
CMC International Stock Fund 59.02% 19.35% 14.63%
(MSCI) EAFE Index 27.30% 16.06% 10.97%

The Fund's total return for the six month period ended 6/30/2000 was
13.15%.

EXPENSES
--------

What expenses do I pay as an investor in the Fund?

14
<PAGE>

---------------------------------------------------------------------
Fee Table

Shareholder transaction fees (fees paid directly None
from your investment)

Annual Fund Operating Expenses
(expenses that are paid out of Fund assets)

Management Fees 0.75%
Distribution and/or Service (12b-1) Fees None
Other Expenses 0.56%

Total Fund Operating Expenses 1.31%

---------------------------------------------------------------------

Expense Examples

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$133 $415 $718 $1,579

15
<PAGE>

FINANCIAL HIGHLIGHTS
--------------------

Fiscal Year Ended October 31,
-------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year............... $12.54 $42.71 $42.46 $37.06 $39.51
------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss)..................... (0.02) 0.25 0.41 0.32 0.39
Net realized and unrealized gains (losses)
on investments................................. 5.34 (0.78) 6.16 5.86 (2.64)
---- ------ ---- ---- ------
Total from investment operations............ 5.32 (0.53) 6.57 6.18 (2.25)
---- ------ ---- ---- ------

Less distributions:
Dividends from net investment income............. - - (0.46) (0.78) (0.20)
Distributions from net capital gains............. (0.00)* (29.64) (5.86) - -
------ ------- ------ ------ ------
Total distributions......................... 0.00 (29.64) (6.32) (0.78) (0.20)
---- ------- ------ ------ ------

Net asset value, end of year..................... $17.86 $12.54 $42.71 $42.46 $37.06
====== ====== ====== ====== ======

Total return..................................... 42.44% -1.24% 15.47% 16.67% -5.69%

Ratios/Supplemental data
Net assets, end of year (in thousands)........... $30,492 $15,377 $81,471 $73,542 $68,758
Ratio of expenses to average net assets.......... 1.31% 1.04% 1.05% 1.00% 0.98%
Ratio of net income (loss) to average net assets. (0.14)% 0.60% 0.88% 0.78% 0.99%
Portfolio turnover rate.......................... 96.34% 52.68% 126.56% 119.98% 158.32%
</TABLE>

* Amount represents less than $0.01 per share.

--------------------------------------------------------------------------------
MANAGEMENT
--------------------------------------------------------------------------------

The Funds' investment adviser is Columbia Management Co., 1300 S.W.
Sixth avenue, P.O. Box 1350, Portland, Oregon 97207-1350 ("CMC" or "Adviser").
CMC has acted as an investment adviser since 1969.

The Funds' have contracted with CMC to provide research, advice and
supervision with respect to investment matters and to determine what securities
to purchase or sell and what portion of the Funds' assets to invest. For the
fiscal year

16
<PAGE>

ended October 31, 1999, the Small Cap Fund and the International Stock Fund paid
CMC a management fee, expressed as a percentage of average net assets, of 0.75%.
Under its advisory contract with the Adviser, the Small/Mid Cap Fund will pay a
management fee, expressed as a percentage of average net assets of 0.75%.

CMC uses an investment team approach to analyze investment themes and
strategies for the Funds. Members of the investment team are responsible for the
analysis of particular industries and market sectors within those industries and
for recommendations on individual securities within those industries or market
sectors.

Richard J. Johnson, a Vice President of CMC (since 1995) and a
Chartered Financial Analyst, has since April 1995 had responsibility for
implementing the investment strategies developed for the Small Cap Fund. Mr.
Johnson joined the Adviser in 1994 as a portfolio analyst and member of the
investment team. Before joining the Adviser, Mr. Johnson was a portfolio manager
and analyst for Provident Investment Counsel (1990-1994).

James M. McAlear, a Vice President of CMC (since 1992), has had
principal responsibility for investment decisions of the International Stock
Fund since its inception in 1994. He joined the Adviser in 1992 as a portfolio
analyst and member of the investment team. Previously, Mr. McAlear was Senior
Vice President for American Express Financial Advisers in London (1985-1992) and
Executive Director for Merrill Lynch Europe (1972-1985).

--------------------------------------------------------------------------------
INFORMATION ABOUT YOUR INVESTMENT
--------------------------------------------------------------------------------

YOUR ACCOUNT
------------

Buying Shares
-------------

Shares in the Funds are available for purchase by clients of
CMC enabling them to invest in diversified portfolios of either small
cap securities , small/mid cap or foreign securities in a pooled
environment, rather than purchasing securities on an individual basis.

If you want to invest in a Fund, contact your CMC
representative at 1-800-547-1037. CMC may, at its discretion also use
the Funds as a way to diversify the portfolios of its separately
managed accounts. If the separately managed account is governed by the
rules and regulations promulgated under the Employee Retirement Income
Securities Act of 1974, any investment in the Funds will only be made
after the investment has been approved by an independent fiduciary and
certain conditions are satisfied. See the Statement of Additional
information for more detail.

17
<PAGE>

The price for a Fund's shares is the Fund's net asset value
per share ("NAV"), which is generally calculated as of the close of
trading on the New York Stock Exchange (usually 4:00 p.m., Eastern
time) every day the exchange is open. Your order will be priced at the
next NAV calculated after your order is accepted by the Fund.

Although none of the Funds has a policy with respect to
initial or subsequent minimum investments, purchase orders may be
refused at the discretion of the Fund.

Selling Shares
--------------

You may sell shares at any time. Upon redemption you will
receive the Fund's next NAV calculated after your order is accepted by
the Fund's transfer agent. Any certificates representing Fund shares
being sold must be returned with your redemption request. You can
request a redemption by calling your CMC Representative at
1-800-547-1037. Redemption proceeds are normally transmitted in the
manner specified in the redemption request on the business day
following the effective date of the redemption. Except as provided by
rules of the Securities and Exchange Commission, redemption proceeds
must be transmitted to you within seven days of the redemption date.

Each Fund also reserves the right to make a "redemption in
kind" - pay you in portfolio securities rather than cash - if the
amount you are redeeming is large enough to affect the Fund's
operations (for example, if the redemption represents more than 1% of
the Fund's assets).

Pricing of Shares
-----------------

Each Fund's investments are valued based on their market value
using the last sales price reported on the principal securities
exchange on which the investment is traded, or, in the absence of
recorded sales, at the closing bid prices on such exchanges or over the
counter markets. If applicable to a Fund, securities trading in various
foreign markets may take place on days when the New York Stock Exchange
is closed. Further, when the New York Stock Exchange is open, the
foreign markets may be closed. Therefore, the calculation of the Fund's
NAV may not take place at the same time the prices of certain
securities held by a Fund are determined. In most cases, events
affecting the values of portfolio securities that occur between the
time their prices are determined and the close of normal trading on the
New York Stock Exchange on a day the Fund's NAV is calculated will not
be reflected in the Fund's NAV. If, however, CMC determines that a
particular event would materially affect the Fund's NAV, then CMC under
the general supervision of the Board of Trustees

18
<PAGE>

will use all relevant information available to it to determine a fair
value for the affected portfolio securities.

DISTRIBUTION AND TAXES
----------------------

Income and Capital Gains Distributions
--------------------------------------

Each Fund pays its shareholders dividends from its net
investment income and generally distributes substantially all of its
net realized capital gains to shareholders once a year, usually in
December. The amount of capital gains distributed will depend on the
amount of capital gains realized from the sale of the Fund's portfolio
securities. Dividend and capital gain distributions are declared and
paid as cash dividends and reinvested in additional shares at the net
asset value, as calculated after payment of the distribution, at the
close of business on the dividend payment date, unless you have elected
to receive the capital gain distribution in cash.

Tax Effect of Distributions and Transactions
--------------------------------------------

The dividends and distributions of each Fund are taxable to
most investors, unless the shareholder is exempt from federal or state
income taxes or the investment is in a tax-advantaged account. The tax
status of any distribution is the same regardless of how long you have
been in the Fund and whether you reinvest your distributions or take
them as income. In general, distributions are taxable as follows:
<TABLE>
<CAPTION>

-----------------------------------------------------------------------
Taxability of Distributions
-----------------------------------------------------------------------

Type of Tax Rate for Tax Rate for
Distribution 15% Bracket 28% Bracket or Higher
------------ ----------- ---------------------

<S> <C> <C>
Income Dividends Ordinary Income Rate Ordinary Income Rate

Short Term Capital Gains Ordinary Income Rate Ordinary Income Rate

Long Term Capital Gains 10% 20%
------------------------ -------------------- ---------------------
</TABLE>

Each Fund expects that, as a result of its investment
objective to achieve capital appreciation, its distributions will
consist primarily of capital gains. Each year the Fund's will send you
information detailing the amount of ordinary income and capital gains
distributed to you for the previous year.

19
<PAGE>

The sale of shares in your account may produce a gain or loss
and is a taxable event. For tax purposes, an exchange of shares of a
Fund for shares of another fund managed by the Adviser is the same as a
sale.

|--------------------------------------------------------|
| Your investment in a Fund could have additional tax |
| consequences. Please consult your tax professional for |
| assistance. |
|--------------------------------------------------------|

--------------------------------------------------------------------------------
MORE ABOUT THE FUNDS
--------------------------------------------------------------------------------

INVESTMENT STRATEGY
-------------------

Small Cap Fund and Small/Mid Cap Fund
-------------------------------------

In identifying attractive securities for investment in the
Funds, the Adviser begins with a bottom up, fundamental analysis of
individual companies. The bottom up analysis is intended to provide
insights about the financial condition and growth prospects of a
company whose stock is under consideration. As part of this intensive
research process, the Adviser evaluates a company's balance sheets and
income statements to draw conclusions about earnings growth and
profitability. The Adviser also examines quality of management, a
company's level of investment in research and development, as well as
the company's potential for new products or services. In addition, the
Adviser looks at sales trends and factors affecting stock price, such
as price earnings and price to book ratios. To round out the bottom up
research, the Adviser uses top down analysis to determine how macro
changes in the economy may affect the prospects for the industry in
which the company under consideration is operating. By utilizing this
investment strategy, the Funds strive to anticipate and act upon market
change, understand its effects on the risks and rewards of the Funds'
securities, and thereby generate consistent, competitive results over
the long-term.

The Funds may invest in securities convertible into common
stocks of small cap companies. Securities convertible into common stock
may include both debt securities and preferred stock. The Funds may
also invest in warrants, which are options to buy a stated number of
underlying securities at a specified price any time during the life of
the warrants.

There is no minimum aggregate market valuation for a company
to be considered an appropriate investment for either Fund. Both Funds
may invest up to 35% of the value of its total assets in the securities
of larger, more established companies when these securities offer
capital appreciation potential that is generally comparable to small or
mid cap securities.

20
<PAGE>

International Stock Fund
------------------------

For the International Stock Fund, the Adviser uses a top down
analysis to identify attractive countries, stock markets, industries,
sectors and securities for investment. As part of this approach, the
Adviser conducts an ongoing evaluation of the global economic and
investment environments to anticipate how potential change may
influence the prospects for particular global regions, countries and
the industries in those countries. This is because even small shifts in
such macroeconomic factors as interest rates, inflation, government
regulation, political activity, flows of capital and international
monetary policy can affect the overall economic health of an entire
global region or a country, including the industries in that region or
country. Once the Adviser has identified attractive regions, countries
and industries for emphasis through the top down approach, fundamental
security analysis is used to evaluate the merits of individual
companies being considered for investment. By utilizing this investment
strategy, the Adviser strives to anticipate and act upon economic and
stock market changes, thereby generating consistent, competitive
investment results over the long-term.

The Fund may invest up to 25% of its assets in smaller, less
seasoned companies when these securities offer attractive opportunities
consistent with the Fund's investment objective. These investments are
subject to the risks of investing in small cap companies discussed in
the Risk/Return Summary of the Small Cap Fund.

The Fund intends to invest principally in the equity
securities of companies located in the following countries: Belgium,
Brazil, Finland, France, Germany, Italy, Ireland, India, Korea, The
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, the United
Kingdom, Australia, Hong Kong, Japan, New Zealand, Singapore, Canada,
Thailand and Mexico.

The value of the International Stock Fund is measured in U.S.
dollars and will fluctuate as a result of changes in the exchange rates
between the U.S. dollar and the currencies in which the foreign
securities or bank deposits held by the Fund are denominated. To reduce
or limit exposure to adverse change in currency exchange rates
(referred to as "hedging"), the Fund may enter into forward currency
exchange contracts that in effect lock in a rate of exchange during the
period of the forward contract. The Fund will only enter into forward
contracts for hedging and not for speculation. When required by the
Investment Company Act or the SEC, the Fund will "cover" its commitment
under the forward contracts by segregating cash or liquid, high-grade
securities with the Fund's custodian in an amount not less than the
value of the Fund's total assets committed to the forward contracts.
Under normal market

21
<PAGE>

conditions, no more than 25% of the Fund's assets may be committed to
currency exchange contracts.

The International Stock Fund may also purchase or sell foreign
currencies on a "spot" (cash) basis or on a forward basis to lock in
the U.S. dollar value of a transaction at the exchange rate or rates
then prevailing. The Fund may use this hedging technique in an attempt
to insulate itself against possible losses resulting from a change in
the relationship between the U.S. dollar and the relevant foreign
currency during the period between the date the security is purchased
or sold and the date on which payment is made or received.

In addition to investing directly in foreign equity
securities, the Fund may also purchase securities in the form of
American Depository Receipts ("ADRs") and Global Depository Receipts
("GDRs"). ADRs in registered form are dollar-denominated securities
designed for use in the U.S. securities markets. ADRs are sponsored and
issued by domestic banks and represent and may be converted into
underlying foreign securities deposited with the domestic bank or a
correspondent bank. ADRs do not eliminate the risks inherent in
investing in the securities of foreign issuers. By investing in ADRs
rather than directly in the foreign security, however, the Fund may
avoid currency risks during the settlement period for either purchases
or sales. There is a large, liquid market in the United States for most
ADRs. GDRs are receipts representing an arrangement with a European
bank similar to that for ADRs. GDRs are not necessarily denominated in
the currency of the underlying security.

Changes to Investment Objective and Temporary Investments
---------------------------------------------------------

The investment objective of each Fund may be changed by the
Board of Trustees, without shareholder approval, upon 30 days written
notice. Additionally, under adverse market conditions, a Fund may
depart from its principal investment strategy by taking temporary
defensive positions in response to adverse economic or market
conditions. When a Fund assumes a temporary defensive position, it is
not invested in securities designed to achieve its stated investment
objective.

Portfolio Turnover
------------------

Each Fund is actively managed, which means the Fund's manager
may frequently buy and sell securities. Frequent trading increases a
Fund's turnover rate and may increase transaction costs, such as
brokerage commissions. Increased transaction costs could detract from a
Fund's performance.

22
<PAGE>

OTHER RISKS
-----------

In addition to the certain risks stated in the "RISK/RETURN SUMMARY",
there are other risks of investing in the Funds such as:

Foreign Securities. The International Stock Fund may invest a portion
of its assets in companies located in developing countries or in countries with
new or developing capital markets, such as countries in Eastern Europe and South
America or Southeast Asia. The considerations noted above concerning the risk of
investing in foreign securities are generally more significant for these
investments. These countries may have relatively unstable governments and
securities markets in which only a small number of securities trade. Markets of
developing countries may generally be more volatile than markets of more
developed countries. Investments in these markets may involve significantly
greater risks, as well as the potential for greater gains.

Additional costs may be incurred in connection with the International
Stock Fund's foreign investments. Foreign brokerage commissions are generally
higher than those in the United States. Expenses may also be incurred on
currency conversions when the Fund moves investments from one country to
another. Increased custodian costs as well as administrative difficulties may be
experienced in connection with maintaining assets in foreign jurisdictions.

Conversion to Euro. On January 1, 1999, the European Monetary Union
("EMU") introduced a new single currency, the Euro, to replace the national
currencies of the participating member nations. The eleven member nations are
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg,
Netherlands, Portugal and Spain. It is expected that other countries will be
added in the future. The International Stock Fund currently holds investments in
countries with currencies which were replaced by the Euro. This change to a
single currency was new and untested and resulted in market volatility. It is
not possible to confidently predict the long term impact of the Euro on the
business or financial condition of European issuers or on the International
Stock Fund. To the extent the Fund holds non-U.S. dollar (Euro or other)
denominated securities, it will still be exposed to currency risk due to
fluctuations in those currencies versus the U.S. dollar.

23
<PAGE>

--------------------------------------------------------------------------------
FOR MORE INFORMATION
--------------------------------------------------------------------------------

You can find additional information on the Funds' structure and
performance in the following documents:

o Annual/Semiannual Reports. While the Prospectus
describes the Funds' potential investments, these
reports detail the Funds' actual investments as of the
report date. Reports include a discussion by Fund
management of recent market conditions, economic trends,
and Fund strategies that significantly affected a Fund's
performance during the reporting period.

o Statement of Additional Information ("SAI"). A
supplement to the Prospectus, the SAI contains further
information about each Fund and its investment
restrictions, risks and polices. It also includes the
most recent annual report and the independent
accountant's report.

A current SAI for the Funds is on file with the Securities and Exchange
Commission and is incorporated into this Prospectus by reference, which means it
is considered part of this Prospectus.

