<PAGE> 1
LIBERTY MUTUAL FUNDS
STEIN ROE MUTUAL FUNDS
ONE FINANCIAL CENTER, BOSTON, MASSACHUSETTS 02111-2621
Dear Shareholder:
Your Fund will hold a special meeting on December 27, 2000 at 10:00 a.m.
Eastern Time, at the offices of Colonial Management Associates, Inc. You will be
asked to vote on the acquisition of your Fund and (with the exception of Liberty
All-Star Growth and Income Fund shareholders) on the election of eleven
Trustees. A formal Notice of Special Meeting of Shareholders appears on the next
few pages, followed by the combined Prospectus/Proxy Statement which explains in
more detail the proposals to be considered. We hope that you can attend the
Meeting in person; however, we urge you in any event to vote your shares at your
earliest convenience.
Your Fund is part of one of several proposed acquisitions and liquidations
of funds in the Liberty and Stein Roe Fund groups proposed by Liberty Financial
Companies, Inc., the indirect parent of each of the investment advisors to the
Liberty and Stein Roe Funds. The overall purposes of these acquisitions and
liquidations include streamlining the product offerings of the Liberty and Stein
Roe Funds, potentially reducing fund expense ratios by creating larger funds and
permitting the Liberty Financial organization to concentrate its portfolio
management resources on a more focused group of portfolios. Please review the
enclosed Prospectus/Proxy Statement for a more detailed description of the
proposed acquisition of your Fund and the specific reasons it is being proposed.
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. YOU CAN
VOTE EASILY AND QUICKLY BY MAIL, BY FAX (NOT AVAILABLE FOR ALL SHAREHOLDERS;
REFER TO ENCLOSED PROXY INSERT), BY PHONE OR IN PERSON. A SELF-ADDRESSED,
POSTAGE-PAID ENVELOPE HAS BEEN ENCLOSED FOR YOUR CONVENIENCE. PLEASE HELP YOUR
FUND AVOID THE EXPENSE OF A FOLLOW-UP MAILING BY VOTING TODAY!
Your Fund is using Shareholder Communications Corporation ("SCC"), a
professional proxy solicitation firm, to assist shareholders in the voting
process. As the date of the special meeting approaches, if we have not yet
received your vote, you may receive a telephone call from SCC reminding you to
exercise your right to vote.
Please take a few moments to review the details of each proposal. If you
have any questions regarding the combined Prospectus/Proxy Statement, please
feel free to call the contact number listed in the enclosed Prospectus/Proxy
Statement.
We appreciate your participation and prompt response in these matters and
thank you for your continued support.
Sincerely,
/s/ Stephen E. Gibson
Stephen E. Gibson, President
November 17, 2000
G-60/607D-1000
<PAGE> 2
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
TO BE HELD DECEMBER 27, 2000
LIBERTY-STEIN ROE FUNDS INVESTMENT TRUST
STEIN ROE GROWTH & INCOME FUND CLASS S
LIBERTY VALUE OPPORTUNITIES FUND CLASSES A, B, C AND Z
LIBERTY FUNDS TRUST VI
LIBERTY VALUE FUND
LIBERTY FUNDS TRUST IX
LIBERTY ALL-STAR GROWTH AND INCOME FUND
NOTICE IS HEREBY GIVEN that Special Meetings of the shareholders of the
Stein Roe Growth & Income Fund Class S and the Liberty Value Opportunities Fund
Classes A, B, C and Z, the Liberty Value Fund and the Liberty All-Star Growth
and Income Fund (together, the "Acquired Funds") will be held at 10:00 a.m.
Eastern Time on Wednesday, December 27, 2000 at the offices of Colonial
Management Associates, Inc., One Financial Center, Boston, Massachusetts
02111-2621, for these purposes:
1. SHAREHOLDERS OF THE STEIN ROE GROWTH & INCOME FUND CLASS S AND THE
LIBERTY VALUE OPPORTUNITIES FUND CLASSES A, B, C AND Z VOTE: To
approve an Agreement and Plan of Reorganization providing for the sale
of all of the assets of the Stein Roe Growth & Income Fund Class S and
the Liberty Value Opportunities Fund Classes A, B, C and Z to, and the
assumption of all of the liabilities of the Stein Roe Growth & Income
Fund Class S and the Liberty Value Opportunities Fund Classes A, B, C
and Z by, the Liberty Growth & Income Fund in exchange for shares of
the Liberty Growth & Income Fund and the distribution of such shares to
the shareholders of the Stein Roe Growth & Income Fund Class S and the
Liberty Value Opportunities Fund Classes A, B, C and Z in complete
liquidation of the Stein Roe Growth & Income Fund Class S and the
Liberty Value Opportunities Fund Classes A, B, C and Z.
2. SHAREHOLDERS OF THE LIBERTY VALUE FUND VOTE: To approve an Agreement
and Plan of Reorganization providing for the sale of all of the assets
of the Liberty Value Fund to, and the assumption of all of the
liabilities of the Liberty Value Fund by, the Liberty Growth & Income
Fund in exchange for shares of the Liberty Growth & Income Fund and the
distribution of such shares to the shareholders of the Liberty Value
Fund in complete liquidation of the Liberty Value Fund.
3. SHAREHOLDERS OF THE LIBERTY ALL-STAR GROWTH AND INCOME FUND VOTE: To
approve an Agreement and Plan of Reorganization providing for the sale
of all of the assets of the Liberty All-Star Growth and Income Fund to,
and the assumption of all of the liabilities of the Liberty All-Star
Growth and Income Fund by, the Liberty Growth & Income Fund in exchange
for shares of the Liberty Growth & Income Fund and the distribution of
such shares to the shareholders of the Liberty All-Star Growth and
Income Fund in complete liquidation of the Liberty All-Star Growth and
Income Fund.
4. SHAREHOLDERS OF THE STEIN ROE GROWTH & INCOME FUND CLASS S AND THE
LIBERTY VALUE OPPORTUNITIES FUND CLASSES A, B, C AND Z VOTE: To elect
eleven Trustees of Liberty-Stein Roe Funds Investment Trust and SR&F
Base Trust.
5. SHAREHOLDERS OF THE LIBERTY VALUE FUND VOTE: To elect eleven Trustees
of Liberty Funds Trust VI.
6. To consider and act upon any other matters that properly come before
the meeting and any adjourned session of the meeting.
Shareholders of record at the close of business on September 29, 2000 are
entitled to notice of and to vote at the meeting and any adjourned session.
By order of the Board of Trustees,
William J. Ballou, Assistant Secretary
November 17, 2000
<PAGE> 3
NOTICE: YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. YOU
CAN VOTE EASILY AND QUICKLY BY PHONE, BY MAIL, BY FAX (NOT AVAILABLE FOR
ALL SHAREHOLDERS; REFER TO ENCLOSED PROXY INSERT) OR IN PERSON. PLEASE
HELP YOUR FUND AVOID THE EXPENSE OF A FOLLOW-UP MAILING BY VOTING TODAY!
<PAGE> 4
COMBINED PROSPECTUS AND PROXY STATEMENT
NOVEMBER 17, 2000
ACQUISITION OF THE ASSETS AND LIABILITIES OF EACH OF
STEIN ROE GROWTH & INCOME FUND CLASS S AND
LIBERTY VALUE OPPORTUNITIES FUND CLASSES A, B, C AND Z
c/o Liberty-Stein Roe Funds Investment Trust
One Financial Center
Boston, Massachusetts 02111-2621
1-800-338-2550
and
LIBERTY VALUE FUND
c/o Liberty Funds Trust VI
One Financial Center
Boston, Massachusetts 02111-2621
1-800-426-3750
and
LIBERTY ALL-STAR GROWTH AND INCOME FUND
c/o Liberty Funds Trust IX
One Financial Center
Boston, Massachusetts 02111-2621
1-800-426-3750
BY AND IN EXCHANGE FOR SHARES OF
LIBERTY GROWTH & INCOME FUND
c/o Liberty Funds Trust VI
One Financial Center
Boston, Massachusetts 02111-2621
1-800-426-3750
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
QUESTIONS AND ANSWERS....................................... 4
PROPOSAL 1 -- Acquisition of the Stein Roe Growth & Income
Fund Class S and the Liberty Value
Opportunities Fund Classes A, B, C and Z by
the Liberty Growth & Income Fund.............. 15
Principal Investment Risks................................ 15
Information about the Acquisition......................... 15
PROPOSAL 2 -- Acquisition of the Liberty Value Fund by the
Liberty Growth & Income Fund.................. 19
Principal Investment Risks................................ 19
Information about the Acquisition......................... 19
PROPOSAL 3 -- Acquisition of the Liberty All-Star Growth and
Income Fund by the Liberty Growth & Income
Fund.......................................... 24
Principal Investment Risks................................ 24
Information about the Acquisition......................... 25
INFORMATION APPLICABLE TO PROPOSALS 1, 2 AND 3.............. 29
PROPOSAL 4 -- Election of Trustees by Stein Roe Growth &
Income Fund Class S and Liberty Value
Opportunities Fund Classes A, B, C and Z
Shareholders.................................. 31
PROPOSAL 5 -- Election of Trustees by Liberty Value Fund
Shareholders.............................................. 35
GENERAL..................................................... 38
Voting Information........................................ 38
Appendix A -- Form of Agreement and Plan of
Reorganization............................................ A-1
Appendix B -- Fund Information.............................. B-1
Appendix C -- Capitalization................................ C-1
</TABLE>
1
<PAGE> 5
This combined Prospectus/Proxy Statement contains information you should
know before voting on the proposed acquisition of the Stein Roe Growth & Income
Fund Class S shares and the Liberty Value Opportunities Fund Class A, B, C and Z
shares (collectively, the "Stein Roe Fund"), the Liberty Value Fund (the "Value
Fund") and the Liberty All-Star Growth and Income Fund (the "All-Star Fund")
(each, an "Acquired Fund," and together, the "Acquired Funds") by the Liberty
Growth & Income Fund (the "Growth & Income Fund") (each, an "Acquisition," and
together, the "Acquisitions") or voting on the other proposals to be considered
at a Special Meeting of Shareholders of each Acquired Fund (the "Meetings"),
which will be held at 10:00 a.m. Eastern Time on December 27, 2000 at the
offices of Colonial Management Associates, Inc. ("Colonial"), One Financial
Center, Boston, Massachusetts 02111-2621. Please read this Prospectus/Proxy
Statement and keep it for future reference.
Proposal 1 in this Prospectus/Proxy Statement relates to the proposed
acquisition of the Stein Roe Fund by the Growth & Income Fund. Proposal 2 in
this Prospectus/Proxy Statement relates to the proposed acquisition of the Value
Fund by the Growth & Income Fund. Proposal 3 in this Prospectus/Proxy Statement
relates to the proposed acquisition of the All-Star Fund by the Growth & Income
Fund. If the Acquisition of your Fund occurs, you will become a shareholder of
the Growth & Income Fund. The Growth & Income Fund seeks long-term growth and
income. If the Agreement and Plan of Reorganization for your Fund is approved by
the shareholders of your Fund and the Acquisition occurs, your Fund will
transfer all of the assets and liabilities attributable to each class of its
shares to the Growth & Income Fund in exchange for shares of the same class of
the Growth & Income Fund with the same aggregate net asset value as the assets
and liabilities transferred. After that exchange, shares of each class received
by each Acquired Fund will be distributed pro rata to its shareholders of the
same class.
Proposal 4 in this Prospectus/Proxy Statement relates to the election of
Trustees of Liberty-Stein Roe Funds Investment Trust (the "Stein Roe Trust"), of
which the Stein Roe Fund is a series, and the election of Trustees of the SR&F
Base Trust (the "Base Trust"), of which the master fund for the Stein Roe Fund,
the SR&F Growth & Income Portfolio (the "Master Fund"), is a series. Proposal 5
in this Prospectus/Proxy Statement relates to the election of Trustees of
Liberty Funds Trust VI ("Trust VI"), of which the Value Fund is a series.
If you are a shareholder of the Stein Roe Fund, you are being asked to vote
on Proposals 1 and 4 in this Prospectus/Proxy Statement. Please review these
Proposals carefully, as well as the section "Information Applicable to Proposals
1, 2 and 3." If you are a shareholder of the Value Fund, you are being asked to
vote on Proposals 2 and 5 in this Prospectus/Proxy Statement. Please review
these Proposals carefully, as well as the section "Information Applicable to
Proposals 1, 2 and 3." If you are a shareholder of the All-Star Fund, you are
being asked to vote on Proposal 3 in this Prospectus/Proxy Statement. Please
review this Proposal carefully, as well as the section "Information Applicable
to Proposals 1, 2 and 3."
Please review the enclosed Prospectus of the Growth & Income Fund for your
class of shares and the Annual Report of the Growth & Income Fund. Each of these
documents is incorporated in this Prospectus/Proxy Statement by reference. The
following documents have also been filed with the Securities and Exchange
Commission (the "SEC") and are incorporated in this Prospectus/Proxy Statement
by reference:
- The Prospectuses of the Stein Roe Fund dated November 22, 1999, as
supplemented on February 1, 2000, August 2, 2000, August 15, 2000, August
21, 2000, October 23, 2000 and October 26, 2000, with respect to Class A,
B, C and Z shares; and dated February 1, 2000, as supplemented on
February 11, 2000, April 20, 2000, June 5, 2000, June 23, 2000, July 14,
2000, August 2, 2000, August 11, 2000, August 28, 2000, September 1, 2000
and November 1, 2000, with respect to Class S shares.
- The Prospectuses of the Value Fund dated November 1, 1999, as
supplemented on December 28, 1999, July 28, 2000, August 1, 2000, August
15, 2000, October 23, 2000 and October 26, 2000.
- The Prospectuses of the All-Star Fund dated March 17, 2000, as
supplemented on August 1, 2000, August 15, 2000, October 23, 2000 and
October 26, 2000.
2
<PAGE> 6
- The Statement of Additional Information of the Stein Roe Fund dated
November 22, 1999, as supplemented on June 23, 2000, with respect to
Class A, B, C and Z shares; and dated February 1, 2000, as supplemented
on June 23, 2000, with respect to Class S shares.
- The Statement of Additional Information of the Value Fund dated November
1, 1999, as supplemented on June 23, 2000 and August 21, 2000.
- The Statement of Additional Information of the All-Star Fund dated March
17, 2000, as supplemented on June 27, 2000 and August 21, 2000.
- The Statement of Additional Information of the Growth & Income Fund dated
November 1, 2000.
- The Report of Independent Accountants and financial statements included
in the Annual Report to Shareholders of the Stein Roe Fund dated
September 30, 1999.
- The financial statements included in the Stein Roe Fund's Semi-Annual
Report to Shareholders dated March 31, 2000.
- The Report of Independent Accountants and financial statements included
in the Annual Report to Shareholders of the Value Fund dated June 30,
2000.
- The Report of Independent Accountants and financial statements included
in the Annual Report to Shareholders of the All-Star Fund dated December
31, 1999.
- The financial statements included in the All-Star Fund's Semi-Annual
Report to Shareholders dated June 30, 2000.
- The Statement of Additional Information of the Growth & Income Fund dated
November 17, 2000 relating to the Acquisitions.
Each Acquired Fund has previously sent its Annual and Semi-Annual Reports
to its shareholders. For a free copy of these Reports or any of the documents
listed above, Value Fund, All-Star Fund and Growth & Income Fund shareholders
may call 1-800-426-3750 and Stein Roe Fund shareholders may call 1-800-338-2550,
or you may write to your Fund at the address listed on the cover of this
Prospectus/Proxy Statement. You may also obtain many of these documents by
accessing the web site of your Fund at www.libertyfunds.com or www.steinroe.com.
Hearing impaired shareholders of the Value Fund or the All-Star Fund may call
Liberty Funds Services, Inc. at 1-800-528-6979 if you have special TTD
equipment. Text-only versions of all the Stein Roe Fund, Value Fund, All-Star
Fund and Growth & Income Fund documents can be viewed online or downloaded from
the Edgar database on the SEC's internet site at www.sec.gov. You can review and
copy information about the Funds by visiting the following location, and you can
obtain copies, upon payment of a duplicating fee, by electronic request at the
following e-mail address: [email protected], or by writing the Public Reference
Room, U.S. Securities and Exchange Commission, Washington, DC 20549-0102.
Information on the operation of the Public Reference Room may be obtained by
calling 202-942-8090.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS/PROXY STATEMENT IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
3
<PAGE> 7
QUESTIONS AND ANSWERS
THE FOLLOWING QUESTIONS AND ANSWERS PROVIDE AN OVERVIEW OF KEY FEATURES OF THE
ACQUISITIONS AND OF THE OTHER MATTERS TO BE CONSIDERED AT THE MEETINGS AND OF
THE INFORMATION CONTAINED IN THIS COMBINED PROSPECTUS/PROXY STATEMENT. PLEASE
REVIEW THE FULL PROSPECTUS/PROXY STATEMENT PRIOR TO CASTING YOUR VOTE.
1. WHAT IS BEING PROPOSED?
First, the Trustees of the Stein Roe Trust are recommending in Proposal 1 that
the Growth & Income Fund acquire the Stein Roe Fund, the Trustees of Trust VI
are recommending in Proposal 2 that the Growth & Income Fund acquire the Value
Fund, and the Trustees of Liberty Funds Trust IX ("Trust IX"), of which the
All-Star Fund is a series, are recommending in Proposal 3 that the Growth &
Income Fund acquire the All-Star Fund. This means that the Growth & Income Fund
would acquire all of the assets and liabilities of each of the Acquired Funds in
exchange for shares of the Growth & Income Fund representing the aggregate net
asset value of each Acquired Fund's assets and liabilities. If Proposals 1, 2
and 3 are approved, you will receive shares of the Growth & Income Fund with an
aggregate net asset value equal to the aggregate net asset value of your
Acquired Fund shares as of the business day before the closing of the
Acquisitions. The Acquisitions are currently scheduled to take place on or
around January 29, 2001. Note that the closing of each Acquisition is not
conditioned on the closing of the other Acquisitions proposed in this
Prospectus/Proxy Statement. Accordingly, in the event that the shareholders of
one of the Acquired Funds approve their Fund's Acquisition, it is expected that
the approved Acquisition will, subject to the terms of the Agreement and Plan of
Reorganization, take place as described in this Prospectus/Proxy Statement, even
if the shareholders of another Acquired Fund have not approved their Fund's
Acquisition.
In addition, the Trustees of the Stein Roe Trust and the Trustees of Trust VI
are recommending in Proposal 4 and Proposal 5, respectively, that you vote in
favor of eleven nominees for Trustees.
2. WHY ARE THE ACQUISITIONS BEING PROPOSED?
The Trustees of each of the Stein Roe Trust, Trust VI and Trust IX recommend
approval of the Acquisitions. In reviewing the Acquisitions, the Trustees
considered:
- that absent the Acquisition, Liberty Financial Companies, Inc. ("Liberty
Financial"), the indirect parent of the investment advisors to the Value
Fund and the All-Star Fund, will recommend to the Trustees that each such
Fund for which the Acquisition is not consummated be liquidated;
- the Acquisition offers shareholders of each Acquired Fund an investment
in a larger fund with somewhat similar investment goals and strategies;
- the expected reduction in the fees and expenses payable by the Value Fund
and the All-Star Fund as a result of the Acquisitions, assuming each such
Fund's investment advisor declined to continue the current voluntary fee
waiver or expense reimbursement in effect with respect to such Fund;
- that the Value and All-Star Funds have not achieved sufficient sales
growth and are not likely to do so in the near future;
- the ability of the Funds' investment advisors to create a more focused
value-style investment management team (applicable to the Value Fund and
the Stein Roe Fund); and
- the expected tax-free nature of the Acquisitions as opposed to other
alternatives for the Funds and for shareholders and other tax
considerations.
Please review "Reasons for the Acquisition" in Proposals 1, 2 and 3 of this
Prospectus/Proxy Statement for a full description of the factors considered by
the Trustees.
3. HOW DO THE MANAGEMENT FEES AND EXPENSES OF THE FUNDS COMPARE AND WHAT ARE
THEY ESTIMATED TO BE FOLLOWING THE ACQUISITIONS?
The following tables allow you to compare the sales charges, if applicable, and
management fees and expenses of each Acquired Fund and the Growth & Income Fund
and to analyze the estimated expenses that Liberty Financial expects the
combined fund to bear in the first year following the Acquisitions. The
shareholder fees presented below for the Growth & Income Fund apply both before
and after giving effect to the Acquisitions.
4
<PAGE> 8
Sales charges are paid directly by shareholders to Liberty Funds Distributor,
Inc., each Fund's distributor. Annual Fund Operating Expenses are deducted from
the Fund's assets. They include management and administration fees, 12b-1 fees
(if applicable) and administrative costs, including pricing and custody
services. The Annual Fund Operating Expenses shown in the table below represent
expenses incurred by the Stein Roe Fund for its fiscal year ended September 30,
1999, by the Value Fund for its last fiscal year ended June 30, 2000, by the
All-Star Fund for its last fiscal year ended December 31, 1999, and by the
Growth & Income Fund for its last fiscal year ended June 30, 2000.
Detailed pro forma combined expense information presented in the Annual Fund
Operating Expenses table below for the combined fund is provided based on the
assumption that the Growth & Income Fund acquires all three Acquired Funds. In
addition, following the presentation of that detailed information, the total
Annual Fund Operating Expenses are presented on a pro forma combined basis for
each possible scenario in which the Growth & Income Fund acquires one or two,
but not all three, of the Acquired Funds.
SHAREHOLDER FEES
(paid directly from your investment)
<TABLE>
<CAPTION>
STEIN ROE FUND VALUE FUND(1)
-------------- -------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B C Z S A B C Z
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum sales charge
(load) on purchases (%)
(as a percentage of the
offering price) 5.75 0.00 0.00 0.00 0.00 5.75 0.00 0.00 0.00
--------------------------------------------------------------------------------------------------------
Maximum deferred sales
charge (load) on
redemptions (%) (as a
percentage of the lesser
of purchase price or
redemption price) 1.00(2) 5.00 1.00 0.00 0.00 1.00(3) 5.00 1.00 0.00
--------------------------------------------------------------------------------------------------------
Redemption fee (%) (as a
percentage of amount
redeemed, if applicable) (4) (4) (4) (4) (5) (4) (4) (4) (4)
</TABLE>
<TABLE>
<CAPTION>
ALL-STAR FUND(1) GROWTH & INCOME FUND(1)
---------------- -----------------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B C Z A B C S Z
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum sales charge
(load) on purchases (%)
(as a percentage of the
offering price) 5.75 0.00 0.00 0.00 5.75 0.00 0.00 0.00 0.00
--------------------------------------------------------------------------------------------------------
Maximum deferred sales
charge (load) on
redemptions (%) (as a
percentage of the lesser
of purchase price or
redemption price) 1.00(3) 5.00 1.00 0.00 1.00(3) 5.00 1.00 0.00 0.00
--------------------------------------------------------------------------------------------------------
Redemption fee (%) (as a
percentage of amount
redeemed, if applicable) (4) (4) (4) (4) (4) (4) (4) (5) (4)
</TABLE>
---------------
(1) A $10 annual fee is deducted from accounts of less than $1,000 and paid to
the transfer agent.
(2) This charge applies only to purchases of $1 million to $5 million if shares
obtained through these purchases are redeemed within 18 months of purchase.
(3) This charge applies only to certain Class A shares bought without an initial
sales charge that are sold within 18 months of purchase.
(4) There is a $7.50 charge for wiring sale proceeds to your bank.
(5) There is a $7.00 charge for wiring sale proceeds to your bank. A fee of $5
per quarter may be charged to accounts that fall below the required minimum
balance.
5
<PAGE> 9
ANNUAL FUND OPERATING EXPENSES
(deducted directly from Fund assets)
<TABLE>
<CAPTION>
STEIN ROE FUND(6) VALUE FUND
----------------- ----------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B C Z S A B C Z
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fee(7)(8) (%) 0.75 0.75 0.75 0.75 0.75 0.80 0.80 0.80 0.80
---------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees
(%) 0.35 1.00 1.00 0.00 0.00 0.25 1.00 1.00 0.00
---------------------------------------------------------------------------------------------------------------
Other expenses(7) (%) 0.33 0.33 0.33 0.33 0.31 0.58 0.58 0.58 0.58
---------------------------------------------------------------------------------------------------------------
Total annual fund operating expenses(7)
(%) 1.43 2.08 2.08 1.08 1.06 1.63 2.38 2.38 1.38
</TABLE>
<TABLE>
<CAPTION>
ALL-STAR FUND GROWTH & INCOME FUND
------------- --------------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B C Z A B C S Z
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fee(7)(8) (%) 0.80 0.80 0.80 0.80 0.78 0.78 0.78 0.78 0.78
---------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees
(%) 0.25 1.00 1.00 0.00 0.25 1.00 1.00 0.00 0.00
---------------------------------------------------------------------------------------------------------------
Other expenses(7) (%) 2.12 2.12 2.12 2.12 0.35 0.35 0.35 0.35 0.35
---------------------------------------------------------------------------------------------------------------
Total annual fund operating expenses(7)
(%) 3.17 3.92 3.92 2.92 1.38 2.13 2.13 1.13 1.13
</TABLE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND (PRO FORMA COMBINED)(9)--
CLASS CLASS CLASS CLASS CLASS
A B C S Z
<S> <C> <C> <C> <C> <C>
Management fee (%) 0.72 0.72 0.72 0.72 0.72
-------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees (%) 0.25 1.00 1.00 0.00 0.00
-------------------------------------------------------------------------------------------------------
Other expenses (%) 0.30 0.30 0.30 0.30 0.30
-------------------------------------------------------------------------------------------------------
Total annual fund operating expenses (%) 1.27 2.02 2.02 1.02 1.02
</TABLE>
---------------
(6) The Stein Roe Fund's expenses include management fees and administrative
costs such as furnishing each Fund with offices and providing tax and
compliance services. Annual fund operating expenses consist of the Stein Roe
Fund's expenses plus the Fund's share of the expenses of the Master Fund.
(7) The Value Fund's investment advisor has voluntarily agreed to waive
management fees and reimburse the Fund for certain expenses so that the
total annual fund operating expenses (exclusive of distribution and service
fees, brokerage commissions, interest, taxes and extraordinary expenses, if
any) will not exceed 0.75%. As a result, the actual management fee for each
share class would be 0.17%, other expenses for each share class would be
0.58% and total annual fund operating expenses for Class A, B, C and Z
shares would be 1.00%, 1.75%, 1.75% and 0.75%, respectively. This
arrangement may be modified or terminated by the investment advisor at any
time. The All-Star Fund's investment advisor and administrator have also
voluntarily agreed to waive management and administration fees and reimburse
the Fund for certain expenses so that the total annual fund operating
expenses (exclusive of distribution and service fees, brokerage commissions,
interest, taxes and extraordinary expenses, if any) will not exceed 1.25%.
As a result, the actual management and administration fees for each share
class would be 0.00%, other expenses for each share class would be 1.25% and
total annual fund operating expenses for Class A, B, C and Z shares would be
1.50%, 2.25%, 2.25% and 1.25%, respectively. This arrangement may be
modified or terminated by the investment advisor at any time.
(8) The management fee of the Stein Roe Fund and the All-Star Fund includes both
the management fee and the administration fee charged to the Fund.
6
<PAGE> 10
(9) The pro forma combined total Annual Fund Operating Expenses detailed above
and the Example Expenses detailed below assume that each Acquired Fund
approves the Acquisitions. Which Acquired Fund or Funds approve the
Acquisitions will affect the total annual fund operating expenses of the
Growth & Income Fund on a pro forma combined basis after the Acquisitions.
The tables below present the pro forma combined total Annual Fund Operating
Expenses and Example Expenses assuming in each case that only one or two,
but not all, of the Acquired Funds approve the Acquisitions.