A copy of the SAI and current annual report may be attached to this
Prospectus. If it is not, or to obtain additional copies of the SAI or copies of
the current annual/semiannual report, without charge, or to make inquiries of a
Fund, you may contact:

CMC Fund Trust
1300 S.W. Sixth Avenue
Portland, Oregon 97201
Telephone: 1-800-547-1037

Information about a Fund (including the SAI) can be reviewed and copied at the
SEC's Public Reference Room in Washington, D.C. Information about the operation
of the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330. Reports and other information regarding the Fund are also on the
SEC's Internet website at http://www.sec.gov, and copies of this information may
be obtained, after paying a duplicating fee, by electronic request at the SEC's
E-mail address at [email protected] or by writing the SEC's Public Reference
Section, Washington, D.C. 20549-0102.

SEC file number: 811-5857

24
<PAGE>
------------------------------------------------------------------------------

CMC SMALL CAP FUND
CMC SMALL/MID CAP FUND
CMC INTERNATIONAL STOCK FUND

------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION

CMC Fund Trust
1300 S.W. Sixth Avenue
P.O. Box 1350
Portland, Oregon 97207
(503) 222-3600

This Statement of Additional Information contains information relating
to CMC Fund Trust (the "Trust") and three portfolios of the Trust, CMC Small Cap
Fund, CMC Small/Mid Cap Fund and CMC International Stock Fund (each a "Fund" and
together the "Funds").

This Statement of Additional Information is not a Prospectus. It
relates to a Prospectus dated October 17, 2000 (the "Prospectus") and should be
read in conjunction with the Prospectus. Copies of the Prospectus are available
without charge upon request to the Trust or by calling 1-800-547-1037.

TABLE OF CONTENTS

Description of the Funds..................................................2
Management................................................................12
Investment Advisory and Other Fees Paid to Affiliates.....................16
Portfolio Transactions....................................................17
Capital Stock and Other Securities........................................20
Purchase, Redemption and Pricing of Shares................................20
Custodians................................................................22
Independent Accountants...................................................23
Taxes.....................................................................23
Performance...............................................................28
Financial Statements......................................................29

October 17, 2000

<PAGE>

--------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
--------------------------------------------------------------------------------

The Trust is an Oregon business trust established under a Restated
Declaration of Trust, dated October 13, 1993, as amended. The Trust is an
open-end, management investment company comprised of separate portfolios, each
of which is treated as a separate fund. There are seven portfolios established
under the Trust: the Funds, CMC High Yield Fund, CMC Short Term Bond Fund, CMC
Fixed Income Securities Fund and CMC International Bond Fund. With the exception
of the International Bond Fund, each Fund is diversified, which means that, with
respect to 75% of its total assets, the Fund will not invest more than 5% of its
assets in the securities of any single issuer. The investment adviser for each
of the Funds is Columbia Management Co. (the "Adviser"). See the section
entitled "INVESTMENT ADVISORY AND OTHER FEES PAID TO AFFILIATES" for further
information about the Adviser.

INVESTMENT OBJECTIVE AND POLICIES
---------------------------------

CMC SMALL CAP FUND

The Small Cap Fund's investment objective is capital appreciation. The
Fund's investment objective may be changed by the Trustees without shareholder
approval upon 30 days written notice. There is no assurance that the Fund will
achieve its investment objective.

To achieve its investment objective, the Fund will generally invest at
least 65% of its total asset value in common stocks or securities convertible
into common stock of companies with market capitalizations of less than 250% of
the dollar-weighted median market capitalization of the S&P Small Cap 600 Index.
The S&P Small Cap 600 Index is a capitalization weighted index that measures the
performance of selected U.S. stocks with small market capitalization. As of
September 30, 2000, under the above definition, companies with a market
capitalization of $2.3 billion or less would be considered small cap. The Fund
may, however, invest from time to time up to 35% of the value of its total
assets in the securities of larger companies when the Adviser believes these
securities offer capital appreciation potential that is generally comparable to
small cap securities.

CMC SMALL/MID CAP FUND

The Small/Mid Cap Fund's investment objective is capital appreciation.
The Fund's investment objective may be changed by the Trustees without
shareholder approval upon 30 days' written notice. There is no assurance that
the Fund will achieve its investment objective.

<PAGE>

To achieve its investment objective, the Fund will generally invest at
least 65% of its total asset value in common stocks or securities convertible
into common stock of companies with small to medium-size market capitalizations
equal to or less than 300 percent of the dollar weighted median market
capitalization of the S&P Mid Cap 400 Index. Under this definition, as of
September 30, 2000, companies with a market capitalization of $10 billion or
less would be considered small to medium size market capitalization and be
eligible for purchase by the Fund. Investments by the Fund in companies which
grow above these medium capitalization criteria may continue to be held if the
Adviser believes they are still attractive investments and offer similar returns
as other securities held by the Fund.

CMC INTERNATIONAL STOCK FUND

The International Stock Fund's investment objective is capital
appreciation. The Fund's investment objective may be changed by the Trustees
without shareholder approval upon 30 days written notice. There is no assurance
that the Fund will achieve its investment objective.

To achieve its investment objective, under normal conditions, the Fund
will invest at least 75% of the Fund's assets in equity securities, including
securities convertible into equity securities, of issuers located outside the
United States that each have an aggregate market valuation of at least $500
million. The Fund may invest in smaller, less seasoned companies when the
Adviser believes these companies offer attractive opportunities consistent with
the Fund's overall investment objective. As discussed further below, an
investment in a less seasoned company may involve greater risks than an
investment in a larger, more established company.

INVESTMENTS HELD BY THE FUNDS
-----------------------------

Under normal conditions, the Funds will invest in equity securities,
including securities convertible into equity securities. Additional information
with respect to certain securities in which the Funds may invest is set forth
below.

Options and Financial Futures Transactions
------------------------------------------

Each Fund may invest up to 5% of its net assets in premiums to purchase
put and call exchange-traded options. A call option gives the holder (buyer) the
right to purchase a security at a specified price (the exercise price) at any
time until a certain date (the expiration date). A put option gives the buyer
the right to sell a security at the exercise price at any time until the
expiration date. The Funds may also purchase options on securities indices.
Options on securities indices are similar to options on a security except that,
rather than the right to take or make delivery of a security at a specified
price, an option on a securities index gives the holder the right to receive, on
exercise of the option, an amount of cash if the closing level of the securities
index on which the option is based is greater than, in the case of a call, or
less than, in the case of a put, the exercise price of the option. Each Fund may
enter into closing transactions, exercise its options, or permit the options to
expire.

3
<PAGE>

The Funds may write call options but only if such options are covered.
A call option on a security is covered if written on a security the Fund owns or
if the Fund has an absolute and immediate right to acquire that security without
additional cash consideration upon conversion or exchange of other securities
held by the Fund. If additional cash consideration is required, that amount will
be held in a segregated account by the Fund's custodian bank. A call option on a
securities index is covered if the Fund owns securities whose price changes, in
the opinion of the Adviser, are expected to be substantially similar to those of
the index. A call option may also be covered in any other manner in accordance
with the rules of the exchange upon which the option is traded and applicable
laws and regulations. A call option is covered if it is written on a security
the Fund owns. Each Fund may write such options on up to 25% of its net assets.

The Funds may engage in financial futures transactions, including
interest rate futures transactions. Financial futures contracts are commodity
contracts that obligate the long or short holder to take or make delivery of a
specified quantity of a financial instrument, such as a security or the cash
value of a securities index, during a specified future period at a specified
price. The Funds' investment restrictions do not limit the percentage of the
Funds' assets that may be invested in financial futures transactions. Each Fund,
however, does not intend to enter into financial futures transactions for which
the aggregate initial margin exceeds 5% of the net assets of the Fund after
taking into account unrealized profits and unrealized losses on any such
transactions it has entered into. The Funds may engage in futures transactions
only on commodities exchanges or boards of trade.

The Funds will not engage in transactions in index options, financial
futures contracts, or related options for speculation, but only as an attempt to
hedge against market conditions affecting the values of securities that the Fund
owns or intends to purchase. When a Fund purchases a put on a stock index or on
a stock index future not held by the Fund, the put protects the Fund against a
decline in the value of all securities held by it to the extent that the stock
index moves in a similar pattern to the prices of the securities held. The
correlation, however, between indices and price movements of the securities in
which a Fund will generally invest may be imperfect. Each Fund expects,
nonetheless, that the use of put options that relate to such indices will, in
certain circumstances, protect against declines in values of specific portfolio
securities or a Fund's portfolio generally. Although the purchase of a put
option may partially protect a Fund from a decline in the value of a particular
security or its portfolio generally, the cost of a put will reduce the potential
return on the security or the portfolio if either increases in value.

Upon entering into a futures contract, each Fund will be required to
deposit with its custodian, in a segregated account, cash or certain U.S.
government securities, or any other portfolio assets as permitted by the
Securities and Exchange commission rules and regulations in an amount known as
the "initial margin." This amount, which is subject to change, is in the nature
of a performance bond or a good faith deposit on the contract and would be
returned to the Fund upon termination of the futures contract, if all
contractual obligations have been satisfied.

4
<PAGE>

The principal risks of options and futures transactions are: (a)
possible imperfect correlation between movements in the prices of options,
currencies, or futures contracts and movements in the prices of the securities
or currencies hedged or used for cover; (b) lack of assurance that a liquid
secondary market will exist for any particular option or futures contract when
needed; (c) the need for additional skills and techniques beyond those required
for normal portfolio management; and (d) losses on futures contracts resulting
from market movements not anticipated by the Adviser.

Foreign Securities
------------------

Both the Small Cap Fund and the Small/Mid Cap Fund may invest up to
one-third of its total assets in securities of foreign issuers in developed
foreign countries, primarily companies in Canada, Western Europe and Asia,
including securities issued by foreign governments, denominated in U.S. dollars.
Investments in foreign securities may involve a greater degree of risk than
those in domestic securities. For a discussion of the risks of investing in
foreign securities, see the summary of the International Stock Fund in the
Prospectus under "RISK/RETURN SUMMARY" and "MORE ABOUT THE FUNDS, OTHER RISKS."

Repurchase Agreements
---------------------

Each Fund may invest in repurchase agreements, which are agreements by
which the Fund purchases a security and simultaneously commits to resell that
security to the seller (a commercial bank or recognized securities dealer) at a
stated price within a number of days (usually not more than seven) from the date
of purchase. The resale price reflects the purchase price plus a rate of
interest which is unrelated to the coupon rate or maturity of the purchased
security. Repurchase agreements may be considered loans by the Fund
collateralized by the underlying security. The obligation of the seller to pay
the stated price is in effect secured by the underlying security. The seller
will be required to maintain the value of the collateral underlying any
repurchase agreement at a level at least equal to the price of the repurchase
agreement. In the case of default by the seller, the Fund could incur a loss. In
the event of a bankruptcy proceeding commenced against the seller, the Fund may
incur costs and delays in realizing upon the collateral. Each Fund will enter
into repurchase agreements only with those banks or securities dealers who are
deemed creditworthy pursuant to criteria adopted by the Trustees of the Trust.
There is no limit on the portion of a Fund's assets that may be invested in
repurchase agreements with maturities of seven days or less.

Illiquid Securities
-------------------

No illiquid securities will be acquired by any of the Funds if upon the
purchase more than 10% of the value of the Fund's net assets would consist of
these securities. "Illiquid securities" are securities that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price used to determine the Fund's net asset value. Under
current interpretations of the Staff of the Securities and Exchange Commission

5
<PAGE>

("SEC"), the following instruments in which the Fund may invest will be
considered illiquid: (1) repurchase agreements maturing in more than seven days;
(2) restricted securities (securities whose public resale is subject to legal
restrictions); (3) options, with respect to specific securities, not traded on a
national securities exchange that are not readily marketable; and (4) any other
securities in which the Fund may invest that are not readily marketable.

Each of the Funds may purchase without limit, however, certain
restricted securities that can be resold to qualifying institutions pursuant to
a regulatory exemption under Rule 144A ("Rule 144A securities"). If a dealer or
institutional trading market exists for Rule 144A securities, these securities
are considered to be liquid and thus not subject to the Fund's 10% limitation on
the investment in restricted or other illiquid securities. Under the supervision
of the Trustees of the Trust, the Adviser determines the liquidity of Rule 144A
securities and, through reports from the Adviser, the Trustees monitor trading
activity in these securities. In reaching liquidity decisions, the Adviser will
consider, among other things, the following factors: (1) the frequency of trades
and quotes for the security; (2) the number of dealers willing to purchase or
sell the security and the number of other potential purchasers; (3) dealer
undertakings to make a market in the security; and (4)the nature of the security
and the marketplace trades (e.g., the time needed to dispose of the security,
the method of soliciting offers, and the procedures for the transfer).

Convertible Securities and Warrants
-----------------------------------

Each Fund may invest in convertible debentures and convertible
preferred stock, each convertible into common stock. Convertible debentures are
interest-bearing debt securities, typically unsecured, that represent an
obligation of the corporation providing the owner with claims to the
corporation's earnings and assets before common and preferred stock owners,
generally on par with unsecured creditors. If unsecured, claims of convertible
debenture owners would be inferior to claims of secured debt holders.
Convertible preferred stocks are securities that represent an ownership interest
in a corporation providing the owner with claims to the corporation's earnings
and assets before common stock owners, but after bond owners. Investments by the
Funds in convertible debentures or convertible preferred stock would be a
substitute for an investment in the underlying common stock, primarily either in
circumstances where only the convertible security is available in quantities
necessary to satisfy the Fund's investment needs (for example, in the case of a
new issuance of convertible securities) or where, because of financial market
conditions, the conversion price of the convertible security is comparable to
the price of the underlying common stock, in which case a preferred position
with respect to the corporation's earnings and assets may be preferable to
holding common stock.

The Funds may also invest in warrants, which are options to buy a
stated number of underlying securities at a specified price any time during the
life of the warrants. The securities underlying these warrants will be the same
types of securities that each Fund will invest in to achieve its investment
objective of capital appreciation. The purchaser of a warrant expects the market
price of the underlying security will exceed the purchase price of the warrant
plus the exercise price of the warrant, thus resulting in a profit. If the
market

6
<PAGE>

price never exceeds the purchase price plus the exercise price of the warrant
before the expiration date of the warrant, the purchaser will suffer a loss
equal to the purchase price of the warrant.

Investments in Small and Unseasoned Companies
---------------------------------------------

The Funds may invest in companies that are unseasoned; that is,
companies that have limited or unprofitable operating histories, limited
financial resources, and inexperienced management. In addition, small and
unseasoned companies often face competition from larger or more established
firms that have greater resources. Securities of small and unseasoned companies
are frequently traded in the over-the-counter market or on regional exchanges
where low trading volumes may result in erratic or abrupt price movements. To
dispose of these securities, the Funds may need to sell them over an extended
period or below the original purchase price. Investments by the Funds in these
small or unseasoned companies may also be regarded as speculative. Each of the
Small Cap Fund and Small/Mid Cap Fund has a fundamental policy not to invest
more than 10% of its total assets in companies that have a record of less than
three years of continuous operations. The International Stock Fund limits
investments in small and unseasoned companies to 5% of its total assets.

Temporary Investments
---------------------

When, as a result of market conditions, the Adviser determines a
temporary defensive position is warranted to help preserve capital, a Fund may
without limit temporarily retain cash, or invest in prime commercial paper,
high-grade debt securities, securities of the U.S. Government and its agencies
and instrumentalities, and high-quality money market instruments, including
repurchase agreements. The International Stock Fund may invest in such
securities issued by entities organized in the United States or any foreign
country, denominated in U.S. dollars or foreign currency. When a Fund assumes a
temporary defensive position, it is not invested in securities designed to
achieve its investment objective of capital appreciation.

Technology Sector
-----------------

The Small Cap and Small/Mid Cap Funds may invest a significant portion
of their assets in companies in the technology sector. The Funds consider
technology to be a sector larger than any one industry. Accordingly, investments
by any Fund in companies within the technology sector will not be considered a
concentration of investments in an industry.

INVESTMENT RESTRICTIONS
-----------------------

The following is a list of investment restrictions applicable to the
Funds. If a percentage limitation is adhered to at the time of the investment, a
later increase or decrease in percentage resulting from any change in value or
net assets will not result in a violation of

7
<PAGE>

such restriction, provided, however, at no time will a Fund's investment in
illiquid securities exceed 15% of its net assets. The Trust may not change these
restrictions without a majority vote of the outstanding securities of the
applicable Fund.

The Small Cap Fund may not:

1. Buy or sell commodities. The Fund may, however, invest in futures
contracts relating to broadly based stock indices, subject to the restrictions
set forth below in restriction 15.

2. Concentrate investments in any industry. The Fund, however, may (a)
invest up to 25% of the value of its total assets in any one industry and (b)
invest for temporary defensive purposes up to 100% of the value of the total
assets in securities issued or guaranteed by the U.S. Government or its agencies
or instrumentalities.

3. Buy or sell real estate.

4. Make loans to other persons (except by purchase of short-term
commercial paper, repurchase agreements, bonds, debentures, or other debt
securities constituting part of an issue). For purposes of this restriction, the
making of a loan by the Fund will not include the purchase of a portion of an
issue of publicly distributed bonds, debentures, or other securities, whether or
not the purchase is made upon the original issuance of the securities.