If only Stein Roe Fund shareholders were to approve the Acquisition, the
total Annual Fund Operating Expenses and Example Expenses would be as
follows:
ANNUAL FUND OPERATING EXPENSES
GROWTH & INCOME FUND
(pro forma combined)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS S CLASS Z
<S> <C> <C> <C> <C> <C>
Management fee (%) 0.72 0.72 0.72 0.72 0.72
----------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees (%) 0.25 1.00 1.00 0.00 0.00
----------------------------------------------------------------------------------------------------------------
Other Expenses (%) 0.30 0.30 0.30 0.30 0.30
----------------------------------------------------------------------------------------------------------------
Total annual fund operating expenses (%) 1.27 2.02 2.02 1.02 1.02
</TABLE>
EXAMPLE EXPENSES
GROWTH & INCOME FUND
(pro forma combined)
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $697 $954 $1,231 $2,018
------------------------------------------------------------------------------------------------------
Class B: did not sell your shares $205 $633 $1,087 $2,153
sold all your shares at end of period $705 $933 $1,287 $2,153
------------------------------------------------------------------------------------------------------
Class C: did not sell your shares $205 $633 $1,087 $2,346
sold all your shares at end of period $305 $633 $1,087 $2,346
------------------------------------------------------------------------------------------------------
Class S $104 $324 $ 562 $1,245
------------------------------------------------------------------------------------------------------
Class Z $104 $324 $ 562 $1,245
</TABLE>
If only Value Fund shareholders were to approve the Acquisition, the total
Annual Fund Operating Expenses and Example Expenses would be as follows:
ANNUAL FUND OPERATING EXPENSES
GROWTH & INCOME FUND
(pro forma combined)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS S CLASS Z
<S> <C> <C> <C> <C> <C>
Management fee (%) 0.75 0.75 0.75 N/A 0.75
----------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees(%) 0.25 1.00 1.00 N/A 0.00
----------------------------------------------------------------------------------------------------------------
Other Expenses (%) 0.31 0.31 0.31 N/A 0.31
----------------------------------------------------------------------------------------------------------------
Total annual fund operating expenses (%) 1.31 2.06 2.06 N/A 1.06
</TABLE>
7
<PAGE> 11
EXAMPLE EXPENSES
GROWTH & INCOME FUND
(pro forma combined)
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $701 $966 $1,251 $2,061
------------------------------------------------------------------------------------------------------
Class B: did not sell your shares $209 $645 $1,107 $2,195
sold all your shares at end of period $709 $945 $1,307 $2,195
------------------------------------------------------------------------------------------------------
Class C: did not sell your shares $209 $645 $1,107 $2,387
sold all your shares at end of period $309 $645 $1,107 $2,387
------------------------------------------------------------------------------------------------------
Class S N/A N/A N/A N/A
------------------------------------------------------------------------------------------------------
Class Z $108 $337 $ 584 $1,292
</TABLE>
If only All-Star Fund shareholders were to approve the Acquisition, the
total Annual Fund Operating Expenses and Example Expenses would be as
follows:
ANNUAL FUND OPERATING EXPENSES
GROWTH & INCOME FUND
(pro forma combined)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS S CLASS Z
<S> <C> <C> <C> <C> <C>
Management fee (%) 0.76 0.76 0.76 N/A 0.76
----------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees (%) 0.25 1.00 1.00 N/A 0.00
----------------------------------------------------------------------------------------------------------------
Other Expenses (%) 0.30 0.30 0.30 N/A 0.30
----------------------------------------------------------------------------------------------------------------
Total annual fund operating expenses (%) 1.31 2.06 2.06 N/A 1.06
</TABLE>
EXAMPLE EXPENSES
GROWTH & INCOME FUND
(pro forma combined)
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $701 $966 $1,252 $2,063
------------------------------------------------------------------------------------------------------
Class B: did not sell your shares $209 $646 $1,108 $2,197
sold all your shares at end of period $709 $946 $1,308 $2,197
------------------------------------------------------------------------------------------------------
Class C: did not sell your shares $209 $646 $1,108 $2,390
sold all your shares at end of period $309 $646 $1,108 $2,390
------------------------------------------------------------------------------------------------------
Class S N/A N/A N/A N/A
------------------------------------------------------------------------------------------------------
Class Z $108 $337 $ 585 $1,294
</TABLE>
If only Value Fund shareholders and All-Star Fund shareholders were to
approve the Acquisition, the total Annual Fund Operating Expenses and
Example Expenses would be as follows:
ANNUAL FUND OPERATING EXPENSES
GROWTH & INCOME FUND
(pro forma combined)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS S CLASS Z
<S> <C> <C> <C> <C> <C>
Management fee (%) 0.76 0.76 0.76 N/A 0.76
----------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees (%) 0.25 1.00 1.00 N/A 0.00
----------------------------------------------------------------------------------------------------------------
Other Expenses (%) 0.30 0.30 0.30 N/A 0.30
----------------------------------------------------------------------------------------------------------------
Total annual fund operating expenses (%) 1.31 2.06 2.06 N/A 1.06
</TABLE>
8
<PAGE> 12
EXAMPLE EXPENSES
GROWTH & INCOME FUND
(pro forma combined)
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $701 $966 $1,252 $2,063
------------------------------------------------------------------------------------------------------
Class B: did not sell your shares $209 $646 $1,108 $2,197
sold all your shares at end of period $709 $946 $1,308 $2,197
------------------------------------------------------------------------------------------------------
Class C: did not sell your shares $209 $646 $1,108 $2,390
sold all your shares at end of period $309 $646 $1,108 $2,390
------------------------------------------------------------------------------------------------------
Class S N/A N/A N/A N/A
------------------------------------------------------------------------------------------------------
Class Z $108 $337 $ 585 $1,294
</TABLE>
If only Value Fund shareholders and Stein Roe Fund shareholders were to
approve the Acquisition, the total Annual Fund Operating Expenses and
Example Expenses would be as follows:
ANNUAL FUND OPERATING EXPENSES
GROWTH & INCOME FUND
(pro forma combined)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS S CLASS Z
<S> <C> <C> <C> <C> <C>
Management fee (%) 0.72 0.72 0.72 0.72 0.72
----------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees (%) 0.25 1.00 1.00 0.00 0.00
----------------------------------------------------------------------------------------------------------------
Other Expenses (%) 0.30 0.30 0.30 0.30 0.30
----------------------------------------------------------------------------------------------------------------
Total annual fund operating expenses (%) 1.27 2.02 2.02 1.02 1.02
</TABLE>
EXAMPLE EXPENSES
GROWTH & INCOME FUND
(pro forma combined)
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $697 $954 $1,231 $2,018
------------------------------------------------------------------------------------------------------
Class B: did not sell your shares $205 $633 $1,087 $2,153
sold all your shares at end of period $705 $933 $1,287 $2,153
------------------------------------------------------------------------------------------------------
Class C: did not sell your shares $205 $633 $1,087 $2,346
sold all your shares at end of period $305 $633 $1,087 $2,346
------------------------------------------------------------------------------------------------------
Class S $104 $324 $ 562 $1,245
------------------------------------------------------------------------------------------------------
Class Z $104 $324 $ 562 $1,245
</TABLE>
If only Stein Roe Fund shareholders and All-Star Fund shareholders were to
approve the Acquisition, the total Annual Fund Operating Expenses and
Example Expenses would be as follows:
ANNUAL FUND OPERATING EXPENSES
GROWTH & INCOME FUND
(pro forma combined)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS S CLASS Z
<S> <C> <C> <C> <C> <C>
Management fee (%) 0.72 0.72 0.72 0.72 0.72
----------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees (%) 0.25 1.00 1.00 0.00 0.00
----------------------------------------------------------------------------------------------------------------
Other Expenses (%) 0.30 0.30 0.30 0.30 0.30
----------------------------------------------------------------------------------------------------------------
Total annual fund operating expenses (%) 1.27 2.02 2.02 1.02 1.02
</TABLE>
9
<PAGE> 13
EXAMPLE EXPENSES
GROWTH & INCOME FUND
(pro forma combined)
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $697 $954 $1,231 $2,018
------------------------------------------------------------------------------------------------------
Class B: did not sell your shares $205 $633 $1,087 $2,153
sold all your shares at end of period $705 $933 $1,287 $2,153
------------------------------------------------------------------------------------------------------
Class C: did not sell your shares $205 $633 $1,087 $2,346
sold all your shares at end of period $305 $633 $1,087 $2,346
------------------------------------------------------------------------------------------------------
Class S $104 $324 $ 562 $1,245
------------------------------------------------------------------------------------------------------
Class Z $104 $324 $ 562 $1,245
</TABLE>
EXAMPLE EXPENSES
Example Expenses help you compare the cost of investing in your Acquired Fund
and the Growth & Income Fund currently with the cost of investing in the
combined fund on a pro forma basis and also allows you to compare this with the
cost of investing in other mutual funds. The table does not take into account
any expense reduction arrangements discussed in the footnotes to the Annual Fund
Operating Expenses table. It uses the following hypothetical conditions:
- $10,000 initial investment
- 5% total return for each year
- Each Fund's operating expenses remain the same
- Assumes reinvestment of all dividends and distributions
- Assumes Class B shares convert to Class A shares after eight years
EXAMPLE EXPENSES
(your actual costs may be higher or lower)
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
STEIN ROE FUND
Class A $712 $1,000 $1,310 $2,185
--------------------------------------------------------------------------------------------------
Class B: did not sell your shares $211 $ 651 $1,117 $2,240
sold all your shares at end of period $711 $ 951 $1,317 $2,240
--------------------------------------------------------------------------------------------------
Class C: did not sell your shares $211 $ 651 $1,117 $2,406
sold all your shares at end of period $311 $ 651 $1,117 $2,406
--------------------------------------------------------------------------------------------------
Class Z $110 $ 342 $ 593 $1,313
--------------------------------------------------------------------------------------------------
Class S $108 $ 337 $ 585 $1,294
VALUE FUND
Class A $731 $1,060 $1,411 $2,397
--------------------------------------------------------------------------------------------------
Class B: did not sell your shares $241 $ 742 $1,270 $2,530
sold all your shares at end of period $741 $1,042 $1,470 $2,530
--------------------------------------------------------------------------------------------------
Class C: did not sell your shares $241 $ 742 $1,270 $2,716
sold all your shares at end of period $341 $ 742 $1,270 $2,716
--------------------------------------------------------------------------------------------------
Class Z $140 $ 437 $ 755 $1,657
</TABLE>
10
<PAGE> 14
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
ALL-STAR FUND
Class A $876 $1,496 $2,138 $3,850
--------------------------------------------------------------------------------------------------
Class B: did not sell your shares $394 $1,195 $2,013 $3,978
sold all your shares at end of period $894 $1,495 $2,213 $3,978
--------------------------------------------------------------------------------------------------
Class C: did not sell your shares $394 $1,195 $2,013 $4,137
sold all your shares at end of period $494 $1,195 $2,013 $4,137
--------------------------------------------------------------------------------------------------
Class Z $295 $ 903 $1,537 $3,242
GROWTH & INCOME FUND
Class A $707 $ 987 $1,287 $2,137
--------------------------------------------------------------------------------------------------
Class B: did not sell your shares $216 $ 667 $1,144 $2,271
sold all your shares at end of period $716 $ 967 $1,344 $2,271
--------------------------------------------------------------------------------------------------
Class C: did not sell your shares $216 $ 667 $1,144 $2,462
sold all your shares at end of period $316 $ 667 $1,144 $2,462
--------------------------------------------------------------------------------------------------
Class S $115 $ 359 $ 622 $1,375
--------------------------------------------------------------------------------------------------
Class Z $115 $ 359 $ 622 $1,375
GROWTH & INCOME FUND
(pro forma combined)
Class A $697 $ 954 $1,231 $2,019
--------------------------------------------------------------------------------------------------
Class B: did not sell your shares $205 $ 633 $1,087 $2,154
sold all your shares at end of period $705 $ 933 $1,287 $2,154
--------------------------------------------------------------------------------------------------
Class C: did not sell your shares $205 $ 633 $1,087 $2,347
sold all your shares at end of period $305 $ 633 $1,087 $2,347
--------------------------------------------------------------------------------------------------
Class S $104 $ 324 $ 562 $1,246
--------------------------------------------------------------------------------------------------
Class Z $104 $ 324 $ 562 $1,246
</TABLE>
Significant assumptions underlying the pro forma Annual Fund Operating Expenses
and Example Expenses are as follows: (1) the current contractual agreements will
remain in place; (2) certain duplicate costs involved in operating the Acquired
Funds are eliminated; and (3) expense ratios are based on pro forma combined
average net assets for the year ended June 30, 2000.
11
<PAGE> 15
4. HOW DO THE INVESTMENT GOALS, STRATEGIES AND POLICIES OF YOUR ACQUIRED FUND
AND THE GROWTH & INCOME FUND COMPARE?
This table shows the investment goals and primary investment strategies of each
Fund:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
STEIN ROE FUND VALUE FUND
-------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT GOALS: The Stein Roe Fund seeks INVESTMENT GOAL: The Value Fund seeks
to provide both growth of capital and current long-term growth and current income.
income.
-------------------------------------------------------------------------------------------------
PRIMARY INVESTMENT STRATEGIES: The Stein Roe PRIMARY INVESTMENT STRATEGIES: The Value
Fund seeks to achieve its goals by investing Fund seeks to achieve its goals as follows:
all of its investable assets in the Master - The Fund invests primarily in income-
Fund. The Master Fund invests its assets as producing equity securities.
follows: - The Fund invests at least 65% of its total
- The Master Fund invests primarily in common assets in equity securities.
stocks of well-established companies having - The Fund uses a "value" investment approach
large market capitalizations (as defined by when purchasing stocks.
Morningstar).
- The Master Fund may also invest in
companies having midsized market
capitalizations (as defined by Morningstar)
and up to 25% of its assets in foreign
stocks.
- The Master Fund uses a bottom-up,
fundamental analysis to find well-managed
businesses selling at very attractive
valuations.
-------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 16
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
ALL-STAR FUND GROWTH & INCOME FUND
-------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT GOAL: The All-Star Fund seeks INVESTMENT GOAL: The Growth & Income Fund
total return, comprised of long-term capital seeks long-term growth and income.
appreciation and current income through
investment primarily in a diversified
portfolio of equity securities.
-------------------------------------------------------------------------------------------------
PRIMARY INVESTMENT STRATEGIES: The All-Star PRIMARY INVESTMENT STRATEGIES: The Growth &
Fund seeks to achieve its goal as follows: Income Fund seeks to achieve its goal as
- The Fund invests primarily in equity and follows:
equity-related securities, which include - The Fund invests at least 65% of its total
common stocks, bonds convertible into assets in common stocks of U.S. companies
stocks, warrants and other rights to with equity market capitalizations at the
purchase stocks. time of purchase in excess of $3 billion.
- The Fund uses a multi-manager concept by - Up to 35% of the Fund's total assets may be
allocating the Fund's portfolio assets on invested in common stocks of U.S. companies
an approximately equal basis among a number with equity market capitalizations at the
of independent investment management time of purchase between $1 billion and $3
organizations ("Portfolio Managers"). There billion.
are currently five Portfolio Managers, each - Up to 10% of the Fund's total assets may be
of which employs a different investment invested in a combination of (i)
style. convertible bonds, (ii) corporate bonds
that are rated investment grade, and (iii)
U.S. government securities.
- The Fund may use a "value" investment
approach when purchasing stocks.
-------------------------------------------------------------------------------------------------
</TABLE>
The following compares the primary investment strategies that each of the Stein
Roe Fund, the Value Fund and the All-Star Fund, on the one hand, and the Growth
& Income Fund, on the other hand, uses to achieve its investment goal or goals:
- Unlike the Value Fund and the All-Star Fund, which do not invest on the
basis of market capitalization as part of their primary investment
strategies, the Growth & Income Fund and the Stein Roe Fund (through the
Master Fund) invest primarily (up to 65% of total Fund assets in the case
of the Growth & Income Fund) in the equity securities of companies having
large market capitalizations. The Growth & Income Fund and the Stein Roe
Fund may also invest (up to 35% of total Fund assets in the case of the
Growth & Income Fund) in securities of companies with midsized market
capitalizations.
- Unlike the other Funds, the Stein Roe Fund may invest up to 25% of its
total assets in foreign stocks as part of its primary investment
strategy.
- While all of the Funds invest primarily in equity securities, the
All-Star Fund also invests in equity-related securities, which include
bonds convertible into stocks, warrants and other rights to purchase
stocks. In addition , the Value Fund may invest up to 35% of its total
assets in debt securities, and the Growth & Income Fund may invest up to
10% of its total assets in convertible bonds, investment grade corporate
bonds and U.S. Government securities.
- The Funds use varying investment approaches to achieve their investment
goals. The Value Fund uses, and the Growth & Income Fund may use, a
"value" investment approach in selecting stocks for their portfolios. The
Stein Roe Fund uses a bottom-up, fundamental analysis to find
well-managed businesses selling at attractive valuations. The All-Star
Fund uses a multi-manager concept by
13
<PAGE> 17
allocating the Fund's portfolio assets on an approximately equal basis among a
number of independent investment management organizations.
The fundamental and non-fundamental investment policies of each of the Acquired
Funds, on the one hand, and the Growth & Income Fund, on the other hand, are
similar, except as follows:
- The Growth & Income Fund may not invest more than 10% of its assets in
American Depositary Receipts.
- The Stein Roe Fund, unlike the Growth & Income Fund, may not invest more
than 5% of its total assets in restricted securities, other than
so-called "Rule 144A securities."
- All of the Growth & Income Fund's debt (up to 10% of its assets) must be
investment grade, whereas the Value Fund may invest up to 20% of its
assets in lower-rated debt.
- In addition to the foregoing significant considerations, the Stein Roe
Fund has a number of investment restrictions to which the Growth & Income
Fund is not subject. Many of these restrictions were imposed by
regulations of state securities laws which are no longer applicable to
mutual funds.
In addition, the Stein Roe Fund currently pursues its investment program by
investing all of its assets in another investment company, the Master Fund. The
Master Fund is advised by Stein Roe & Farnham Incorporated ("Stein Roe") and
invests in a diversified portfolio of securities. This arrangement is known as a
"master-feeder" structure. The Stein Roe Fund currently owns substantially all
of the shares of the Master Fund, although a small interest in the Master Fund
is also owned by Liberty Financial. If Proposal 1 is approved, prior to the
Acquisition, the Master Fund is expected to liquidate the interests of Liberty
Financial in the Master Fund and distribute all of its remaining assets to the
Stein Roe Fund in exchange for all of the shares of the Master Fund owned by the
Stein Roe Fund in complete liquidation of the Master Fund. As a result,
immediately before the Acquisition, the Stein Roe Fund will cease to operate
under a "master-feeder" structure.
For a complete list of the Funds' investment restrictions, see the Statement of
Additional Information of each Fund, each of which is incorporated by reference
into this Prospectus/Proxy Statement.
5. WHAT CLASS OF SHARES WILL YOU RECEIVE IN THE GROWTH & INCOME FUND IF THE
ACQUISITIONS OCCUR?
You will receive the same class of shares that you currently own in your
Acquired Fund. The shares will have the same exchange rights and will bear the
same contingent deferred sales charges ("CDSCs"), if applicable, as your current
shares. The shares will also have the same distribution, purchase and redemption
procedures as your current shares.
6. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE ACQUISITIONS?
Each Acquisition is expected to be tax free to you for federal income tax
purposes. This means that no gain or loss will be recognized by the Stein Roe
Fund, the Value Fund or the All-Star Fund, or any such Fund's shareholders as a
result of the Acquisitions.
The cost basis and holding period of your Stein Roe Fund, Value Fund or All-Star
Fund shares are expected to carry over to your new shares in the Growth & Income
Fund.
14
<PAGE> 18
PROPOSAL 1 -- ACQUISITION OF THE STEIN ROE GROWTH & INCOME FUND CLASS S AND THE
LIBERTY VALUE OPPORTUNITIES FUND CLASSES A, B, C AND Z BY THE
LIBERTY GROWTH & INCOME FUND
THE PROPOSAL
You are being asked to approve the Agreement and Plan of Reorganization
dated October 26, 2000. A form of Agreement and Plan of Reorganization is
attached as Appendix A to this Prospectus/Proxy Statement. By approving the
Agreement and Plan of Reorganization, you are also approving the Acquisition of
the Stein Roe Fund by the Growth & Income Fund under the Agreement and Plan of
Reorganization.
PRINCIPAL INVESTMENT RISKS
What are the principal investment risks of the Growth & Income Fund, and how
do they compare with the Stein Roe Fund?
Because the Funds have somewhat similar goals and strategies, the principal
risks associated with each Fund are similar. Both Funds are subject to market
risk and management risk. The Stein Roe Fund is subject to the risks associated
with foreign securities because of its strategy to invest in such securities.
Because the Growth & Income Fund and the Stein Roe Fund may invest in securities
of companies with midsized market capitalizations, both Funds are subject to the
risks related to investments in mid-capitalization companies. Management risk
means that the advisor's stock and bond selections and other investment
decisions might produce losses or cause the Fund to underperform when compared
to other funds with a similar investment goal. Market risk means that security
prices in a market, sector or industry may move down. Downward movements will
reduce the value of your investment. The securities issued by mid-capitalization
companies may have more risk than those of larger companies as these securities
are more susceptible to market downturns, and their prices could be more
volatile.
The Growth & Income Fund is exposed to the risks related to value stocks
with respect to its value-oriented investments. Value stocks are securities of
companies that may have experienced adverse business or industry developments or
may be subject to special risks that have caused the stocks to be out of favor.
If the advisor's assessment of the company's prospects is wrong, the price of
its stock may not approach the value the advisor has placed on it. For more
information about the principal investment risks of the Growth & Income Fund,
please see the enclosed Prospectus of the Growth & Income Fund. The actual risks
of investing in each Fund depend on the securities held in each Fund's portfolio
and on market conditions, both of which change over time.
INFORMATION ABOUT THE ACQUISITION
Please see the section "Information Applicable to Proposals 1, 2 and 3" of
this combined Prospectus/Proxy Statement.
Shares You Will Receive
If the Acquisition occurs, you will receive shares in the Growth & Income
Fund of the same class as the shares that you currently own in the Stein Roe
Fund. In comparison to the shares you currently own, the shares you receive will
have the following characteristics:
- The shares you receive will have an aggregate net asset value equal to
the aggregate net asset value of your current shares as of the business
day before the closing of the Acquisition.
- If applicable, your Growth & Income Fund shares will bear the same sales
charges, redemption fees and CDSCs as your current shares, but for
purposes of determining the CDSC applicable to any redemption, the new
shares will continue to age from the date you purchased your Stein Roe
Fund shares.
- The procedures for purchasing and redeeming your shares will not change
as a result of the Acquisition.
- You will have the same exchange options as you currently have.
15
<PAGE> 19
- You will have the same voting rights as you currently have, but as a
shareholder of the Growth & Income Fund and of Trust VI.
Information concerning the capitalization of each of the Funds is contained
in Appendix C.
Reasons for the Acquisition
The Trustees of each Trust, including all Trustees who are not "interested
persons" of the Trust, have determined that the Acquisition would be in the best
interests of each Fund, on balance in light of all relevant factors, and that
the interests of existing shareholders of each Fund would not be diluted as a
result of the Acquisition. For these reasons, the Trustees have unanimously
approved the Acquisition and recommend that you vote in favor of the Acquisition
by approving the Agreement and Plan of Reorganization, a form of which is
attached as Appendix A to this Prospectus/Proxy Statement. Each shareholder
should carefully consider whether remaining a shareholder of the Growth & Income
Fund after the Acquisition is consistent with that shareholder's financial needs
and circumstances.
The Acquisition is one of several proposed acquisitions and liquidations of
funds in the Liberty and Stein Roe Fund groups proposed by Liberty Financial,
the indirect parent of each of the investment advisors to the Liberty and Stein
Roe Funds. The overall purposes of these acquisitions and liquidations include
streamlining the product offerings of the Liberty and Stein Roe Funds,
potentially reducing fund expense ratios by creating larger funds and permitting
the Liberty Financial organization to concentrate its portfolio management
resources on a more focused group of portfolios.
In proposing the Acquisition, Liberty Financial presented to the Trustees
the following reasons for the Stein Roe Fund to enter into the Acquisition:
- The Acquisition is expected to create a larger fund with somewhat similar
investment goals and strategies to the Stein Roe Fund.
- The Acquisition will permit a more focused value-style investment
management team to concentrate its efforts on a single value equity
approach rather than manage multiple portfolios with somewhat different
investment approaches.
- The Acquisition is intended to permit the Stein Roe Fund's shareholders
to exchange their investment for an investment in the Growth & Income
Fund without recognizing gain or loss for federal income tax purposes. By
contrast, if a Stein Roe Fund shareholder redeemed his or her shares to
invest in another fund, like the Growth & Income Fund, the transaction
would likely be a taxable event for such shareholder. Similarly, if the
Stein Roe Fund were liquidated or reorganized in a taxable transaction,
the transaction would likely be a taxable event for the Fund's
shareholders. After the Acquisition, shareholders may redeem any or all
of their Growth & Income Fund shares at net asset value (subject to any
applicable CDSC) at any time, at which point they would recognize a
taxable gain or loss.
The Trustees also considered the differences in the Funds' investment
objectives, policies and strategies and the related risks. In addition, the
Trustees considered the relative Fund performance results which are based on the
factors and assumptions set forth below under "Performance Information." No
assurance can be given that the Growth & Income Fund will achieve any particular
level of performance after the Acquisition.
Although the Trustees are proposing that the Growth & Income Fund acquire
all three of the Acquired Funds, the acquisition of the Stein Roe Fund is not
conditioned upon the acquisition of the other Acquired Funds. Accordingly, if
the Stein Roe Fund's shareholders approve the acquisition of the Stein Roe Fund,
but the other Acquired Funds' shareholders do not approve the acquisition of one
or both of the other Acquired Funds, it is expected that, subject to the terms
of the Agreement and Plan of Reorganization, the Acquisition proposed in this
Proposal 1 will take place as described in this Prospectus/Proxy Statement.
16
<PAGE> 20
Performance Information
The charts below show the percentage gain or loss in each calendar year for
the 10-year period ending December 31, 1999 or, if shorter, since inception, for
the Class S shares of the Stein Roe Fund and the Class A shares of the Growth &
Income Fund. They should give you a general idea of how each Fund's return has
varied from year to year. The charts include the effects of Fund expenses, but
not sales charges (if applicable to the Fund's shares). Returns would be lower
if any applicable sales charges were included. The calculations of total return
assume the reinvestment of all dividends and capital gain distributions on the
reinvestment date. Past performance is not an indication of future results.
Performance results include the effect of expense reduction arrangements, if
any. If these arrangements were not in place, then the performance results would
have been lower. Any expense reduction arrangements may be discontinued at any
time.
Additional discussion of the manner of calculation of total return is
contained in each Fund's respective Prospectus and Statement of Additional
Information, which are incorporated by reference in this Prospectus/ Proxy
Statement.
STEIN ROE FUND
[OPPORTUNITIES FUND BAR CHART]
<TABLE>
<CAPTION>
OPPORTUNITIES FUND
------------------
<S> <C>
1990 -1.72%
1991 32.42%
1992 10.01%
1993 12.86%
1994 -0.14%
1995 30.15%
1996 21.81%
1997 25.71%
1998 19.54%
1999 11.13%
</TABLE>
The Fund's year-to-date total return through
September 30, 2000 was 0.07%.
For period shown in bar chart:
Best quarter: Fourth quarter 1998, +17.91%
Worst quarter: Third quarter 1990, -12.06%
GROWTH & INCOME FUND
[GROWTH & INCOME FUND BAR CHART]
<TABLE>
<CAPTION>
GROWTH & INCOME FUND
--------------------
<S> <C>
1993 14.19%
1994 -0.34%
1995 29.49%
1996 19.69%
1997 35.18%
1998 20.05%
1999 11.4%
</TABLE>
The Fund's year-to-date total return through
September 30, 2000 was 8.34%.
For period shown in bar chart:
Best quarter: Fourth quarter 1998, +21.59%
Worst quarter: Third quarter 1998, -14.04%
17
<PAGE> 21
The following tables list each Fund's average annual total return for each
class of its shares for the one-year, five-year and ten-year (or, if shorter,
life of the Fund) periods ending December 31, 1999, including the applicable
sales charge for Class A, B, C and Z shares of the Stein Roe Fund and Growth &
Income Fund. (Class S shares of the Growth & Income Fund, which were not in
existence as of December 31, 1999, are not included in the tables.) These tables
are intended to provide you with some indication of the risks of investing in
the Funds. At the bottom of each table, you can compare the Funds' performance
with one or more indices or averages.
STEIN ROE FUND*
<TABLE>
<CAPTION>
INCEPTION
DATE 1 YEAR 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A (%) 11/2/99 4.76 20.07 14.95(1)
--------------------------------------------------------------------------------------------------
Class B (%) 11/2/99 6.10 21.31 15.62(1)
--------------------------------------------------------------------------------------------------
Class C (%) 11/2/99 10.10 21.49 15.62(1)
--------------------------------------------------------------------------------------------------
Class Z (%) 11/2/99 11.18 21.51 15.63(1)
--------------------------------------------------------------------------------------------------
Class S (%) 3/23/87 11.13 21.50 15.63
--------------------------------------------------------------------------------------------------
S&P 500 Index (%) N/A 21.03 28.54 18.19
</TABLE>
GROWTH & INCOME FUND+
<TABLE>
<CAPTION>
INCEPTION LIFE OF
DATE 1 YEAR 5 YEARS FUND
<S> <C> <C> <C> <C>
Class A (%) 7/1/92 5.00 21.44 17.22
---------------------------------------------------------------------------------------------------
Class B (%) 7/1/92 5.53 21.79 17.24
---------------------------------------------------------------------------------------------------
Class C (%) 7/1/94 9.58 21.98 17.25(1)
---------------------------------------------------------------------------------------------------
Class Z (%) 1/11/99 11.76 22.96(2) 18.20(2)
---------------------------------------------------------------------------------------------------
S&P 500 Index (%) N/A 21.03 28.54 21.24(3)
---------------------------------------------------------------------------------------------------
Lipper Average (%) N/A 13.92 21.45 16.73(3)
</TABLE>
---------------
* The Stein Roe Fund's return is compared to the Standard & Poor's 500 Index
("S&P 500 Index"), an unmanaged index that tracks the performance of U.S.
stock market securities. Unlike the Stein Roe Fund, indices are not
investments, do not incur fees or expenses and are not professionally
managed. It is not possible to invest directly in indices.
+ The Growth & Income Fund's return is compared to the S&P 500 Index. Unlike
the Growth & Income Fund, indices are not investments, do not incur fees or
expenses and are not professionally managed. It is not possible to invest
directly in indices. The Growth & Income Fund's return is also compared to
the average return of the funds included in the Lipper Growth and Income
Funds category ("Lipper Average"). This Lipper Average, which is calculated
by Lipper, Inc., is composed of funds with similar investment objectives to
the Fund. Sales charges are not reflected in the Lipper Average.
(1) Class A, Class B, Class C and Class Z are the newer classes of shares. Their
performance information includes returns of the Stein Roe Fund's Class S
shares (the oldest existing fund class) for periods prior to the inception
of the newer classes of shares. The Class S share returns are not restated
to reflect any differences in expenses (such as Rule 12b-1 fees) between
Class S shares and the newer classes of shares.
(2) Class C and Class Z are the newer classes of shares. Their performance
information includes returns of the Growth & Income Fund's Class A shares
(the oldest existing fund class) for periods prior to the inception of the
newer classes of shares. The Class A share returns are not restated to
reflect any differences in expenses (such as Rule 12b-1 fees) between Class
A shares and the newer classes of shares.
(3) Performance information is from June 30, 1992 through December 31, 1999.
18
<PAGE> 22
THE TRUSTEES OF THE STEIN ROE TRUST UNANIMOUSLY RECOMMEND APPROVAL OF THE
AGREEMENT AND PLAN OF REORGANIZATION.
Required Vote for Proposal 1
Approval of the Agreement and Plan of Reorganization dated October 26, 2000
among the Stein Roe Trust on behalf of the Stein Roe Fund, Trust VI on behalf of
the Growth & Income Fund, and Liberty Financial will require the affirmative
vote of a majority of the shares of the Stein Roe Fund outstanding at the record
date for the Meetings.
PROPOSAL 2 -- ACQUISITION OF THE LIBERTY VALUE FUND BY THE LIBERTY GROWTH &
INCOME FUND
THE PROPOSAL
You are being asked to approve the Agreement and Plan of Reorganization
dated October 26, 2000. A form of Agreement and Plan of Reorganization is
attached as Appendix A to this Prospectus/Proxy Statement. By approving the
Agreement and Plan of Reorganization, you are also approving the Acquisition of
the Value Fund by the Growth & Income Fund under the Agreement and Plan of
Reorganization.
PRINCIPAL INVESTMENT RISKS
What are the principal investment risks of the Growth & Income Fund, and how do
they compare with the Value Fund?
Because the Funds have similar goals and strategies, the principal risks
associated with each Fund are similar. Both Funds are subject to market risk and
management risk. Because the Growth & Income Fund may invest in securities of
companies with midsized market capitalizations, it is subject to the risks
related to investments in medium capitalization companies. Management risk means
that the advisor's stock and bond selections and other investment decisions
might produce losses or cause the Fund to underperform when compared to other
funds with a similar investment goal. Market risk means that security prices in
a market, sector or industry may move down. Downward movements will reduce the
value of your investment. The securities issued by mid-capitalization companies
may have more risk than those of larger companies as these securities may be
more susceptible to market downturns, and their prices could be more volatile.
The Value Fund and the Growth & Income Fund are exposed to the risks
related to value stocks with respect to their value-oriented investments. Value
stocks are securities of companies that may have experienced adverse business or
industry developments or may be subject to special risks that have caused the
stocks to be out of favor. If the advisor's assessment of the company's
prospects is wrong, the price of its stock may not approach the value the
advisor has placed on it. For more information about the principal investment
risks of the Growth & Income Fund, please see the enclosed Prospectus of the
Growth & Income Fund. The actual risks of investing in each Fund depend on the
securities held in each Fund's portfolio and on market conditions, both of which
change over time.
INFORMATION ABOUT THE ACQUISITION
Please see the section "Information Applicable to Proposals 1, 2 and 3" of
this combined Prospectus/Proxy Statement.
19
<PAGE> 23
Shares You Will Receive
If the Acquisition occurs, you will receive shares in the Growth & Income
Fund of the same class as the shares that you currently own in the Value Fund.
In comparison to the shares you currently own, the shares you receive will have
the following characteristics:
- The shares you receive will have an aggregate net asset value equal to
the aggregate net asset value of your current shares as of the business
day before the closing of the Acquisition.
- If applicable, your Growth & Income Fund shares will bear the same sales
charges, redemption fees and CDSCs as your current shares, but for
purposes of determining the CDSC applicable to any redemption, the new
shares will continue to age from the date you purchased your Value Fund
shares.
- The procedures for purchasing and redeeming your shares will not change
as a result of the Acquisition.
- You will have the same exchange options as you currently have.
- You will have the same voting rights as you currently have, but as a
shareholder of the Growth & Income Fund.
Information concerning the capitalization of each of the Funds is contained
in Appendix C.
Reasons for the Acquisition
The Trustees of each Trust, including all Trustees who are not "interested
persons" of the Trust, have determined that the Acquisition would be in the best
interests of each Fund, on balance in light of all relevant factors, and that
the interests of existing shareholders of each Fund would not be diluted as a
result of the Acquisition. For these reasons, the Trustees have unanimously
approved the Acquisition and recommend that you vote in favor of the Acquisition
by approving the Agreement and Plan of Reorganization, a form of which is
attached as Appendix A to this Prospectus/Proxy Statement. Each shareholder
should carefully consider whether remaining a shareholder of the Growth & Income
Fund after the Acquisition is consistent with that shareholder's financial needs
and circumstances.
The Acquisition is one of several proposed acquisitions and liquidations of
funds in the Liberty and Stein Roe Fund groups proposed by Liberty Financial,
the indirect parent of each of the investment advisors to the Liberty and Stein
Roe Funds. The overall purposes of these acquisitions and liquidations include
streamlining the product offerings of the Liberty and Stein Roe Funds,
potentially reducing fund expense ratios by creating larger funds and permitting
the Liberty Financial organization to concentrate its portfolio management
resources on a more focused group of portfolios.
In proposing the Acquisition, Liberty Financial presented to the Trustees
the following reasons for the Value Fund to enter into the Acquisition:
- Absent the Acquisition, Liberty Financial indicated to the Trustees that
it will discontinue subsidizing the Value Fund's operations (through fee
waivers or expense reductions) and that it will recommend to the Trustees
that the Value Fund be liquidated. Liberty Financial informed the
Trustees that the Value Fund has not achieved sufficient sales growth and
is not likely to do so in the near future, and, therefore, the Fund may
not be able to provide a competitive investment return in the absence of
a subsidy.
- The Acquisition is intended to permit the Value Fund's shareholders to
exchange their investment for an investment in a larger fund with
somewhat similar investment goals and strategies to the Value Fund
without recognizing gain or loss for federal income tax purposes. By
contrast, if a Value Fund shareholder redeemed his or her shares to
invest in another fund, like the Growth & Income Fund, the transaction
would likely be a taxable event for such shareholder. Similarly, if the
Value Fund were liquidated or reorganized in a taxable transaction, the
transaction would likely be a taxable event for the Fund's shareholders.
After the Acquisition, shareholders may redeem any or all of their Growth
&
20
<PAGE> 24
Income Fund shares at net asset value (subject to any applicable CDSC) at
any time, at which point they would recognize a taxable gain or loss.
- As a result of Liberty Financial's decision to discontinue its expense
subsidy of the Value Fund, the expense ratio of the Value Fund will
increase significantly if the Acquisition does not occur. If the
Acquisition does occur, then the expense ratio of the combined Growth &
Income Fund is expected to be materially lower than the Value Fund's
expense ratio after Liberty Financial discontinues its subsidy. Although,
as explained below, it is not possible to predict future expense ratios
with certainty, information provided to the Trustees by Liberty Financial
indicated that, based on the assets of the Value and Growth & Income
Funds on July 31, 2000 and the Funds' current expense structures
(assuming the voluntary expense limitation is discontinued), the Growth &
Income Fund's annualized expense ratio (exclusive of 12b-1 fees)
immediately after the Acquisitions would be about 0.31% lower than the
Value Fund's current expense ratio (for example, for Class A shares, a
1.07% expense ratio for the Growth & Income Fund, as compared to 1.38%
for the Value Fund if the limitation were discontinued and 0.75% if it
continued). Note that the 12b-1 fees on Class A, B and C shares of each
Fund are 0.25%, 1.00% and 1.00%, respectively. There are no 12b-1 fees on
Class S and Z shares.
- The Acquisition will permit a more focused value-style investment
management team to concentrate its efforts on a single value equity
approach rather than manage multiple portfolios with somewhat different
investment approaches.
In reviewing the Acquisition, the Trustees also considered the fact that
the unrealized gain exposure in the Value Fund's portfolio will potentially
increase as a result of the Acquisition. This may increase and accelerate a
Value Fund shareholder's exposure to federal income taxes. This means that, in
the future, a Value Fund shareholder may be liable for a greater amount of
federal income taxes as a shareholder of the Growth & Income Fund than he or she
otherwise would pay as a shareholder of the Value Fund. The Trustees determined,
despite this consideration, that on balance the Acquisition is in the best
interests of the Value Fund's shareholders.
The Trustees also considered the differences in the Funds' investment
objectives, policies and strategies and the related risks. In addition, the
Trustees considered the relative Fund performance results which are based on the
factors and assumptions set forth below under Performance Information. No
assurance can be given that the Growth & Income Fund will achieve any particular
level of performance after the Acquisition.
The projected post-Acquisition expense reductions presented above are based
on the Growth & Income Fund's current expense structure and the projected
post-Acquisition assets of the combined Fund. The projected reductions are
further based upon numerous material assumptions, including that: (1) the
current contractual agreements will remain in place; (2) certain duplicate costs
involved in operating the Acquired Funds are eliminated; and (3) the Growth &
Income Fund acquires all three of the Acquired Funds. See the table "Annual Fund
Operating Expenses" under Question 3 in the "Questions and Answers" section
above for the expenses that would be applicable if one or two of the
Acquisitions did not take place. Although these projections represent good faith
estimates, there can be no assurance that any particular level of expenses or
expense savings will be achieved, because expenses depend on a variety of
factors (including the future level of Fund assets), many of which factors are
beyond the control of the Fund or Liberty Financial.
Although the Trustees are proposing that the Growth & Income Fund acquire
all three of the Acquired Funds, the acquisition of the Value Fund is not
conditioned upon the acquisition of the other Acquired Funds. Accordingly, if
the Value Fund's shareholders approve the acquisition of the Value Fund, but the
other Acquired Funds' shareholders do not approve the acquisition of one or both
of the other Acquired Funds, it is expected that, subject to the terms of the
Agreement and Plan of Reorganization, the Acquisition proposed in this Proposal
1 will take place as described in this Prospectus/Proxy Statement.
Performance Information
The charts below show the percentage gain or loss in each calendar year for
the period from the Fund's inception through December 31, 1999 for the Class A
shares of the Value Fund and the Class A shares of the
21
<PAGE> 25
Growth & Income Fund. They should give you a general idea of how each Fund's
return has varied from year to year. The charts include the effects of Fund
expenses, but not sales charges. Returns would be lower if applicable sales
charges were included. The calculations of total return assume the reinvestment
of all dividends and capital gain distributions on the reinvestment date. Past
performance is not an indication of future results. Performance results include
the effect of expense reduction arrangements, if any. If these arrangements were
not in place, then the performance results would have been lower. Any expense
reduction arrangements may be discontinued at any time.
Additional discussion of the manner of calculation of total return is
contained in each Fund's respective Prospectus and Statement of Additional
Information, which are incorporated by reference in this Prospectus/ Proxy
Statement.
VALUE FUND
[VALUE FUND BAR CHART]
<TABLE>
<CAPTION>
VALUE FUND
----------
<S> <C>
1997 29.64%
1998 8.13%
1999 2.11%
</TABLE>
<TABLE>
<S> <C>
The Fund's year-to-date total return through For period shown in bar chart:
September 30, 2000 was 5.49%. Best quarter: Second quarter 1997, +13.61%
Worst quarter: Third quarter 1998, -13.29%
</TABLE>
GROWTH & INCOME FUND
[GROWTH & INCOME FUND BAR CHART]
<TABLE>
<CAPTION>
GROWTH & INCOME FUND
--------------------
<S> <C>
1993 14.19%
1994 -0.34%
1995 29.49%
1996 19.69%
1997 35.18%
1998 20.05%
1999 11.4%
</TABLE>
<TABLE>
<S> <C>
The Fund's year-to-date total return through For period shown in bar chart:
September 30, 2000 was 8.34%. Best quarter: Fourth quarter 1998, +21.59%
Worst quarter: Third quarter 1998, -14.04%
</TABLE>
22
<PAGE> 26
The following tables list each Fund's average annual total return for each
class of its shares for the one-year and life of the Fund periods ending
December 31, 1999, in the case of the Value Fund, and the one-year, five-year
and life of Fund periods ending December 31, 1999, in the case of the Growth &
Income Fund, in each case including the applicable sales charge for Class A, B
and C shares of the Funds. (Class S shares of the Growth & Income Fund, which
were not in existence as of December 31, 1999, are not included in the tables.)
These tables are intended to provide you with some indication of the risks of
investing in the Funds. At the bottom of each table, you can compare the Funds'
performance with one or more indices or averages.
VALUE FUND+
<TABLE>
<CAPTION>
INCEPTION
DATE 1 YEAR LIFE OF FUND
<S> <C> <C> <C>
Class A (%) 3/25/96 (3.76) 11.69
-------------------------------------------------------------------------------------------------
Class B (%) 3/25/96 (3.61) 12.05
-------------------------------------------------------------------------------------------------
Class C (%) 3/25/96 0.37 12.62
-------------------------------------------------------------------------------------------------
Class Z (%) 12/1/98 2.29 13.52
-------------------------------------------------------------------------------------------------
S&P 500 Index (%) N/A 21.03 26.60(1)
-------------------------------------------------------------------------------------------------
Barra Value Index (%) N/A 12.72 19.11(1)
</TABLE>
GROWTH & INCOME FUND*
<TABLE>
<CAPTION>
INCEPTION LIFE OF
DATE 1 YEAR 5 YEARS FUND
<S> <C> <C> <C> <C>
Class A (%) 7/1/92 5.00 21.44 17.22
----------------------------------------------------------------------------------------------------
Class B (%) 7/1/92 5.53 21.79 17.24
----------------------------------------------------------------------------------------------------
Class C (%) 7/1/94 9.58 21.98 17.25(2)
----------------------------------------------------------------------------------------------------
Class Z (%) 1/11/99 11.76 22.96(2) 18.20(2)
----------------------------------------------------------------------------------------------------
S&P 500 Index (%) N/A 21.03 28.54 21.24(3)
----------------------------------------------------------------------------------------------------
Lipper Average (%) N/A 13.92 21.45 16.73(3)
</TABLE>
---------------
+ The Value Fund's return is compared to the Standard & Poor's 500 Index ("S&P
500 Index"), an unmanaged index that tracks the performance of 500 widely
held, large capitalization U.S. stocks. The Value Fund's return is also
compared to the Barra Value Index, an unmanaged index that tracks the
performance of value stocks, as determined by low price-to-book ratios,
included in the S&P 500 Index. Unlike the Fund, indices are not investments,
do not incur fees or expenses and are not professionally managed. It is not
possible to invest directly in indices.
* The Growth & Income Fund's return is compared to the S&P 500 Index. Unlike
the Fund, indices are not investments, do not incur fees or expenses and are
not professionally managed. It is not possible to invest directly in
indices. The Growth & Income Fund's return is also compared to the average
return of the funds included in the Lipper Growth and Income Funds category
("Lipper Average"). This Lipper Average, which is calculated by Lipper,
Inc., is composed of funds with similar investment objectives to the Fund.
Sales charges are not reflected in the Lipper Average.
(1) Performance information is from March 31, 1996 through December 31, 1999.
(2) Class C and Class Z are the newer classes of shares. Their performance
information includes returns of the Growth & Income Fund's Class A shares
(the oldest existing fund class) for periods prior to the inception of the
newer classes of shares. The Class A share returns are not restated to
reflect any differences in expenses (such as Rule 12b-1 fees) between Class
A shares and the newer classes of shares.
(3) Performance information is from June 30, 1992 through December 31, 1999.
23
<PAGE> 27
THE TRUSTEES OF TRUST VI UNANIMOUSLY RECOMMEND APPROVAL OF THE AGREEMENT AND
PLAN OF REORGANIZATION.
The Declaration of Trust establishing Trust VI (the "Trust VI Declaration")
provides that any series of Trust VI (such as the Value Fund) may be terminated
by a two-thirds vote of the series' shares or by notice from the Trustees to the
shareholders. The Trust believes that, under this provision, no shareholder vote
is required to approve the Acquisition, although the provision could also be
interpreted to require a two-thirds vote, if the Acquisition is submitted for
shareholder approval. The Trust VI Declaration also provides that it may be
amended by the Trustees, upon majority vote of the shareholders of the affected
series. To eliminate any uncertainty about whether any shareholder vote is
required to approve the Acquisition, the Trustees will consider any vote in
favor of the Acquisition to be a vote in favor of amending the Trust VI
Declaration to provide that the Value Fund may be terminated by majority vote of
the Value Fund's shares entitled to vote (or by Trustee notice to shareholders),
and will so amend the Trust VI Declaration if a majority of the Value Fund's
shareholders entitled to vote on the proposal vote in favor of such proposal.
Required Vote for Proposal 2
Approval of the Agreement and Plan of Reorganization dated October 26, 2000
among Trust VI on behalf of the Value Fund, Trust VI on behalf of the Growth &
Income Fund, and Liberty Financial will require the affirmative vote of a
majority of the shares of the Value Fund outstanding at the record date for the
Meetings.
PROPOSAL 3 -- ACQUISITION OF THE LIBERTY ALL-STAR GROWTH AND INCOME FUND BY THE
LIBERTY GROWTH & INCOME FUND
THE PROPOSAL
You are being asked to approve the Agreement and Plan of Reorganization,
dated October 26, 2000. A form of Agreement and Plan of Reorganization is
attached as Appendix A to this Prospectus/Proxy Statement. By approving the
Agreement and Plan of Reorganization, you are also approving the Acquisition of
the All-Star Fund by the Growth & Income Fund under the Agreement and Plan of
Reorganization.
PRINCIPAL INVESTMENT RISKS
What are the principal investment risks of the Growth & Income Fund, and how do
they compare with the All-Star Fund?
Because the Funds have somewhat similar goals and strategies, the principal
risks associated with each Fund are similar. Both Funds are subject to market
risk and management risk. Because of its strategy to invest in bonds convertible
into stocks, the All-Star Fund is more exposed to interest rate risk than the
Growth & Income Fund. Because the Growth & Income Fund may invest in securities
of companies with midsized market capitalizations, it is subject to the risks
related to investments in medium capitalization companies. Management risk means
that the advisor's stock and bond selections and other investment decisions
might produce losses or cause the Fund to underperform when compared to other
funds with a similar investment goal. Market risk means that security prices in
a market, sector or industry may move down. Downward movements will reduce the
value of your investment. The securities issued by mid-capitalization companies
may have more risk than those of larger companies as these securities are more
susceptible to market downturns, and their prices could be more volatile.
The Growth & Income Fund is exposed to the risks related to value stocks
with respect to its value-oriented investments. Value stocks are securities of
companies that may have experienced adverse business or industry developments or
may be subject to special risks that have caused the stocks to be out of favor.
If the advisor's assessment of the company's prospects is wrong, the price of
its stock may not approach the value the advisor has placed on it. For more
information about the principal investment risks of the Growth & Income Fund,
please see the enclosed Prospectus of the Growth & Income Fund. The actual risks
of investing in each
24
<PAGE> 28
Fund depend on the securities held in each Fund's portfolio and on market
conditions, both of which change over time.
INFORMATION ABOUT THE ACQUISITION
Please see the section "Information Applicable to Proposals 1, 2 and 3" of
this combined Prospectus/Proxy Statement.
Shares You Will Receive
If the Acquisition occurs, you will receive shares in the Growth & Income
Fund of the same class as the shares that you currently own in the All-Star
Fund. In comparison to the shares you currently own, the shares you receive will
have the following characteristics:
- The shares you receive will have an aggregate net asset value equal to
the aggregate net asset value of your current shares as of the business
day before the closing of the Acquisition.
- If applicable, your Growth & Income Fund shares will bear the same sales
charges, redemption fees and CDSCs as your current shares, but for
purposes of determining the CDSC applicable to any redemption, the new
shares will continue to age from the date you purchased your All-Star
Fund shares.
- The procedures for purchasing and redeeming your shares will not change
as a result of the Acquisition.
- You will have the same exchange options as you currently have.
- You will have the same voting rights as you currently have, but as a
shareholder of the Growth & Income Fund and of Trust VI.
Unlike Trust IX, which has only one series of shares, Trust VI has multiple
series of shares, and all shareholders of Trust VI vote together on matters not
specific to any series or class of shares, including on the election of
Trustees. Several of the current Trustees of Trust IX are also Trustees of Trust
VI. The shareholders of Trust VI and of various other open-end trusts are being
asked to elect a Board of Trustees that includes three Trustees who serve as
Trustees of Trust IX at a meeting to be held on December 27, 2000.
Information concerning the capitalization of each of the Funds is contained
in Appendix C.
Reasons for the Acquisition
The Trustees of each Trust, including all Trustees who are not "interested
persons" of the Trust, have determined that the Acquisition would be in the best
interests of each Fund, on balance in light of all relevant factors, and that
the interests of existing shareholders of each Fund would not be diluted as a
result of the Acquisition. For these reasons, the Trustees have unanimously
approved the Acquisition and recommend that you vote in favor of the Acquisition
by approving the Agreement and Plan of Reorganization, a form of which is
attached as Appendix A to this Prospectus/Proxy Statement. Each shareholder
should carefully consider whether remaining a shareholder of the Growth & Income
Fund after the Acquisition is consistent with that shareholder's financial needs
and circumstances.
The Acquisition is one of several proposed acquisitions and liquidations of
funds in the Liberty and Stein Roe Fund groups proposed by Liberty Financial,
the indirect parent of each of the investment advisors to the Liberty and Stein
Roe Funds. The overall purposes of these acquisitions and liquidations include
streamlining the product offerings of the Liberty and Stein Roe Funds,
potentially reducing fund expense ratios by creating larger funds and permitting
the Liberty Financial organization to concentrate its portfolio management
resources on a more focused group of portfolios.
25
<PAGE> 29
In proposing the Acquisition, Liberty Financial presented to the Trustees
the following reasons for the All-Star Fund to enter into the Acquisition:
- Absent the Acquisition, Liberty Financial indicated to the Trustees that
it will discontinue subsidizing the All-Star Fund's operations (through
fee waivers or expense reductions) and that it will recommend to the
Trustees that the All-Star Fund be liquidated. Liberty Financial informed
the Trustees that the All-Star Fund has not achieved sufficient sales
growth and is not likely to do so in the near future, and, therefore, the
Fund will not be able to provide a competitive investment return in the
absence of a subsidy.
- The Acquisition is intended to permit the All-Star Fund's shareholders to
exchange their investment for an investment in a larger fund with
somewhat similar investment goals and strategies to the All-Star Fund
without recognizing gain or loss for federal income tax purposes. By
contrast, if an All-Star Fund shareholder redeemed his or her shares to
invest in another fund, like the Growth & Income Fund, the transaction
would likely be a taxable event for such shareholder. Similarly, if the
All-Star Fund were liquidated or reorganized in a taxable transaction,
the transaction would likely be a taxable event for the Fund's
shareholders. After the Acquisition, shareholders may redeem any or all
of their Growth & Income Fund shares at net asset value (subject to any
applicable CDSC) at any time, at which point they would recognize a
taxable gain or loss.
- As a result of Liberty Financial's decision to discontinue its expense
subsidy of the All-Star Fund, the expense ratio of the All-Star Fund will
increase significantly if the Acquisition does not occur. If the
Acquisition does occur, then the expense ratio of the combined Growth &
Income Fund is expected to be materially lower than the All-Star Fund's
expense ratio whether or not Liberty Financial discontinued its subsidy.
Although, as explained below, it is not possible to predict future
expense ratios with certainty, information provided to the Trustees by
Liberty Financial indicated that, based on the assets of the All-Star and
Growth & Income Funds on July 31, 2000 and the Funds' current expense
structures, the Growth & Income Fund's annualized expense ratio
(exclusive of 12b-1 fees) immediately after the Acquisitions would be
about 0.18% lower than the All-Star Fund's current expense ratio and
about 0.57% lower than the All-Star Fund's expense ratio if the
limitation is discontinued (for example, for Class A shares, a 1.07%
expense ratio for the Growth & Income Fund, as compared to 1.64% for the
All-Star Fund if the limitation were discontinued and 1.25% if it
continued). Note that the 12b-1 fees on Class A, B and C shares of each
Fund are 0.25%, 1.00%, and 1.00%, respectively. There are no 12b-1 fees
on Class S and Z shares.
In reviewing the Acquisition, the Trustees considered that shareholders who
wish to continue investing in a fund with a multi-manager approach could invest
in the Liberty All-Star Equity Fund, a closed-end fund with similar investment
objectives and policies to the All-Star Fund and which like the All-Star Fund is
managed by Liberty Asset Management Company ("LAMCO") using the same
multi-manager approach with the same portfolio managers. The Liberty All-Star
Equity Fund's shares are listed on the New York Stock Exchange, ticker symbol
USA. Closed-end funds like the Liberty All-Star Equity Fund differ from open-end
funds like the All-Star Fund in a number of respects, including that shares are
traded on a secondary market (typically at either a discount from or a premium
to net asset value), do not trade at net asset value and are not redeemable by
shareholders at net asset value. You should consult your financial adviser prior
to investing in a closed-end fund such as the Liberty All-Star Equity Fund. You
may contact LAMCO at 1-800-241-1850 for information on how to purchase shares of
the Liberty All-Star Equity Fund.
In reviewing the Acquisition, the Trustees also considered the fact that
the unrealized gain exposure in the All-Star Fund's portfolio will potentially
increase as a result of the Acquisition. This may increase and accelerate an
All-Star Fund shareholder's exposure to federal income taxes. This means that,
in the future, an All-Star Fund shareholder may be liable for a greater amount
of federal income taxes as a shareholder of the Growth & Income Fund than he or
she otherwise would pay as a shareholder of the All-Star Fund. The Trustees
determined, despite the loss of the multi-manager approach and the unrealized
gain exposure, that on balance the Acquisition is in the best interests of the
All-Star Fund's shareholders.
26
<PAGE> 30
The Trustees also considered the differences in the Funds' investment
objectives, policies and strategies and the related risks. In addition, the
Trustees considered the relative performance results which are based on the
factors and assumptions set forth below under "Performance Information." No
assurance can be given that the Growth & Income Fund will achieve any particular
level of performance after the Acquisition.
The projected post-Acquisition expense reductions presented above are based
on the Growth & Income Fund's current expense structure and the projected
post-Acquisition assets of the combined Fund. The projected reductions are
further based upon numerous material assumptions, including that: (1) the
current contractual agreements will remain in place; (2) certain duplicate costs
involved in operating the Acquired Funds are eliminated; and (3) the Growth &
Income Fund acquires all three of the Acquired Funds. See the table "Annual Fund
Operating Expenses" under Question 3 in the "Questions and Answers" section
above for the expenses that would be applicable if one or two of the
Acquisitions did not take place. Although these projections represent good faith
estimates, there can be no assurance that any particular level of expenses or
expense savings will be achieved, because expenses depend on a variety of
factors (including the future level of Fund assets), many of which factors are
beyond the control of the Fund or Liberty Financial.
Although the Trustees are proposing that the Growth & Income Fund acquire
all three of the Acquired Funds, the acquisition of the All-Star Fund is not
conditioned upon the acquisition of the other Acquired Funds. Accordingly, if
the All-Star Fund's shareholders approve the acquisition of the All-Star Fund,
but the other Acquired Funds' shareholders do not approve the acquisition of one
or both of the other Acquired Funds it is expected that, subject to the terms of
the Agreement and Plan of Reorganization, the Acquisition proposed in this
Proposal will take place as described in this Prospectus/Proxy Statement.
Performance Information
The chart below shows the percentage gain or loss in each calendar year for
the period from the Growth & Income Fund's inception through December 31, 1999
for the Fund's Class A shares. The chart should give you a general idea of how
the Growth & Income Fund's return has varied from year to year. The chart
includes the effects of Fund expenses, but not sales charges. Returns would be
lower if applicable sales charges were included. The calculations of total
return assume the reinvestment of all dividends and capital gain distributions
on the reinvestment date. Past performance is not an indication of future
results. Performance results include the effect of expense reduction
arrangements, if any. If these arrangements were not in place, then the
performance results would have been lower. Any expense reduction arrangements
may be discontinued at any time.
Additional discussion of the manner of calculation of total return is
contained in the Fund's Prospectus and Statement of Additional Information,
which are incorporated by reference in this Prospectus/Proxy Statement.
Because the All-Star Fund commenced investment operations on March 1, 1999,
and has not completed one full calendar year, information related to the
All-Star Fund's performance has not been included in this Prospectus/Proxy
Statement.
27
<PAGE> 31
GROWTH & INCOME FUND
[GROWTH & INCOME FUND BAR CHART]
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND
----------------------
<S> <C>
1993 14.19%
1994 -0.34%
1995 29.49%
1996 19.69%
1997 35.18%
1998 20.05%
1999 11.40%
</TABLE>
The Fund's year-to-date total return through September 30, 2000 was 8.34%.