5. Purchase illiquid securities, if upon the purchase more than 10% of
the value of the Fund's net assets would consist of these securities. See
"DESCRIPTION OF THE FUNDS, INVESTMENTS HELD BY THE FUNDS" for a complete
discussion of illiquid securities.

6. Purchase the securities of any issuer if the purchase, at the time
thereof, would cause more than 10% of the outstanding voting securities of that
issuer to be held in the Fund.

7. Purchase the securities of any issuer if the purchase, at the time
thereof, would cause more than 5% of the value of the total assets of the Fund
at market value to be invested in the securities of that issuer (other than
obligations of the U.S. Government and its agencies and instrumentalities), with
reference to 75% of the assets of the Fund.

8. Purchase securities of other open-end investment companies. The Fund
may, however, purchase securities of closed-end investment companies so long as
the Fund does not own in the aggregate more than 10% of the outstanding voting
securities of such investment company.

9. Issue senior securities, bonds, or debentures.

10. Underwrite securities of other issuers, except the Fund may acquire
portfolio securities in circumstances where, if the securities are later
publicly offered or sold by the

8
<PAGE>

Fund, it might be deemed to be an underwriter for purposes of the Securities Act
of 1933, as amended ("1933 Act").

11. Borrow money in excess of 5% of its net asset value. Any borrowing
must only be temporary, from banks, and for extraordinary or emergency purposes.

12. Invest its assets in the securities of any company if the purchase,
at the time thereof, would cause more than 10% of the value of the Fund's total
assets to be invested in companies which have a record of less than three years
of continuous operation including the operation of predecessors and parents.

13. Invest in companies for the purpose of exercising control or
management.

14. Engage in short sales of securities except to the extent that such
sales are "against the box"; that is, only to the extent the Fund owns the
securities sold short or owns other securities convertible into an equivalent
amount of securities sold short. Such transactions may only be made to protect a
profit in or to attempt to minimize a loss with respect to convertible
securities. In any event, no more than 10% of the value of the Fund's net assets
may, at the time, be held as collateral for such sales.

15. Buy and sell puts and calls on stock index futures, or financial
futures or options on financial futures, unless such options are written by
other persons and the options or futures are offered through the facilities of a
national securities association or are listed on a national securities or
commodities exchange.

The Small/Mid Cap Fund may not:

1. Buy or sell commodities. The Fund may, however, invest in futures
contracts relating to broadly based stock indices, subject to the restrictions
set forth below in restriction 15.

3. Buy or sell real estate.

9
<PAGE>

6. Purchase the securities of any issuer if the purchase, at the time
thereof, would cause more than 10% of the outstanding voting securities of that
issuer to be held in the Fund.

9. Issue senior securities, bonds, or debentures.

10. Underwrite securities of other issuers, except the Fund may acquire
portfolio securities in circumstances where, if the securities are later
publicly offered or sold by the Fund, it might be deemed to be an underwriter
for purposes of the Securities Act of 1933, as amended ("1933 Act").

11. Borrow money in excess of 5% of its net asset value. Any borrowing
must only be temporary, from banks, and for extraordinary or emergency purposes.

13. Invest in companies for the purpose of exercising control or
management.

15. Buy and sell puts and calls on stock index futures, or financial
futures or options on financial futures, unless such options are written by
other persons and the options or

10
<PAGE>

futures are offered through the facilities of a national securities association
or are listed on a national securities or commodities exchange.

The International Stock Fund may not:

1. Buy or sell commodities. However, the Fund may invest in futures
contracts or options on such contracts relating to broadly based stock indices,
subject to the restrictions set forth below in restriction 15, and may enter
into foreign currency transactions.

2. Concentrate investments in any industry. However, the Fund may (a)
invest up to 25% of the value of its assets in any one industry and (b) invest
for temporary defensive purposes up to 100% of the value of its assets in
securities issued or guaranteed by the United States or its agencies or
instrumentalities.

3. Buy or sell real estate. However, the Fund may purchase or hold
readily marketable securities issued by companies, such as real estate
investment trusts, which deal in real estate or interests therein.

4. Make loans to other persons, except by purchase of short-term
commercial paper, bonds, repurchase agreements, debentures, or other debt
securities constituting part of an issue and except to the extent the entry into
repurchase agreements in accordance with the Fund's investment restrictions may
be deemed a loan.

5. Purchase illiquid securities, if upon the purchase more than 10% of
the value of the Fund's assets (taken at current value) would consist of these
securities. See "DESCRIPTION OF THE FUNDS, INVESTMENTS HELD BY THE FUNDS" for a
complete discussion of illiquid securities.

6. Purchase the securities of any issuer if the purchase, at the time
thereof, would cause more than 10% of the outstanding voting securities of that
issuer to be held by the Fund.

7. Purchase the securities of any issuer (including any foreign
government issuer) if the purchase, at the time thereof, would cause more than
5% of the value of the total assets of the Fund at market value to be invested
in the securities of that issuer (other than obligations of the U.S. government
and its agencies and instrumentalities), with reference to 75% of the assets of
the Fund.

8. Purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition, or reorganization, or by
purchase in the open market of securities of closed-end investment companies
where no underwriter or dealer's commission or profit, other than customary
broker's commission, is involved and only if immediately thereafter not more
than (i) 3% of the total outstanding voting stock of such company is owned by
the Fund, (ii) 5% of the Fund's total assets would be invested in any one such
company, and (iii) 10% of the Fund's total assets would be invested in such
securities.

11
<PAGE>

9. Issue senior securities, bonds, or debentures.

10. Underwrite securities of other issuers, except that the
International Stock Fund may acquire portfolio securities in circumstances
where, if the securities are later publicly offered or sold by the Fund, it
might be deemed to be an underwriter for purposes of the 1933 Act.

11. Borrow money, except temporarily for extraordinary or emergency
purposes. For all amounts borrowed, the Fund will maintain an asset coverage of
300%. The Fund will not make any additional investments while borrowings exceed
5% of the Fund's total assets.

12. Invest its funds in the securities of any company if the purchase
would cause more than 5% of the value of the Fund's total assets to be invested
in companies which have a record of less than three years of continuous
operation, including operation of predecessors and parents.

13. Invest in companies for the purpose of exercising control or
management.

14. Engage in short sales of securities except to the extent that the
Fund owns other securities convertible into an equivalent amount of such
securities. Such transactions may only be made to protect a profit in or to
attempt to minimize a loss with respect to convertible securities. In any event,
no more than 5% of the value of the Fund's net assets taken at market may, at
any time, be held as collateral for such sales.

15. Buy and sell puts and calls on securities, stock index futures, or
options on stock index futures, or financial futures or options on financial
futures, unless such options are written by other persons and the options or
futures are offered through the facilities of a recognized securities
association or are listed on a recognized securities or commodities exchange or
similar entity.

--------------------------------------------------------------------------------
MANAGEMENT
--------------------------------------------------------------------------------

The Trust is managed under the general supervision of the Trustees of
the Trust. The trustees and officers of the Trust are listed below, together
with their principal business occupations. All principal business positions have
been held for more than five years, except as follows: Columbia National
Municipal Bond Fund, Inc. since January 1999; Columbia Small Cap Fund, Inc.
since August 1996; and except as otherwise indicated. The term "Columbia Funds"
refers to Columbia High Yield Fund, Inc., Columbia Balanced Fund, Inc., Columbia
Common Stock Fund, Inc., Columbia International Stock Fund, Inc., Columbia
Oregon Municipal Bond Fund, Inc., Columbia National Municipal Bond Fund, Inc.,
Columbia Real Estate Equity Fund, Inc., Columbia U.S. Government Securities
Fund, Inc., Columbia Special Fund, Inc.,

12
<PAGE>

Columbia Growth Fund, Inc., Columbia Daily Income Company, Columbia Small Cap
Fund, Inc., and Columbia Fixed Income Securities Fund, Inc.

J. JERRY INSKEEP, JR.,* Age 69, Chairman and Trustee of the Trust; Chairman and
Director of each of the Columbia Funds; Consultant with FleetBoston Financial
Corporation (since December 1997); formerly President of the Trust and each of
the Columbia Funds; formerly Chairman and a Director of Columbia Management Co.
(the "Adviser"), the investment adviser of the Fund, Columbia Funds Management
Company ("CFMC"), Columbia Trust Company (the "Trust Company"), the Fund's
transfer agent; and formerly a Director of Columbia Financial Center
Incorporated ("Columbia Financial"). Mr. Inskeep's business address is 1300 S.W.
Sixth Avenue, P.O. Box 1350, Portland, Oregon 97207.

JAMES C. GEORGE, Age 67, Trustee of the Trust (since December 1997) and Director
of each of the Columbia Funds (since June 1994). Mr. George, former investment
manager of the Oregon State Treasury (1966-1992), is an investment consultant.
Mr. George's business address is 1001 S.W. Fifth Avenue, Portland, Oregon 97204.

PATRICK J. SIMPSON, Age 55, Trustee of the Trust (since April 2000) and Director
of each of the Columbia Funds (since April 2000); attorney with Perkins Coie
LLP. Mr. Simpson's business address is 1211 S.W. Fifth Avenue, Suite 1500,
Portland, Oregon 97204.

RICHARD L. WOOLWORTH, Age 59, Trustee of the Trust and Director of each of the
Columbia Funds; Chairman and Chief Executive Officer of Blue Cross and Blue
Shield of Oregon; and Chairman and Chief Executive Officer of the Regence Group,
health insurers. Mr. Woolworth's address is 200 S.W. Market Street, Portland,
Oregon 97201.

JEFF B. CURTIS,* Age 46, President and Assistant Secretary of the Trust and each
of the Columbia Funds (since April 2000); Director and President of Columbia
Financial (since October 1999); Director and Senior Vice President (since
January 1999) and Secretary (since April 1993) of the Trust Company; Director
(since December 1997) and Senior Vice President (since January 1999) of the
Adviser and CFMC. Prior to his current officer positions, Mr. Curtis was Vice
President and General Counsel of the Adviser, CFMC, the Trust Company and
Columbia Financial (from April 1993 to December 1998). Mr. Curtis's business
address is 1300 S.W. Sixth Avenue, Portland, Oregon 97207.

THOMAS L. THOMSEN,* Age 56, Vice President of the Trust and each of the Columbia
Funds (since April 2000); President and Chief Investment Officer (since December
1997) and Director (since 1980) of the Trust Company; Director (since 1989),
President and Chief Investment Officer (since December 1997) of the Adviser;
Director

13
<PAGE>

(since 1982), President and Chief Investment Officer (since December 1997) of
CFMC. Prior to his current officer positions, Mr. Thomsen was Vice President of
the Adviser, CFMC and the Trust Company. Mr. Thomsen's business address is 1300
S.W. Sixth Avenue, Portland, Oregon 97207.

MYRON G. CHILD,* Age 60, Vice President of the Trust and each of the Columbia
Funds (since April 2000); Vice President of the Trust Company (since December
1997); Vice President of the Adviser and CFMC (since December 1997). Prior to
becoming Vice President to the Adviser and CFMC, Mr. Child was Corporate
Controller (from March 1981 to November 1997). Mr. Child's business address is
1300 S.W. Sixth Avenue, Portland, Oregon 97207.

KATHLEEN M. GRIFFIN,* Age 41, Vice President of the Trust and each of the
Columbia Funds (since April 2000); Vice President of Columbia Financial (since
December 1997). Prior to becoming a Vice President of Columbia Financial, Ms.
Griffin was Manager of Shareholder Communications (from January 1995 to November
1997). Ms. Griffin's business address is 1300 S.W. Sixth Avenue, Portland,
Oregon 97207.

JEFFREY L. LUNZER,* Age 39, Vice President of the Trust and each of the Columbia
Funds (since April 2000); Vice President of the Trust Company (since April
2000), the Adviser and CFMC (since January 1999). Prior to becoming a Vice
President of the Trust Company, Adviser and CFMC, Mr. Lunzer was the Funds'
Controller (from December 1998 to December 1999). Prior to joining the Adviser
and CFMC, Mr. Lunzer was Vice President and Accounting Manager for WM
Shareholder Services, Inc., a subsidiary of Washington Mutual Bank (from 1984 to
November 1998), and Treasurer and Fund Officer of WM Group of Funds, a mutual
fund company (from 1988 to November 1998). Mr. Lunzer's business address is 1300
S.W. Sixth Avenue, Portland, Oregon 97207.

SUSAN J. WOODWORTH,* Age 48, Vice President of the Trust and each of the
Columbia Funds (since April 2000); Vice President of the Trust Company (since
December 1997). Prior to becoming Vice President of the Trust Company, Ms.
Woodworth was Manager of Mutual Fund Operations (from July 1980 to November
1997). Ms. Woodworth's business address is 1300 S.W. Sixth Avenue, Portland,
Oregon 97207.

MARK A. WENTZIEN,* Age 40, Secretary of the Trust and each of the Columbia Funds
(since April 2000); Director, Vice President and Secretary of Columbia Financial
(since January 1999); Associate Counsel of the Trust Company (since January
1999); Vice President-Legal of the Adviser and CFMC (since July 1999), and
Associate Counsel (from April 1997 to June 1999). Prior to joining the Adviser
and CFMC, Mr. Wentzien was an attorney with the law firm of Davis Wright
Tremaine LLP (from September 1985 to April 1997). Mr. Wentzien's business
address is 1300 S.W. Sixth Avenue, Portland, Oregon 97207.

14
<PAGE>

*These individuals are "interested persons" as defined by the
Investment Company Act of 1940 (the "1940 Act") and receive no fees or salaries
from the Trust or the Funds.

The following table sets forth the compensation received by the
disinterested trustees of the Trust for the fiscal year ended October 31, 1999:

Total Compensation from the
Trustee Compensation From Trust Trust and Columbia Funds
------- ----------------------- -------------------------

Richard L. Woolworth $9,000 $32,000
Thomas R. Mackenzie* $9,000 $31,000
James C. George $9,000 $31,000

* Mr. Mackenzie retired as a trustee of the Trust in April 2000.

At September 30, 2000, to the knowledge of the Trust, the following
persons owned of record or beneficially more than 5% of the outstanding shares
of the Funds:

Shares Beneficially Owned
Name and Address at September 30, 2000
---------------- ------------------------------------

CMC Small Cap Fund

OSU Foundation - Small Cap 1,127,870 (7.89%)
850 SW 35th Street
Corvallis, OR 97333

JELD-WEN, Inc. Pension Trust 928,897 (6.50%)
3250 Lakeport Blvd.
Klamath Falls, OR 97601

Legacy Health System 899,459 (6.29%)
Employees Retirement Plan-Small Cap
2801 N. Grantenbein Avenue
Portland, OR 97227

CMC International Stock Fund

Lumber Industry Pension Fund 387,858 (27.10%)
Associated Administrators, Inc.
2929 N.W. 31st Avenue
Portland, OR 97205

15
<PAGE>

Freightliner Corporation Pension Plan 314,063 (21.95%)
4747 North Channel Avenue
Portland, OR 97217

Oregon Sheet Metal Worker's Pension Trust 219,847 (15.36%)
740 North Knott Street
Portland, OR 97227-2099

AECOM Technology Corp. Pension Plan 184,905 (12.92%)
3250 Wilshire Blvd., 5th Floor
Los Angeles, CA 90010

Oregon Steel Mills Inc. Pension Plan 101,663 (7.10%)
1000 S.W. Broadway Drive
Portland, OR 97205

As defined by SEC rules and regulations, the Oregon Community
Foundation is a "control person" of the International Stock Fund since it owns
over 25% of the voting securities of the Fund. The fact that the Oregon
Community Foundation owns over 25% of the Fund's voting securities means it may
be able to impact the outcome of any matter in which shareholders are asked to
vote.

--------------------------------------------------------------------------------
INVESTMENT ADVISORY AND OTHER FEES PAID TO AFFILIATES
--------------------------------------------------------------------------------

The investment adviser to the Funds is Columbia Management Co. (the
"Adviser"). The Adviser has entered into an investment contract with each Fund.
Pursuant to the investment contract the Adviser provides research, advice, and
supervision with respect to investment matters and determines what securities to
purchase or sell and what portion of the Fund's assets to invest. The Adviser
and the Trust Company are indirect wholly owned subsidiaries of FleetBoston
Financial Corporation ("Fleet"). Fleet and its affiliates provide a wide range
of banking, financial, and investment products and services to individuals and
businesses. Their principal activities include customer and commercial banking,
mortgage lending and servicing, trust administration, investment management,
retirement plan services, brokerage and clearing services, securities
underwriting, private and corporate financing and advisory activities, and
insurance services.

The Adviser provides office space and pays all executive salaries and
executive expenses of each Fund. Each Fund assumes its costs relating to trust
matters, cost of services to shareholders, transfer and dividend paying agent
fees, custodian fees, legal and auditing expenses, disinterested trustees fees,
taxes and governmental fees, interest, broker's commissions, transaction
expenses, cost of stock certificates and any other expenses (including clerical
expenses) of issue, sale, repurchase, or redemption of its shares, expenses of
registering

16
<PAGE>

or qualifying its shares for sale, transfer taxes, and all other expenses of
preparing its registration statement, prospectuses, and reports.