For period shown in bar chart:
Best quarter: Fourth quarter 1998, +21.59%
Worst quarter: Third quarter 1998, -14.04%
The next table lists the Growth & Income Fund's average annual total return
for each class of its shares for the one-year, five-year and life of the Fund
periods ending December 31, 1999, including the applicable sales charge for
Class A, B and C shares. (Class S shares of the Growth & Income Fund, which were
not in existence as of December 31, 1999, are not included in the table.) This
table is intended to provide you with some indication of the risks of investing
in the Fund. At the bottom of the table, you can compare the Fund's performance
with one or more indices or averages.
Because the All-Star Fund commenced investment operations on March 1, 1999,
and has not completed one full calendar year, information related to the
All-Star Fund's performance has not been included in this Prospectus/Proxy
Statement.
GROWTH & INCOME FUND*
<TABLE>
<CAPTION>
INCEPTION LIFE OF
DATE 1 YEAR 5 YEARS FUND
<S> <C> <C> <C> <C>
Class A (%) 7/1/92 5.00 21.44 17.22
----------------------------------------------------------------------------------------------------
Class B (%) 7/1/92 5.53 21.79 17.24
----------------------------------------------------------------------------------------------------
Class C (%) 7/1/94 9.58 21.98 17.25(1)
----------------------------------------------------------------------------------------------------
Class Z (%) 1/11/99 11.76 22.96(1) 18.20(1)
----------------------------------------------------------------------------------------------------
S&P 500 Index (%) N/A 21.03 28.54 21.24(2)
----------------------------------------------------------------------------------------------------
Lipper Average (%) N/A 13.92 21.45 16.73(2)
</TABLE>
---------------
* The Growth & Income Fund's return is compared to the Standard & Poor's 500
Index ("S&P 500 Index"). Unlike the Fund, indices are not investments, do
not incur fees or expenses and are not professionally managed. It is not
possible to invest directly in indices. The Growth & Income Fund's return is
also compared to the average return of the funds included in the Lipper
Growth and Income Funds category ("Lipper Average"). This Lipper Average,
which is calculated by Lipper, Inc., is composed of funds with similar
investment objectives to the Fund. Sales charges are not reflected in the
Lipper Average.
(1) Class C and Class Z are the newer classes of shares. Their performance
information includes returns of the Growth & Income Fund's Class A shares
(the oldest existing fund class) for periods prior to the inception of the
newer classes of shares. The Class A share returns are not restated to
reflect any differences in expenses (such as Rule 12b-1 fees) between Class
A shares and the newer classes of shares.
(2) Performance information is from June 30, 1992 through December 31, 1999.
28
<PAGE> 32
THE TRUSTEES OF TRUST IX UNANIMOUSLY RECOMMEND APPROVAL OF THE AGREEMENT AND
PLAN OF REORGANIZATION.
The Declaration of Trust establishing Trust IX (the "Trust IX Declaration")
provides that any series of Trust IX (such as the All-Star Fund) may be
terminated by a two-thirds vote of the series' shares or by notice from the
Trustees to the shareholders. The Trust believes that, under this provision, no
shareholder vote is required to approve the Acquisition, although the provision
could also be interpreted to require a two-thirds vote, if the Acquisition is
submitted for shareholder approval. The Trust IX Declaration also provides that
it may be amended by the Trustees, upon majority vote of the shareholders of the
affected series. To eliminate any uncertainty about whether any shareholder vote
is required to approve the Acquisition, the Trustees will consider any vote in
favor of the Acquisition to be a vote in favor of amending the Trust IX
Declaration to provide that the All-Star Fund may be terminated by majority vote
of the All-Star Fund's shares entitled to vote (or by Trustee notice to
shareholders), and will so amend the Trust IX Declaration if a majority of the
All-Star Fund's shareholders entitled to vote in favor of the proposal vote in
favor of such proposal.
Required Vote for Proposal 3
Approval of the Agreement and Plan of Reorganization dated October 26, 2000
among Trust IX on behalf of the All-Star Fund, Trust VI on behalf of the Growth
& Income Fund, and Liberty Financial will require the affirmative vote of a
majority of the shares of the All-Star Fund outstanding at the record date for
the Meetings.
INFORMATION APPLICABLE TO PROPOSALS 1, 2 AND 3
Terms of the Agreement and Plan of Reorganization
If approved by the shareholders of each Acquired Fund, the Acquisitions are
expected to occur on or around January 29, 2001 under the Agreement and Plan of
Reorganization, a form of which is attached as Appendix A to this combined
Prospectus/Proxy Statement. Please review Appendix A. The following is a brief
summary of the principal terms of the Agreement and Plan of Reorganization:
- Each Acquired Fund will transfer all of the assets and liabilities
attributable to each class of its shares to the Growth & Income Fund in
exchange for shares of the same class of the Growth & Income Fund with an
aggregate net asset value equal to the net asset value of the transferred
assets and liabilities.
- The Acquisitions will occur on the next business day after the time
(currently scheduled to be 4:00 p.m. Eastern Time on January 26, 2001 or
such other date and time as the parties may determine) when the assets of
each Fund are valued for purposes of the Acquisitions.
- The shares of each class of the Growth & Income Fund received by each
Acquired Fund will be distributed to each Acquired Fund's respective
shareholders of the same class pro rata in accordance with their
percentage ownership of each class of such Acquired Fund in full
liquidation of such Acquired Fund.
- After the Acquisitions, each Acquired Fund will be terminated, and its
affairs will be wound up in an orderly fashion.
- Each Acquisition requires approval by the Acquired Fund's shareholders
and satisfaction of a number of other conditions; each Acquisition may be
terminated at any time with the approval of the Trustees of Trust VI and
the Stein Roe Trust, Trust VI or Trust IX, as the case may be.
Although the Trustees are proposing that the Growth & Income Fund acquire
each of the Acquired Funds, the Acquisition proposed in each Proposal is not
conditioned upon the approval of the Acquisitions proposed in the other
Proposals. Accordingly, in the event that the shareholders of the respective
Acquired Funds approve one but not one or both of the other Acquisitions, it is
expected that the approved Acquisition will, subject to the terms of the
Agreement and Plan of Reorganization, take place as described above.
29
<PAGE> 33
Shareholders who object to the Acquisitions will not be entitled under
Massachusetts law or the Declaration of Trust of the Stein Roe Trust, Trust VI
or Trust IX to demand payment for, or an appraisal of, their shares. However,
shareholders should be aware that the Acquisitions as proposed are not expected
to result in recognition of gain or loss to shareholders for federal income tax
purposes and that, if the Acquisitions are consummated, shareholders will be
free to redeem the shares which they receive in the transaction at their
then-current net asset value, plus any applicable CDSC. In addition, shares may
be redeemed (at net asset value plus any applicable CDSC) at any time prior to
the consummation of the Acquisitions.
The form of Agreement and Plan of Reorganization attached as Appendix A to
this combined Prospectus/Proxy Statement is a general form which will be used
for each of the Acquisitions. There will be a separate Agreement and Plan of
Reorganization with respect to each Acquisition, among the Stein Roe Trust,
Trust VI or Trust IX, as applicable, on behalf of the relevant Acquired Fund,
Trust VI on behalf of the Growth & Income Fund, and Liberty Financial. The form
of Agreement and Plan of Reorganization for each Acquisition has been filed with
the SEC as part of the Registration Statement of which this Prospectus/Proxy
Statement forms a part. Please see page 3 of this Prospectus/Proxy Statement for
information on how to obtain a copy of the Registration Statement or the form of
Agreement and Plan of Reorganization for your Fund's Acquisition.
Federal Income Tax Consequences
Each Acquisition is intended to be a tax-free reorganization. Ropes & Gray
or Bell, Boyd & Lloyd LLC, as the case may be, has delivered to each Acquired
Fund and the Growth & Income Fund an opinion, and the closing of each
Acquisition will be conditioned on receipt of a letter from Ropes & Gray or
Bell, Boyd & Lloyd LLC, as applicable, confirming such opinion, to the effect
that, on the basis of existing law under specified sections of the Internal
Revenue Code of 1986, as amended (the "Code"), for federal income tax purposes:
- under Section 361 or Section 354 of the Code, respectively, no gain or
loss will be recognized by the Acquired Funds or the shareholders of the
Acquired Funds as a result of each Acquisition;
- under Section 358 of the Code, the tax basis of the Growth & Income Fund
shares you receive will be the same, in the aggregate, as the aggregate
tax basis of your Stein Roe Fund, Value Fund or All-Star Fund shares;
- under Section 1223(1) of the Code, your holding period for the Growth &
Income Fund shares you receive will include the holding period for your
Stein Roe Fund, Value Fund or All-Star Fund shares if you hold your
shares as a capital asset;
- under Section 1032 of the Code, no gain or loss will be recognized by the
Growth & Income Fund as a result of each Acquisition;
- under Section 362(b) of the Code, the Growth & Income Fund's tax basis in
the assets that the Growth & Income Fund receives from each Acquired Fund
will be the same as such Acquired Fund's basis in such assets; and
- under Section 1223(2) of the Code, the Growth & Income Fund's holding
period in such assets will include the relevant Acquired Fund's holding
period in such assets.
The opinions are, and the confirmation letters will be, based on certain
factual certifications made by officers of each Trust. The opinions are not a
guarantee that the tax consequences of the Acquisitions will be as described
above. Prior to the closing of the Acquisitions, each Acquired Fund and the
Growth & Income Fund will each distribute to their shareholders all of their
respective investment company taxable income and net realized capital gains that
have not previously been distributed to shareholders. Such distributions will be
taxable to the shareholders of the respective Funds.
This description of the federal income tax consequences of the Acquisitions
does not take into account your particular facts and circumstances. Consult your
own tax advisor about the effect of state, local, foreign, and other tax laws.
30
<PAGE> 34
PROPOSAL 4 -- ELECTION OF TRUSTEES BY STEIN ROE GROWTH & INCOME FUND CLASS S AND
LIBERTY VALUE OPPORTUNITIES FUND CLASSES A, B, C AND Z
SHAREHOLDERS
THE PROPOSAL
The purpose of this proposal is to elect six new members as well as five of
the currently serving members of the Board of Trustees of both (1) the Stein Roe
Trust, of which the Stein Roe Fund is a series, and (2) the Base Trust, of which
the Master Fund is a series. You will be asked to vote both to elect the
nominees listed below to the Board of Trustees of the Stein Roe Trust and to
authorize the Stein Roe Fund to cast votes for election of the same nominees to
the Board of Trustees of the Base Trust. Your approval or disapproval of each
nominee for Trustee of the Stein Roe Trust in Proposal 4 will be voted in the
same manner for or against each nominee for Trustee of the Base Trust. All of
the nominees listed below, except for the proposed six new members (Ms. Verville
and Messrs. Lowry, Macera, Mayer, Neuhauser and Stitzel), are currently members
of the Boards of Trustees of the Stein Roe Trust and the Base Trust, as well as
two Stein Roe closed-end funds and six other Stein Roe open-end trusts
(collectively, the "Stein Roe Mutual Funds"), and have served in that capacity
continuously since originally elected or appointed. All of the currently serving
members of the Board of Trustees of the Stein Roe Trust, other than Mr. Palombo,
have been previously elected by the shareholders of the Stein Roe Trust. All of
the currently serving members of the Board of Trustees of the Base Trust, other
than Ms. Kelly and Mr. Palombo, have been previously elected by the shareholders
of the Base Trust. The proposed six new members currently serve on the Boards of
Trustees of nine Liberty closed-end funds and eight Liberty open-end trusts (or,
in the case of Messrs. Lowry, Mayer and Neuhauser, eleven Liberty closed-end
funds and nine Liberty open-end trusts (collectively, the "Liberty Mutual
Funds")), and were recommended for election as Trustees of the Stein Roe Trust
and the Base Trust by the Board of Trustees of the respective Trusts at special
meetings held on October 17, 2000. Each of the nominees elected will serve as a
Trustee until the next meeting of shareholders of the Stein Roe Trust or the
Base Trust, as the case may be, called for the purpose of electing a Board of
Trustees, and until a successor is elected and qualified or until death,
retirement, resignation or removal.
Currently, two different boards of trustees are responsible for overseeing
substantially all of the Liberty and Stein Roe Mutual Funds. Liberty Financial
and the Stein Roe Trust's Trustees have agreed that shareholder interests can
more effectively be represented by a single board with responsibility for
overseeing substantially all of the Liberty and Stein Roe Mutual Funds. Creation
of a single, consolidated board should also provide certain administrative
efficiencies for Liberty Financial and potential future cost savings for both
the Liberty and Stein Roe Mutual Funds and Liberty Financial. The nominees
listed below will be the members of the single, consolidated Board of Trustees.
The persons named in the enclosed proxy card intend to vote at the Meetings in
favor of the election of the nominees named below as Trustees of the Stein Roe
Trust and the Base Trust (if so instructed). If any nominee below becomes
unavailable for election, the proxy may be voted for a substitute nominee in the
discretion of the proxy holder(s).
INFORMATION ABOUT THE NOMINEES
Set forth below is information concerning each of the nominees.
31
<PAGE> 35
<TABLE>
<CAPTION>
NOMINEE NAME & AGE PRINCIPAL OCCUPATION(1) AND DIRECTORSHIPS TRUSTEE SINCE
------------------ --------------------------------------------- -------------
<S> <C> <C>
Douglas A. Hacker Executive Vice President and Chief Financial 1996
(43) Officer of UAL, Inc. (airline) since July
1999; Senior Vice President and Chief
Financial Officer of UAL, Inc. prior thereto.
Janet Langford Kelly Executive Vice President -- Corporate 1996
(41) Development, General Counsel, and Secretary
of Kellogg Company (food, beverage and
tobacco producer) since September 1999;
Senior Vice President, Secretary and General
Counsel of Sara Lee Corporation (branded,
packaged, consumer-products manufacturer)
prior thereto.
Richard W. Lowry Private Investor since 1987. (Formerly New nominee
(64) Chairman and Chief Executive Officer of U.S.
Plywood Corporation (building products
producer) from August 1985 to August 1987.)
Salvatore Macera Private Investor since 1981. (Formerly New nominee
(69) Executive Vice President and Director of Itek
Corporation (electronics) from 1975 to 1981.)
William E. Mayer(2) Partner, Park Avenue Equity Partners (venture New nominee
(60) capital), since November 1996; Dean, College
of Business and Management, University of
Maryland, prior thereto; Director, Johns
Manville (building products producer), Lee
Enterprises (print and on-line media) and WR
Hambrecht + Co. (financial services
provider).
Charles R. Nelson Van Voorhis Professor, Department of 1981
(57) Economics, University of Washington;
Consultant on economic and statistical
matters.
John J. Neuhauser Academic Vice President and Dean of New nominee
(57) Faculties, Boston College, since August 1999;
Dean, Boston College School of Management,
prior thereto.
Joseph R. Palombo(3) Trustee of the Liberty Mutual Funds since 2000
(47) August 2000; Executive Vice President and
Director of Colonial and Stein Roe since
April 1999; Executive Vice President and
Chief Administrative Officer of Liberty Funds
Group LLC since April 1999; Director of
AlphaTrade Inc. (broker-dealer), Colonial
Advisory Services, Inc., Liberty Funds
Distributor, Inc. and Liberty Funds Services,
Inc. since April 1999. (Formerly Vice
President of the Stein Roe Mutual Funds from
April 1999 to October 2000, Vice President of
the Liberty Mutual Funds from April 1999 to
August 2000, and Chief Operating Officer of
Putnam Mutual Funds (investments) from 1994
to 1998.)
Thomas E. Stitzel Business Consultant since 1999; Professor of New nominee
(64) Finance and Dean, College of Business, Boise
State University, prior thereto; Chartered
Financial Analyst.
</TABLE>
32
<PAGE> 36
<TABLE>
<CAPTION>
NOMINEE NAME & AGE PRINCIPAL OCCUPATION(1) AND DIRECTORSHIPS TRUSTEE SINCE
------------------ --------------------------------------------- -------------
<S> <C> <C>
Thomas C. Theobald Managing Director, William Blair Capital 1996
(62) Partners (private equity investing), since
1994; Chief Executive Officer and Chairman of
the Board of Directors of Continental Bank
Corporation (banking services) prior thereto.
Anne-Lee Verville Consultant since 1997; General Manager, New nominee
(55) Global Education Industry (global education
applications), prior thereto. (Formerly
President, Applications Solutions Division,
IBM Corporation (global education and global
applications), from 1991 to 1994.)
</TABLE>
---------------
(1) Except as otherwise noted, each individual has held the office indicated or
other offices in the same company for the last five years.
(2) Mr. Mayer is an "interested person," as defined in the Investment Company
Act of 1940, as amended (the "1940 Act"), because of his affiliation with WR
Hambrecht + Co. (a registered broker-dealer).
(3) Mr. Palombo is an "interested person," as defined in the 1940 Act, because
of his affiliation with Liberty Financial.
The following persons who are currently serving on the Board of Trustees of
the Stein Roe Trust and the Base Trust are not standing for reelection:
<TABLE>
<CAPTION>
TRUSTEE NAME & AGE PRINCIPAL OCCUPATION(1) AND DIRECTORSHIPS TRUSTEE SINCE
------------------ --------------------------------------------- -------------
<S> <C> <C>
John A. Bacon Jr. Private Investor. 1998
(72)
William W. Boyd Chairman and Director of Sterling Plumbing 1994
(72) (manufacturer of plumbing products).
Lindsay Cook(2) Executive Vice President of Liberty Financial 1994
(47) since March 1997; Senior Vice President prior
thereto.
</TABLE>
---------------
(1) Except as otherwise noted, each individual has held the office indicated or
other offices in the same company for the last five years.
(2) Mr. Cook is an "interested person," as defined in the 1940 Act, because he
is an officer of Liberty Financial.
TRUSTEES' COMPENSATION
The members of the Board of Trustees will serve as Trustees of the Liberty
and Stein Roe Mutual Funds, for which service each Trustee, except for Mr.
Palombo, will receive an annual retainer of $45,000, and attendance fees of
$8,000 for each regular joint meeting and $1,000 for each special joint meeting.
Committee chairs will receive an additional annual retainer of $5,000, and
receive $1,000 for each special meeting attended on a day other than a regular
joint meeting day. Committee members will receive an additional annual retainer
of $1,000, and receive $1,000 for each special meeting attended on a day other
than a regular joint meeting day. Two-thirds of the Trustees' fees are allocated
among the Liberty and Stein Roe Mutual Funds based on each Fund's relative net
assets, and one-third of the fees is divided equally among the Liberty and Stein
Roe Mutual Funds.
The Stein Roe Mutual Funds do not currently provide pension or retirement
plan benefits to the Trustees. However, Messers. Boyd and Bacon, two of the
Trustees currently serving on the Board of Trustees of the Stein Roe Trust who
are not continuing on the combined Board of Trustees of the Liberty and Stein
Roe Mutual Funds, will receive certain payments after completing their service
on the Board. Mr. Boyd will receive a payment of $50,000 upon his departure. Mr.
Bacon will receive payments at an annual rate equal to the 1999 compensation of
the Trustees of the Liberty Mutual Funds until he would otherwise have retired
at age 74. The payments to Mr. Bacon will be made quarterly, beginning in 2001.
Liberty Financial and the Stein Roe Mutual Funds will each bear one-half of the
cost of the payments to Messrs. Boyd and Bacon; the Stein
33
<PAGE> 37
Roe Mutual Funds' portion of the payments will be allocated among the Stein Roe
Mutual Funds based on each fund's share of the Trustee fees for 2000.
Further information concerning the Trustees' compensation is included in
Appendix B.
MEETINGS AND CERTAIN COMMITTEES
Composition. The current Board of Trustees of the Stein Roe Mutual Funds
consists of six non-interested Trustees and two interested Trustees.
Audit Committee. The Audit Committee of the Stein Roe Mutual Funds,
consisting of Messrs. Hacker (Chairman), Bacon, Boyd, Nelson and Theobald and
Ms. Kelly, all of whom are non-interested Trustees, recommends to the Board of
Trustees the independent accountants to serve as auditors, reviews with the
independent accountants the results of the auditing engagement and internal
accounting procedures and considers the independence of the independent
accountants, the range of their audit services and their fees.
Compensation Committee. The Compensation Committee of the Stein Roe Mutual
Funds, consisting of Messrs. Boyd and Nelson, both of whom are non-interested
Trustees, reviews compensation of the Board of Trustees.
Nominating Committee. The Nominating Committee of the Stein Roe Mutual
Funds, consisting of Messrs. Boyd and Nelson, both of whom are non-interested
Trustees, recommends to the Board of Trustees, among other things, nominees for
trustee and for appointments to various committees. The Committee will consider
candidates for trustee recommended by shareholders. Written recommendations with
supporting information should be directed to the Committee in care of the Stein
Roe Trust, Attention: Secretary, One Financial Center, Boston, Massachusetts
02111-2621.
Executive Committee. The Executive Committee of the Stein Roe Mutual
Funds, consisting of Mr. Boyd, a non-interested Trustee, and Mr. Cook, an
interested Trustee, is authorized to take certain actions delegated to it by the
full Board of Trustees and to exercise the full powers of the Board of Trustees,
with some exceptions, between Board meetings.
Record of Board and Committee Meetings. During the fiscal year ended
September 30, 2000, the Board of Trustees of the Stein Roe Trust held five
meetings, the Audit Committee held four meetings, the Compensation Committee
held no meetings, the Nominating Committee held no meetings, and the Executive
Committee held one meeting.
During the most recently completed fiscal year, each of the current
Trustees attended more than 75% of the meetings of the Board of Trustees and the
committees of which such Trustee was a member.
THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS OF THE STEIN ROE FUND
VOTE FOR EACH NOMINEE IN PROPOSAL 4.
Required Vote for Proposal 4
A plurality of the votes cast at the Meetings for the Stein Roe Trust, if a
quorum is represented, is required for the election of each Trustee to the Board
of Trustees of the Stein Roe Trust. Since the number of Trustees for the Stein
Roe Trust has been fixed at eleven, this means that the eleven persons receiving
the highest number of votes will be elected as Trustees of the Stein Roe Trust.
Shareholders of the Stein Roe Fund vote together with the other
shareholders of the Master Fund and with the shareholders of the feeder funds of
the other master funds which are series of the Base Trust for the election of
Trustees of the Base Trust. A plurality of the votes cast at the Meetings for
the Base Trust, if a quorum is represented, is required for the election of each
Trustee to the Board of Trustees of the Base Trust. Since the number of Trustees
for the Base Trust has been fixed at eleven, this means that the eleven persons
receiving the highest number of votes will be elected as Trustees of the Base
Trust.
34
<PAGE> 38
PROPOSAL 5 -- ELECTION OF TRUSTEES BY LIBERTY VALUE FUND SHAREHOLDERS
THE PROPOSAL
You are being asked to approve the election of four new members as well as
seven of the currently serving members of the Board of Trustees of Trust VI, of
which the Value Fund is a series. All of the nominees listed below, except for
the proposed four new members of the Board of Trustees of Trust VI, as well as
nine Liberty closed-end funds and seven other Liberty open-end trusts (or, in
the case of Messrs. Lowry, Mayer and Neuhauser, eleven Liberty closed-end funds
and eight other Liberty open-end trusts (collectively, the "Liberty Mutual
Funds")), and have served in that capacity continuously since originally elected
or appointed. All of the currently serving members, other than Mr. Palombo, have
been previously elected by the shareholders of Trust VI. The proposed four new
members currently serve on the Board of Trustees of two Stein Roe closed-end
funds and seven Stein Roe open-end trusts (collectively, the "Stein Roe Mutual
Funds"), and were recommended for election as Trustees of the Liberty Mutual
Funds by the Board of Trustees at meetings held on October 25 and 26, 2000. Each
of the nominees elected will serve as a Trustee of Trust VI until the next
meeting of shareholders of Trust VI called for the purpose of electing a Board
of Trustees, and until a successor is elected and qualified or until death,
retirement, resignation or removal.
Currently, two different boards of trustees are responsible for overseeing
substantially all of the Liberty and Stein Roe Mutual Funds. Liberty Financial
and the Trustees of Trust VI have agreed that shareholder interests can more
effectively be represented by a single board with responsibility for overseeing
substantially all of the Liberty and Stein Roe Mutual Funds. Creation of a
single, consolidated board should also provide certain administrative
efficiencies for Liberty Financial and potential future cost savings for both
the Liberty and Stein Roe Mutual Funds and Liberty Financial. The nominees
listed below will be the members of the single, consolidated Board of Trustees.
The persons named in the enclosed proxy card intend to vote at the Meetings in
favor of the election of the nominees named below as Trustees of Trust VI (if so
instructed). If any nominee listed below becomes unavailable for election, the
proxy may be voted for a substitute nominee in the discretion of the proxy
holder(s).
INFORMATION ABOUT THE NOMINEES
Set forth below is information concerning each of the nominees.
<TABLE>
<CAPTION>
NOMINEE NAME & AGE PRINCIPAL OCCUPATION(1) AND DIRECTORSHIPS TRUSTEE SINCE
------------------ --------------------------------------------- -------------
<S> <C> <C>
Douglas A. Hacker Executive Vice President and Chief Financial New nominee
(43) Officer of UAL, Inc. (airline) since July
1999; Senior Vice President and Chief
Financial Officer of UAL, Inc. prior thereto.
Janet Langford Kelly Executive Vice President -- Corporate New nominee
(41) Development, General Counsel, and Secretary
of Kellogg Company (food, beverage and
tobacco producer) since September 1999;
Senior Vice President, Secretary and General
Counsel of Sara Lee Corporation (branded,
packaged, consumer-products manufacturer)
prior thereto.
Richard W. Lowry Private Investor since 1987. (Formerly 1995
(64) Chairman and Chief Executive Officer of U.S.
Plywood Corporation (building products
producer) from August 1985 to August 1987.)
Salvatore Macera Private Investor since 1981. (Formerly 1998
(69) Executive Vice President and Director of Itek
Corporation (electronics) from 1975 to 1981.)
</TABLE>
35
<PAGE> 39
<TABLE>
<CAPTION>
NOMINEE NAME & AGE PRINCIPAL OCCUPATION(1) AND DIRECTORSHIPS TRUSTEE SINCE
------------------ --------------------------------------------- -------------
<S> <C> <C>
William E. Mayer(2) Partner, Park Avenue Equity Partners (venture 1994
(60) capital), since November 1996; Dean, College
of Business and Management, University of
Maryland, prior thereto; Director, Johns
Manville (building products producer), Lee
Enterprises (print and on-line media) and WR
Hambrecht + Co. (financial services
provider).
Charles R. Nelson Van Voorhis Professor, Department of New nominee
(57) Economics, University of Washington;
Consultant on economic and statistical
matters.
John J. Neuhauser Academic Vice President and Dean of 1985
(57) Faculties, Boston College, since August 1999;
Dean, Boston College School of Management,
prior thereto.
Joseph R. Palombo(3) Trustee of the Stein Roe Mutual Funds since 2000
(47) October 2000; Executive Vice President and
Director of Colonial and Stein Roe since
April 1999; Executive Vice President and
Chief Administrative Officer of Liberty Funds
Group LLC since April 1999; Director of
AlphaTrade Inc. (broker-dealer), Colonial
Advisory Services, Inc., Liberty Funds
Distributor, Inc. and Liberty Funds Services,
Inc. since April 1999. (Formerly Vice
President of the Stein Roe Mutual Funds from
April 1999 to October 2000, Vice President of
the Liberty Mutual Funds from April 1999 to
August 2000, and Chief Operating Officer of
Putnam Mutual Funds (investments) from 1994
to 1998.)
Thomas E. Stitzel Business Consultant since 1999; Professor of 1998
(64) Finance and Dean, College of Business, Boise
State University, prior thereto; Chartered
Financial Analyst.
Thomas C. Theobald Managing Director, William Blair Capital New nominee
(62) Partners (private equity investing), since
1994; Chief Executive Officer and Chairman of
the Board of Directors of Continental Bank
Corporation (banking services) prior thereto.
Anne-Lee Verville Consultant since 1997; General Manager, 1998
(55) Global Education Industry (global education
applications), prior thereto. (Formerly
President, Applications Solutions Division,
IBM Corporation (global education and global
applications), from 1991 to 1994.)
</TABLE>
---------------
(1) Except as otherwise noted, each individual has held the office indicated or
other offices in the same company for the last five years.
(2) Mr. Mayer is not affiliated with Liberty Financial, but is an "interested
person," as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), because of his affiliation with WR Hambrecht + Co. (a
registered broker-dealer).
(3) Mr. Palombo is an "interested person," as defined in the 1940 Act, because
of his affiliation with Liberty Financial.
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<PAGE> 40
The following persons who are currently serving on the Board of Trustees of
Trust VI are not standing for reelection:
<TABLE>
<CAPTION>
TRUSTEE NAME & AGE PRINCIPAL OCCUPATION(1) AND DIRECTORSHIPS TRUSTEE SINCE
------------------ --------------------------------------------- -------------
<S> <C> <C>
Tom Bleasdale Retired (formerly Chairman of the Board and 1987
(70) Chief Executive Officer, Shore Bank & Trust
Company (banking services) from 1992 to
1993); Director, Empire Co. (food
distributor).