For its services provided to each Fund, the Adviser charges an advisory
fee, which is accrued daily and paid monthly. The advisory fee for each Fund
equals the annual rate of 0.75 of 1% of its daily net assets. While comparable
to the advisory fees paid by other mutual funds with similar investment
objectives, these fees are higher than the advisory fees paid by most other
mutual funds. The Small/Mid Cap Fund is new and has not paid any advisory fees.
Advisory fees paid by the Small Cap Fund to the Adviser were $1,784,355,
$2,429,552 and $3,462,393 for fiscal year 1999, fiscal year 1998, and fiscal
year 1997, respectively. Advisory fees paid by the International Stock Fund to
the Adviser were $139,065, $395,072 and $686,166 for fiscal year 1999, fiscal
year 1998, and fiscal year 1997, respectively.

The Trust Company acts as transfer agent and dividend crediting agent
for each Fund. Its address is 1301 S.W. Fifth Avenue, P.O. Box 1350, Portland,
Oregon 97207. It issues certificates for shares of the Fund, if requested, and
records and disburses dividends for the Fund. The Trust pays the Trust Company a
per account fee of $1 per month for each shareholder account with the Funds
existing at any time during the month, with a minimum aggregate fee of $1,500
per month for each Fund. In addition, the Trust pays the Trust Company for extra
administrative services performed at cost in accordance with a schedule set
forth in the agreement between the Trust Company and the Trust and reimburses
the Trust Company for certain out-of-pocket expenses incurred in carrying out
its duties under that agreement. The Trust paid $18,000 on behalf of each Fund
(except the Small/Mid Cap Fund) to the Trust Company for services performed for
fiscal 1999 under the respective transfer agent agreement relating to that Fund.

--------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS
--------------------------------------------------------------------------------

Each Fund will not generally invest in securities for short-term
capital appreciation but, when business and economic conditions, market prices,
or the Fund's investment policy warrant, individual security positions may be
sold without regard to the length of time they have been held.

The Funds may purchase their portfolio securities through a securities
broker and pay the broker a commission, or they may purchase the securities
directly from a dealer which acts as principal and sells securities directly for
its own account without charging a commission. The purchase price of securities
purchased from dealers serving as market makers will include the spread between
the bid and asked prices. The Funds may also purchase securities from
underwriters, the price of which will include a commission or discount paid by
the issuer to the underwriter.

Prompt execution of orders at the most favorable price will be the
primary consideration of the Funds in transactions where brokerage fees are
involved. Additional

17
<PAGE>

factors considered by the Adviser in selecting brokers to execute a transaction
include: (i) professional capability of the executing broker and the value and
quality of the brokerage services provided; (ii) size and type of transaction;
(iii) timing of the transaction in the context of market prices and trends; (iv)
nature and character of markets for the security to be purchased or sold; (v)
the broker's execution efficiency and settlement capability; (vi) the broker's
experience and financial stability and the execution services it renders to the
Adviser on a continuing basis; and (vii) reasonableness of commission.

Research, statistical, and other services offered by the broker also
may be taken into consideration in selecting broker-dealers. These services may
include: advice concerning the value of securities, the advisability of
investing in, purchasing, or selling securities, and the availability of
securities or the purchasers or sellers of securities; and furnishing analyses
and reports concerning issuers, industries, securities, economic factors and
trends, portfolio strategies, and performance of accounts. A commission in
excess of the amount of commission another broker or dealer would have charged
for effecting a transaction may be paid by the Fund if the Adviser determines in
good faith that the commission is reasonable in relation to the value of the
brokerage and research services provided, viewed in terms of either that
particular transaction or management's overall responsibilities with respect to
the Fund.

The Adviser receives a significant amount of proprietary research from
a number of brokerage firms, in most cases on an unsolicited basis. The Adviser
does not make any commitments to allocate brokerage for proprietary research.
The value of that research, however, is considered along with other factors in
the selection of brokers. This research is considered supplemental to the
Adviser's own internal research and does not, therefore, materially reduce the
overall expenses incurred by the Adviser for its research.

In limited circumstances, the Adviser may use a Fund's commissions to
acquire third party research and products that is not available through its full
service brokers. In these arrangements, the Adviser pays an executing broker a
commission equal to the average rate paid on all other trades (e.g., $0.06) and
achieves what it believes is best execution on the trade. The executing broker
then uses a portion of the commission to pay for a specific research service or
product provided to the Adviser. Proposed research to be acquired in this manner
must be approved by the Adviser's Chief Investment Officer, who is responsible
for determining that the research provides appropriate assistance to the Adviser
in connection with its investment management of the Funds and that the price
paid for research services and products with broker commissions is fair and
reasonable.

The receipt of research services and products from brokers or dealers
might be useful to the Adviser and its affiliates in rendering investment
management services to the Fund or other clients; and, conversely, information
provided by brokers or dealers who have executed orders on behalf of other
clients might be useful to the Adviser in carrying out its obligations to the
Funds. The Small/Mid Cap Fund is new and, accordingly, it has not paid any
brokerage commissions. Total brokerage commissions paid by the Small Cap Fund
for the last three fiscal years were $802,523, $1,136,316 and $1,285,537 for
fiscal year 1999, fiscal year 1998, and for fiscal year 1997, respectively.
Total brokerage commissions paid by the

18
<PAGE>

International Stock Fund for the last three fiscal years were $100,706, $307,219
and $577,355 for fiscal year 1999, fiscal year 1998, and fiscal year 1997,
respectively. Of the commissions paid in the fiscal year ended in 1999, the
Small Cap Fund paid $94,943 for third party research and products provided by
brokerage firms.

The Adviser may use research services provided by and place agency
transactions with affiliated broker-dealers, if the commissions are fair and
reasonable and comparable to commissions charged by non-affiliated qualified
brokerage firms. In addition, the Fund may purchase securities from an
underwriting syndicate in which an affiliate is a member of the underwriting
syndicate. In any agency transaction or purchase from an underwriting syndicate
of which an affiliate is a member, the trade will be accomplished in accordance
with the rules and regulations of the 1940 Act.

Investment decisions for the Funds are made independently from those of
the other portfolios of the Trust or accounts managed by the Adviser or its
affiliate, Columbia Funds Management Company. The same security is sometimes
held in the portfolio of more than one fund or account. Simultaneous
transactions are inevitable when several funds or accounts are managed by the
same investment adviser, particularly when the same security is suitable for the
investment objective of more than one fund or account. In the event of
simultaneous transactions, allocations among the Fund or accounts will be made
on an equitable basis.

Both the Trust and the Adviser have adopted a Code of Ethics (the
"Code") that sets forth general and specific standards relating to the
securities trading activities of all their employees. The Code does not prohibit
employees from purchasing securities that may be held or purchased by the Funds,
but is intended to ensure that all employees conduct their personal transactions
in a manner that does not interfere with the portfolio transactions of the Fund
or the Adviser's other clients or take unfair advantage of their relationship
with the Adviser. The specific standards in the Code include, among others, a
requirement that all employee trades be pre-cleared; a prohibition on investing
in initial public offerings; required pre-approval of an investment in private
placements; a prohibition on portfolio managers trading in a security seven days
before or after a trade in the same security by an account over which the
manager exercises investment discretion; and a prohibition on realizing any
profit on the trading of a security held less than 60 days. Certain securities
and transactions, such as mutual fund shares or U. S. Treasuries and purchases
of options on securities indexes or securities under an automatic dividend
reinvestment plan, are exempt from the restrictions in the Code because they
present little or no potential for abuse. Certain transactions involving the
stocks of large capitalization companies are exempt from the seven day black-out
period and short-term trading prohibitions because such transactions are highly
unlikely to affect the price of these stocks. In addition to the trading
restrictions, the Code contains reporting obligations that are designed to
ensure compliance and allow the Adviser's Ethics Committee to monitor that
compliance.

The Trust and the Adviser have also adopted a Policy and Procedures
Designed to Detect and Prevent Insider Trading (the "Insider Trading Policy").
The Insider Trading Policy prohibits any employee from trading, either
personally or on behalf of others

19
<PAGE>

(including a client account), on the basis of material nonpublic information.
All employees are required to certify each year that they have read and complied
with the provisions of the Code and the Insider Trading Policy.

--------------------------------------------------------------------------------
CAPITAL STOCK AND OTHER SECURITIES
--------------------------------------------------------------------------------

The Trust may establish separate series of investment portfolios under
its Restated Declaration of Trust. The Funds, CMC Short Term Bond Fund, CMC High
Yield Fund, CMC Fixed Income Securities Fund and CMC International Bond Fund are
the only series established under the Trust. Shares of each series vote
together, except as provided in the Trust's Declaration of Trust and under
applicable law. It is expected that shares of a series would vote separately by
series on any changes in fundamental investment policies relating to that
series. All shares of each series of the Trust, including the Funds, have equal
rights as to voting, redemption, dividends and distributions. All issued and
outstanding shares of a Fund are fully paid and nonassessable. Shares have no
preemptive or conversion rights. Fractional shares have the same rights
proportionately as full shares. The shares of a Fund do not have cumulative
voting rights, which means that the holders of more than 50% of the shares of
the Fund and any other portfolio of the Trust, voting for the election of
Trustees, can elect all the Trustees if they choose to do so. In certain
circumstances, Trustees may be removed by action of the Trustees or the
shareholders.

Any reference to the phrase "vote of a majority of the outstanding
voting securities of the Fund" means the vote at any meeting of shareholders of
a Fund of (i) 67% or more of the shares present or represented by proxy at the
meeting, if the holders of more than 50% of the outstanding shares are present
or represented by proxy, or (ii) more than 50% of the outstanding shares,
whichever is less.

--------------------------------------------------------------------------------
PURCHASE, REDEMPTION AND PRICING OF SHARES
--------------------------------------------------------------------------------

PURCHASES
---------

Shareholders of the Funds are investment advisory clients of the
Adviser. Investments in each Fund are made directly by clients of the Adviser or
by the Adviser in its role as discretionary investment adviser over a portion of
the shareholder's assets. With respect to assets of an investment advisory
client of the Adviser invested in a Fund, that client will pay a reduced, or in
the case of an employee benefit plan, no fee pursuant to its separate management
contract with the Adviser (for the period during which the assets are invested
in the Fund).

If the Adviser is deemed to be a fiduciary with respect to a
prospective shareholder of a Fund pursuant to the Employee Retirement Income
Security Act of 1974 ("ERISA"), certain conditions must be satisfied before
assets may be invested in the Fund by the Adviser on

20
<PAGE>

behalf of the shareholder. These conditions are set forth by the U. S.
Department of Labor in Prohibited Transaction Class Exemption No. 77-4 (the
"Exemption"). The Exemption permits the Adviser to direct investments of
ERISA-qualified plans to a mutual fund, such as the Fund, for which the Adviser
serves as an investment adviser if, after review of the Prospectus and
disclosure relating to fees of the Fund and fees under the advisory contract,
another fiduciary, as determined under ERISA, with respect to that shareholder
approves investments in the Fund. The second fiduciary must be independent of
and unrelated to the Adviser under standards set forth by the U. S. Department
of Labor in the Exemption.

The second, independent fiduciary that must approve investments in the
Fund by the Adviser must not be engaged as a second fiduciary only in
contemplation of a possible investment in the Fund. Rather, the second,
independent fiduciary is almost always a committee appointed by the employee
benefit plan sponsor and has oversight responsibility for appointment of CMC as
an investment adviser with respect to certain plan assets. This committee is
almost always made up of one or more employees of the plan sponsor, and, as
such, these employees receive compensation from the plan sponsor but are not
compensated out of plan assets.

The transfer agent for the Funds may, at its discretion, permit
investors to purchase shares through the exchange of securities they hold. Any
securities exchanged must meet the investment objective, policies, and
limitations of the Fund, must have a readily ascertainable market value, must be
liquid, and must not be subject to restrictions on resale. The market value of
any securities exchanged, plus any cash, must be at least $100,000. Shares
purchased in exchange for securities generally may not be redeemed or exchanged
until the transfer has settled - usually within 15 days following the purchase
by exchange. The basis of the exchange will depend upon the relative net asset
value of the shares purchased and securities exchanged. Securities accepted by a
Fund will be valued in the same manner as the Fund values its assets. Any
interest earned on securities following their delivery to the transfer agent and
prior to the exchange will be considered in valuing the securities. All
interest, dividends, subscription, or other rights attached to the securities
become the property of the Fund, along with the securities. Before engaging in
an exchange, investors should consult their tax advisers concerning the tax
consequences to them of the exchange.

REDEMPTIONS
-----------

Redemptions of all or any portion of a shareholder's investment can be
made at any time. Redemption of shares are at the net asset value next computed
after receipt of a redemption order on a day the New York Stock Exchange
("NYSE") is open for business. Payment will be made within seven days of the
date of redemption, except as provided by the rules of the SEC. The Trust may
suspend the determination of net asset value of a Fund and the right of
redemption for any period (1) when the NYSE is closed, other than customary
weekend and holiday closings, (2) when trading on the NYSE is restricted, (3)
when an emergency exists as a result of which sale of securities owned by the
Fund is not reasonably practicable or it is not reasonably practicable for the
Trust to determine the value of the Fund's net assets, or (4) as the SEC may by
order permit for the protection of security

21
<PAGE>

holders, provided the Trust complies with rules and regulations of the SEC which
govern as to whether the conditions prescribed in (2) or (3) exist. The NYSE
observes the following holidays: New Year's Day, Martin Luther King, Jr.'s
Birthday, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving, and Christmas. In the case of suspension of the right to
redeem, shareholders may withdraw their redemption request or receive payment
based upon the net asset value computed upon the termination of the suspension.

Each Fund reserves the right to redeem Fund shares in cash or in kind.
The Trust has elected, however, to be governed by Rule 18f-1 under the
Investment Company Act of 1940 (the "1940 Act"), pursuant to which the Fund is
obligated to redeem, during any 90-day period, shares of a shareholder solely
for cash up to the lesser of $250,000 or 1% of the net asset value of the Fund.
A shareholder who is redeemed in kind may incur brokerage fees upon the sale of
any securities distributed upon redemption.

PRICING OF SHARES
-----------------

The net asset value per share of each Fund is determined by the
Adviser, under procedures approved by the trustees of the Trust, as of the close
of regular trading (normally 4:00 p.m. New York time) on each day the NYSE is
open for business and at other times determined by the Board of Trustees. The
net asset value per share is computed by dividing the value of all assets of the
Fund, less its liabilities, by the number of shares outstanding.

Each Fund's securities are valued at the last sale price on the
securities exchange or national securities markets at which such securities
primarily are traded. Securities not listed on an exchange or national
securities market, or securities in which there were no transactions, are valued
using the last bid price. Any assets or liabilities initially expressed in a
foreign currency will, on a daily basis, be converted into U.S. dollars. Foreign
securities will be valued based upon the most recent closing price on their
principal exchange, or based upon the most recent price obtained by the Fund, if
the price is not available on an exchange, even if the close of that exchange or
price determination is earlier than the time of the Funds' NAV calculation. In
the case of such foreign security, if an event that is likely to materially
affect the value of a portfolio security occurs between the time the foreign
price is determined and the time the Fund's NAV is calculated, it may be
necessary to revalue the security in light of that event. Securities for which
market quotations are not readily available will be valued at fair market value
as determined in good faith under procedures established by and under the
general supervision of the Board of Trustees.

--------------------------------------------------------------------------------
CUSTODIANS
--------------------------------------------------------------------------------

U S Bank N.A., 321 S.W. Sixth Avenue, Portland, Oregon 97208, acts as
general custodian of the Trust (a "Custodian"). The Chase Manhattan Bank
("Chase" or a "Custodian"), 3 Chase Metrotech Center, Brooklyn, New York 11245,
has entered into a

22
<PAGE>

custodian agreement with the Trust in respect of the purchase
of foreign securities by each of the Funds. The Custodians hold all securities
and cash of the Funds, receive and pay for securities purchased, deliver against
payment securities sold, receive and collect income from investments, make all
payments covering expenses of the Funds, and perform other administrative
duties, all as directed by authorized officers of the Trust. The Custodians do
not exercise any supervisory function in the purchase and sale of portfolio
securities or payment of dividends.

Portfolio securities purchased outside the United States by the Funds
are maintained in the custody of foreign banks, trust companies, or depositories
that have sub-custodian arrangements with Chase (the "foreign sub-custodians").
Each of the domestic and foreign custodial institutions that may hold portfolio
securities of the Funds has been approved by the Trustees of the Trust or a
delegate of the Trustees in accordance with regulations under the 1940 Act.

--------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------

PricewaterhouseCoopers LLP, 1300 S.W. Fifth Avenue, Suite 3100,
Portland, Oregon 97201, serves as the Trust's independent accountants and, in
addition to examining the annual financial statements of the Trust, assists in
the preparation of the tax returns of the Trust and in certain other matters.

--------------------------------------------------------------------------------
TAXES
--------------------------------------------------------------------------------

Federal Income Taxes
--------------------

Each Fund intends and expects to meet continuously the tests for
qualification as a regulated investment company under Part I of Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"). Each Fund believes
it satisfies the tests to qualify as a regulated investment company.