Lora S. Collins Attorney (formerly Attorney, Kramer Levin 1991
(65) Naftalis & Frankel LLP (law firm) from 1986
to 1996).
James E. Grinnell Private investor since November 1988. 1995
(72)
James L. Moody, Jr. Retired (formerly Chairman of the Board, 1986
(70) Hannaford Bros. Co. (food retailer) from 1984
to 1997 and Chief Executive Officer prior
thereto).
</TABLE>
---------------
(1) Except as otherwise noted, each individual has held the office indicated or
other offices in the same company for the last five years.
TRUSTEES' COMPENSATION
The members of the Board of Trustees will serve as Trustees of the Liberty
and Stein Roe Mutual Funds, for which service each Trustee, except for Mr.
Palombo, will receive an annual retainer of $45,000, and attendance fees of
$8,000 for each regular joint meeting and $1,000 for each special joint meeting.
The Board of Trustees is expected to hold six regular joint meetings each year.
Committee chairs will receive an additional annual retainer of $5,000, and
receive $1,000 for each special meeting attended on a day other than a regular
joint meeting day. Committee members will receive an additional annual retainer
of $1,000, and receive $1,000 for each special meeting attended on a day other
than a regular joint meeting day. Two-thirds of the Trustees' fees are allocated
among the Liberty and Stein Roe Mutual Funds based on each Fund's relative net
assets, and one-third of the fees is divided equally among the Liberty and Stein
Roe Mutual Funds.
The Liberty Mutual Funds do not currently provide pension or retirement
plan benefits to the Trustees. However, certain Trustees currently serving on
the Board of Trustees of the Liberty Mutual Funds who are not continuing on the
combined Board of Trustees of the Liberty and Stein Roe Mutual Funds will
receive payments at an annual rate equal to their 1999 Trustee compensation for
the lesser of two years or until the date they would otherwise have retired at
age 72. These payments will be made quarterly, beginning in 2001. Liberty
Financial and the Liberty Mutual Funds will each bear one-half of the cost of
the payments; the Liberty Mutual Funds' portion of the payments will be
allocated among the Liberty Mutual Funds based on each fund's share of the
Trustee fees for 2000.
Further information concerning the Trustees' compensation is included in
Appendix B.
MEETINGS AND CERTAIN COMMITTEES
Composition. The current Board of Trustees of the Liberty Mutual Funds
consists of two interested and nine non-interested Trustees. Mr. Mayer is not
affiliated with Liberty Financial or any of its investment advisor affiliates,
but is considered interested as a result of his affiliation with a
broker-dealer. Mr. Palombo is an interested person because of his affiliation
with Liberty Financial.
Audit Committee. The Audit Committee of Trust VI, consisting of Ms.
Verville (Chairperson) and Messrs. Bleasdale, Grinnell, Lowry, Macera and Moody,
all of whom are non-interested Trustees, recommends to the Board of Trustees the
independent accountants to serve as auditors, reviews with the
37
<PAGE> 41
independent accountants the results of the auditing engagement and internal
accounting procedures and considers the independence of the independent
accountants, the range of their audit services and their fees.
Compensation Committee. The Compensation Committee of Trust VI, consisting
of Messrs. Neuhauser (Chairman), Grinnell and Stitzel and Ms. Collins, all of
whom are non-interested Trustees, reviews compensation of the Board of Trustees.
Governance Committee. The Governance Committee of Trust VI, consisting of
Messrs. Bleasdale (Chairman), Lowry, Mayer and Moody and Ms. Verville, all of
whom are non-interested Trustees, except for Mr. Mayer (Mr. Mayer is interested
as a result of his affiliation with a broker-dealer, but is not affiliated with
Liberty Financial or any of its investment advisor affiliates), recommends to
the Board of Trustees, among other things, nominees for trustee and for
appointments to various committees. The Committee will consider candidates for
trustee recommended by shareholders. Written recommendations with supporting
information should be directed to the Committee in care of Trust VI, Attention:
Secretary, One Financial Center, Boston, Massachusetts 02111-2621.
Record of Board and Committee Meetings. During the fiscal year ended June
30, 2000, the Board of Trustees of Trust VI held six meetings, the Audit
Committee held four meetings, the Compensation Committee held two meetings, and
the Governance Committee held six meetings.
During the most recently completed fiscal years, each of the current
Trustees attended more than 75% of the meetings of the Board of Trustees and the
committees of which such Trustee was a member.
THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS OF THE VALUE FUND VOTE
FOR EACH NOMINEE IN PROPOSAL 5.
Required Vote for Proposal 5
A plurality of the votes cast at the Meetings for Trust VI, if a quorum is
represented, is required for the election of each Trustee to the Board of
Trustees of Trust VI. Since the number of Trustees has been fixed at eleven,
this means that the eleven persons receiving the highest number of votes will be
elected.
GENERAL
VOTING INFORMATION
The Trustees of the Stein Roe Trust, Trust VI and Trust IX are soliciting
proxies from the shareholders of each Acquired Fund in connection with the
Meetings, which have been called to be held at 10:00 a.m. Eastern Time on
December 27, 2000 at Colonial's offices, One Financial Center, Boston,
Massachusetts 02111-2621. The meeting notice, this combined Prospectus/Proxy
Statement and proxy cards and inserts are being mailed to shareholders beginning
on or about November 17, 2000.
Information About Proxies and the Conduct of the Meetings
Solicitation of Proxies. Proxies will be solicited primarily by mailing
this combined Prospectus/Proxy Statement and its enclosures, but proxies may
also be solicited through further mailings, telephone calls, personal interviews
or e-mail by officers of the Stein Roe Fund, the Value Fund or the All-Star
Fund, or by employees or agents of LAMCO, Stein Roe or Colonial and their
affiliated companies. In addition, Shareholder Communications Corporation
("SCC") has been engaged to assist in the solicitation of proxies, at an
estimated total cost of $700,000 for all of the proposed acquisitions of funds
in the Liberty and Stein Roe Mutual Fund groups scheduled to take place in
January 2001.
38
<PAGE> 42
Voting Process
You can vote in any one of the following four ways:
a. By mail, by filling out and returning the enclosed proxy card;
b. By phone, by calling toll-free 1-877-518-9416 between the hours of 9:00
a.m. and 11:00 p.m. Eastern Time and following the instructions;
c. By fax (not available for all shareholders; refer to enclosed proxy
insert); or
d. In person at the Meetings.
Shareholders who owned shares on the record date, September 29, 2000, are
entitled to vote at the Meetings. Shareholders of the Value Fund and the
All-Star Fund are entitled to cast one vote for each share owned on the record
date. Shareholders of the Stein Roe Fund are entitled to cast a number of votes
equal to the dollar net asset value of shares owned as of the record date. The
net asset value on the record date of a Class A, B, C, S and Z share of the
Stein Roe Fund was $27.44, $27.29, $27.29, $27.43 and $27.44, respectively. If
you choose to vote by mail or by fax, and you are an individual account owner,
please sign exactly as your name appears on the proxy card. Either owner of a
joint account may sign the proxy card, but the signer's name must exactly match
the name that appears on the card.
Costs. The estimated costs of the Meetings, including the costs of
soliciting proxies, and the costs of the Acquisitions to be borne by the Stein
Roe Fund, the Value Fund, the All-Star Fund and the Growth & Income Fund are
approximately $29,000, $26,000, $25,000 and $18,000, respectively. Liberty
Financial is also bearing a portion of such costs. This portion to be borne by
Liberty Financial is in addition to the amounts to be borne by the Funds.
Voting and Tabulation of Proxies. Shares represented by duly executed
proxies will be voted as instructed on the proxy card. If no instructions are
given, the proxy will be voted in favor of each Proposal. You can revoke your
proxy by sending a signed, written letter of revocation to the Secretary of your
Fund, by properly executing and submitting a later-dated proxy or by attending
the Meetings and voting in person.
Votes cast in person or by proxy at the Meetings will be counted by persons
appointed by each Acquired Fund as tellers for the Meetings (the "Tellers").
Thirty percent (30%) of the shares of each of the Stein Roe Fund, the Value Fund
and the All-Star Fund outstanding on the record date, present in person or
represented by proxy, constitute a quorum for the transaction of business by the
shareholders of the respective Funds at the Meetings. Shareholders of the Stein
Roe Fund vote together with the shareholders of the other series of the Stein
Roe Trust for the election of Trustees of the Stein Roe Trust; thirty percent
(30%) of the outstanding shares of the Stein Roe Trust constitutes a quorum for
voting on the election of Trustees. Shareholders of the Stein Roe Fund vote
together with the other shareholders of the Master Fund and with the
shareholders of the feeder funds of the other master funds which are series of
the Base Trust for the election of Trustees of the Base Trust; thirty percent
(30%) of the outstanding shares of the Base Trust constitutes a quorum for
voting on the election of Trustees. Shareholders of the Value Fund vote together
with the shareholders of the other series of Trust VI for the election of
Trustees of Trust VI; thirty percent (30%) of the outstanding shares of Trust VI
constitutes a quorum for voting on the election of Trustees. In determining
whether a quorum is present, the Tellers will count shares represented by
proxies that reflect abstentions and "broker non-votes" as shares that are
present and entitled to vote. Since these shares will be counted as present, but
not as voting in favor of any proposal, these shares will have the same effect
as if they cast votes against Proposals 1, 2 and 3 and will have no effect on
the outcome of Proposals 4 and 5. "Broker non-votes" are shares held by brokers
or nominees as to which (i) the broker or nominee does not have discretionary
voting power and (ii) the broker or nominee has not received instructions from
the beneficial owner or other person who is entitled to instruct how the shares
will be voted.
Advisors', Underwriter's and Administrator's Addresses. The address of
Colonial Management Associates, Inc., the investment advisor of the Value Fund
and the Growth & Income Fund and the administrator of the Stein Roe Fund and the
All-Star Fund, is One Financial Center, Boston, Massachusetts 02111-2621. The
address of the Stein Roe Fund's investment advisor, Stein Roe & Farnham
Incorporated, is One South
39
<PAGE> 43
Wacker Drive, Chicago, Illinois 60606. The address of the All-Star Fund's
investment advisor, Liberty Asset Management Company, is Federal Reserve Plaza,
600 Atlantic Avenue, Boston, Massachusetts 02110-2621. The address of each
Fund's principal underwriter, Liberty Funds Distributor, Inc., is One Financial
Center, Boston, Massachusetts 02111-2621.
Information About Liberty Financial. On November 1, 2000, Liberty
Financial announced that it had retained CS First Boston to help it explore
strategic alternatives, including the possible sale of Liberty Financial.
Outstanding Shares and Significant Shareholders. Appendix B to this
Prospectus/Proxy Statement lists for the Stein Roe Fund and the Stein Roe Trust
and the Base Trust, the Value Fund and the Growth & Income Fund and Trust VI,
and the All-Star Fund and Trust IX the total number of shares outstanding as of
September 29, 2000 for each class of the shares of each such Fund and Trust
entitled to vote at the Meetings. It also lists for the Growth & Income Fund the
total number of shares outstanding as of September 29, 2000 for each class of
the Fund's shares. It also identifies holders of more than 5% or 25% of any
class of shares of each Fund, and contains information about the executive
officers and Trustees of the Trusts and their shareholdings in the Funds and
Trusts.
Adjournments; Other Business. If an Acquired Fund or the Trust of which it
is a series, as applicable, has not received enough votes by the time of the
Meetings to approve any Proposal, the persons named as proxies may propose that
such Meetings be adjourned one or more times to permit further solicitation of
proxies. Any adjournment requires the affirmative vote of a majority of the
total number of shares of such Acquired Fund or Trust, as applicable, that are
present in person or by proxy on the question when the adjournment is being
voted on. The persons named as proxies will vote in favor of any such
adjournment all proxies that they are entitled to vote in favor of the relevant
Proposal (or in favor of any nominee, in the case of Proposals 4 and 5). They
will vote against any such adjournment any proxy that directs them to vote
against the Proposal (or against all nominees, in the case of Proposals 4 and
5). They will not vote any proxy that directs them to abstain from voting on the
Proposal in question.
The Meetings have been called to transact any business that properly comes
before them. The only business that management of each Acquired Fund intends to
present or knows that others will present is Proposals 1 through 5. If any other
matters properly come before the Meetings, and on all matters incidental to the
conduct of the Meetings, the persons named as proxies intend to vote the proxies
in accordance with their judgment, unless the Secretary of the relevant Acquired
Fund has previously received written contrary instructions from the shareholder
entitled to vote the shares.
Shareholder Proposals at Future Meetings. The Stein Roe Trust, the Base
Trust, Trust VI and Trust IX do not hold annual or other regular meetings of
shareholders. Shareholder proposals to be presented at any future meeting of
shareholders of the Funds or the Trusts must be received by the relevant Fund or
Trust in writing a reasonable amount of time before the Trust solicits proxies
for that meeting in order to be considered for inclusion in the proxy materials
for that meeting. Shareholder proposals should be sent to your Fund, care of the
relevant Trust, Attention: Secretary, One Financial Center, Boston,
Massachusetts 02111-2621.
40
<PAGE> 44
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of October 26, 2000 is
by and among [Name of Acquired Fund Trust] (the "Trust"), a Massachusetts
business trust established under a Declaration of Trust dated __________, as
amended, on behalf of [Name of Acquired Fund] (the "Acquired Fund"), a series of
the Trust, Liberty Funds Trust VI (the "Acquiring Trust"), a Massachusetts
business trust established under a Declaration of Trust dated January 3, 1992,
as amended, on behalf of Liberty Growth & Income Fund (the "Acquiring Fund"), a
series of the Acquiring Trust, and Liberty Financial Companies, Inc.
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code"), and any successor
provision. The reorganization will consist of the transfer of all of the assets
of the Acquired Fund in exchange solely for [Class A, B, C, Z and S] shares of
beneficial interest of the Acquiring Fund ("Acquiring Shares") and the
assumption by the Acquiring Fund of the liabilities of the Acquired Fund (other
than certain expenses of the reorganization contemplated hereby) and the
distribution of such Acquiring Shares to the shareholders of the Acquired Fund
in liquidation of the Acquired Fund, all upon the terms and conditions set forth
in this Agreement.
In consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:
1. TRANSFER OF ASSETS OF ACQUIRED FUND IN EXCHANGE FOR ASSUMPTION OF LIABILITIES
AND ACQUIRING SHARES AND LIQUIDATION OF ACQUIRED FUND.
1.1 Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein,
(a) The Trust, on behalf of the Acquired Fund, will transfer and deliver
to the Acquiring Fund, and the Acquiring Fund will acquire, all the
assets of the Acquired Fund as set forth in paragraph 1.2.;
(b) The Acquiring Fund will assume all of the Acquired Fund's
liabilities and obligations of any kind whatsoever, whether
absolute, accrued, contingent or otherwise in existence on the
Closing Date (as defined in paragraph 1.2 hereof) (the
"Obligations"), except that expenses of reorganization contemplated
hereby to be paid by the Acquired Fund pursuant to paragraphs 1.5
and 9.2 shall not be assumed or paid by the Acquiring Fund; and
(c) The Acquiring Fund will issue and deliver to the Acquired Fund in
exchange for such assets the number of Acquiring Shares (including
fractional shares, if any) determined by dividing the net asset
value of the Acquired Fund, computed in the manner and as of the
time and date set forth in paragraph 2.1, by the net asset value of
one Acquiring Share, computed in the manner and as of the time and
date set forth in paragraph 2.2. Such transactions shall take place
at the closing provided for in paragraph 3.1 (the "Closing").
1.2 The assets of the Acquired Fund to be acquired by the Acquiring Fund
shall consist of all cash, securities, dividends and interest
receivable, receivables for shares sold and all other assets which are
owned by the Acquired Fund on the closing date provided in paragraph
3.1 (the "Closing Date") and any deferred expenses, other than
unamortized organizational expenses, shown as an asset on the books of
the Acquired Fund on the Closing Date.
1.3 As provided in paragraph 3.4, as soon after the Closing Date as is
conveniently practicable (the "Liquidation Date"), the Acquired Fund
will liquidate and distribute pro rata to its shareholders of record
("Acquired Fund Shareholders"), determined as of the close of business
on the Valuation Date (as defined in paragraph 2.1), the Acquiring
Shares received by the Acquired Fund pursuant to paragraph 1.1. Such
liquidation and distribution will be accomplished by the transfer of
the
A-1
<PAGE> 45
Acquiring Shares then credited to the account of the Acquired Fund on
the books of the Acquiring Fund to open accounts on the share records
of the Acquiring Fund in the names of the Acquired Fund Shareholders
and representing the respective pro rata number of Acquiring Shares due
such shareholders. The Acquiring Fund shall not be obligated to issue
certificates representing Acquiring Shares in connection with such
exchange.
1.4 With respect to Acquiring Shares distributable pursuant to paragraph
1.3 to an Acquired Fund Shareholder holding a certificate or
certificates for shares of the Acquired Fund, if any, on the Valuation
Date, the Acquiring Trust will not permit such shareholder to receive
Acquiring Share certificates therefor, exchange such Acquiring Shares
for shares of other investment companies, effect an account transfer of
such Acquiring Shares, or pledge or redeem such Acquiring Shares until
the Acquiring Trust has been notified by the Acquired Fund or its agent
that such Acquired Fund Shareholder has surrendered all his or her
outstanding certificates for Acquired Fund shares or, in the event of
lost certificates, posted adequate bond.
1.5 [RESERVED]
1.6 As promptly as possible after the Closing Date, the Acquired Fund shall
be terminated pursuant to the provisions of the laws of the
Commonwealth of Massachusetts, and, after the Closing Date, the
Acquired Fund shall not conduct any business except in connection with
its liquidation.
2. VALUATION.
2.1 For the purpose of paragraph 1, the value of the Acquired Fund's assets
to be acquired by the Acquiring Fund hereunder shall be the net asset
value computed as of the close of regular trading on the New York Stock
Exchange on the business day next preceding the Closing (such time and
date being herein called the "Valuation Date") using the valuation
procedures set forth in the Declaration of Trust of the Acquiring Trust
and the then current prospectus or statement of additional information
of the Acquiring Fund, after deduction for the expenses of the
reorganization contemplated hereby to be paid by the Acquired Fund
pursuant to paragraphs 1.5, and shall be certified by the Acquired
Fund.
2.2 For the purpose of paragraph 2.1, the net asset value of an Acquiring
Share shall be the net asset value per share computed as of the close
of regular trading on the New York Stock Exchange on the Valuation
Date, using the valuation procedures set forth in the Declaration of
Trust of the Acquiring Trust and the then current prospectus or
prospectuses and the statement or statements of additional information
of the Acquiring Fund (collectively, as from time to time amended and
supplemented, the "Acquiring Fund Prospectus").
3. CLOSING AND CLOSING DATE.
3.1 The Closing Date shall be on January 29, 2001, or on such other date as
the parties may agree in writing. The Closing shall be held at 9:00
a.m. at the offices of Colonial Management Associates, Inc., One
Financial Center, Boston, Massachusetts 02111, or at such other time
and/or place as the parties may agree.
3.2 The portfolio securities of the Acquired Fund shall be made available
by the Acquired Fund to The Chase Manhattan Bank, as custodian for the
Acquiring Fund (the "Custodian"), for examination no later than five
business days preceding the Valuation Date. On the Closing Date, such
portfolio securities and all the Acquired Fund's cash shall be
delivered by the Acquired Fund to the Custodian for the account of the
Acquiring Fund, such portfolio securities to be duly endorsed in proper
form for transfer in such manner and condition as to constitute good
delivery thereof in accordance with the custom of brokers or, in the
case of portfolio securities held in the U.S. Treasury Department's
book-entry system or by the Depository Trust Company, Participants
Trust Company or other third party depositories, by transfer to the
account of the Custodian in accordance with Rule 17f-4 or Rule 17f-5,
as the case may be, under the Investment Company Act of 1940 (the "1940
Act") and
A-2
<PAGE> 46
accompanied by all necessary federal and state stock transfer stamps or
a check for the appropriate purchase price thereof. The cash delivered
shall be in the form of currency or certified or official bank checks,
payable to the order of "The Chase Manhattan Bank, custodian for
Acquiring Fund."
3.3 In the event that on the Valuation Date (a) the New York Stock Exchange
shall be closed to trading or trading thereon shall be restricted, or
(b) trading or the reporting of trading on said Exchange or elsewhere
shall be disrupted so that accurate appraisal of the value of the net
assets of the Acquired Fund or the Acquiring Fund is impracticable, the
Closing Date shall be postponed until the first business day after the
day when trading shall have been fully resumed and reporting shall have
been restored; provided that if trading shall not be fully resumed and
reporting restored within three business days of the Valuation Date,
this Agreement may be terminated by either of the Trust or the
Acquiring Trust upon the giving of written notice to the other party.
3.4 At the Closing, the Acquired Fund or its transfer agent shall deliver
to the Acquiring Fund or its designated agent a list of the names and
addresses of the Acquired Fund Shareholders and the number of
outstanding shares of beneficial interest of the Acquired Fund owned by
each Acquired Fund Shareholder, all as of the close of business on the
Valuation Date, certified by the Secretary or Assistant Secretary of
the Trust. The Acquiring Trust will provide to the Acquired Fund
evidence satisfactory to the Acquired Fund that the Acquiring Shares
issuable pursuant to paragraph 1.1 have been credited to the Acquired
Fund's account on the books of the Acquiring Fund. On the Liquidation
Date, the Acquiring Trust will provide to the Acquired Fund evidence
satisfactory to the Acquired Fund that such Acquiring Shares have been
credited pro rata to open accounts in the names of the Acquired Fund
shareholders as provided in paragraph 1.3.
3.5 At the Closing each party shall deliver to the other such bills of
sale, instruments of assumption of liabilities, checks, assignments,
stock certificates, receipts or other documents as such other party or
its counsel may reasonably request in connection with the transfer of
assets, assumption of liabilities and liquidation contemplated by
paragraph 1.
4. REPRESENTATIONS AND WARRANTIES.
4.1 The Trust, on behalf of the Acquired Fund, represents and warrants the
following to the Acquiring Trust and to the Acquiring Fund as of the
date hereof and agrees to confirm the continuing accuracy and
completeness in all material respects of the following on the Closing
Date:
(a) The Trust is a business trust duly organized, validly existing and
in good standing under the laws of the Commonwealth of
Massachusetts;
(b) The Trust is a duly registered investment company classified as a
management company of the open-end type and its registration with
the Securities and Exchange Commission as an investment company
under the 1940 Act is in full force and effect, and the Acquired
Fund is a separate series thereof duly designated in accordance
with the applicable provisions of the Declaration of Trust of the
Trust and the 1940 Act;
(c) The Trust is not in violation in any material respect of any
provision of its Declaration of Trust or By-laws or of any
agreement, indenture, instrument, contract, lease or other
undertaking to which the Trust is a party or by which the Acquired
Fund is bound, and the execution, delivery and performance of this
Agreement will not result in any such violation;
(d) The Trust has no material contracts or other commitments (other
than this Agreement and such other contracts as may be entered into
in the ordinary course of its business) which if terminated may
result in material liability to the Acquired Fund or under which
(whether or not terminated) any material payments for periods
subsequent to the Closing Date will be due from the Acquired Fund;
(e) No litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or
threatened against the Acquired Fund, any of its properties or
A-3
<PAGE> 47
assets, or any person whom the Acquired Fund may be obligated to
indemnify in connection with such litigation, proceeding or
investigation. The Acquired Fund knows of no facts which might form
the basis for the institution of such proceedings, and is not a
party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and
adversely affects its business or its ability to consummate the
transactions contemplated hereby;
(f) The statement of assets and liabilities, the statement of
operations, the statement of changes in net assets, and the
schedule of investments as at and for the two years ended
[ , ____] of the Acquired Fund, audited by
[PricewaterhouseCoopers LLP/Arthur Andersen] [and the statement of
assets, the statement of changes in net assets and the schedule of
investments for the six months ended ____________, 2000,], copies
of which have been furnished to the Acquiring Fund, fairly reflect
the financial condition and results of operations of the Acquired
Fund as of such dates and for the periods then ended in accordance
with generally accepted accounting principles consistently applied,
and the Acquired Fund has no known liabilities of a material
amount, contingent or otherwise, other than those shown on the
statements of assets referred to above or those incurred in the
ordinary course of its business since ____________, 2000;
(g) Since __________, 2000, there has not been any material adverse
change in the Acquired Fund's financial condition, assets,
liabilities or business (other than changes occurring in the
ordinary course of business), or any incurrence by the Acquired
Fund of indebtedness, except as disclosed in writing to the
Acquiring Fund. For the purposes of this subparagraph (g),
distributions of net investment income and net realized capital
gains, changes in portfolio securities, changes in the market value
of portfolio securities or net redemptions shall be deemed to be in
the ordinary course of business;
(h) By the Closing Date, all federal and other tax returns and reports
of the Acquired Fund required by law to have been filed by such
date (giving effect to extensions) shall have been filed, and all
federal and other taxes shown to be due on said returns and reports
shall have been paid so far as due, or provision shall have been
made for the payment thereof, and to the best of the Acquired
Fund's knowledge no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(i) For all taxable years and all applicable quarters of such years
from the date of its inception, the Acquired Fund has met the
requirements of subchapter M of the Code, for treatment as a
"regulated investment company" within the meaning of Section 851 of
the Code. Neither the Trust nor the Acquired Fund has at any time
since its inception been liable for nor is now liable for any
material excise tax pursuant to Section 852 or 4982 of the Code.
The Acquired Fund has duly filed all federal, state, local and
foreign tax returns which are required to have been filed, and all
taxes of the Acquired Fund which are due and payable have been paid
except for amounts that alone or in the aggregate would not
reasonably be expected to have a material adverse effect. The
Acquired Fund is in compliance in all material respects with
applicable regulations of the Internal Revenue Service pertaining
to the reporting of dividends and other distributions on and
redemptions of its capital stock and to withholding in respect of
dividends and other distributions to shareholders, and is not
liable for any material penalties which could be imposed
thereunder;
(j) The authorized capital of the Trust consists of an unlimited number
of shares of beneficial interest with no par value, of multiple
series and classes. All issued and outstanding shares of the
Acquired Fund are, and at the Closing Date will be, duly and
validly issued and outstanding, fully paid and (except as set forth
in the Acquired Fund's then current prospectus or prospectuses and
statement or statements of additional information (collectively, as
amended or supplemented from time to time, the "Acquired Fund
Prospectus")), non-assessable by the Acquired Fund and will have
been issued in compliance with all applicable
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registration or qualification requirements of federal and state
securities laws. No options, warrants or other rights to subscribe
for or purchase, or securities convertible into, any shares of
beneficial interest of the Acquired Fund are outstanding and none
will be outstanding on the Closing Date (except that Class B shares
of the Acquired Fund convert automatically into Class A shares, as
set forth in the Acquired Fund Prospectus);
(k) The Acquired Fund's investment operations from inception to the
date hereof have been in compliance in all material respects with
the investment policies and investment restrictions set forth in
its prospectus and statement of additional information as in effect
from time to time, except as previously disclosed in writing to the
Acquiring Fund;
(l) The execution, delivery and performance of this Agreement has been
duly authorized by the Trustees of the Trust, and, upon approval
thereof by the required majority of the shareholders of the
Acquired Fund, this Agreement will constitute the valid and binding
obligation of the Acquired Fund enforceable in accordance with its
terms except as the same may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and other equitable principles;
(m) The Acquiring Shares to be issued to the Acquired Fund pursuant to
paragraph 1 will not be acquired for the purpose of making any
distribution thereof other than to the Acquired Fund Shareholders
as provided in paragraph 1.3;
(n) The information provided by the Acquired Fund for use in the
Registration Statement and Proxy Statement referred to in paragraph
5.3 shall be accurate and complete in all material respects and
shall comply with federal securities and other laws and regulations
applicable thereto;
(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the
Acquired Fund of the transactions contemplated by this Agreement,
except such as may be required under the Securities Act of 1933, as
amended (the "1933 Act"), the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the 1940 Act and state insurance,
securities or "Blue Sky" laws (which term as used herein shall
include the laws of the District of Columbia and of Puerto Rico);
(p) At the Closing Date, the Trust, on behalf of the Acquired Fund,
will have good and marketable title to its assets to be transferred
to the Acquiring Fund pursuant to paragraph 1.1 and will have full
right, power and authority to sell, assign, transfer and deliver
the Investments (as defined below) and any other assets and
liabilities of the Acquired Fund to be transferred to the Acquiring
Fund pursuant to this Agreement. At the Closing Date, subject only
to the delivery of the Investments and any such other assets and
liabilities and payment therefor as contemplated by this Agreement,
the Acquiring Fund will acquire good and marketable title thereto
and will acquire the Investments and any such other assets and
liabilities subject to no encumbrances, liens or security interests
whatsoever and without any restrictions upon the transfer thereof,
except as previously disclosed to the Acquiring Fund. As used in
this Agreement, the term "Investments" shall mean the Acquired
Fund's investments shown on the schedule of its investments as of
__________, 2000 referred to in Section 4.1(f) hereof, as
supplemented with such changes in the portfolio as the Acquired
Fund shall make, and changes resulting from stock dividends, stock
split-ups, mergers and similar corporate actions through the
Closing Date;
(q) At the Closing Date, the Acquired Fund will have sold such of its
assets, if any, as are necessary to assure that, after giving
effect to the acquisition of the assets of the Acquired Fund
pursuant to this Agreement, the Acquiring Fund will remain a
"diversified company" within the meaning of Section 5(b)(1) of the
1940 Act and in compliance with such other mandatory investment
restrictions as are set forth in the Acquiring Fund Prospectus, as
amended through the Closing Date; and
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(r) No registration of any of the Investments would be required if they
were, as of the time of such transfer, the subject of a public
distribution by either of the Acquiring Fund or the Acquired Fund,
except as previously disclosed by the Acquired Fund to the
Acquiring Fund.