To qualify as a regulated investment company for any taxable year, a
Fund must, among other things:

(a) derive at least 90% of its gross income from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of stock, securities, or foreign currencies, or other income
(including but not limited to gains from options, futures, or forward contracts)
derived with respect to its business of investing in such stock, securities, or
currencies (the "90% Test"); and

(b) diversify its holdings so that at the end of each quarter (i) 50%
or more of the value of the assets of the Fund is represented by cash,
government securities, and other

23
<PAGE>

securities limited, in respect of any one issuer of such other securities, to an
amount not greater than 5% of the value of the assets of the Fund and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of the assets of the Fund is invested in the securities (other than
government securities) of any one issuer or of two or more issuers that the Fund
"controls" within the meaning of Section 851 of the Code and that meet certain
requirements. In addition, the Fund must file, or have filed, a proper election
with the Internal Revenue Service.

Part I of Subchapter M of the Code will apply to the Funds during a
taxable year only if it meets certain additional requirements. Among other
things, a Fund must: (a) have a deduction for dividends paid (without regard to
capital gain dividends) at least equal to the sum of 90% of its investment
company taxable income (computed without any deduction for dividends paid) and
90% of its tax-exempt interest in excess of certain disallowed deductions
(unless the Internal Revenue Service waives this requirement) and (b) either (i)
have been subject to Part I of Subchapter M for all taxable years ending after
November 8, 1983 or (ii) as of the close of the taxable year have no earnings
and profits accumulated in any taxable year to which Part I of Subchapter M did
not apply.

The Trust currently has seven portfolios, including the Funds. The
Trust may establish additional funds in the future. Federal income tax laws
generally will treat each Fund as a separate corporation (provided that each
Fund consists of a segregated portfolio of assets the beneficial interests in
which are owned by the holders of a class or series of stock that is preferred
over all other classes or series in respect of that portfolio of assets).

A regulated investment company that meets the requirements described
above is taxed only on its "investment company taxable income," which generally
equals the undistributed portion of its ordinary net income and any excess of
net short-term capital gain over net long-term capital loss. In addition, any
excess of net long-term capital gain over net short-term capital loss that is
not distributed is taxed to each Fund at corporate capital gain tax rates. The
policy of each Fund is to apply capital loss carry-forwards as a deduction
against future capital gains before making a capital gain distribution to
shareholders.

If any net long-term capital gains in excess of net short-term capital
losses are retained by a Fund, requiring federal income taxes to be paid thereon
by the Fund, the Fund may elect to treat such capital gains as having been
distributed to shareholders. In the case of such an election, shareholders will
be taxed on such amounts as long-term capital gains, will be able to claim their
proportional share of the federal income taxes paid by the Fund on such gains as
a credit against their own federal income tax liabilities, and generally will be
entitled to increase the adjusted tax basis of their shares in the Fund by the
differences between their pro rata shares of such gains and their tax credits.

Shareholders of each Fund are taxed on distributions of net investment
income, or of any excess of net short-term capital gain over net long-term
capital loss, as ordinary income. Distributions of any excess of net long-term
capital gain over net short-term capital loss from a Fund are ineligible for the
dividends-received deduction.

24
<PAGE>

Distributions properly designated by a Fund as representing the excess
of net long-term capital gain over net short-term capital loss are taxable to
shareholders as long-term capital gain, regardless of the length of time the
shares of the Fund have been held by shareholders. For noncorporate taxpayers,
the highest rate that applies to long-term capital gains is lower than the
highest rate that applies to ordinary income. Any loss that is realized and
allowed on redemption of shares of the Fund six months or less from the date of
purchase of the shares and following the receipt of a capital gain dividend will
be treated as a long-term capital loss to the extent of the capital gain
dividend. For this purpose, Section 852(b)(4) of the Code contains special rules
on the computation of a shareholder's holding period.

Distributions of taxable net investment income and net realized capital
gains will be taxable as described above, whether paid in shares or in cash.
Each distribution is accompanied by a brief explanation of the form and
character of the distribution. Within 60 days after the close of each taxable
year (October 31), each Fund issues to each shareholder a statement of the
federal income tax status of all distributions, including a statement of the
prior taxable year's distributions which the Fund has designated to be treated
as long-term capital gain.

A distribution may be taxable to a shareholder even if the distribution
reduces the net asset value of the shares held below their cost (and is in an
economic sense a return of the shareholder's capital). This tax result is most
likely when shares are purchased shortly before an annual distribution of
capital gains or other earnings.

If a fund declares a dividend in October, November, or December payable
to shareholders of record on a certain date in such a month and pays the
dividend during January of the following year, the shareholders will be taxed as
if they had received the dividend on December 31 of the year in which the
dividend was declared. Thus, a shareholder may be taxed on the dividend in a
taxable year prior to the year of actual receipt.

A special tax may apply to a Fund if it fails to make sufficient
distributions during the calendar year. The required distributions for each
calendar year generally equal the sum of (a) 98% of the ordinary income for the
calendar year plus (b) 98% of the capital gain net income for the one-year
period that ends on October 31 during the calendar year, plus (c) an adjustment
relating to any shortfall for the prior taxable year. If the actual
distributions are less than the required distributions, a tax of 4% applies to
the shortfall.

The Code allows the deduction by certain individuals, trusts, and
estates of "miscellaneous itemized deductions" only to the extent that such
deductions exceed 2% of adjusted gross income. The limit on miscellaneous
itemized deductions will not apply, however, with respect to the expenses
incurred by any "publicly offered regulated investment company." Each Fund
believes that it is a publicly offered regulated investment company because its
shares are continuously offered pursuant to a public offering (within the
meaning of section 4 of the 1933 Act. Therefore, the limit on miscellaneous
itemized deductions should not apply to expenses incurred by either Fund.

25
<PAGE>

Special Aspects of 90% Test with Respect to Foreign Currency. For
purposes of the 90% Test, foreign currency gains that are not directly related
to a Fund's principal business of investing in stocks or securities (or options
and futures with respect to stock or securities) may be excluded from qualifying
income by regulation. No such regulations, however, have been issued.

Unless an exception applies, a Fund may be required to recognize some
income with respect to foreign currency contracts under the mark-to-market rules
of Section 1256 of the Code even though that income is not realized. Special
rules under Sections 1256 and 988 of the Code determine the character of any
income, gain, or loss on foreign currency contracts.

Two possible exceptions to marking-to-market relate to hedging
transactions and mixed straddles. A hedging transaction is defined for purposes
of Section 1256 as a transaction that (1) a Fund properly identifies as a
hedging transaction, (2) is entered into in the normal course of business
primarily to reduce the risk of price changes or currency fluctuations with
respect to the Fund's investments, and (3) results in ordinary income or loss. A
mixed straddle is a straddle where (1) at least one (but not all) of the
straddle positions are Section 1256 contracts and (2) the Fund properly
identifies each position forming part of the straddle. A straddle for these
purposes generally is offsetting positions with respect to personal property. A
Fund holds offsetting positions generally if there is a substantial diminution
of the Fund's risk of loss from holding a position by reason of its holding one
or more other positions.

Foreign Income Taxes. The International Stock Fund invests in the
securities of foreign corporations and issuers. Foreign countries may impose
income taxes, generally collected by withholding, on foreign-source dividends
and interest paid to a Fund. These foreign taxes will reduce the International
Stock Fund's distributed income. While the Fund generally does not expect to
incur foreign income taxes on gains from the sale of foreign stocks and
securities, for the fiscal year ended October 31, 1999, the Fund did incur a tax
of $7,582 for securities held in India.

The United States has entered into income tax treaties with many
foreign countries to reduce or eliminate the foreign taxes on certain dividends
and interest received from corporations in those countries. The International
Stock Fund intends to take advantage of such treaties where possible. It is
impossible to predict with certainty the effective rate of foreign taxes that
will be paid by that Fund since the amount invested in particular countries will
fluctuate and the amounts of dividends and interest relative to total income
will fluctuate.

U.S. Foreign Tax Credits or Deductions for Shareholders of the
International Stock Fund. Section 853 of the Code allows a regulated investment
company to make a special election relating to foreign income taxes if more than
50% of the value of the company's total assets at the close of its taxable year
consists of stock or securities in foreign corporations and the company
satisfies certain holding period requirements. The International Stock Fund
generally expects, if necessary, to qualify for and to make the

26
<PAGE>

election permitted under Section 853 of the Code. Although the International
Stock Fund intends to meet the requirements of the Code to "pass through" such
foreign taxes, there can be no assurance that the Fund will be able to do so.
The International Stock Fund will elect under Section 853 of the Code only if it
believes that it is in the best interests of its shareholders to do so.

If the International Stock Fund elects pursuant to Section 853,
shareholders of that Fund will be required to include in income (in addition to
other taxable distributions) and will be allowed a credit or deduction for,
their pro rata portions of the income taxes paid by the Fund to foreign
countries. A shareholder's use of the credits resulting from the election will
be subject to the limits of Section 904 of the Code. In general, those limits
will prevent a shareholder from using foreign tax credits to reduce U.S. taxes
on U.S. source income. Each shareholder should discuss the use of foreign tax
credits and the Section 904 limits with the shareholder's tax adviser.

No deduction for foreign taxes may be claimed under the Code by
individual shareholders who do not elect to itemize deductions on their federal
income tax returns, although such a shareholder may claim a credit for foreign
taxes and in any event will be treated as having taxable income in the amount of
the shareholder's pro rata share of foreign taxes paid by the Fund.

Each year, the International Stock Fund will provide a statement to
each shareholder showing the amount of foreign taxes for which a credit or a
deduction may be available.

Investment in Passive Foreign Investment Companies. If a Fund invests
in an entity that is classified as a "passive foreign investment company"
("PFIC") for federal income tax purposes, the application of certain provisions
of the Code applying to PFICs could result in the imposition of certain federal
income taxes on the Fund. It is anticipated that any taxes on a Fund with
respect to investments in PFICs would be insignificant.

State Income Taxes
------------------

The state tax consequences of investments in the Fund are beyond the
scope of the tax discussions in the Prospectus and this Statement of Additional
Information.

Additional Information
----------------------

The foregoing summary and the summary included in the Prospectus under
"Taxes" of tax consequences of investment in the Fund are necessarily general
and abbreviated. No attempt has been made to present a complete or detailed
explanation of tax matters. Furthermore, the provisions of the statutes and
regulations on which they are based are subject to change by legislative or
administrative action. State and local taxes are beyond the scope of this
discussion. Prospective investors in the Fund are urged to consult their own tax
advisers regarding specific questions as to federal, state, or local taxes.

27
<PAGE>

--------------------------------------------------------------------------------
PERFORMANCE
--------------------------------------------------------------------------------

The Trust may from time to time advertise or quote total return
performance for the Funds. These figures represent historical data and are
calculated according to SEC rules standardizing such computations. The
investment return on and the value of shares of the Fund will fluctuate so that
the shares when redeemed may be worth more or less than their original cost.

The Trust may publish average annual total return quotations for recent
1, 5, and 10-year periods (or a fractional portion thereof) computed by finding
the average annual compounded rates of return over the 1, 5, and 10-year periods
that would equate the initial amount invested to the ending redeemable value,
according to the following formula:

P(1+T)n = ERV

Where: P = a hypothetical initial payment of $1000

T = average annual total return

n = number of years

ERV = ending redeemable value of a hypothetical
$1000 payment made at the beginning of the 1,
5, and 10-year periods (or a fractional portion
thereof)

Total return figures may also be published for recent 1, 5, and 10-year
periods (or a fractional portion thereof) where the total return figures
represent the percentage return for the 1, 5, and 10-year periods that would
equate the initial amount invested to the ending redeemable value. If the
Trust's registration statement under the 1940 Act with respect to the Fund has
been in effect less than 1, 5 or 10 years, the time period during which the
registration statement with respect to that Fund has been in effect will be
substituted for the periods stated. For the period ended October 31, 1999, the
average annual return for the Small Cap Fund for the 1, 5 and 10 year periods
was 36.70%, 18.28% and 15.46%, respectively. For the period ended October 31,
1999, the average annual return for the International Stock Fund for the 1 year,
5 year periods and since inception (February 1, 1994) was 42.44%, 12.32% and
10.49%, respectively.

The Funds may compare their performance to other mutual funds with
similar investment objectives and to the mutual fund industry as a whole, as
quoted by ranking services and publications of general interest. Examples of
these services or publications include Lipper Analytical Services, Inc.,
Barron's The Dow Jones Business and Financial Weekly, The Financial Times,
Financial World, Forbes, Investor's Business Daily, Money, Morningstar Mutual
Funds, Personal Investor, The Economist, The Wall Street Journal and USA Today.

28
<PAGE>

(Lipper Analytical Services, Inc. is an independent rating service that ranks
over 1000 mutual funds based on total return performance.) These ranking
services and publications may rank the performance of the Fund against all other
funds over specified categories.

The Funds may also compare their performance to that of a recognized
unmanaged index of investment results, including the S&P 500, Dow Jones
Industrial Average, Russell 2000, and Nasdaq stock indices and with respect to
the International Stock Fund other suitable international indices, such as the
Morgan Stanley Capital International Europe, Australasia, Far East Index or the
FT-S&P Actuaries Europe-Pacific Index . The comparative material found in
advertisements, sales literature, or in reports to shareholders may contain past
or present performance ratings. This is not to be considered representative or
indicative of future results or future performance.

--------------------------------------------------------------------------------
FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

The financial statements for the CMC Small Cap Fund and the CMC
International Stock Fund for the fiscal year ended October 31, 1999, together
with the Independent Accountant's Report of PricewaterhouseCoopers LLP, are
attached hereto and incorporated by reference into this Statement of Additional
Information.

29
<PAGE>

CMC SMALL CAP FUND
A Portfolio of CMC Trust
MANAGEMENT DISCUSSION OF FUND PERFORMANCE

We are pleased to provide you with an investment review of the CMC Small Cap
Fund. The Fund rebounded after two consecutive years of underperformance in the
small cap market to report a total return of 36.70% for the fiscal year ended
October 31, 1999. For the same period, the Fund's benchmark, the Russell 2000
Index, returned 14.88%.

Sharply falling equity prices and a sell-off of small cap names characterized
the fiscal year's beginning in late 1998. In an effort to thwart fears of an
economic slowdown, the Federal Reserve reduced interest rates in November, the
third reduction in 1998. As a result, the market rebounded, with small cap
stocks leading the charge. This comeback was short-lived, however, and a
"correction" followed in the second quarter. The portfolio's performance lagged
behind its benchmark since holdings did not include stocks of several Internet
companies that engaged in initial public offerings and performed well during the
quarter. While media and retail holdings benefited the Fund, software stocks
suffered and technology stocks provided mixed results. In addition, health care
holdings hurt performance and were greatly reduced.

As prospects for world recovery improved, smaller stocks picked up momentum
again and economically sensitive stocks staged a rebound in April. With
technology playing an ever-increasing role in productivity and economic growth,
the sector remained the largest weighting in the portfolio. In addition, the
Fund increased exposure to the energy sector in response to positive forecasts
about drilling and production services. The fourth fiscal quarter witnessed
greater market volatility as the Fed raised interest rates a second time since
June in an effort to contain inflationary pressures and manage economic
expansion. A narrow group of stocks, principally from the technology and energy
sectors, led the market expansion. Stocks with exposure to the explosive growth
of the Internet also performed well.

Because small cap valuations relative to large caps reached near historic lows
during the fiscal year, the future environment for small cap stocks appears
favorable.

The Fund's top ten holdings (as a percentage of net assets) as of October 31,
1999 were:

Cymer, Inc. (2.2%)
Radisys Corp. (2.2%)
CSG Systems International, Inc. (2.1%)
Symantec Corp. (1.9%)
Integrated Device Technology, Inc. (1.9%)
Powerwave Technologies, Inc. (1.9%)
Entercom Communications Corp. (1.9%)
Intelligent Polymers Ltd. (1.8%)
Atmel Corp. (1.8%)
Macromedia, Inc. (1.7%)

We appreciate your continued confidence in CMC Small Cap Fund.

The Investment Team

December 3, 1999

30
<PAGE>
Graphic line chart depicting "Growth of $10,000 Over 10 Years" showing the
growth in dollar amounts ($5,000-$55,000) of CMC Small Cap, Russell 2000 and S&P
500 for the period 10/31/89 to 10/31/99 to $42,118, $30,130 and $51,548,
respectively:

<TABLE>
<CAPTION>
Average Annual Total Return
-------------------------------------------
1 Year 5 Years 10 Years
------ ------- --------
<S> <C> <C> <C>
CMC Small Cap 36.70% 18.28% 15.46%
Russell 2000 14.88% 12.57% 11.66%
S&P 500 25.67% 26.01% 17.82%
</TABLE>

Past performance does not guarantee future results. The Fund's inception date
was August 30, 1989. Index performance is based on the periods beginning August
31, 1989. Total return performance is illustrated for the periods ended October
31, 1999. The S&P 500 and Russell 2000 are unmanaged stock indices.

31
<PAGE>
CMC INTERNATIONAL STOCK FUND
A Portfolio of CMC Trust
MANAGEMENT DISCUSSION OF FUND PERFORMANCE

We are pleased to provide you with an investment review of the CMC International
Stock Fund. After a year of turmoil due to the Asian financial crisis,
international markets began to show signs of improvement late in 1998 and gained
momentum over the course of 1999. For the fiscal year ended October 31, 1999,
the Fund posted a total return of 42.44%, well ahead of its benchmark index, the
MSCI/EAFE, which returned 23.38% for the same period.