4.2 The Acquiring Trust, on behalf of the Acquiring Fund, represents and
warrants the following to the Trust and to the Acquired Fund as of the
date hereof and agrees to confirm the continuing accuracy and
completeness in all material respects of the following on the Closing
Date:
(a) The Acquiring Trust is a business trust duly organized, validly
existing and in good standing under the laws of The Commonwealth of
Massachusetts;
(b) The Acquiring Trust is a duly registered investment company
classified as a management company of the open-end type and its
registration with the Securities and Exchange Commission as an
investment company under the 1940 Act is in full force and effect,
and the Acquiring Fund is a separate series thereof duly designated
in accordance with the applicable provisions of the Declaration of
Trust of the Acquiring Trust and the 1940 Act;
(c) The Acquiring Fund Prospectus conforms in all material respects to
the applicable requirements of the 1933 Act and the rules and
regulations of the Securities and Exchange Commission thereunder
and does not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and there
are no material contracts to which the Acquiring Fund is a party
that are not referred to in such Prospectus or in the registration
statement of which it is a part;
(d) At the Closing Date, the Acquiring Fund will have good and
marketable title to its assets;
(e) The Acquiring Trust is not in violation in any material respect of
any provisions of its Declaration of Trust or By-laws or of any
agreement, indenture, instrument, contract, lease or other
undertaking to which the Acquiring Trust is a party or by which the
Acquiring Fund is bound, and the execution, delivery and
performance of this Agreement will not result in any such
violation;
(f) No litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or
threatened against the Acquiring Fund or any of its properties or
assets. The Acquiring Fund knows of no facts which might form the
basis for the institution of such proceedings, and is not a party
to or subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely
affects its business or its ability to consummate the transactions
contemplated hereby;
(g) The statement of assets, the statement of operations, the statement
of changes in assets and the schedule of investments as at and for
the two years ended June 30, 2000 of the Acquiring Fund, audited by
PricewaterhouseCoopers LLP, copies of which have been furnished to
the Acquired Fund, fairly reflect the financial condition and
results of operations of the Acquiring Fund as of such dates and
the results of its operations for the periods then ended in
accordance with generally accepted accounting principles
consistently applied, and the Acquiring Fund has no known
liabilities of a material amount, contingent or otherwise, other
than those shown on the statements of assets referred to above or
those incurred in the ordinary course of its business since January
30, 2000;
(h) Since January 30, 2000, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets,
liabilities or business (other than changes occurring in the
ordinary course of business), or any incurrence by the Acquiring
Fund of indebtedness. For the purposes of this subparagraph (h),
changes in portfolio securities, changes in the market value of
portfolio securities or net redemptions shall be deemed to be in
the ordinary course of business;
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<PAGE> 50
(i) By the Closing Date, all federal and other tax returns and reports
of the Acquiring Fund required by law to have been filed by such
date (giving effect to extensions) shall have been filed, and all
federal and other taxes shown to be due on said returns and reports
shall have been paid so far as due, or provision shall have been
made for the payment thereof, and to the best of the Acquiring
Fund's knowledge no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(j) For each fiscal year of its operation, the Acquiring Fund has met
the requirements of Subchapter M of the Code for qualification as a
regulated investment company;
(k) The authorized capital of the Acquiring Trust consists of an
unlimited number of shares of beneficial interest, no par value, of
such number of different series as the Board of Trustees may
authorize from time to time. The outstanding shares of beneficial
interest in the Acquiring Fund are, and at the Closing Date will
be, divided into Class A shares, Class B shares, Class C shares,
Class Z shares and Class S shares each having the characteristics
described in the Acquiring Fund Prospectus. All issued and
outstanding shares of the Acquiring Fund are, and at the Closing
Date will be, duly and validly issued and outstanding, fully paid
and non-assessable (except as set forth in the Acquiring Fund
Prospectus) by the Acquiring Trust, and will have been issued in
compliance with all applicable registration or qualification
requirements of federal and state securities laws. Except for Class
B shares which convert to Class A shares after the expiration of a
period of time, no options, warrants or other rights to subscribe
for or purchase, or securities convertible into, any shares of
beneficial interest in the Acquiring Fund of any class are
outstanding and none will be outstanding on the Closing Date;
(l) The Acquiring Fund's investment operations from inception to the
date hereof have been in compliance in all material respects with
the investment policies and investment restrictions set forth in
its prospectus and statement of additional information as in effect
from time to time;
(m) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of the
Acquiring Trust, and this Agreement constitutes the valid and
binding obligation of the Acquiring Trust and the Acquiring Fund
enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and
other equitable principles;
(n) The Acquiring Shares to be issued and delivered to the Acquired
Fund pursuant to the terms of this Agreement will at the Closing
Date have been duly authorized and, when so issued and delivered,
will be duly and validly issued [Class A shares, Class B shares,
Class C shares, Class Z shares and Class S shares] of beneficial
interest in the Acquiring Fund, and will be fully paid and
non-assessable (except as set forth in the Acquiring Fund
Prospectus) by the Acquiring Trust, and no shareholder of the
Acquiring Trust will have any preemptive right of subscription or
purchase in respect thereof;
(o) The information to be furnished by the Acquiring Fund for use in
the Registration Statement and Proxy Statement referred to in
paragraph 5.3 shall be accurate and complete in all material
respects and shall comply with federal securities and other laws
and regulations applicable thereto; and
(p) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the
Acquiring Fund of the transactions contemplated by this Agreement,
except such as may be required under 1933 Act, the 1934 Act, the
1940 Act and state insurance, securities or "Blue Sky" laws (which
term as used herein shall include the laws of the District of
Columbia and of Puerto Rico).
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<PAGE> 51
5. COVENANTS OF THE ACQUIRED FUND AND THE ACQUIRING FUND.
The Acquiring Trust, on behalf of the Acquiring Fund, and the Trust, on
behalf of the Acquired Fund, each hereby covenants and agrees with the other as
follows:
5.1 The Acquiring Fund and the Acquired Fund each will operate its business
in the ordinary course between the date hereof and the Closing Date, it
being understood that such ordinary course of business will include
regular and customary periodic dividends and distributions.
5.2 The Acquired Fund will call a meeting of its shareholders to be held
prior to the Closing Date to consider and act upon this Agreement and
take all other reasonable action necessary to obtain the required
shareholder approval of the transactions contemplated hereby.
5.3 In connection with the Acquired Fund shareholders' meeting referred to
in paragraph 5.2, the Acquired Fund will prepare a Proxy Statement for
such meeting, to be included in a Registration Statement on Form N-14
(the "Registration Statement") which the Acquiring Trust will prepare
and file for the registration under the 1933 Act of the Acquiring
Shares to be distributed to the Acquired Fund shareholders pursuant
hereto, all in compliance with the applicable requirements of the 1933
Act, the 1934 Act, and the 1940 Act.
5.4 The information to be furnished by the Acquired Fund for use in the
Registration Statement and the information to be furnished by the
Acquiring Fund for use in the Proxy Statement, each as referred to in
paragraph 5.3, shall be accurate and complete in all material respects
and shall comply with federal securities and other laws and regulations
thereunder applicable thereto.
5.5 The Acquiring Fund will advise the Acquired Fund promptly if at any
time prior to the Closing Date the assets of the Acquired Fund include
any securities which the Acquiring Fund is not permitted to acquire.
5.6 Subject to the provisions of this Agreement, the Acquired Fund and the
Acquiring Fund will each take, or cause to be taken, all action, and do
or cause to be done, all things reasonably necessary, proper or
advisable to cause the conditions to the other party's obligations to
consummate the transactions contemplated hereby to be met or fulfilled
and otherwise to consummate and make effective such transactions.
5.7 The Acquiring Fund will use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act and
such of the state securities or "Blue Sky" laws as it may deem
appropriate in order to continue its operations after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND.
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Trust and the Acquiring Fund of all the obligations to be performed by
them hereunder on or before the Closing Date and, in addition thereto, to the
following further conditions:
6.1 The Acquiring Trust, on behalf of the Acquiring Fund, shall have
delivered to the Trust a certificate executed in its name by its
President or Vice President and its Treasurer or Assistant Treasurer,
in form satisfactory to the Trust and dated as of the Closing Date, to
the effect that the representations and warranties of the Acquiring
Trust on behalf of the Acquiring Fund made in this Agreement are true
and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement, and that
the Acquiring Trust and the Acquiring Fund have complied with all the
covenants and agreements and satisfied all of the conditions on their
parts to be performed or satisfied under this Agreement at or prior to
the Closing Date.
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<PAGE> 52
6.2 The Trust shall have received a favorable opinion from Ropes & Gray,
counsel to the Acquiring Trust for the transactions contemplated
hereby, dated the Closing Date and, in a form satisfactory to the
Trust, to the following effect:
(a) The Acquiring Trust is a business trust duly organized and validly
existing under the laws of The Commonwealth of Massachusetts and has
power to own all of its properties and assets and to carry on its
business as presently conducted, and the Acquiring Fund is a
separate series thereof duly constituted in accordance with the
applicable provisions of the 1940 Act and the Declaration of Trust
and By-laws of the Acquiring Trust; (b) this Agreement has been duly
authorized, executed and delivered on behalf of the Acquiring Fund
and, assuming the Prospectus and Registration Statement referred to
in paragraph 5.3 complies with applicable federal securities laws
and assuming the due authorization, execution and delivery of this
Agreement by the Trust on behalf of the Acquired Fund, is the valid
and binding obligation of the Acquiring Fund enforceable against the
Acquiring Fund in accordance with its terms, except as the same may
be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights
generally and other equitable principles; (c) the Acquiring Fund has
the power to assume the liabilities to be assumed by it hereunder
and upon consummation of the transactions contemplated hereby the
Acquiring Fund will have duly assumed such liabilities; (d) the
Acquiring Shares to be issued for transfer to the shareholders of
the Acquired Fund as provided by this Agreement are duly authorized
and upon such transfer and delivery will be validly issued and
outstanding and fully paid and nonassessable [Class A shares, Class
B shares, Class C shares, Class Z shares and Class S shares] of
beneficial interest in the Acquiring Fund, and no shareholder of the
Acquiring Fund has any preemptive right of subscription or purchase
in respect thereof; (e) the execution and delivery of this Agreement
did not, and the performance by the Acquiring Trust and the
Acquiring Fund of their respective obligations hereunder will not,
violate the Acquiring Trust's Declaration of Trust or By-laws, or
any provision of any agreement known to such counsel to which the
Acquiring Trust or the Acquiring Fund is a party or by which either
of them is bound or, to the knowledge of such counsel, result in the
acceleration of any obligation or the imposition of any penalty
under any agreement, judgment, or decree to which the Acquiring
Trust or the Acquiring Fund is a party or by which either of them is
bound; (f) to the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority is
required for the consummation by the Acquiring Trust or the
Acquiring Fund of the transactions contemplated by this Agreement
except such as may be required under state securities or "Blue Sky"
laws or such as have been obtained; (g) except as previously
disclosed, pursuant to section 4.2(f) above, such counsel does not
know of any legal or governmental proceedings relating to the
Acquiring Trust or the Acquiring Fund existing on or before the date
of mailing of the Prospectus referred to in paragraph 5.3 or the
Closing Date required to be described in the Registration Statement
referred to in paragraph 5.3 which are not described as required;
(h) the Acquiring Trust is registered with the Securities and
Exchange Commission as an investment company under the 1940 Act; and
(i) to the best knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to the
Acquiring Trust or the Acquiring Fund or any of their properties or
assets and neither the Acquiring Trust nor the Acquiring Fund is a
party to or subject to the provisions of any order, decree or
judgment of any court or governmental body, which materially and
adversely affects its business.
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<PAGE> 53
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to complete the transactions provided
for herein shall be subject, at its election, to the performance by the Acquired
Fund of all the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, to the following further conditions:
7.1 The Trust, on behalf of the Acquired Fund, shall have delivered to the
Acquiring Trust a certificate executed in its name by its President or
Vice President and its Treasurer or Assistant Treasurer, in form and
substance satisfactory to the Acquiring Trust and dated the Closing
Date, to the effect that the representations and warranties of the
Acquired Fund made in this Agreement are true and correct at and as of
the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and that the Trust and the Acquired
Fund have complied with all the covenants and agreements and satisfied
all of the conditions on its part to be performed or satisfied under
this Agreement at or prior to the Closing Date.
7.2 The Acquiring Trust shall have received a favorable opinion from [Ropes
& Gray/Bell, Boyd & Lloyd LLC/Bingham Dana LLP], counsel to the Trust,
dated the Closing Date and in a form satisfactory to the Acquiring
Trust, to the following effect:
(a) The Trust is a business trust duly organized and validly existing
under the laws of the Commonwealth of Massachusetts and has
corporate power to own all of its properties and assets and to carry
on its business as presently conducted, and the Acquired Fund is a
separate series thereof duly constituted in accordance with the
applicable provisions of the 1940 Act and the Declaration of Trust
of the Trust; (b) this Agreement has been duly authorized, executed
and delivered on behalf of the Acquired Fund and, assuming the Proxy
Statement referred to in paragraph 5.3 complies with applicable
federal securities laws and assuming the due authorization,
execution and delivery of this Agreement by the Acquiring Trust on
behalf of the Acquiring Fund, is the valid and binding obligation of
the Acquired Fund enforceable against the Acquired Fund in
accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and other
equitable principles; (c) the Acquired Fund has the power to sell,
assign, transfer and deliver the assets to be transferred by it
hereunder, and, upon consummation of the transactions contemplated
hereby, the Acquired Fund will have duly transferred such assets to
the Acquiring Fund; (d) the execution and delivery of this Agreement
did not, and the performance by the Trust and the Acquired Fund of
their respective obligations hereunder will not, violate the Trust's
Declaration of Trust or By-laws, or any provision of any agreement
known to such counsel to which the Trust or the Acquired Fund is a
party or by which either of them is bound or, to the knowledge of
such counsel, result in the acceleration of any obligation or the
imposition of any penalty under any agreement, judgment, or decree
to which the Trust or the Acquired Fund is a party or by which
either of them is bound; (e) to the knowledge of such counsel, no
consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Trust
or the Acquired Fund of the transactions contemplated by this
Agreement, except such as may be required under state securities or
"Blue Sky" laws or such as have been obtained; (f) such counsel does
not know of any legal or governmental proceedings relating to the
Trust or the Acquired Fund existing on or before the date of mailing
of the Prospectus referred to in paragraph 5.3 or the Closing Date
required to be described in the Registration Statement referred to
in paragraph 5.3 which are not described as required; (g) the Trust
is registered with the Securities and Exchange Commission as an
investment company under the 1940 Act; and (h) to the best knowledge
of such counsel, no litigation or administrative proceeding or
investigation of or before any court or governmental body is
presently pending or threatened as to the Trust or the Acquired Fund
or any of its properties or assets and neither the Trust nor the
Acquired Fund is a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body, which
materially and adversely affects its business.
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<PAGE> 54
7.3 [RESERVED]
7.4 Prior to the Closing Date, the Acquired Fund shall have declared a
dividend or dividends which, together with all previous dividends,
shall have the effect of distributing all of the Acquired Fund's
investment company taxable income for its taxable years ending on or
after __________, 2000 and on or prior to the Closing Date (computed
without regard to any deduction for dividends paid), and all of its net
capital gains realized in each of its taxable years ending on or after
__________, 2000 and on or prior to the Closing Date.
7.5 The Acquired Fund shall have furnished to the Acquiring Fund a
certificate, signed by the President (or any Vice President) and the
Treasurer of the Trust, as to the adjusted tax basis in the hands of
the Acquired Fund of the securities delivered to the Acquiring Fund
pursuant to this Agreement.
7.6 The custodian of the Acquired Fund shall have delivered to the
Acquiring Fund a certificate identifying all of the assets of the
Acquired Fund held by such custodian as of the Valuation Date.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH OF THE ACQUIRING FUND AND
THE ACQUIRED FUND.
The respective obligations of the Trust and the Acquiring Trust hereunder
are each subject to the further conditions that on or before the Closing Date:
8.1 This Agreement and the transactions contemplated herein shall have been
approved by the vote of the required majority of the holders of the
outstanding shares of the Acquired Fund of record on the record date
for the meeting of its shareholders referred to in paragraph 5.2.
8.2 On the Closing Date no action, suit or other preceding shall be pending
before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection
with, this Agreement or the transactions contemplated hereby.
8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including
those of the Securities and Exchange Commission and of state Blue Sky
and securities authorities) deemed necessary by the Trust or the
Acquiring Trust to permit consummation, in all material respects, of
the transactions contemplated hereby shall have been obtained, except
where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties
of the Acquiring Fund or the Acquired Fund.
8.4 The Registration Statement referred to in paragraph 5.3 shall have
become effective under the 1933 Act and no stop order suspending the
effectiveness thereof shall have been issued and, to the best knowledge
of the parties hereto, no investigation or proceeding for that purpose
shall have been instituted or be pending, threatened or contemplated
under the 1933 Act.
8.5 The Trust shall have received a favorable opinion of Ropes & Gray
satisfactory to the Trust and the Acquiring Trust shall have received a
favorable opinion of [Ropes & Gray/Bell, Boyd & Lloyd LLC] satisfactory
to the Acquiring Trust, each substantially to the effect that, for
federal income tax purposes:
(a) The acquisition by the Acquiring Fund of the assets of the Acquired
Fund in exchange for the Acquiring Fund's assumption of the
Obligations of the Acquired Fund and issuance of the Acquiring
Shares, followed by the distribution by the Acquired Fund of such
the Acquiring Shares to the shareholders of the Acquired Fund in
exchange for their shares of the Acquired Fund, all as provided in
paragraph 1 hereof, will constitute a reorganization within the
meaning of Section 368(a) of the Code, and the Acquired Fund and the
Acquiring Fund will each be "a party to a reorganization" within the
meaning of Section 368(b) of the Code;
(b) No gain or loss will be recognized by the Acquired Fund (i) upon the
transfer of its assets to the Acquiring Fund in exchange for the
Acquiring Shares or (ii) upon the distribution of the
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<PAGE> 55
Acquiring Shares to the shareholders of the Acquired Fund as
contemplated in paragraph 1 hereof;
(c) No gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund in exchange for the
assumption of the Obligations and issuance of the Acquiring Shares
as contemplated in paragraph 1 hereof;
(d) The tax basis of the assets of the Acquired Fund acquired by the
Acquiring Fund will be the same as the basis of those assets in the
hands of the Acquired Fund immediately prior to the transfer, and
the holding period of the assets of the Acquired Fund in the hands
of the Acquiring Fund will include the period during which those
assets were held by the Acquired Fund;
(e) The shareholders of the Acquired Fund will recognize no gain or loss
upon the exchange of their shares of the Acquired Fund for the
Acquiring Shares;
(f) The tax basis of the Acquiring Shares to be received by each
shareholder of the Acquired Fund will be the same in the aggregate
as the aggregate tax basis of the shares of the Acquired Fund
surrendered in exchange therefor;
(g) The holding period of the Acquiring Shares to be received by each
shareholder of the Acquired Fund will include the period during
which the shares of the Acquired Fund surrendered in exchange
therefor were held by such shareholder, provided such shares of the
Acquired Fund were held as a capital asset on the date of the
exchange; and
(h) The Acquiring Fund will succeed to and take into account the items
of Acquired Fund described in Section 381(c) of the Code, subject to
the conditions and limitations specified in Sections 381, 382, 383
and 384 of the Code and the regulations thereunder.
8.6 At any time prior to the Closing, any of the foregoing conditions of
this Agreement may be waived jointly by the Board of Trustees of the
Trust and the Board of Trustees of the Acquiring Trust if, in their
judgment, such waiver will not have a material adverse effect on the
interests of the shareholders of the Acquired Fund and the Acquiring
Fund.
9. BROKERAGE FEES AND EXPENSES.
9.1 The Trust, on behalf of the Acquired Fund, and the Acquiring Trust, on
behalf of the Acquiring Fund, each represents and warrants to the other
that there are no brokers or finders entitled to receive any payments
in connection with the transactions provided for herein.
9.2 The Acquiring Trust, on behalf of the Acquiring Fund, shall pay all
fees paid to governmental authorities for the registration or
qualification of the Acquiring Shares. All of the other out-of-pocket
expenses (other than tabulation costs which will be borne in their
entirety by Liberty Financial) of the transactions contemplated by this
Agreement shall be borne as follows: (a) as to expenses allocable to
the Trust, on behalf of the Acquired Fund, [fifty percent (50%) for
Liberty Value Fund and Liberty All-Star Growth & Income
Fund/twenty-five percent (25%) for Liberty Value Opportunities Fund] of
such expenses shall be borne by the Trust, on behalf of the Acquired
Fund, and [fifty percent (50%) for Liberty Value Fund and Liberty
All-Star Growth & Income Fund/ seventy-five percent (75%) for Liberty
Value Opportunities Fund] of such expenses shall be borne by Liberty
Financial; and (b) as to expenses allocable to the Acquiring Trust, on
behalf of the Acquiring Fund, twenty-five percent (25%) of such
expenses shall be borne by the Acquiring Trust, on behalf of the
Acquiring Fund, and seventy-five percent (75%) of such expenses shall
be borne by Liberty Financial. The foregoing sentence shall be subject,
however, to any undertaking by Liberty Financial to Liberty Funds Trust
I, II, III, IV, V, VI, VII and IX (or any of their series)
(collectively, the "Liberty Trusts") to limit the aggregate expenses
(other than fees paid to governmental authorities for the registration
or qualification of shares of the Liberty Trusts) of the transactions
contemplated by this Agreement and other transactions involving the
Liberty Trusts.
A-12
<PAGE> 56
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES.
10.1 The Trust on behalf of the Acquired Fund and the Acquiring Trust on
behalf of the Acquiring Fund agree that neither party has made any
representation, warranty or covenant not set forth herein and that
this Agreement constitutes the entire agreement between the parties.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in
connection herewith shall not survive the consummation of the
transactions contemplated hereunder except paragraphs 1.1, 1.3, 1.5,
1.6, 5.4, 9, 10, 13 and 14.
11. TERMINATION.
11.1 This Agreement may be terminated by the mutual agreement of the
Acquiring Trust and the Trust. In addition, either the Acquiring Trust
or the Trust may at its option terminate this Agreement at or prior to
the Closing Date because:
(a) Of a material breach by the other of any representation, warranty,
covenant or agreement contained herein to be performed by the other
party at or prior to the Closing Date;
(b) A condition herein expressed to be precedent to the obligations of
the terminating party has not been met and it reasonably appears
that it will not or cannot be met; or
(c) If the transactions contemplated by this Agreement have not been
substantially completed by May 31, 2001 this Agreement shall
automatically terminate on that date unless a later date is agreed
to by both the Trust and the Acquiring Trust.
11.2 If for any reason the transactions contemplated by this Agreement are
not consummated, no party shall be liable to any other party for any
damages resulting therefrom, including without limitation
consequential damages.
12. AMENDMENTS.
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of the Trust
on behalf of the Acquired Fund and the Acquiring Trust on behalf of the
Acquiring Fund; provided, however, that following the shareholders' meeting
called by the Acquired Fund pursuant to paragraph 5.2 no such amendment may have
the effect of changing the provisions for determining the number of the
Acquiring Shares to be issued to shareholders of the Acquired Fund under this
Agreement to the detriment of such shareholders without their further approval.
13. NOTICES.
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to: Liberty Funds Trust VI, One
Financial Center, Boston, Massachusetts 02111, Attention: Secretary or to [Name
and Address of Trust], Attention: Secretary.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT NON-RECOURSE.
14.1 The article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
A-13
<PAGE> 57
14.3 This Agreement shall be governed by and construed in accordance with
the domestic substantive laws of The Commonwealth of Massachusetts,
without giving effect to any choice or conflicts of law rule or
provision that would result in the application of the domestic
substantive laws of any other jurisdiction.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment
or transfer hereof or of any rights or obligations hereunder shall be
made by any party without the written consent of the other party.
Nothing herein expressed or implied is intended or shall be construed
to confer upon or give any person, firm or corporation, other than the
parties hereto and their respective successors and assigns, any rights
or remedies under or by reason of this Agreement.
14.5 A copy of the Declaration of Trust of the Trust and the Declaration of
Trust of the Acquiring Trust are each on file with the Secretary of
State of the Commonwealth of Massachusetts, and notice is hereby given
that no trustee, officer, agent or employee of either the Trust or the
Acquiring Trust shall have any personal liability under this
Agreement, and that this Agreement is binding only upon the assets and
properties of the Acquired Fund and the Acquiring Fund.
A-14
<PAGE> 58
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed as a sealed instrument by its President or Vice President and its
corporate seal to be affixed thereto and attested by its Secretary or Assistant
Secretary.
[ACQUIRED FUND TRUST],
on behalf of [Name of Acquired Fund]
By:
------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
ATTEST:
---------------------------------------------------------
Name:
-------------------------------------------------
Title:
-------------------------------------------------
LIBERTY FUNDS TRUST VI,
on behalf of Liberty Growth & Income
Fund
By:
------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
ATTEST:
---------------------------------------------------------
Name:
-------------------------------------------------
Title:
-------------------------------------------------
A-15
<PAGE> 59
Solely for purposes of Section 9.2
of the Agreement:
LIBERTY FINANCIAL COMPANIES, INC.