The Fund's substantial presence in Japan benefited overall portfolio
performance. CMC International Stock Fund began the fiscal year with a
surprisingly strong rise in the Japanese Yen, which had a positive impact on the
value of the Fund's Japanese holdings. In the second fiscal quarter, measures
implemented by the Japanese government to rejuvenate the stagnant economy --
including adoption of fiscal spending, banking reform and corporate
restructuring programs -- resulted in favorable stock market performance. As a
result, during fiscal year 1999, the Japanese stock market was the top performer
among the world's developed markets.

As the year progressed, smaller Asian markets recovered as financial pressures
dissipated. Investor confidence gained ground, and the Fund made a gradual
return to this region, which began posting gains by the end of the reporting
period.

The portfolio's performance was also enhanced by a large exposure to European
markets. Positions in telecommunications, technology and pharmaceuticals
continued to prove particularly rewarding. In the United Kingdom, in particular,
the telecommunications and cable sector performed well. Elsewhere, the Euro made
a surprisingly feeble introduction in January 1999 and remained consistently
weak throughout the remainder of the period, hampering Fund results.
Nonetheless, European economies began experiencing accelerating growth as the
fiscal year drew to a close, and we maintain an optimistic outlook for the
coming fiscal year.

CMC International Stock Fund portfolio composition as of October 31, 1999, was:

% of Net Assets % of Net Assets
--------------- ---------------
Japan 28.7 Singapore 1.5
United Kingdom 17.1 Spain 1.5
Netherlands 5.0 United States 1.2
Germany 4.3 Thailand 1.1
France 3.9 Ireland 1.1
Canada 3.8 Italy 0.9
India 3.0 Korea 0.8
Sweden 2.2 Mexico 0.3
Australia 2.1 Malaysia 0.3
Switzerland 2.0 Brazil 0.2
Finland 1.5 Other Assets less
liabilities 17.5

32
<PAGE>
The Fund's top ten holdings (as a percentage of net assets) as of October 31,
1999, were:

Mannesmann AG (Germany) 2.5%
NTT Mobile Comm Network (Japan) 2.1%
Fujitsu Ltd. (Japan) 2.0%
Ryohin Keikaku Co., Ltd. (Japan) 1.9%
Asahi Bank Ltd. (Japan) 1.8%
WPP Group plc (United Kingdom) 1.8%
Equant NV (Netherlands) 1.7%
Fancl Corp. (Japan) 1.6%
British Telecommunications plc (United Kingdom) 1.5%
Infosys Technologies Ltd. (India) 1.3%

We appreciate your continued confidence in CMC International Stock Fund.

The Columbia Investment Team

December 3, 1999

Graphic line chart depicting "Growth of $10,000 Since Inception" showing the
growth in dollar amounts ($5,000-$35,000) of CMC International Stock Fund,
FT/S&P Euro Pacific, S&P 500, and MSCI EAFE Index for the period 2/1/94 to
10/31/99 to $17,655, $15,965, $31,975 and $16,376, respectively:

<TABLE>
<CAPTION>
Average Annual Total Return
----------------------------------------
1 Year 5 Years Since Inception
------ ------- ---------------
<S> <C> <C> <C>
CMC International Stock Fund 42.44% 12.32% 10.49%
FT/S&P Euro Pacific 26.48% 9.08% 8.55%
S&P 500 25.67% 26.01% 22.62%
MSCI EAFE Index 23.38% 9.52% 9.04%
</TABLE>

Past performance does not guarantee future results. The Fund's inception date
was February 1, 1994. Index performance information is based on the period
beginning February 1, 1994. Total return performance is illustrated for the
periods ended October 31, 1999. S&P 500 and FT/S&P Euro Pacific are unmanaged
stock indices. The MSCI EAFE Index is a market capitalization weighted index
composed of companies representative of the market structure of 20 developed
market countries in Europe, Australasia and the Far East.

33
<PAGE>
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout Each Year)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
CMC SMALL CAP FUND
------------------

Year Ended October 31,
--------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ................. $ 9.96 $ 13.60 $ 13.01 $ 14.00 $ 12.34
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss)...................... (0.04) (0.03) (0.01) (0.02) 0.06
Net realized and unrealized gains (losses)
on investments.................................. 3.69 (2.21) 3.52 4.20 2.71
---------- ---------- ---------- ---------- ----------
Total from investment operations.............. 3.65 (2.24) 3.51 4.18 2.77
---------- ---------- ---------- ---------- ----------

Less distributions:
Dividends from net investment income.............. - - - - (0.04)
Distributions from net capital gains.............. (0.02) (1.40) (2.92) (5.17) (1.07)
---------- ---------- ---------- ---------- ----------
Total distributions........................... (0.02) (1.40) (2.92) (5.17) (1.11)
---------- ---------- ---------- ---------- ----------

Net asset value, end of year ....................... $ 13.59 $ 9.96 $ 13.60 $ 13.01 $ 14.00
========== ========== ========== ========== ==========

Total return........................................ 36.70% -16.49% 26.98% 30.30% 22.55%

Ratios/Supplemental data
Net assets, end of year (in thousands).............. $ 240,129 $ 267,789 $ 521,770 $ 522,408 $ 537,167
Ratio of expenses to average net assets............. 0.79% 0.77% 0.76% 0.78% 0.77%
Ratio of net income (loss) to average net assets.... (0.33)% (0.20)% (0.08)% (0.14)% 0.43%
Portfolio turnover rate............................. 186.07% 158.98% 168.72% 147.77% 125.80%

NOTE: Per share amounts have been adjusted to retroactively reflect a 4 for 1
share split effective September 1, 1999.

See Accompanying Notes to Financial Statements
</TABLE>

34
<PAGE>
<TABLE>
<CAPTION>
CMC INTERNATIONAL STOCK FUND
----------------------------

Year Ended October 31,
--------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ................ $ 12.54 $ 42.71 $ 42.46 $ 37.06 $ 39.51
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss)..................... (0.02) 0.25 0.41 0.32 0.39
Net realized and unrealized gains (losses)
on investments................................. 5.34 (0.78) 6.16 5.86 (2.64)
---------- ---------- ---------- ---------- ----------
Total from investment operations............. 5.32 (0.53) 6.57 6.18 (2.25)
---------- ---------- ---------- ---------- ----------

Less distributions:
Dividends from net investment income............. - - (0.46) (0.78) (0.20)
Distributions from net capital gains............. (0.00)* (29.64) (5.86) - -
---------- ---------- ---------- ---------- ----------
Total distributions.......................... (0.00) (29.64) (6.32) (0.78) (0.20)
---------- ---------- ---------- ---------- ----------

Net asset value, end of year....................... $ 17.86 $ 12.54 $ 42.71 $ 42.46 $ 37.06
========== ========== ========== ========== ==========

Total return....................................... 42.44% -1.24% 15.47% 16.67% -5.69%

Ratios/Supplemental data
Net assets, end of year (in thousands)............. $ 30,492 $ 15,377 $ 81,471 $ 73,542 $ 68,758
Ratio of expenses to average net assets............ 1.31% 1.04% 1.05% 1.00% 0.98%
Ratio of net income (loss) to average net assets... (0.14)% 0.60% 0.88% 0.78% 0.99%
Portfolio turnover rate............................ 96.34% 52.68% 126.56% 119.98% 158.32%

* Amount represents less than $0.01 per share.

See Accompanying Notes to Financial Statements
</TABLE>

35
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<CAPTION>
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CMC SMALL CAP FUND
A Portfolio of CMC Fund Trust
SCHEDULE OF INVESTMENTS
------------------------------------------------------------------------------------------
OCTOBER 31, 1999

SHARES VALUE
------------- -------------
<S> <C> <C>
COMMON STOCKS (95.3%)
BASIC INDUSTRIES & MFG. (1.7%)
BUILDING & FORESTRY PRODUCTS (0.2%)
SOUTHDOWN, INC. 10,200 $ 492,787
-------------
CHEMICALS (0.4%)
AIRGAS, INC. * 104,500 992,750
-------------
MACHINERY CAPITAL SPENDING (0.8%)
TEREX CORP. * 70,900 1,874,419
-------------
METALS & MINING (0.3%)
NS GROUP, INC. * 29,500 298,688
STILLWATER MINING CO. * 19,300 388,412
-------------
687,100
-------------

TOTAL BASIC INDUSTRIES & MFG. 4,047,056
-------------

BUSINESS & CONSUMER SERVICES (16.2%)
MEDIA & ENTERTAINMENT (6.1%)
CUMULUS MEDIA, INC. * 63,500 2,278,062
ENTERCOM COMMUNICATIONS CORP. * 90,020 4,484,121
RADIO ONE, INC. * 34,820 1,736,648
SALEM COMMUNICATIONS CORP. (CLASS A) * 81,500 2,027,312
SFX ENTERTAINMENT, INC. (CLASS A) * 74,600 2,606,338
YOUNG BROADCASTING, INC. (CLASS A) * 31,900 1,479,363
-------------
14,611,844
-------------
POLLUTION CONTROL (0.7%)
TETRA TECH, INC. * 1,807,766
-------------
SERVICES & PUBLISHING (9.4%)
APOLLO GROUP, INC. * 113,875 2,981,206
CHEMDEX CORP. * 8,700 331,688
CSG SYSTEMS INTERNATIONAL, INC. * 148,840 5,107,072
G & K SERVICES, INC. (CLASS A) 40,000 1,502,500
NATIONAL DATA CORP. 46,100 1,106,400
NCO GROUP, INC. * 35,000 1,483,125
NOVA CORP. * 140,770 3,660,020
PROFESSIONAL DETAILING, INC. * 51,530 1,288,250
PROFIT RECOVERY GROUP INTERNATIONAL, INC. * 69,050 2,843,997
RENT-WAY, INC. * 25,300 420,612
WHITTMAN-HART, INC. * 47,300 1,818,094
-------------
22,542,964
-------------

TOTAL BUSINESS & CONSUMER SERVICES 38,962,574
-------------

See Accompanying Notes to Financial Statements
</TABLE>

36
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<CAPTION>
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CMC SMALL CAP FUND
A Portfolio of CMC Fund Trust
SCHEDULE OF INVESTMENTS
------------------------------------------------------------------------------------------

SHARES VALUE
------------- -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
CONSUMER CYCLICAL (8.5%)
CONSUMER DURABLE (0.8%)
FURNITURE BRANDS INTERNATIONAL, INC. * 75,700 $ 1,466,688
MODTECH HOLDINGS, INC. * 85,524 454,346
-------------
1,921,034
-------------
CONSUMER NON-DURABLE (7.7%)
AMES DEPARTMENT STORES, INC. * 66,100 2,094,544
BED, BATH & BEYOND, INC. * 23,800 792,838
CALLAWAY GOLF CO. 174,500 2,344,844
CHEESECAKE FACTORY, INC. (THE) * 54,100 1,656,812
HOLLYWOOD ENTERTAINMENT CORP. * 89,700 1,267,012
INTERTAN, INC. * 55,100 1,239,750
MICHAELS STORES, INC. * 78,000 2,617,875
P. F. CHANGS CHINA BISTRO, INC. * 81,900 1,760,850
STEINER LEISURE LTD. * 66,000 1,249,875
TWEETER HOME ENTERTAINMENT GROUP, INC. * 33,500 1,432,125
WET SEAL, INC. (CLASS A) * 32,000 448,000
WILLIAMS-SONOMA, INC. * 30,300 1,628,625
-------------
18,533,150
-------------

TOTAL CONSUMER CYCLICAL 20,454,184
-------------

CONSUMER STAPLES (9.9%)
FOOD & HOUSEHOLD PRODUCTS (0.7%)
U.S. FOODSERVICE, INC. * 93,400 1,792,112
-------------

HEALTH (9.2%)
ALKERMES, INC. * 41,200 1,454,875
ANESTA CORP. * 66,000 734,250
BIOVAIL CORP. INTERNATIONAL * 16,700 921,631
FIRST HEALTH GROUP CORP. * 85,800 1,994,850
INTELLIGENT POLYMERS LTD. * 139,000 4,248,188
NOVOSTE CORP. * 122,600 2,107,188
OXFORD HEALTH PLANS, INC. * 169,500 2,002,219
PROTEIN DESIGN LABS, INC. * 41,600 1,666,600
RESMED, INC. * 76,700 2,655,737
SHIRE PHARMACEUTICALS GROUP PLC ADR * 63,180 2,005,965
SPIROS DEVELOPMENT CORP. II (UNITS) * 62,300 354,331
TRANSKARYOTIC THERAPIES, INC. * 41,200 1,915,800
-------------
22,061,634
-------------

TOTAL CONSUMER STAPLES 23,853,746
-------------

See Accompanying Notes to Financial Statements
</TABLE>

37
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<CAPTION>
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CMC SMALL CAP FUND
A Portfolio of CMC Fund Trust
SCHEDULE OF INVESTMENTS
------------------------------------------------------------------------------------------

SHARES VALUE
------------- -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
ENERGY (8.3%)
DOMESTIC & INTERNATIONAL INTEGRATED (3.0%)
DEVON ENERGY CORP. 74,800 $ 2,907,850
OCEAN ENERGY, INC. * 179,500 1,649,156
PENNACO ENERGY, INC. * 33,300 368,381
WESTERN GAS RESOURCES, INC. 144,500 2,375,219
-------------
7,300,606
-------------
ENERGY SERVICES (5.3%)
GLOBAL INDUSTRIES LTD. * 138,500 1,108,000
HANOVER COMPRESSOR CO. * 89,900 3,326,300
MARINE DRILLING COS., INC. * 105,600 1,709,400
NOBLE DRILLING CORP. * 50,400 1,118,250
PATTERSON ENERGY, INC. * 134,500 1,723,281
PRECISION DRILLING CORP. * 129,900 3,012,057
R & B FALCON CORP. * 55,100 685,306
-------------
12,682,594
-------------

TOTAL ENERGY 19,983,200
-------------

FINANCIAL (0.9%)
CITY NATIONAL CORP. 33,100 1,282,625
COMMUNITY FIRST BANKSHARES, INC. 38,500 732,703
-------------
2,015,328
-------------
TECHNOLOGY (49.3%)
ACCRUE SOFTWARE, INC. * 24,500 1,316,875
ACXIOM CORP. * 152,700 2,519,550
ADAPTIVE BROADBAND CORP. * 43,300 1,599,394
ADVANCED DIGITAL INFORMATION CORP. * 47,100 1,754,475
ADVANCED FIBRE COMMUNICATIONS, INC. * 98,000 2,143,750
AETHER SYSTEMS, INC. * 9,800 681,712
ALLAIRE CORP. * 25,100 1,830,731
AMDOCS LTD. * 139,300 3,874,281
ANTEC CORP. * 63,000 3,055,500
ARTESYN TECHNOLOGIES, INC. * 83,700 1,653,075
ASYST TECHNOLOGIES, INC. * 31,600 1,224,500
ATMEL CORP. * 109,700 4,237,162
BINDVIEW DEVELOPMENT CORP. * 110,200 3,306,000
BSQUARE CORP. * 13,400 530,137
CAREINSITE, INC. * 10,250 448,437
COMMSCOPE, INC. * 93,600 3,732,300
CONCURRENT COMPUTER CORP. * 32,900 378,350
CREDENCE SYSTEMS CORP. * 53,900 2,459,187
CROSSROADS SYSTEMS, INC. * 6,600 469,425
CYMER, INC. * 142,100 5,248,819

See Accompanying Notes to Financial Statements
</TABLE>

38
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<TABLE>
<CAPTION>
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CMC SMALL CAP FUND
A Portfolio of CMC Fund Trust
SCHEDULE OF INVESTMENTS
------------------------------------------------------------------------------------------

SHARES VALUE
------------- -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
DAVOX CORP. * 38,700 $ 498,262
DOCUMENTUM, INC. * 132,500 3,759,687
DSET CORP. * 78,900 1,380,750
ELECTRO SCIENTIFIC INDUSTRIES, INC. * 50,000 2,700,000
EMULEX CORP. * 22,500 3,508,594
ETEC SYSTEMS, INC. * 63,300 2,417,269
GENESYS TELECOMMUNICATIONS LABORATORIES, INC. * 33,400 1,640,775
HARMONIC, INC. * 22,600 1,341,875
INTEGRATED DEVICE TECHNOLOGY, INC. * 223,700 4,599,831
INTERACTIVE PICTURES CORP. * 72,100 1,698,856
INTERVOICE-BRITE, INC. * 11,600 143,550
JNI CORP. * 8,800 470,250
KULICKE & SOFFA INDUSTRIES, INC. * 79,800 2,349,112
LATTICE SEMICONDUCTOR CORP. * 101,000 3,572,875
MACROMEDIA, INC. * 64,800 4,175,550
MARIMBA, INC. * 3,800 107,350
MICROS SYSTEMS, INC. * 82,900 3,836,716
MIPS TECHNOLOGIES, INC. (CLASS A) * 29,500 851,813
MMC NETWORKS, INC. * 40,900 1,303,688
MTI TECHNOLOGY, CORP. * 180,800 3,062,300
OPTICAL COATING LABORATORY, INC. 20,100 2,148,188
PERKINELMER, INC. 28,600 1,167,238
POWER-ONE, INC. * 100,400 2,008,000
POWERWAVE TECHNOLOGIES, INC. * 70,300 4,573,894
PRIMUS KNOWLEDGE SOLUTIONS, INC. * 33,500 1,009,188
RADISYS CORP. * 97,900 5,188,700
RAVISENT TECHNOLOGIES, INC. * 74,700 1,199,869
REMEDY CORP. * 46,400 1,995,200
SANDISK CORP. * 29,800 1,806,625
SPECTRIAN CORP. * 48,900 1,638,150
SYMANTEC CORP. * 97,200 4,641,300
TELETECH HOLDINGS, INC. * 100,600 1,427,263
TIBCO SOFTWARE, INC. * 4,000 156,000
USINTERNETWORKING, INC. * 2,900 96,606
VIADOR, INC. * 101,000 1,805,375
WEBTRENDS CORP. * 25,300 1,562,275
-------------
118,306,634
-------------
TRANSPORTATION (0.5%)
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. 31,700 1,184,788
-------------

TOTAL COMMON STOCKS
(COST $180,207,471) 228,807,510
-------------

See Accompanying Notes to Financial Statements
</TABLE>

39
<PAGE>
<TABLE>
<CAPTION>
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CMC SMALL CAP FUND
A Portfolio of CMC Fund Trust
SCHEDULE OF INVESTMENTS
------------------------------------------------------------------------------------------

SHARES OR
PRINCIPAL
AMOUNT VALUE
------------- -------------
<S> <C> <C>
WARRANT (1.5%)
BIOVAIL CORP. INTERNATIONAL (EXPIRE 09/30/2002) *
(COST $1,390,000) 139,000 $ 3,683,500
-------------

TOTAL INVESTMENTS, EXCLUDING TEMPORARY INVESTMENTS
(COST $181,597,471) 232,491,010
-------------

REPURCHASE AGREEMENT (3.9%)
J.P. MORGAN SECURITIES, INC.
5.282% DATED 10/29/1999,
DUE 11/01/1999 IN THE
AMOUNT OF $9,255,887.
COLLATERALIZED BY
U.S. TREASURY BONDS
6.125% TO 10.375%
DUE 11/15/2009 TO 8/15/2029
U.S. TREASURY NOTES
5.875% TO 6.250%
DUE 5/31/2000 TO 6/30/2000
(COST $9,254,548) $ 9,254,548 9,254,548
-------------

TOTAL INVESTMENTS (100.7%)
(COST $190,852,019) 241,745,558

OTHER ASSETS LESS LIABILITIES (-0.7%) (1,616,795)
-------------

NET ASSETS (100.00%) $ 240,128,763
=============

* Non-Income Producing

See Accompanying Notes to Financial Statements
</TABLE>

40
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
CMC INTERNATIONAL STOCK FUND
A Portfolio of CMC Fund Trust
SCHEDULE OF INVESTMENTS
---------------------------------------------------------------------------------------------------------------
OCTOBER 31, 1999

SHARES VALUE
------------- -------------
<S> <C> <C>
COMMON STOCKS (82.0%)
AUSTRALIA (2.1%)
BROKEN HILL PROPRIETARY CO., LTD. (MINING-METAL/MINERALS) 11,000 $ 113,606
CABLE & WIRELESS OPTUS LTD. (UTILITIES/COMMUNICATION) * 39,000 89,220
PASMINCO LTD. (MINING-METAL/MINERALS) * 155,000 148,159
TELSTRA CORP., LTD. (INSTALLMENT RECEIPTS) (UTILITIES/
COMMUNICATION) * 31,650 101,449
WMC LTD. (MINING-METALS/MINERALS) 46,000 197,278
-------------
649,712
-------------
BRAZIL (0.2%)
CIA TECIDOS DO NORTE DE MINAS SA (TEXTILES) 1,100,000 50,716
-------------
CANADA (3.8%)
ABITIBI-CONSOLIDATED, INC. (FORESTRY/PAPER PRODUCTS) 14,300 174,023
ALCAN ALUMINIUM LTD. (MINING-METAL/MINERALS) 2,900 95,129
ANDERSON EXPLORATION LTD. (OIL) * 17,500 225,457
MANULIFE FINANCIAL CORP. (INSURANCE) * 27,000 324,903
NORTEL NETWORKS CORP. (OFFICE EQUIP./COMP./COMM.) 2,600 160,059
SHAW COMMUNICATIONS, INC. (CLASS B) (MEDIA) 6,000 182,541
-------------
1,162,112
-------------
FINLAND (1.5%)
SONERA OYJ (UTILITIES/COMMUNICATION) 8,000 240,060
STORA ENSO OYJ (FORESTRY/PAPER PRODUCTS) 18,000 236,486
-------------
476,546
-------------
FRANCE (3.9%)
ALSTOM SA (ELECTRICAL EQUIPMENT) 3,500 105,946
AXA SA (INSURANCE) 1,100 155,041
BANQUE NATIONALE DE PARIS (BANKS) 1,000 87,763
CAP GEMINI SA (BUSINESS SERVICES) 1,100 166,486
FRANCE TELECOM SA, ADR (UTILITIES/COMMUNICATION) 1,700 164,475
LAFARGE SA (CONSTRUCTION/BUILDING MATERIALS) 1,200 115,405
SODEXHO ALLIANCE SA (BUSINESS SERVICES) 600 98,378
TOTAL FINA SA (CLASS B) (OIL) 600 81,036
USINOR SA (STEEL) 8,400 116,629
VIVENDI SA (UTILITIES) 1,500 113,592
-------------
1,204,751
-------------
GERMANY (3.8%)
DEUTSCHE BANK AG (BANKS) 1,500 107,176
EPCOS AG (ELECTRONICS) * 7,000 286,716
MANNESMANN AG (MACHINERY/CAPITAL SPENDING) 4,800 756,252
-------------
1,150,144
-------------

INDIA (3.0%)
BANK OF BARODA LTD. (BANKS) 100 150
BHARAT HEAVY ELECTRICALS LTD. (HEAVY ENG./SHIPBUILDING) 30,000 185,296
CASTROL (INDIA) LTD. (CHEMICALS) 20,000 157,179

See Accompanying Notes to Financial Statements
</TABLE>

41
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<CAPTION>
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CMC INTERNATIONAL STOCK FUND
A Portfolio of CMC Fund Trust
SCHEDULE OF INVESTMENTS
---------------------------------------------------------------------------------------------------------------

SHARES VALUE
------------- -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
INDIAN HOTELS CO., LTD. (ENTERTAINMENT/LEISURE) 12,900 $ 109,140
INFOSYS TECHNOLOGIES LTD. (BUSINESS SERVICES) 2,500 400,322
SATYAM INFOWAY LTD. ADR (BUSINESS SERVICES) * 1,500 58,125
-------------
910,212
-------------
IRELAND (1.1%)
BANK OF IRELAND PLC (BANKS) 18,000 140,378
CRH PLC (CONSTRUCTION/BUILDING MATERIALS) 4,300 81,126
IRISH LIFE & PERMANENT PLC (INSURANCE) 11,257 114,767
-------------
336,271
-------------
ITALY (0.9%)
ASSICURAZIONI GENERALI S.P.A (INSURANCE) 4,200 134,640
UNICREDITO ITALIANO S.P.A (BANKS) 30,000 140,315
-------------
274,955
-------------
JAPAN (28.7%)
ASAHI BANK LTD. (BANKS) 63,000 559,007
AVEX, INC. (ENTERTAINMENT/LEISURE) 1,500 316,213
DAIMEI TELECOM ENGINEERING CORP. (ENGINEERING) 7,000 82,905
DEODEO CORP. (RETAIL) 4,000 49,827
DRAKE BEAM MORIN-JAPAN, INC. (BUSINESS SERVICES) 1,000 289,383
EIDEN CO., LTD. (RETAIL) 5,000 55,625
FANCL CORP. (HEALTH/PERSONAL CARE) 1,700 488,693
FUJI BANK LTD. (BANKS) 25,000 342,564
FUJI MACHINE MFG. CO., LTD. (MACHINERY/CAPITAL SPENDING) 5,000 232,369
FUJITSU LTD. (OFFICE EQUIP./COMP./COMM.) 20,000 601,763
HAPPINET CORP. (RETAIL) 2,000 114,987
HIROSE ELECTRIC CO., LTD. (ELECTRONICS) 2,000 348,601
JAPAN LIFELINE CO., LTD. (HEALTH/PERSONAL CARE) 3,900 85,952
KATOKICHI CO., LTD. (FOOD/BEVERAGES) 3,000 53,612
KEYENCE CORP. (ELECTRONICS) 300 80,347
MARUBENI CORP. (CONSTRUCTION/BUILDING MATERIALS) 50,000 159,065
MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD. (ELECTRONICS) 9,000 189,297
MURATA MANUFACTURING CO., LTD. (ELECTRONICS) 1,000 128,402
NEC CORP. (ELECTRONICS) 8,000 161,748
NIDEC CORP. (ELECTRICAL EQUIPMENT) 1,000 194,040
NIKKO SECURITIES CO., LTD. (FINANCIAL SERVICES) 15,000 140,858
NIPPON KANZAI CO., LTD.
(CONSTRUCTION/BUILDING MATERIALS) 5,000 167,689
NIPPON TELEGRAPH & TELEPHONE CORP. (UTILITIES/
COMMUNICATION) 21 321,962
NTT MOBILE COMMUNICATIONS NETWORK, INC.
(UTILITIES/COMMUNICATION) 24 637,025
OBIC CO., LTD. (BUSINESS SERVICES) 360 169,030
OJI PAPER CO., LTD. (FORESTRY/PAPER PRODUCTS) 14,000 98,601
RYOHIN KEIKAKU CO., LTD. (RETAIL) 3,000 576,657

See Accompanying Notes to Financial Statements
</TABLE>

42
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<CAPTION>
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CMC INTERNATIONAL STOCK FUND
A Portfolio of CMC Fund Trust
SCHEDULE OF INVESTMENTS
---------------------------------------------------------------------------------------------------------------

SHARES VALUE
------------- -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
SAIZERIYA CO., LTD. (RESTAURANTS) 1,300 $ 103,392
SANWA BANK LTD., THE (BANKS) 20,000 297,240
SHIMAMURA CO., LTD. (RETAIL) 2,000 287,466
SONY CORP. (ELECTRONICS) 2,000 311,614
TAIYO INK MFG. CO., LTD. (ELECTRONICS) 1,000 134,151
TAKEDA CHEMICAL INDS., LTD. (PHARMACEUTICALS) 4,000 229,590
THK CO., LTD. (MACHINERY/CAPITAL SPENDING) 7,000 228,727
TRANS COSMOS, INC. (BUSINESS SERVICES) 1,500 190,446
WORLD CO., LTD. (RETAIL) 1,800 181,966
YAMADA DENKI CO., LTD. (RETAIL) 2,000 142,392
-------------
8,753,206
-------------
KOREA (0.8%)
SAMSUNG ELECTRONICS, GDR (ELECTRONICS) 4,000 234,000
-------------
MALAYSIA (0.3%)
STAR CRUISES PLC (ENTERTAINMENT/LEISURE) 10,000 85,000
-------------
MEXICO (0.3%)
TELEFONOS DE MEXICO SA, ADR (UTILITIES/COMMUNICATION) 1,000 85,500
-------------
NETHERLANDS (5.0%)
ASM LITHOGRAPHY HOLDING NV (ELECTRONICS) * 1,700 123,463
EQUANT NV (BUSINESS SERVICES) * 5,200 504,400
ING GROEP NV (INSURANCE) 2,200 129,674
KONINKLIJKE PHILIPS ELECTRONICS NV (ELECTRICAL EQUIPMENT) 1,200 122,973
LAURUS NV (RETAIL) 3,900 86,696
STMICROELECTRONICS NV (ELECTRONICS) 1,200 109,050
UNITED PAN-EUROPE COMMUNICATIONS NV, ADR (MEDIA) * 3,400 263,500
VENDEX KBB NV (RETAIL) 6,000 175,000
-------------
1,514,756
-------------
SINGAPORE (1.5%)
DATACRAFT ASIA LTD. (OFFICE EQUIP./COMP./COMM.) 56,000 257,600
GES INTERNATIONAL LTD. (OFFICE EQUIP./COMP./COMM.) 180,000 156,866
OVERSEA-CHINESE BANKING CORP., LTD. (BANKS) 5,250 39,442
-------------
453,908
-------------
SPAIN (1.5%)
ARGENTARIA SA (BANKS) 4,700 104,233
SOGECABLE SA (MEDIA) * 4,100 112,731
TELEFONICA SA, ADR (UTILITIES/COMMUNICATION) * 4,680 233,708
-------------
450,672
-------------
SWEDEN (2.2%)
ASSA ABLOY AB (CLASS B) (DIVERSIFIED INDS./MANUFACTURING) 11,880 131,949
MUNTERS AB (DIVERSIFIED CONSUMER MANUFACTURING) 17,400 204,874
SKANDIA INSURANCE CO., LTD. (INSURANCE) 14,800 328,760
-------------
665,583
-------------
SWITZERLAND (2.0%)
JULIUS BAER HOLDING LTD. (BEARER) (BANKS) 30 90,272

See Accompanying Notes to Financial Statements
</TABLE>

43
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<CAPTION>
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CMC INTERNATIONAL STOCK FUND
A Portfolio of CMC Fund Trust
SCHEDULE OF INVESTMENTS
---------------------------------------------------------------------------------------------------------------

SHARES VALUE
------------- -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
NOVARTIS AG (REGISTERED) (PHARMACEUTICALS) 90 $ 134,669
ROCHE HOLDING AG (GENUSSSHEINE) (PHARMACEUTICALS) 19 228,189
ZURICH ALLIED AG (REGISTERED) (INSURANCE) 300 169,911
-------------
623,041
-------------
THAILAND (1.1%)
BANGKOK BANK PUBLIC CO., LTD. (FOREIGN) (BANKS) * 38,000 88,601
COGENERATION PUBLIC CO., LTD. (FOREIGN)
(UTILITIES/ELECTRIC & GAS) * 55,000 24,579
NATIONAL PETROCHEMICAL PUBLIC CO., LTD. PCL (FOREIGN)
(CHEMICALS) * 100,000 90,026
SIAM MAKRO PUBLIC CO., LTD. (FOREIGN) (WHOLESALE TRADE) 25,000 41,774
THAI FARMERS BANK PUBLIC CO., LTD. (FOREIGN) (BANKS) * 76,000 107,306
-------------
352,286
-------------
UNITED KINGDOM (17.1%)
BARCLAYS PLC (BANKS) 6,600 201,762
BILLITON PLC (MINING-METAL/MINERALS) 69,200 298,638
BP AMOCO PLC, ADR (OIL) 4,400 254,099
BRITISH TELECOMMUNICATIONS PLC
(UTILITIES/COMMUNICATION) 24,500 443,630
COLT TELECOM GROUP PLC (UTILITIES/COMMUNICATION) * 6,600 196,997
COMPASS GROUP PLC (ENTERTAINMENT/LEISURE) 37,200 397,991
GLAXO WELLCOME PLC (PHARMACEUTICALS) 6,000 176,824
GRANADA GROUP PLC (ENTERTAINMENT/LEISURE) 38,092 300,650
HAYS PLC (BUSINESS SERVICES) 18,500 211,434
HSBC HOLDINGS PLC (BANKS) 17,000 209,076
NATIONAL WESTMINSTER BANK PLC (BANKS) 6,700 151,058
NEXT PLC (RETAIL) 22,500 242,013
ORANGE PLC (UTILITIES/COMMUNICATION) * 9,000 224,032
PEARSON PLC (MEDIA) 13,000 291,605
SHELL TRANSPORT & TRADING CO. PLC (OIL) 11,000 84,203
SHELL TRANSPORT & TRADING CO., ADR (OIL) 3,500 160,562
SMITHKLINE BEECHAM PLC (PHARMACEUTICALS) 19,861 255,505
TELEWEST COMMUNICATIONS PLC (MEDIA) * 48,100 209,354
TESCO PLC (FOOD/BEVERAGES) 37,000 109,891
VODAFONE AIRTOUCH PLC (UTILITIES/COMMUNICATION) 52,170 242,265
WPP GROUP PLC (MEDIA) 51,500 558,165
-------------
5,219,754
-------------
UNITED STATES (1.2%)
NTL, INC. (MEDIA) * 2,500 188,437
SCHLUMBERGER LTD. (OIL) 2,800 169,575
-------------
358,012
-------------

TOTAL COMMON STOCKS
(COST $19,629,989) 25,011,137
-------------

See Accompanying Notes to Financial Statements
</TABLE>

44
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<CAPTION>
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CMC INTERNATIONAL STOCK FUND
A Portfolio of CMC Fund Trust
SCHEDULE OF INVESTMENTS
---------------------------------------------------------------------------------------------------------------

SHARES OR
PRINCIPAL
AMOUNT VALUE
------------- -------------
<S> <C> <C>
PREFERRED STOCK (0.5%)
GERMANY
PORSCHE AG (AUTOMOBILES)
(COST $56,832) 50 $ 136,636
-------------