By:
------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
ATTEST:
---------------------------------------------------------
Name:
-------------------------------------------------
Title:
-------------------------------------------------
A-16
<PAGE> 60
APPENDIX B
FUND INFORMATION
SHARES OUTSTANDING AND ENTITLED TO VOTE OF THE STEIN ROE FUND AND THE STEIN ROE
TRUST AND THE BASE TRUST, THE VALUE FUND AND TRUST VI, AND THE ALL-STAR FUND AND
TRUST IX, AND SHARES OUTSTANDING OF THE GROWTH & INCOME FUND
For each class of each Acquired Fund's shares and each Trust's shares
entitled to vote at the Meetings, and for each class of the Growth & Income
Fund's shares, the number of shares outstanding as of September 29, 2000 was as
follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES OUTSTANDING
FUND OR TRUST CLASS AND ENTITLED TO VOTE
------------- ----- ----------------------------
<S> <C> <C>
STEIN ROE FUND...................... A 14,114
B 64,928
C 3,876
S 11,075,265
Z 38
STEIN ROE TRUST..................... 130,357,064
BASE TRUST.......................... 1,248,501,499
VALUE FUND.......................... A 912,113
B 1,702,865
C 176,789
Z 1,190,367
TRUST VI............................ 72,651,978
ALL-STAR FUND....................... A 375,651
B 1,499,158
C 390,487
Z 199,907
TRUST IX............................ 2,465,202
GROWTH & INCOME FUND................ A 15,676,399
B 38,455,710
C 1,403,148
S 0
Z 52
</TABLE>
OWNERSHIP OF SHARES
As of September 29, 2000, each Trust believes that the Trustees and
officers of the respective Trusts, as a group, owned less than one percent of
each class of shares of each Fund and of each Trust as a whole. As of
B-1
<PAGE> 61
September 29, 2000, the following shareholders of record owned 5% or more of the
outstanding shares of the noted class of shares of the noted Fund:
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
OUTSTANDING OUTSTANDING
SHARES SHARES
OF CLASS OF CLASS
FUND AND CLASS NAME AND ADDRESS OF SHAREHOLDER OWNED OWNED
-------------- ------------------------------- ----------- -------------
<S> <C> <C> <C>
STEIN ROE FUND
CLASS A................... Merrill Lynch Pierce Fenner & Smith 1,969.582 13.95%
For the Sole Benefit of its
Customers
Attn: Fund Administration
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484
Ricky E. Theobold TOD 2,581.844 18.29%
Jennifer L. Theobold
Subject to STA TOD Rules
4141 Sweeney Lane
Hillsboro, OH 45133
Investors Bank & Trust Co. 940.557 6.66%
Custodian
Thomas Hunt Terry III IRA
153 Red Oak
Seguin, TX 78155-7411
Leonard J. Rickelman 810.458 5.74%
Bernice C. Rickelman
Leonard & Bernice Rickleman Rev
Trust U/A 3/19/1993
1365 250th Avenue
West Point, IA 52656-9218
Virginia M. Ladd 1,194.659 8.46%
4036 Baronne Way
Memphis, TN 38117-2908
CLASS B................... Merrill Lynch Pierce Fenner & Smith 5,354.224 8.25%
For the Sole Benefit of its
Customers
Attn: Fund Administration
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484
AG Edwards & Sons Inc. Custodian 4,208.596 6.48%
P.O. Box 360
West Point, NY 10997
CLASS C................... Ann M. Cochran 884.630 22.82%
P.O. Box 666
Fillmore, CA 93016-0666
Raymond James & Assoc., Inc. CSDN 366.647 9.45%
6145 Cumberland Ct.
Mentor, OH 44060
</TABLE>
B-2
<PAGE> 62
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
OUTSTANDING OUTSTANDING
SHARES SHARES
OF CLASS OF CLASS
FUND AND CLASS NAME AND ADDRESS OF SHAREHOLDER OWNED OWNED
-------------- ------------------------------- ----------- -------------
<S> <C> <C> <C>
CLASS Z................... Colonial Management Associates, Inc. 37.546 100.00%
Attn: Finance Department
One Financial Center
Boston, MA 02111-2621
VALUE FUND
CLASS A................... Keyport Life Insurance Company 353,105.445 38.71%
c/o Chris Westfall
125 High Street
Boston, MA 02111
Merrill Lynch Pierce Fenner & Smith 66,689.040 7.31%
4800 Deer Lake Drive E. 3rd Floor
Jacksonville, FL 32246
CLASS B................... Merrill Lynch Pierce Fenner & Smith 127,630.269 7.50%
4800 Deer Lake Drive E. 3rd Floor
Jacksonville, FL 32246
CLASS C................... Keyport Life Insurance Company 34,228.114 19.36%
c/o Chris Westfall
125 High Street
Boston, MA 02111
Merrill Lynch Pierce Fenner & Smith 16,528.538 9.35%
4800 Deer Lake Drive E. 3rd Floor
Jacksonville, FL 32246
CLASS Z................... Colonial Counselor Growth Portfolio 709,862.779 59.63%
c/o Christie McCullough
245 Summer Street
Boston, MA 02111
Colonial Counselor 450,511.620 37.85%
Balanced Portfolio
c/o Christie McCullough
245 Summer Street
Boston, MA 02111
ALL-STAR FUND
CLASS A................... Peter Stovall Cook Trustee 20,621.624 5.49%
Peter Stovall Cook Living Trust
U/A 01/21/1999
1763 Las Gallinas
San Rafael, CA 94903
Rodney G. Island 30,239.074 8.05%
P.O. Box 528
Redwood Valley, CA 95470
</TABLE>
B-3
<PAGE> 63
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
OUTSTANDING OUTSTANDING
SHARES SHARES
OF CLASS OF CLASS
FUND AND CLASS NAME AND ADDRESS OF SHAREHOLDER OWNED OWNED
-------------- ------------------------------- ----------- -------------
<S> <C> <C> <C>
CLASS C................... Russell J. Ohlson Trustee 47,125.353 12.07%
The Russell J. Ohlson Trust
U/A 1/28/1994
P.O. Box 806
Bodega Bay, CA 94923
RGB Display Corp 40,270.079 10.31%
22525 Kingston Lane
Grass Valley, CA 95949
CLASS Z................... Liberty Asset Management Company 199,906.542 100.00%
Attn: Michael Santilli
600 Atlantic Avenue
Boston, MA 02210
GROWTH & INCOME FUND
CLASS C................... Merrill Lynch Pierce Fenner & Smith 91,069.436 6.49%
For the Sole Benefit of its
Customers
Attn: Fund Administration #970X8
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484
Banc One Securities Corp 93,538.117 6.67%
FBO The One Select Portfolio
733 Greencrest Drive
Westerville, OH 43081
CLASS Z................... Colonial Management Associates, Inc. 52.015 100.00%
Attn: Finance Department
One Financial Center
Boston, MA 02111-2621
</TABLE>
B-4
<PAGE> 64
OWNERSHIP OF SHARES UPON CONSUMMATION OF ACQUISITION
As of September 29, 2000, the shareholders of record that owned 5% or more
of the outstanding shares of the noted class of shares of the noted Fund would
own the following percentage of the Growth & Income Fund upon consummation of
the Acquisition:
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING SHARES
OF CLASS OWNED UPON
CONSUMMATION OF
FUND AND CLASS NAME AND ADDRESS OF SHAREHOLDER ACQUISITION
-------------- ------------------------------- --------------------
<S> <C> <C>
STEIN ROE FUND
CLASS A....................... Merrill Lynch Pierce Fenner & Smith 0.02%
For the Sole Benefit of its
Customers
Attn: Fund Administration
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484
Ricky E. Theobold TOD 0.02%
Jennifer L. Theobold
Subject to STA TOD Rules
4141 Sweeney Lane
Hillsboro, OH 45133
Investors Bank & Trust Co. 0.01%
Custodian
Thomas Hunt Terry III IRA
153 Red Oak
Seguin, TX 78155-7411
Leonard J. Rickelman 0.01%
Bernice C. Rickelman
Leonard & Bernice Rickleman Rev
Trust U/A 3/19/1993
1365 250th Avenue
West Point, IA 52656-9218
Virginia M. Ladd 0.01%
4036 Baronne Way
Memphis, TN 38117-2908
CLASS B....................... Merrill Lynch Pierce Fenner & Smith 0.02%
For the Sole Benefit of its
Customers
Attn: Fund Administration
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484
AG Edwards & Sons Inc. Custodian 0.01%
P.O. Box 360
West Point, NY 10997
CLASS C....................... Ann M. Cochran 0.07%
P.O. Box 666
Fillmore, CA 93016-0666
Raymond James & Assoc., Inc. CSDN 0.03%
6145 Cumberland Ct.
Mentor, OH 44060
</TABLE>
B-5
<PAGE> 65
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING SHARES
OF CLASS OWNED UPON
CONSUMMATION OF
FUND AND CLASS NAME AND ADDRESS OF SHAREHOLDER ACQUISITION
-------------- ------------------------------- --------------------
<S> <C> <C>
CLASS Z....................... Colonial Management Associates, Inc. 0.01%
Attn: Finance Department
One Financial Center
Boston, MA 02111-2621
VALUE FUND
CLASS A....................... Keyport Life Insurance Company 1.30%
c/o Chris Westfall
125 High Street
Boston, MA 02111
Merrill Lynch Pierce Fenner & Smith 0.24%
4800 Deer Lake Drive E. 3rd Floor
Jacksonville, FL 32246
CLASS B....................... Merrill Lynch Pierce Fenner & Smith 0.18%
4800 Deer Lake Drive E. 3rd Floor
Jacksonville, FL 32246
CLASS C....................... Keyport Life Insurance Company 1.13%
c/o Chris Westfall
125 High Street
Boston, MA 02111
Merrill Lynch Pierce Fenner & Smith 0.54%
4800 Deer Lake Drive E. 3rd Floor
Jacksonville, FL 32246
CLASS Z....................... Colonial Counselor Growth Portfolio 50.98%
c/o Christie McCullough
245 Summer Street
Boston, MA 02111
Colonial Counselor 32.35%
Balanced Portfolio
c/o Christie McCullough
245 Summer Street
Boston, MA 02111
ALL-STAR FUND
CLASS A....................... Peter Stovall Cook Trustee 0.08%
Peter Stovall Cook Living Trust
U/A 01/21/1999
1763 Las Gallinas
San Rafael, CA 94903
Rodney G. Island 0.11%
P.O. Box 528
Redwood Valley, CA 95470
</TABLE>
B-6
<PAGE> 66
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING SHARES
OF CLASS OWNED UPON
CONSUMMATION OF
FUND AND CLASS NAME AND ADDRESS OF SHAREHOLDER ACQUISITION
-------------- ------------------------------- --------------------
<S> <C> <C>
CLASS C....................... Russell J. Ohlson Trustee 1.56%
The Russell J. Ohlson Trust
U/A 1/28/1994
P.O. Box 806
Bodega Bay, CA 94923
RGB Display Corp 1.33%
22525 Kingston Lane
Grass Valley, CA 95949
CLASS Z....................... Liberty Asset Management Company 14.58%
Attn: Michael Santilli
600 Atlantic Avenue
Boston, MA 02210
GROWTH & INCOME FUND
CLASS C....................... Merrill Lynch Pierce Fenner & Smith 5.04%
For the Sole Benefit of its
Customers
Attn: Fund Administration #970X8
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484
Banc One Securities Corp. 5.17%
FBO The One Select Portfolio
733 Greencrest Drive
Westerville, OH 43081
CLASS Z....................... Colonial Management Associates, Inc. 0.01%
Attn: Finance Department
One Financial Center
Boston, MA 02111-2621
</TABLE>
B-7
<PAGE> 67
INFORMATION CONCERNING EXECUTIVE OFFICERS
The following table sets forth certain information about the executive
officers of each Fund:
<TABLE>
<CAPTION>
YEAR OF
EXECUTIVE OFFICER ELECTION AS
NAME & AGE OFFICE AND PRINCIPAL OCCUPATION* EXECUTIVE OFFICER
----------------- -------------------------------- -----------------
<S> <C> <C>
Stephen E. Gibson.................... President of the Stein Roe Mutual 1998
(46) Funds since November 1999; President
of the Liberty Mutual Funds since
June 1998; Chairman of the Board
since July 1998, Chief Executive
Officer and President since December
1996, and Director since July 1996 of
Colonial (formerly Executive Vice
President of Colonial from July 1996
to December 1996); Chairman of the
Board, Director, Chief Executive
Officer and President of Liberty
Funds Group LLC ("LFG") since
December 1998 (formerly Director,
Chief Executive Officer and President
of The Colonial Group, Inc. from
December 1996 to December 1998);
Director since September 2000,
President since January 2000, and
Vice Chairman since August 1998 of
Stein Roe (formerly Assistant
Chairman and Executive Vice President
of Stein Roe from August 1998 to
January 2000). (Formerly Managing
Director of Marketing of Putnam
Investments (investment advisor) from
June 1992 to July 1996.)
William J. Ballou.................... Assistant Secretary of the Stein Roe 2000
(35) Mutual Funds since May 2000;
Secretary of the Liberty Mutual Funds
since October 2000 (formerly
Assistant Secretary of the Liberty
Mutual Funds from October 1997 to
October 2000); Vice President,
Assistant Secretary and Counsel of
Colonial since October 1997; Vice
President and Counsel since April
2000, and Assistant Secretary since
December 1998 of LFG; Associate
Counsel, Massachusetts Financial
Services Company (financial services
provider) prior thereto.
</TABLE>
B-8
<PAGE> 68
<TABLE>
<CAPTION>
YEAR OF
EXECUTIVE OFFICER ELECTION AS
NAME & AGE OFFICE AND PRINCIPAL OCCUPATION* EXECUTIVE OFFICER
----------------- -------------------------------- -----------------
<S> <C> <C>
Kevin M. Carome...................... Executive Vice President of the 1999
(44) Liberty Mutual Funds since October
2000; Executive Vice President of the
Stein Roe Mutual Funds since May 1999
(formerly Vice President from April
1998 to May 1999, Secretary from
February 2000 to May 2000 and
Assistant Secretary from April 1998
to February 2000 of the Stein Roe
Mutual Funds); Chief Legal Officer of
Liberty Financial since August 2000;
Senior Vice President, Legal, of LFG
since January 1999; General Counsel
and Secretary of Stein Roe since
January 1998; Associate General
Counsel and Vice President of Liberty
Financial prior thereto.
</TABLE>
The following individuals are Executive Officers of the Stein Roe Mutual
Funds only:
<TABLE>
<S> <C> <C>
Loren A. Hansen...................... Executive Vice President of the Stein 1997
(52) Roe Mutual Funds since November 1997;
Executive Vice President, Stein Roe
since December 1995; Senior Vice
President, Colonial, since October
1997; Senior Vice President, Northern
Trust Company (banking) prior
thereto.
William D. Andrews................... Executive Vice President of the Stein 1997
(53) Roe Mutual Funds since November 1997;
Executive Vice President, Stein Roe
since December 1995; Senior Vice
President, Stein Roe prior thereto.
</TABLE>
---------------
* Except as otherwise noted, each individual has held the office indicated or
other offices in the same company for the last five years.
B-9
<PAGE> 69
ADDITIONAL INFORMATION CONCERNING TRUSTEE COMPENSATION
The current Board of Trustees of the Liberty Mutual Funds received the
following compensation from the Value Fund and the Growth & Income Fund as of
each such Fund's fiscal year end(1):
<TABLE>
<CAPTION>
GROWTH &
VALUE FUND INCOME FUND
TRUSTEE 6/30/00 6/30/00
------- ---------- -----------
<S> <C> <C>
Mr. Bleasdale............................................... $700(2) $5,278(3)
Ms. Collins................................................. 635 4,787
Mr. Grinnell................................................ 661 4,989
Mr. Lowry................................................... 654 4,931
Mr. Macera.................................................. 631 4,761
Mr. Mayer................................................... 661 4,989
Mr. Moody................................................... 666(4) 5,029(5)
Mr. Neuhauser............................................... 671 5,040
Mr. Stitzel................................................. 638 4,809
Ms. Verville................................................ 630(6) 4,748(7)
</TABLE>
The current Board of Trustees of the Liberty Mutual Funds received the
following compensation from the All-Star Fund as of the Fund's fiscal year end:
<TABLE>
<CAPTION>
ALL-STAR FUND(8)
TRUSTEE 12/31/99
------- ----------------
<S> <C>
Mr. Grinnell................................................ $2,549
Mr. Lowry................................................... 2,549
Mr. Mayer................................................... 2,549
Mr. Neuhauser............................................... 2,549
</TABLE>
The following table sets forth the total compensation paid to each Trustee
by the Liberty Mutual Funds for the calendar year ended December 31, 1999.
<TABLE>
<CAPTION>
TRUSTEE TOTAL COMPENSATION
------- ------------------
<S> <C>
Mr. Bleasdale............................................... $103,000(9)
Ms. Collins................................................. 96,000
Mr. Grinnell................................................ 100,000
Mr. Lowry................................................... 97,000
Mr. Macera.................................................. 95,000
Mr. Mayer................................................... 101,000
Mr. Moody................................................... 91,000(10)
Mr. Neuhauser............................................... 101,252
Mr. Stitzel................................................. 95,000
Ms. Verville................................................ 96,000(11)
</TABLE>
For the calendar year ended December 31, 1999, certain of the Trustees
received the following compensation in their capacities as Trustees or Directors
of the Liberty All-Star Equity Fund, the Liberty All-Star Growth Fund, Inc. and
the Liberty Funds Trust IX (together, the "Liberty All-Star Funds"):
<TABLE>
<CAPTION>
TRUSTEE TOTAL COMPENSATION(12)
------- ----------------------
<S> <C>
Mr. Grinnell............................................. 25,000
Mr. Lowry................................................ 25,000
Mr. Mayer................................................ 25,000
Mr. Neuhauser............................................ 25,000
</TABLE>
B-10
<PAGE> 70
The current Board of Trustees of the Stein Roe Trust received the following
compensation from the Stein Roe Fund as of the Fund's fiscal year end:
<TABLE>
<CAPTION>
STEIN ROE FUND
TRUSTEE 9/30/00
------- --------------
<S> <C>
Mr. Bacon................................................... $1,300
Mr. Boyd.................................................... 1,400
Mr. Hacker.................................................. 1,300
Ms. Kelly................................................... 1,300
Mr. Nelson.................................................. 1,200
Mr. Theobald................................................ 1,200
</TABLE>
The following table sets forth the total compensation paid to each Trustee
by the Stein Roe Funds for the calendar year ended December 31, 1999.
<TABLE>
<CAPTION>
TRUSTEE TOTAL COMPENSATION(13)
------- ----------------------
<S> <C>
Mr. Bacon.............................................. $117,850
Mr. Boyd............................................... 104,100
Mr. Hacker............................................. 93,900
Ms. Kelly.............................................. 103,400
Mr. Nelson............................................. 103,900
Mr. Theobald........................................... 103,400
</TABLE>
---------------
(1) The Liberty Mutual Funds do not currently provide pension or retirement
plan benefits to the Trustees.
(2) Includes $345 payable in later years as deferred compensation.
(3) Includes $2,576 payable in later years as deferred compensation.
(4) Total compensation of $666 for the fiscal year ended June 30, 2000 will be
payable in later years as deferred compensation.
(5) Total compensation of $5,029 for the fiscal year ended June 30, 2000 will
be payable in later years as deferred compensation.
(6) Total compensation of $630 for the fiscal year ended June 30, 2000 will be
payable in later years as deferred compensation.
(7) Total compensation of $4,748 for the fiscal year ended June 30, 2000 will
be payable in later years as deferred compensation.
(8) Liberty Funds Trust IX, Liberty All-Star Equity Fund and Liberty All-Star
Growth Fund, Inc., each of which has the same Board of Trustees, pay
aggregate Trustees' fees of $25,000 per annum, assuming a minimum of four
meetings are held and attended, one-third of which is allocated among the
three funds on a per fund basis and the remaining two-thirds of which is
allocated based on net assets.
(9) Includes $52,000 payable in later years as deferred compensation.
(10) Total compensation of $91,000 for the calendar year ended December 31, 1999
will be payable in later years as deferred compensation.
(11) Total compensation of $96,000 for the calendar year ended December 31, 1999
will be payable in later years as deferred compensation.
(12) The Liberty All-Star Funds are advised by Liberty Asset Management Company
("LAMCO"). LAMCO is an indirect wholly-owned subsidiary of Liberty
Financial.
(13) At December 31, 1999, the Stein Roe Fund Complex consisted of 12 series of
the Trust, one series of Liberty-Stein Roe Funds Trust, four series of
Liberty-Stein Roe Funds Municipal Trust, four series of Liberty-Stein Roe
Funds Income Trust, five series of Liberty-Stein Roe Advisor Trust, five
series of Stein Roe Variable Investment Trust, 12 portfolios of SR&F Base
Trust, Liberty-Stein Roe Advisor Floating Rate Fund, Liberty-Stein Roe
Institutional Floating Rate Income Fund, and Stein Roe Floating Rate
Limited Liability Company.
B-11
<PAGE> 71
APPENDIX C
CAPITALIZATION
The following table shows on an unaudited basis the capitalization of each
of the Stein Roe Fund, the Value Fund, the All-Star Fund and the Growth & Income
Fund as of June 30, 2000, and on a pro forma combined basis, giving effect to
the acquisition of the assets and liabilities of each Acquired Fund by the
Growth & Income Fund at net asset value as of that date.
<TABLE>
<CAPTION>
GROWTH &
GROWTH & INCOME FUND
STEIN ROE VALUE ALL-STAR INCOME FUND PRO FORMA PRO FORMA
FUND FUND FUND (ACQUIRING FUND) ADJUSTMENTS(1) COMBINED(2)
------------ ----------- ----------- ---------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Class A
Net asset value............... $ 259,166 $10,441,098 $ 4,299,897 $309,356,714 $ (14,658) $324,342,217
Shares outstanding............ 9,814 920,529 368,742 15,017,711 (571,614) 15,745,182
Net asset value per share..... $ 26.41 $ 11.34 $ 11.66 $ 20.60 $ 20.60
Class B
Net asset value............... $ 1,269,238 $19,380,181 $16,346,839 $822,643,366 $ (38,567) $859,601,057
Shares outstanding............ 48,240 1,714,187 1,415,688 41,382,562 (1,318,981) 43,241,696
Net asset value per share..... $ 26.31 $ 11.31 $ 11.55 $ 19.88 $ 19.88
Class C
Net asset value............... $ 75,057 $ 1,934,018 $ 4,524,072 $ 29,281,763 $ (5,636) $ 35,809,274
Shares outstanding............ 2,853 171,022 391,868 1,465,147 (239,131) 1,791,759
Net asset value per share..... $ 26.31 $ 11.31 $ 11.54 $ 19.99 $ 19.99
Class Z
Net asset value............... $ 1,004 $13,687,128 $ 2,338,265 $ 1,077 $ (10,056) $ 16,017,418
Shares outstanding............ 38 1,206,557 199,907 52 (633,197) 773,357
Net asset value per share..... $ 26.42 $ 11.34 $ 11.70 $ 20.71 $ 20.71
Class S(3)
Net asset value............... $306,223,844 $ (29,316) $306,194,528
Shares outstanding............ 11,601,266 3,182,499 14,783,765
Net asset value per share..... $ 26.40 $ 20.71
</TABLE>
---------------
(1) Adjustments reflect estimated one time proxy, accounting, legal and other
costs of the reorganization of $29,470, $26,420, $24,684 and $17,660 to be
borne by the Stein Roe Fund, the Value Fund, the All-Star Fund and the
Growth & Income Fund, respectively.
(2) Assumes the Acquisitions were consummated on June 30, 2000, and is for
information purposes only. No assurance can be given as to how many shares
of the Growth & Income Fund will be received by the shareholders of each
Acquired Fund on the date the Acquisitions take place, and the foregoing
should not be relied upon to reflect the number of shares of the Growth &
Income Fund that actually will be received on or after such date.
(3) Stein Roe Fund shares will be exchanged for new Class S shares of Growth &
Income Fund upon consummation of the Acquisition. Initial per share value of
Class S shares is presumed to be equal to that of current Class Z shares.
C-1
<PAGE> 72
CAPITALIZATION
The following table shows on an unaudited basis the capitalization of each
of the Stein Roe Fund, the Value Fund and the Growth & Income Fund as of June
30, 2000, and on a pro forma combined basis, giving effect to the acquisition of
the assets and liabilities of each Acquired Fund by the Growth & Income Fund at
net asset value as of that date.
<TABLE>
<CAPTION>
GROWTH &
GROWTH & INCOME FUND
STEIN ROE VALUE INCOME FUND PRO FORMA PRO FORMA
FUND FUND (ACQUIRING FUND) ADJUSTMENTS(1) COMBINED(2)
------------ ----------- ---------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Class A
Net asset value............................ $ 259,166 $10,441,098 $309,356,714 $ (10,800) $320,046,178
Shares outstanding......................... 9,814 920,529 15,017,711 (411,423) 15,536,631
Net asset value per share.................. $ 26.41 $ 11.34 $ 20.60 $ 20.60
Class B
Net asset value............................ $ 1,269,238 $19,380,181 $822,643,366 $ (23,899) $843,268,886
Shares outstanding......................... 48,240 1,714,187 41,382,562 (724,873) 42,420,116
Net asset value per share.................. $ 26.31 $ 11.31 $ 19.88 $ 19.88
Class C
Net asset value............................ $ 75,057 $ 1,934,018 $ 29,281,763 $ (1,577) $ 31,289,261
Shares outstanding......................... 2,853 171,022 1,465,147 (73,428) 1,565,594
Net asset value per share.................. $ 26.31 $ 11.31 $ 19.99 $ 19.99
Class Z
Net asset value............................ $ 1,004 $13,687,128 $ 1,077 $ (7,958) $ 13,681,251
Shares outstanding......................... 38 1,206,557 52 (546,085) 660,562
Net asset value per share.................. $ 26.42 $ 11.34 $ 20.71 $ 20.71
Class S(3)
Net asset value............................ $306,223,844 $ (29,316) $306,194,528
Shares outstanding......................... 11,601,266 3,182,499 14,783,765
Net asset value per share.................. $ 26.40 $ 20.71
</TABLE>
---------------
(1) Adjustments reflect estimated one time proxy, accounting, legal and other
costs of the reorganization of $29,470, $26,420 and $17,660 to be borne by
the Stein Roe Fund, the Value Fund and the Growth & Income Fund,
respectively.
(2) Assumes the Acquisitions were consummated on June 30, 2000, and is for
information purposes only. No assurance can be given as to how many shares
of the Growth & Income Fund will be received by the shareholders of each
Acquired Fund on the date the Acquisitions take place, and the foregoing
should not be relied upon to reflect the number of shares of the Growth &
Income Fund that actually will be received on or after such date.
(3) As of June 30, 2000, there were no Class S shares of the Growth & Income
Fund outstanding. Stein Roe Fund shares will be exchanged for new Class S
shares of Growth & Income Fund upon consummation of the Acquisition. Initial
per share value of Class S shares is presumed to be equal to that of current
Class Z shares.
C-2
<PAGE> 73
CAPITALIZATION
The following table shows on an unaudited basis the capitalization of each
of the Stein Roe Fund, the All-Star Fund and the Growth & Income Fund as of June
30, 2000, and on a pro forma combined basis, giving effect to the acquisition of
the assets and liabilities of each Acquired Fund by the Growth & Income Fund at
net asset value as of that date.
<TABLE>
<CAPTION>
GROWTH & INCOME
GROWTH & INCOME FUND
STEIN ROE ALL-STAR FUND PRO FORMA PRO FORMA
FUND FUND (ACQUIRING FUND) ADJUSTMENTS(1) COMBINED(2)
------------ ----------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Class A
Net asset value............. $ 259,166 $ 4,299,897 $309,356,714 $ (8,588) $313,907,189
Shares outstanding.......... 9,814 368,742 15,017,711 (157,653) 15,238,614
Net asset value per share... $ 26.41 $ 11.66 $ 20.60 $ 20.60
Class B
Net asset value............. $ 1,269,238 $16,346,839 $822,643,366 $ (27,300) $840,232,143
Shares outstanding.......... 48,240 1,415,688 41,382,562 (579,136) 42,267,354
Net asset value per share... $ 26.31 $ 11.55 $ 19.88 $ 19.88
Class C
Net asset value............. $ 75,057 $ 4,524,072 $ 29,281,763 $ (4,512) $ 33,876,380
Shares outstanding.......... 2,853 391,868 1,465,147 (164,824) 1,695,044
Net asset value per share... $ 26.31 $ 11.54 $ 19.99 $ 19.99
Class Z
Net asset value............. $ 1,004 $ 2,338,265 $ 1,077 $ (2,098) $ 2,338,248
Shares outstanding.......... 38 199,907 52 (87,101) 112,896
Net asset value per share... $ 26.42 $ 11.70 $ 20.71 $ 20.71
Class S(3)
Net asset value............. $306,223,844 $ (29,316) $306,194,528
Shares outstanding.......... 11,601,266 3,182,499 14,783,765
Net asset value per share... $ 26.40 $ 20.71
</TABLE>
---------------
(1) Adjustments reflect estimated one time proxy, accounting, legal and other
costs of the reorganization of $29,470, $24,684 and $17,660 to be borne by
the Stein Roe Fund, the All-Star Fund and the Growth & Income Fund,
respectively.
(2) Assumes the Acquisitions were consummated on June 30, 2000, and is for
information purposes only. No assurance can be given as to how many shares
of the Growth & Income Fund will be received by the shareholders of each
Acquired Fund on the date the Acquisitions take place, and the foregoing
should not be relied upon to reflect the number of shares of the Growth &
Income Fund that actually will be received on or after such date.
(3) As of June 30, 2000, there were no Class S shares of the Growth & Income
Fund outstanding. Stein Roe Fund shares will be exchanged for new Class S
shares of Growth & Income Fund upon consummation of the Acquisition. Initial
per share value of Class S shares is presumed to be equal to that of current
Class Z shares.
C-3
<PAGE> 74
CAPITALIZATION
The following table shows on an unaudited basis the capitalization of each
of the Value Fund, the All-Star Fund and the Growth & Income Fund as of June 30,
2000, and on a pro forma combined basis, giving effect to the acquisition of the
assets and liabilities of each Acquired Fund by the Growth & Income Fund at net
asset value as of that date.
<TABLE>
<CAPTION>
GROWTH & INCOME
GROWTH & INCOME FUND
ALL-STAR FUND PRO FORMA PRO FORMA
VALUE FUND FUND (ACQUIRING FUND) ADJUSTMENTS(1) COMBINED(2)
----------- ----------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Class A
Net asset value............. $10,441,098 $ 4,299,897 $309,356,714 $ (14,633) $324,083,076
Shares outstanding.......... 920,529 368,742 15,017,711 (574,380) 15,732,602
Net asset value per share... $ 11.34 $ 11.66 $ 20.60 $ 20.60
Class B
Net asset value............. $19,380,181 $16,346,839 $822,643,366 (38,446) $858,331,940
Shares outstanding.......... 1,714,187 1,415,688 41,382,562 $(1,334,584) 43,177,853
Net asset value per share... $ 11.31 $ 11.55 $ 19.88 $ 19.88
Class C
Net asset value............. $ 1,934,018 $ 4,524,072 $ 29,281,763 (5,629) $ 35,734,224
Shares outstanding.......... 171,022 391,868 1,465,147 $ (240,034) 1,788,003
Net asset value per share... $ 11.31 $ 11.54 $ 19.99 $ 19.99
Class Z
Net asset value............. $13,687,128 $ 2,338,265 $ 1,077 (10,056) $ 16,016,414
Shares outstanding.......... 1,206,557 199,907 52 $ (633,207) 773,309
Net asset value per share... $ 11.34 $ 11.70 $ 20.71 $ 20.71
</TABLE>
---------------
(1) Adjustments reflect estimated one time proxy, accounting, legal and other
costs of the reorganization of $26,420, $24,684 and $17,660 to be borne by
the Value Fund, the All-Star Fund and the Growth & Income Fund,
respectively.
(2) Assumes the Acquisitions were consummated on June 30, 2000, and is for
information purposes only. No assurance can be given as to how many shares
of the Growth & Income Fund will be received by the shareholders of each
Acquired Fund on the date the Acquisitions take place, and the foregoing
should not be relied upon to reflect the number of shares of the Growth &
Income Fund that actually will be received on or after such date.
C-4
<PAGE> 75
CAPITALIZATION
The following table shows on an unaudited basis the capitalization of each
of the Stein Roe Fund and the Growth & Income Fund as of June 30, 2000, and on a
pro forma combined basis, giving effect to the acquisition of the assets and
liabilities of the Stein Roe Fund by the Growth & Income Fund at net asset value
as of that date.