TOTAL INVESTMENTS, EXCLUDING TEMPORARY
CASH INVESTMENTS
(COST $19,686,821) 25,147,773
-------------

U.S. TREASURY BILL (6.5%)
4.460% 12/16/1999
(COST $1,988,850) 2,000,000 1,988,850
-------------

REPURCHASE AGREEMENTS (15.2%)
J.P. MORGAN SECURITIES, INC.
5.282% DATED 10/29/1999,
DUE 11/01/1999 IN THE
AMOUNT OF $3,129,497.
COLLATERALIZED BY
U.S. TREASURY BONDS
6.125% TO 10.375%
DUE 11/15/2009 TO 8/15/2029
U.S. TREASURY NOTES
5.875% TO 6.250%
DUE 5/31/2000 TO 6/30/2000 3,129,044 3,129,044
MERRILL LYNCH
5.272% DATED 10/29/1999,
DUE 11/01/1999 IN THE
AMOUNT OF $1,500,217
COLLATERALIZED BY
U.S. TREASURY STRIPS
DUE 11/15/2009 TO 02/15/17 1,500,000 1,500,000
-------------

TOTAL REPURCHASE AGREEMENTS
(COST $4,629,044) 4,629,044
-------------

TOTAL INVESTMENTS (104.2%)
(COST $26,304,715) 31,765,667

OTHER ASSETS LESS LIABILITIES (-4.2%) (1,274,019)
-------------

NET ASSETS (100.0%) $ 30,491,648
=============

* Non-Income Producing

See Accompanying Notes to Financial Statements
</TABLE>

45
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
CMC SMALL CAP FUND
CMC INTERNATIONAL STOCK FUND
Portfolios of CMC Fund Trust
STATEMENTS OF ASSETS AND LIABILITIES
---------------------------------------------------------------------------------------------------------------
October 31, 1999
CMC Small CMC International
Cap Fund Stock Fund
------------------ ------------------
<S> <C> <C>
ASSETS:
Investments at identified cost .................................. $ 181,597,471 $ 19,686,821
Investments at identified cost - federal income tax purposes..... $ 182,917,712 $ 19,686,821
------------------------------------------------------------------- ------------------ ------------------

Investments at value............................................. $ 232,491,010 $ 25,147,773
Temporary cash investments, at value............................. 9,254,548 6,617,894
Cash............................................................. - 68,653
Cash denominated in foreign currencies (cost $233,775) .......... - 233,948
Receivable for:
Investments sold............................................... 4,966,269 275,672
Interest....................................................... 90,652 19,845
Dividends...................................................... 7,225 60,576
------------------ ------------------
Total assets..................................................... 246,809,704 32,424,361
------------------ ------------------

LIABILITIES:
Payable for:
Investments purchased.......................................... 6,484,595 1,842,331
Investment management fee ..................................... 143,621 17,737
Accrued expenses .............................................. 39,265 34,332
Foreign capital gains tax...................................... - 38,313
Capital stock redeemed......................................... 13,460 -
------------------ ------------------
Total liabilities............................................... 6,680,941 1,932,713
------------------ ------------------

NET ASSETS......................................................... $ 240,128,763 $ 30,491,648
================== ==================

NET ASSETS consist of:
Unrealized appreciation (depreciation) on:
Investments.................................................. $ 50,893,539 $ 5,456,572
Translation of assets and liabilities in foreign currencies.. - (7,666)
Undistributed net realized gain from investment transactions... 29,885,983 2,822,061
Capital paid in................................................ 159,349,241 22,220,681
------------------ ------------------

NET ASSETS......................................................... $ 240,128,763 $ 30,491,648
================== ==================

Shares of capital stock outstanding................................ 17,668,929 1,707,360
================== ==================

Net asset value, offering and
redemption price per share...................................... $ 13.59 $ 17.86
================== ==================

See Accompanying Notes to Financial Statements
</TABLE>

46
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
CMC SMALL CAP FUND
CMC INTERNATIONAL STOCK FUND
Portfolios of CMC Fund Trust
STATEMENTS OF OPERATIONS
----------------------------------------------------------------------------------------------------------
Year Ended October 31, 1999

CMC CMC
Small International
Cap Fund Stock Fund
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Income:
Interest........................................................... $ 740,749 $ 76,419
Dividends.......................................................... 367,347 158,561
Foreign withholding tax on dividend income ........................ - (17,880
------------- -------------
Total income.................................................... 1,108,096 217,100
------------- -------------

Expenses:
Investment management fees ........................................ 1,784,355 139,065
Custodian fees..................................................... 38,267 33,915
Legal, insurance and audit fees.................................... 32,743 32,267
Transfer agent fees................................................ 18,000 18,000
Trustees' fees..................................................... 9,454 1,131
Other expenses .................................................... 6,835 19,678
------------- -------------
Total expenses.................................................. 1,889,654 244,056
------------- -------------
Net investment loss................................................... (781,558) (26,956)
------------- -------------

NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain(loss) from:
Investment transactions............................................ 33,791,649 2,975,930
Foreignncurrency transactions...................................... - (110,239)
------------- -------------

Net realized gain .............................................. 33,791,649 2,865,691
------------- -------------

Change in net unrealized appreciation or depreciation on:
Investments........................................................ 37,005,516 3,545,846
Translation of assets and liabilities in foreign currencies........ - (9,281)
------------- -------------

Change in net unrealized appreciation........................... 37,005,516 3,536,565
------------- -------------

Net realized and unrealized gain on investments....................... 70,797,165 6,402,256
------------- -------------

NET INCREASE RESULTING FROM OPERATIONS................................... $ 70,015,607 $ 6,375,300
============= =============

See Accompanying Notes to Financial Statements
</TABLE>

47
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
CMC SMALL CAP FUND
CMC INTERNATIONAL STOCK FUND
Portfolios of CMC Fund Trust
STATEMENTS OF CHANGES IN NET ASSETS
-------------------------------------------------------------------------------------------------------------------------------
Year Ended October 31,

CMC Small CMC International
Cap Fund Stock Fund
-------------------------------- --------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss)......................... $ (781,558) $ (669,344) $ (26,956) $ 307,230
Net realized gain (loss) from:
Investment transactions............................ 33,791,649 29,537,972 2,975,930 10,857,469
Futures contracts.................................. - 1,770,502 - -
Foreign currency transactions...................... - - (110,239) (691,668)
Change in net unrealized appreciation or
depreciation on:
Investments........................................ 37,005,516 (61,700,383) 3,545,846 (4,831,185)
Translation of assets and liabilities
in foreign currencies............................ - - (9,281) 77,019
-------------- -------------- -------------- --------------
Net increase (decrease)
resulting from operations.......................... 70,015,607 (31,061,253) 6,375,300 5,718,865

Distributions to shareholders:
From net realized gain from
investment transactions............................ (384,566) (31,308,474) (3,136) (10,805,915)
In excess of net realized gain from
investment transactions............................ - (1,826,187)* - -

Net capital share transactions.......................... (97,292,620) (189,785,414) 8,742,456 (61,006,570)
-------------- -------------- -------------- --------------

Net increase (decrease) in net assets................... (27,660,400) (253,981,328) 15,114,620 (66,093,620)

NET ASSETS:
Beginning of year ................................... 267,789,163 521,770,491 15,377,028 81,470,648
-------------- -------------- -------------- --------------

End of year ......................................... $ 240,128,763 $ 267,789,163 $ 30,491,648 $ 15,377,028
============== ============== ============== ==============

* On a tax basis, there was no return of capital.

See Accompanying Notes to Financial Statements
</TABLE>

48
<PAGE>
--------------------------------------------------------------------------------
CMC SMALL CAP FUND
CMC INTERNATIONAL STOCK FUND
Portfolios of CMC Fund Trust
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1. Significant accounting policies:

CMC Small Cap Fund and CMC International Stock Fund (the Funds) are portfolios
of CMC Fund Trust (the Trust), an open-end diversified investment company
registered under the Investment Company Act of 1940. The Trust has established
two other portfolios, CMC High Yield Fund and CMC Short Term Bond Fund, neither
of which are included in these financial statements. Each portfolio issues a
separate series of the Trust's shares and maintains a separate investment
portfolio. The policies described below are consistently followed by the Funds
for the preparation of their financial statements in conformity with generally
accepted accounting principles.

Investment valuation. Portfolio securities are valued based on the last sales
prices reported by the principal securities exchanges on which the investments
are traded or, on the absence of recorded sales, at the closing bid prices on
such exchanges or over-the-counter markets. Investment securities with less than
60 days to maturity when purchased are valued at amortized cost, which
approximates market value. Investment securities not currently quoted as
described above will be priced at fair market value as determined in good faith
in a manner prescribed by the Board of Trustees.

Repurchase agreements. The Funds may engage in repurchase agreement
transactions. The Funds, through their custodians, receive delivery of
underlying securities collateralizing repurchase agreements (included in
temporary cash investments). The Funds' investment advisor determines that the
value of the underlying securities is at all times at least equal to the resale
price. In the event of default or bankruptcy by the other party to the
agreement, realization and/or retention of the collateral may be subject to
legal proceedings.

Futures contracts. The CMC Small Cap Fund occasionally utilizes futures
contracts to hedge against market conditions affecting the value of securities
that the Fund owns or intends to purchase. Upon entering into a financial
futures contract, the Fund is required to pledge to the broker an amount of
cash, US Government securities, or any other portfolio asset as permitted by the
Securities and Exchange Commission rules and regulations, equal to a certain
percentage of the contract amount. This amount is known as the "initial margin".
Subsequent payments, known as the "variation margin", are made or received by
the Fund each day, depending on the daily fluctuations in the value of the
underlying financial futures contract. Such variation margin is recorded for
financial statement purposes on a daily basis as unrealized gain or loss until
the financial futures contract is closed, at which time the gain or loss is
reclassified to realized. Using financial futures contracts involves various
market risks. The Fund seeks to reduce these risks by investing in financial
futures contracts solely for hedging purposes and not for leverage. However,
imperfect correlation's between financial futures and the instruments being
hedged or market disruptions do not normally permit full control of these risks
at all times. CMC Small Cap Fund has not entered into futures contracts during
the year ending October 31, 1999.

Forward currency exchange contracts. The CMC International Stock Fund may enter
into forward currency contracts in connection with planned purchases or sales of
securities or to hedge the US dollar value of the portfolio securities
denominated in a foreign currency. Contracts are recorded at the prevailing
forward exchange rate of the underlying currencies. The gain or loss arising
from the difference between the original contract price and the closing price of
such contract is included in the net realized gains or losses from foreign
currency transactions. Fluctuations in the value of forward currency contracts
are recorded for financial reporting purposes as unrealized gains or losses. The
Fund could be exposed to risks if counterparties to the forward contracts are
unable to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably. The effect of any change in the value of a hedged
foreign currency would be offset by the corresponding change (resulting from a
change in exchange rates) in value of the securities denominated in that
currency. During the year ending October 31, 1999, the Fund did not enter into
any such forward currency contracts.

49
<PAGE>
--------------------------------------------------------------------------------
CMC SMALL CAP FUND
CMC INTERNATIONAL STOCK FUND
Portfolios of CMC Fund Trust
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1. Significant accounting policies, continued:

Foreign currency translations. The books and records of the CMC International
Stock Fund are maintained in U.S. dollars. Foreign currency transactions are
translated into US dollars on the market value of investment securities, other
assets, and liabilities at the daily rates of exchange on the valuation date,
and purchases and sales of investment securities, dividend and interest income
and certain expenses at the rates of exchange prevailing on the respective dates
of such transactions.

The CMC International Stock Fund does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices on investments held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.

Reported net realized foreign currency gains or losses arise from the sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the US dollar equivalents of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities, other than investments in securities, resulting
from changes in the exchange rate.

Interest and dividend income. Interest income is recorded on the accrual basis
and dividend income is recorded on the ex-dividend date. Amortization of
discounts or accretion of premiums is recorded over the life of the instrument.

Dividends and distributions to shareholders. Dividends from net investment
income and distributions from any net realized gains are declared and paid
annually.

Income and capital gain distributions are determined in accordance with income
tax regulations, which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions, net operating losses, deferral of losses from wash sales, and
passive foreign investment companies.

Use of estimates. The preparation of the financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.

Federal income taxes. The Funds have made no provision for federal income taxes
on net investment income or realized gains from sales of investment securities,
since it is the intention of the Funds to comply with the provisions of the
Internal Revenue Code available to certain regulated investment companies, and
to make distributions of income and security profits sufficient to relieve them
from substantially all federal income taxes.

Foreign capital gains taxes. Realized gains in countries may be subject to
foreign taxes at rates ranging from approximately 10% to 30%. The Funds'
provides for such foreign taxes on net realized and unrealized gains at the
appropriate rate for each jurisdiction.

Other. Investment transactions are accounted for on the date the investments are
purchased or sold. The cost of investments sold is determined by the use of the
specific identification method for both financial reporting and income tax
purposes. Realized gains and losses from investments are reported on the basis
of identified costs.

50
<PAGE>
--------------------------------------------------------------------------------
CMC SMALL CAP FUND
CMC INTERNATIONAL STOCK FUND
Portfolios of CMC Fund Trust
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
2. Investment transactions:

Aggregate purchases, sales and maturities, net realized gain and net unrealized
appreciation on investments, excluding short-term investments, as of and for the
year ended October 31, 1999 were as follows:
<TABLE>
<CAPTION>
CMC Small CMC International
Cap Fund Stock Fund
----------------- -----------------
<S> <C> <C>
Purchases:
Investment securities other than U.S.
Government obligations....................... $ 415,105,260 $ 21,281,419
================= =================
Sales and Maturities:
Investment securities other than U.S.
Government obligations....................... $ 490,372,422 $ 16,074,686
================= =================
Net Realized Gain:
Investment securities other than U.S.
Government obligations....................... $ 33,791,649 $ 2,975,930
================= =================
Unrealized Appreciation (Depreciation) for
federal income tax purposes:
Appreciation................................... $ 59,951,171 $ 6,280,416
Depreciation................................... (10,377,873) (823,844)
----------------- -----------------
Net unrealized appreciation ................. $ 49,573,298 $ 5,456,572
================= =================
</TABLE>
3. Capital Stock:
<TABLE>
<CAPTION>
CMC Small Cap Fund CMC International Stock Fund
Year Ended October 31, Year Ended October 31,
------------------------------- -------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Shares:
Shares sold.......................... 1,948,298 3,526,101 869,316 140,622
Shares issued for reinvestment
of dividends....................... 28,298 795,793 181 861,716
Shares issued for share split*....... 13,253,670 - - -
-------------- -------------- -------------- --------------
15,230,266 4,321,894 869,497 1,002,338
Less shares redeemed................. (4,284,571) (7,189,299) (388,425) (1,683,481)
-------------- -------------- -------------- --------------

Net increase (decrease) in shares.... 10,945,695 (2,867,405) 481,072 (681,143)
============== ============== ============== ==============

Amounts:
Sales................................ $ 69,448,331 $ 166,362,699 $ 14,220,602 $ 6,648,396
Reinvestment of dividends............ 384,566 31,696,418 3,243 10,805,915
-------------- -------------- -------------- --------------
69,832,897 198,059,117 14,223,845 17,454,311
Less redemptions..................... (167,125,517) (387,844,531) (5,481,389) (78,460,881)
-------------- -------------- -------------- --------------

Net increase (decrease).............. $ (97,292,620) $ (189,785,414) $ 8,742,456 $ (61,006,570)
============== ============== ============== ==============

Capital stock authorized (shares) 100,000,000 100,000,000
</TABLE>
*4 for 1 stock split effective September 1, 1999.
51
<PAGE>
--------------------------------------------------------------------------------
CMC SMALL CAP FUND
CMC INTERNATIONAL STOCK FUND
Portfolios of CMC Fund Trust
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

4. Transactions with affiliates and related parties:

<TABLE>
<CAPTION>
CMC Small CMC International
Cap Fund Stock Fund
------------ -----------------
<S> <C> <C>
Investment management fees incurred........................ $ 1,784,355 $ 139,065

Investment management fee computation basis
(percentage of daily net assets per annum).............. 0.75 of 1% 0.75 of 1%

Transfer agent fee......................................... $ 18,000 $ 18,000

Fees earned by trustees not affiliated with the
Fund's investment adviser or transfer agent.............. $ 9,454 $ 1,131
</TABLE>

The investment adviser of the Funds is Columbia Management Co. (CMC). CMC is an
indirect subsidiary of Fleet Boston Corporation (Fleet), a publicly owned
multi-bank holding company registered under the Bank Holding Company Act of
1956.

The transfer agent for the Funds is Columbia Trust Company (CTC), an affiliate
of CMC and indirect subsidiary of Fleet. CTC is compensated based on a per
account fee or a minimum of $1,500 per month.

The contracts for investment advisory and transfer agent services must be
renewed annually by a majority vote of the Fund's shareholders or by the
Trustees.

J. Jerry Inskeep, Jr., an officer and trustee of the Trust, is affiliated with
Fleet but receives no compensation or other payments from the Trust.

<PAGE>
PRICEWATERHOUSECOOPERS

PricewaterhouseCoopers
1300 SW Fifth Avenue
Portland OR 97201-5638
Telephone (503) 478 6000
Facsimile (503) 478 6099

Report of Independent Accountants

To the Trustees and Shareholders of CMC Fund Trust

In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of CMC High Yield Fund (the Fund), one
of the portfolios of CMC Fund Trust, at October 31, 1999, and the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as financial statements) are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.

PRICEWATERHOUSECOOPERS LLP

December 3, 1999