<TABLE>
<CAPTION>
GROWTH & INCOME
GROWTH & INCOME FUND
STEIN ROE FUND PRO FORMA PRO FORMA
FUND (ACQUIRING FUND) ADJUSTMENTS(1) COMBINED(2)
------------ ---------------- -------------- ---------------
<S> <C> <C> <C> <C>
Class A
Net asset value................ $ 259,166 $309,356,714 $ (4,729) $309,611,151
Shares outstanding............. 9,814 15,017,711 2,538 15,030,063
Net asset value per share...... $ 26.41 $ 20.60 $ 20.60
Class B
Net asset value................ $ 1,269,238 $822,643,366 $ (12,632) $823,899,972
Shares outstanding............. 48,240 41,382,562 14,973 41,445,775
Net asset value per share...... $ 26.31 $ 19.88 $ 19.88
Class C
Net asset value................ $ 75,057 $ 29,281,763 $ (452) $ 29,356,368
Shares outstanding............. 2,853 1,465,147 880 1,468,880
Net asset value per share...... $ 26.31 $ 19.99 $ 19.99
Class Z
Net asset value................ $ 1,004 $ 1,077 $ (0) $ 2,081
Shares outstanding............. 38 52 10 100
Net asset value per share...... $ 26.42 $ 20.71 $ 20.71
Class S(3)
Net asset value................ $306,223,844 $ (29,316) $306,194,528
Shares outstanding............. 11,601,266 3,182,499 14,783,765
Net asset value per share...... $ 26.40 $ 20.71
</TABLE>
---------------
(1) Adjustments reflect estimated one time proxy, accounting, legal and other
costs of the reorganization of $29,470 and $17,660 to be borne by the Stein
Roe Fund and the Growth & Income Fund, respectively.
(2) Assumes the Acquisition was consummated on June 30, 2000, and is for
information purposes only. No assurance can be given as to how many shares
of the Growth & Income Fund will be received by the shareholders of the
Stein Roe Fund on the date the Acquisition takes place, and the foregoing
should not be relied upon to reflect the number of shares of the Growth &
Income Fund that actually will be received on or after such date.
(3) As of June 30, 2000, there were no Class S shares of the Growth & Income
Fund outstanding. Stein Roe Fund shares will be exchanged for new Class S
shares of Growth & Income Fund upon consummation of the Acquisition. Initial
per share value of Class S shares is presumed to be equal to that of current
Class Z shares.
C-5
<PAGE> 76
CAPITALIZATION
The following table shows on an unaudited basis the capitalization of each
of the All-Star Fund and the Growth & Income Fund as of June 30, 2000, and on a
pro forma combined basis, giving effect to the acquisition of the assets and
liabilities of the All-Star Fund by the Growth & Income Fund at net asset value
as of that date.
<TABLE>
<CAPTION>
GROWTH & INCOME
GROWTH & INCOME FUND
ALL-STAR FUND PRO FORMA PRO FORMA
FUND (ACQUIRING FUND) ADJUSTMENTS(1) COMBINED(2)
----------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C>
Class A
Net asset value................. $ 4,299,897 $309,356,714 $ (8,563) $313,648,048
Shares outstanding.............. 368,742 15,017,711 (160,419) 15,226,034
Net asset value per share....... $ 11.66 $ 20.60 $ 20.60
Class B
Net asset value................. $16,346,839 $822,643,366 $ (27,178) $838,963,027
Shares outstanding.............. 1,415,688 41,382,562 (594,738) 42,203,512
Net asset value per share....... $ 11.55 19.88 $ 19.88
Class C
Net asset value................. $ 4,524,072 $ 29,281,763 $ (4,505) $ 33,801,330
Shares outstanding.............. 391,868 1,465,147 (165,726) 1,691,289
Net asset value per share....... $ 11.54 $ 19.99 $ 19.99
Class Z
Net asset value................. $ 2,338,265 $ 1,077 $ (2,098) $ 2,337,244
Shares outstanding.............. 199,907 52 (87,112) 112,847
Net asset value per share....... $ 11.70 $ 20.71 $ 20.71
</TABLE>
---------------
(1) Adjustments reflect estimated one time proxy, accounting, legal and other
costs of the reorganization of $24,684 and $17,660 to be borne by the
All-Star Fund and the Growth & Income Fund, respectively.
(2) Assumes the Acquisition was consummated on June 30, 2000, and is for
information purposes only. No assurance can be given as to how many shares
of the Growth & Income Fund will be received by the shareholders of the
All-Star Fund on the date the Acquisition takes place, and the foregoing
should not be relied upon to reflect the number of shares of the Growth &
Income Fund that actually will be received on or after such date.
C-6
<PAGE> 77
CAPITALIZATION
The following table shows on an unaudited basis the capitalization of each
of the Value Fund and the Growth & Income Fund as of June 30, 2000, and on a pro
forma combined basis, giving effect to the acquisition of the assets and
liabilities of the Value Fund by the Growth & Income Fund at net asset value as
of that date.
<TABLE>
<CAPTION>
GROWTH & INCOME
GROWTH & INCOME FUND
VALUE FUND PRO FORMA PRO FORMA
FUND (ACQUIRING FUND) ADJUSTMENTS(1) COMBINED(2)
----------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C>
Class A
Net asset value................. $10,441,098 $309,356,714 $ (10,775) $319,787,037
Shares outstanding.............. 920,529 15,017,711 (414,189) 15,524,051
Net asset value per share....... $ 11.34 $ 20.60 $ 20.60
Class B
Net asset value................. $19,380,181 $822,643,366 $ (23,778) $841,999,769
Shares outstanding.............. 1,714,187 41,382,562 (740,475) 42,356,274
Net asset value per share....... $ 11.31 $ 19.88 $ 19.88
Class C
Net asset value................. $ 1,934,018 $ 29,281,763 $ (1,570) $ 31,214,211
Shares outstanding.............. 171,022 1,465,147 (74,330) 1,561,839
Net asset value per share....... $ 11.31 $ 19.99 $ 19.99
Class Z
Net asset value................. $13,687,128 $ 1,077 $ (7,958) $ 13,680,247
Shares outstanding.............. 1,206,557 52 (546,096) 660,513
Net asset value per share....... $ 11.34 $ 20.71 $ 20.71
</TABLE>
---------------
(1) Adjustments reflect estimated one time proxy, accounting, legal and other
costs of the reorganization of $26,420 and $17,660 to be borne by the Value
Fund and the Growth & Income Fund, respectively.
(2) Assumes the Acquisition was consummated on June 30, 2000, and is for
information purposes only. No assurance can be given as to how many shares
of the Growth & Income Fund will be received by the shareholders of the
Value Fund on the date the Acquisition takes place, and the foregoing should
not be relied upon to reflect the number of shares of the Growth & Income
Fund that actually will be received on or after such date.
C-7
<PAGE> 78
LIBERTY FUNDS TRUST VI
LIBERTY GROWTH & INCOME FUND
FORM N-14
PART B
STATEMENT OF ADDITIONAL INFORMATION
November 17, 2000
This Statement of Additional Information (the "SAI") relates to the
proposed Acquisition (the "Acquisition") of the Stein Roe Growth & Income Fund
Class S shares and the Liberty Value Opportunities Fund Class A, B, C and Z
shares (collectively, the "Stein Roe Fund"), a series of Liberty-Stein Roe
Funds Investment Trust, the Liberty Value Fund (the "Value Fund") a series of
Liberty Funds Trust VI and the Liberty All-Star Growth and Income Fund (the
"All-Star Fund"), a series of Liberty Funds Trust IX, (together, the "Acquired
Funds"), by the Liberty Growth & Income Fund (the "Acquiring Fund"), a series of
Liberty Funds Trust VI.
This SAI contains information which may be of interest to shareholders
but which is not included in the Prospectus/Proxy Statement dated November 17,
2000 (the "Prospectus/Proxy Statement") of the Acquiring Fund which relates to
the Acquisition. As described in the Prospectus/Proxy Statement, the Acquisition
would involve the transfer of all the assets of the Acquired Funds in exchange
for shares of the Acquiring Fund and the assumption of all the liabilities of
each of the Acquired Funds. Each of the Acquired Funds would distribute the
Acquiring Fund shares it receives to its shareholders in complete liquidation of
the Acquired Fund.
This SAI is not a prospectus and should be read in conjunction with the
Prospectus/Proxy Statement. The Prospectus/Proxy Statement has been filed with
the Securities and Exchange Commission and is available upon request and without
charge by writing to your Fund at One Financial Center, Boston, Massachusetts
02111-2621, or by calling 1-800-426-3750.
Table of Contents
I. Additional Information about the Acquiring Fund.......................2
II. Additional Information about the Acquired Funds.......................2
III. Financial Statements..................................................2
<PAGE> 79
I. Additional Information about the Acquiring Fund.
Incorporated by reference to Post-Effective Amendment No. 21 to the
Registration Statement on Form N-1A (filed on October 31, 2000) of
Liberty Funds Trust VI (Registration Statement Nos. 33-45117 and
811-6529).
II. Additional Information about the Acquired Funds.
With respect to the Stein Roe Fund, incorporated by reference to
Post-Effective Amendment No. 65 to the Registration Statement on Form N-1A
(filed on January 28, 2000) of Liberty-Stein Roe Funds Investment Trust
(Registration Statement Nos. 33-11351 and 811-4978).
With respect to the Value Fund, incorporated by reference to
Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A
(filed on October 18, 1999) of Liberty Funds Trust VI (Registration Statement
Nos. 33-45117 and 811-6529).
With respect to the All-Star Fund, incorporated by reference to
Post-Effective Amendment No. 3 to the Registration Statement on Form N-1A (filed
on March 17, 2000) of Liberty Funds Trust IX (Registration Statement Nos.
333-66819 and 811-09095).
III. Financial Statements.
This SAI is accompanied by (i) the Annual Report for the year ended
June 30, 2000 of the Acquiring Fund; (ii) the Semi-Annual Report for the six
months ended March 31, 2000 and the Annual Report for the year ended September
30, 1999 of the Opportunities Fund; (iii) the Annual Report for the year ended
June 30, 2000 of the Value Fund; (iv) the Semi-Annual Report for the six months
ended June 30, 2000 and the Annual Report for the year ended December 31, 1999
of the All-Star Fund, all of which contain historical financial information
regarding such Funds. Such reports have been filed with the Securities and
Exchange Commission and are incorporated herein by reference.
Pro forma financial statements of the Acquiring Fund for the
Acquisition are provided on the following pages.
-2-
<PAGE> 80
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY GROWTH &
INCOME PORTFOLIO INCOME FUND PRO FORMA COMBINED
SHARES SHARES SHARES
<S> <C> <C> <C>
COMMON STOCKS
Agriculture, Forestry & Fishing
CANADIAN NATL RAILWAY CO 133,100 133,100
Finance, Insurance & Real Estate
ACE LIMITED 81,700 81,700
AMBAC FINANCIAL GROUP INC 40,500 40,500
AMER INTERNATIONAL GROUP INC 132,275 132,275
AMERICAN EXPRESS CO 240,000 144,000 384,000
AXA FINANICAL INC 140,500 140,500
BANK OF AMERICA CORP 67,896 231,234 299,130
BEAR STEARNS COMPANIES INC 30,173 30,173
CAPITAL ONE FINANCIAL CORP 72,100 72,100
CHASE MANHATTAN CORP (NEW) 193,200 186,450 379,650
CINCINNATI FINANCIAL CORP 188,300 188,300
CITIGROUP INC 244,810 523,300 768,110
CITY NATIONAL CORP 119,500 119,500
FANNIE MAE 161,000 163,400 324,400
FLEET BOSTON FINANCIAL CORP 348,600 348,600
FREDDIE MAC 108,300 108,300
GOLDEN STATE BANCORP 171,300 171,300
GOLDEN WEST FINANCIAL CORP 89,100 89,100
HCA-THE HEALTHCARE CORP 346,100 346,100
HOUSEHOLD INTERNATIONAL INC 83,300 83,300
J P MORGAN & CO INC 55,100 55,100
KNIGHT TRADING GROUP INC 59,800 59,800
LEHMAN BROTHERS HLDG INC 100,900 100,900
LOEWS CORP 42,000 42,000
MBNA CORP 210,300 210,300
MGIC INV CORP 123,000 123,000
MORGAN STANLEY DEAN WITTER 165,900 165,900
NATIONWIDE FINANCIAL SERV A 228,700 228,700
PACIFIC CENTURY FINL CORP 145,500 145,500
PMI GROUP INC 131,100 131,100
PNC FINANCIAL SERVICES GROUP 104,900 104,900
PROVIDIAN FINANCIAL CORP 30,100 30,100
SOVEREIGN BANCORP INC 505,200 505,200
UNIONBANCAL CORPORATION 155,100 155,100
UNITED HEALTHCARE CORP 126,700 126,700
WELLS FARGO & CO 156,660 57,800 214,460
Manufacturing
ADC TELECOMMUNICATIONS INC 81,500 81,500
AGILENT TECHNOLOGIES INC 28,986 28,986
ALCOA INC 111,400 111,400
AMGEN INC 80,800 80,800
ANALOG DEVICES INC. 82,900 82,900
ANHEUSER BUSCH INC 162,600 162,600
APPLE COMPUTER INC 49,600 49,600
APPLIED MATLS 80,000 129,200 209,200
APPLIED MICRO CIRCUITS CORP 11,600 11,600
ATMEL CORP 116,900 116,900
AVON PRODUCTS INC 40,000 40,000
BAUSCH & LOMB INC 125,200 125,200
BAXTER INTERNATIONAL INC 95,000 95,000
BECKMAN COULTER INC 29,100 29,100
BESTFOODS 190,600 190,600
BIOMET INC 127,000 127,000
BOEING CO 99,600 332,800 432,400
BP AMOCO PLC-ADR 242,810 150,000 392,810
BRISTOL-MYERS SQUIBB CO 150,000 166,200 316,200
BRUNSWICK CORP 227,400 227,400
CHEVRON CORP 119,200 119,200
CISCO SYSTEMS INC 90,000 456,200 546,200
</TABLE>
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY GROWTH & PRO FORMA
INCOME PORTFOLIO INCOME FUND MARKET COMBINED MARKET
MARKET VALUE VALUE VALUE
<S> <C> <C> <C>
COMMON STOCKS
Agriculture, Forestry & Fishing
CANADIAN NATL RAILWAY CO $ 3,884,856 $ 3,884,856
=====================================
Finance, Insurance & Real Estate
ACE LIMITED 2,287,600 2,287,600
AMBAC FINANCIAL GROUP INC 2,219,906 2,219,906
AMER INTERNATIONAL GROUP INC 15,542,313 15,542,313
AMERICAN EXPRESS CO $ 12,510,000 7,506,000 20,016,000
AXA FINANICAL INC 4,777,000 4,777,000
BANK OF AMERICA CORP 2,919,528 9,943,062 12,862,590
BEAR STEARNS COMPANIES INC 1,255,951 1,255,951
CAPITAL ONE FINANCIAL CORP 3,217,463 3,217,463
CHASE MANHATTAN CORP (NEW) 8,899,275 8,588,353 17,487,628
CINCINNATI FINANCIAL CORP 5,919,681 5,919,681
CITIGROUP INC 14,749,803 31,528,825 46,278,628
CITY NATIONAL CORP 4,242,250 4,242,250
FANNIE MAE 8,402,188 8,527,438 16,929,625
FLEET BOSTON FINANCIAL CORP 11,852,400 11,852,400
FREDDIE MAC 4,386,150 4,386,150
GOLDEN STATE BANCORP 3,083,400 3,083,400
GOLDEN WEST FINANCIAL CORP 3,636,394 3,636,394
HCA-THE HEALTHCARE CORP 10,512,788 10,512,788
HOUSEHOLD INTERNATIONAL INC 3,462,156 3,462,156
J P MORGAN & CO INC 6,067,888 6,067,888
KNIGHT TRADING GROUP INC 1,782,788 1,782,788
LEHMAN BROTHERS HLDG INC 9,541,356 9,541,356
LOEWS CORP 2,520,000 2,520,000
MBNA CORP 5,704,388 5,704,388
MGIC INV CORP 5,596,500 5,596,500
MORGAN STANLEY DEAN WITTER 13,811,175 13,811,175
NATIONWIDE FINANCIAL SERV A 7,518,513 7,518,513
PACIFIC CENTURY FINL CORP 2,127,938 2,127,938
PMI GROUP INC 6,227,250 6,227,250
PNC FINANCIAL SERVICES GROUP 4,917,188 4,917,188
PROVIDIAN FINANCIAL CORP 2,709,000 2,709,000
SOVEREIGN BANCORP INC 3,552,188 3,552,188
UNIONBANCAL CORPORATION 2,879,044 2,879,044
UNITED HEALTHCARE CORP 10,864,525 10,864,525
WELLS FARGO & CO 6,070,575 2,239,750 8,310,325
============================================================
53,551,368 230,548,616 284,099,984
============================================================
Manufacturing
ADC TELECOMMUNICATIONS INC 6,835,813 6,835,813
AGILENT TECHNOLOGIES INC 2,137,718 2,137,718
ALCOA INC 3,230,600 3,230,600
AMGEN INC 5,676,200 5,676,200
ANALOG DEVICES INC. 6,300,400 6,300,400
ANHEUSER BUSCH INC 12,144,188 12,144,188
APPLE COMPUTER INC 2,597,800 2,597,800
APPLIED MATLS 7,250,000 11,708,750 18,958,750
APPLIED MICRO CIRCUITS CORP 1,145,500 1,145,500
ATMEL CORP 4,310,688 4,310,688
AVON PRODUCTS INC 1,780,000 1,780,000
BAUSCH & LOMB INC 9,687,350 9,687,350
BAXTER INTERNATIONAL INC 6,679,688 6,679,688
BECKMAN COULTER INC 1,698,713 1,698,713
BESTFOODS 13,199,050 13,199,050
BIOMET INC 4,881,563 4,881,563
BOEING CO 4,164,525 13,915,200 18,079,725
BP AMOCO PLC-ADR 13,733,940 8,484,375 22,218,315
BRISTOL-MYERS SQUIBB CO 8,737,500 9,681,150 18,418,650
BRUNSWICK CORP 3,766,313 3,766,313
CHEVRON CORP 10,109,650 10,109,650
CISCO SYSTEMS INC 5,720,625 28,997,213 34,717,838
</TABLE>
<PAGE> 81
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY GROWTH &
INCOME PORTFOLIO INCOME FUND PRO FORMA COMBINED
SHARES SHARES SHARES
<S> <C> <C> <C>
COMMON STOCKS
COCA COLA CO 19,700 19,700
COMPAQ COMPUTER CORP 195,000 195,000
COMVERSE TECH 32,200 32,200
CORNING INCORPORATED 21,100 21,100
DELPHI AUTOMOTIVE SYSTEMS 253,600 253,600
DOW CHEMICAL CO 350,500 350,500
ECOLAB INC 250,000 250,000
EI DUPONT DE NEMOURS & CO INC 29,179 60,200 89,379
ELI LILLY & CO 114,500 114,500
EMC CORP 108,400 108,400
EMERSON ELECTRIC CO 50,000 50,000
EXXON MOBIL CORPORATION 365,165 365,165
FMC CORP 43,200 43,200
FORD MOTOR CO 266,300 266,300
GATEWAY INC 51,000 51,000
GENERAL ELECTRIC CO 234,000 640,500 874,500
GEORGIA PACIFIC (TIMBER GRP) 75,000 75,000
GEORGIA PACIFIC CORP 170,000 170,000
GILLETTE CO 134,400 134,400
GRANT PRIDECO INC 164,800 164,800
HEWLETT-PACKARD CO 90,400 90,400
HONEYWELL INTERNATIONAL INC 152,500 77,437 229,937
HUBBELL INC CL B 70,400 70,400
INTEL CORP 40,000 232,800 272,800
INTERNATIONAL GAME TECH 61,300 61,300
INTERNATIONAL PAPER CO 180,700 180,700
INTL BUSINESS MACHINES CORP 105,000 130,800 235,800
JOHNSON & JOHNSON 69,900 69,900
JOHNSON CONTROLS INC 81,500 81,500
KIMBERLY CLARK CORP 66,000 66,000
LEAR CORP 140,000 140,000
LITTLEFUSE INC 35,000 35,000
LOCKHEED MARTIN CORP 422,400 422,400
LSI LOGIC CORP 53,200 53,200
LUCENT TECHNOLOGIES INC 42,800 42,800
LYONDELL PETRO 211,300 211,300
MERCK & CO INC 155,800 155,800
MICROCHIP TECHNOLOGY 115,800 115,800
MINNESOTA MINING & MFG CO 130,300 130,300
MOTOROLA INC 45,000 45,000
MYLAN LABORATORIES, INC 238,600 238,600
NOKIA CORP ADR 112,400 112,400
PACCAR INC 137,100 137,100
PEPSI BOTTLING GROUP 324,800 324,800
PEPSICO INC 262,800 262,800
PFIZER INC 316,250 388,675 704,925
PHARMACIA CORPORATION 149,500 149,500
PHILIP MORRIS CO INC 203,000 280,400 483,400
PROCTER & GAMBLE CO 81,000 157,300 238,300
QUAKER OATS CO 121,000 121,000
ROYAL DUTCH PETRO-NY SHARES 254,300 254,300
SABRE HOLDINGS CORP 36,132 36,132
SARA LEE CORP 144,000 144,000
SCHERING-PLOUGH CORP 86,400 86,400
TEMPLE INLAND INC 24,700 24,700
TERADYNE INC 62,400 62,400
TEXAS INSTRUMENTS INC 78,400 78,400
TRIBUNE CO 100,000 100,000
UNION CARBIDE CORP 111,100 111,100
UNITED TECHNOLOGIES CORP 170,500 170,500
USG CORP NEW 63,300 63,300
VISTEON CORP 33,288 33,288
WEATHERFORD INTERNATIONAL 164,800 164,800
WESTVACO CORP 268,600 268,600
WEYERHAEUSER CO 50,800 50,800
WHIRLPOOL CORP 85,100 85,100
</TABLE>
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY GROWTH & PRO FORMA
INCOME PORTFOLIO INCOME FUND MARKET COMBINED MARKET
MARKET VALUE VALUE VALUE
<S> <C> <C> <C>
COMMON STOCKS
COCA COLA CO 1,131,519 1,131,519
COMPAQ COMPUTER CORP 4,984,688 4,984,688
COMVERSE TECH 2,994,600 2,994,600
CORNING INCORPORATED 5,694,363 5,694,363
DELPHI AUTOMOTIVE SYSTEMS 3,693,050 3,693,050
DOW CHEMICAL CO 10,580,719 10,580,719
ECOLAB INC 9,765,625 9,765,625
EI DUPONT DE NEMOURS & CO INC 1,276,581 2,633,750 3,910,331
ELI LILLY & CO 11,435,688 11,435,688
EMC CORP 8,340,025 8,340,025
EMERSON ELECTRIC CO 3,018,750 3,018,750
EXXON MOBIL CORPORATION 28,665,453 28,665,453
FMC CORP 2,505,600 2,505,600
FORD MOTOR CO 11,450,900 11,450,900
GATEWAY INC 2,894,250 2,894,250
GENERAL ELECTRIC CO 12,402,000 33,946,500 46,348,500
GEORGIA PACIFIC (TIMBER GRP) 1,621,875 1,621,875
GEORGIA PACIFIC CORP 4,462,500 4,462,500
GILLETTE CO 4,695,600 4,695,600
GRANT PRIDECO INC 4,120,000 4,120,000
HEWLETT-PACKARD CO 11,288,700 11,288,700
HONEYWELL INTERNATIONAL INC 5,137,344 2,608,659 7,746,003
HUBBELL INC CL B 1,795,200 1,795,200
INTEL CORP 5,347,500 31,122,450 36,469,950
INTERNATIONAL GAME TECH 1,624,450 1,624,450
INTERNATIONAL PAPER CO 5,387,119 5,387,119
INTL BUSINESS MACHINES CORP 11,504,063 14,330,775 25,834,838
JOHNSON & JOHNSON 7,121,063 7,121,063
JOHNSON CONTROLS INC 4,181,969 4,181,969
KIMBERLY CLARK CORP 3,786,750 3,786,750
LEAR CORP 2,800,000 2,800,000
LITTLEFUSE INC 1,715,000 1,715,000
LOCKHEED MARTIN CORP 10,480,800 10,480,800
LSI LOGIC CORP 2,879,450 2,879,450
LUCENT TECHNOLOGIES INC 2,535,900 2,535,900
LYONDELL PETRO 3,539,275 3,539,275
MERCK & CO INC 11,938,175 11,938,175
MICROCHIP TECHNOLOGY 6,747,159 6,747,159
MINNESOTA MINING & MFG CO 10,749,750 10,749,750
MOTOROLA INC 1,307,813 1,307,813
MYLAN LABORATORIES, INC 4,354,450 4,354,450
NOKIA CORP ADR 5,612,975 5,612,975
PACCAR INC 5,441,156 5,441,156
PEPSI BOTTLING GROUP 9,480,100 9,480,100
PEPSICO INC 11,678,175 11,678,175
PFIZER INC 15,180,000 18,656,400 33,836,400
PHARMACIA CORPORATION 7,727,281 7,727,281
PHILIP MORRIS CO INC 5,392,188 7,448,125 12,840,313
PROCTER & GAMBLE CO 4,637,250 9,005,425 13,642,675
QUAKER OATS CO 9,090,125 9,090,125
ROYAL DUTCH PETRO-NY SHARES 15,655,344 15,655,344
SABRE HOLDINGS CORP 1,029,762 1,029,762
SARA LEE CORP 2,781,000 2,781,000
SCHERING-PLOUGH CORP 4,363,200 4,363,200
TEMPLE INLAND INC 1,037,400 1,037,400
TERADYNE INC 4,586,400 4,586,400
TEXAS INSTRUMENTS INC 5,385,100 5,385,100
TRIBUNE CO 3,500,000 3,500,000
UNION CARBIDE CORP 5,499,450 5,499,450
UNITED TECHNOLOGIES CORP 10,038,188 10,038,188
USG CORP NEW 1,922,738 1,922,738
VISTEON CORP 403,611 403,611
WEATHERFORD INTERNATIONAL 6,561,100 6,561,100
WESTVACO CORP 6,664,638 6,664,638
WEYERHAEUSER CO 2,184,400 2,184,400
WHIRLPOOL CORP 3,967,788 3,967,788
============================================================
170,529,308 559,572,362 730,101,670
============================================================
</TABLE>
<PAGE> 82
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY GROWTH &
INCOME PORTFOLIO INCOME FUND PRO FORMA COMBINED
SHARES SHARES SHARES
<S> <C> <C> <C>
COMMON STOCKS
Mining & Energy
BURLINGTON RESOURCES INC 76,000 76,000
COFLEXIP-SPONSORED ADR 23,270 23,270
CONOCO INC -CL B 61,421 61,421
CONOCO INC-CL A 104,800 104,800
DIAMOND OFFSHORE DRILLING 195,800 195,800
ENRON CORP 115,000 115,000
FALCON DRILLING COMPANY INC 521,800 521,800
PETROLEUM GEO SERVICES ADR 239,100 239,100
SCHLUMBERGER LTD 161,900 161,900
TRANSOCEAN SEDCO FOREX INC 31,343 31,343
Retail Trade
BEST BUY INC 128,500 128,500
CIRCUIT CITY STORES INC 100,700 100,700
CVS CORP 159,200 159,200
DARDEN RESTAURANTS INC 206,000 206,000
FEDERATED DEPT STORES INC NEW 80,000 80,000
HOME DEPOT INC 69,150 69,150
RADIOSHACK CORP 93,700 93,700
TARGET CORP 61,400 61,400
TJX COMPANIES, INC 252,800 252,800
WALGREEN CO 280,000 280,000
WAL-MART STORES INC 150,000 150,700 300,700
Services
ADOBE SYSTEMS INC 73,500 73,500
AMERICA ONLINE INC 113,000 113,000
AUTOMATIC DATA PROCESSING INC 105,600 105,600
CHECK POINT SOFTWARE TECH 5,700 5,700
DUN & BRADSTREET CORP 214,800 214,800
FIRST DATA CORP 129,600 129,600
HARRAH'S ENTERTAINMENT INC 88,500 88,500
HERTZ CORP-CL A 60,000 60,000
INTERPUBLIC GROUP COS INC 121,200 121,200
MANPOWER 128,600 128,600
MICROSOFT CORP 158,700 158,700
NETWORK APPLIANCE INC 15,400 15,400
ORACLE CORP 148,400 148,400
SUN MICROSYSTEMS INC 123,800 123,800
TIME WARNER INC 16,400 16,400
USA NETWORKS INC 101,500 101,500
WALT DISNEY PRODUCTIONS 155,500 155,500
Transportation, Communications, Electric,
Gas and Sanitary Services
A T & T CORP 65,333 348,100 413,433
AMR CORP 50,000 50,000
AT & T WIRELESS CORP 178,200 178,200
BELL ATLANTIC CORP 190,320 122,600 312,920
BELLSOUTH CORP 147,300 147,300
BURLINGTON NORTH SANTA FE CORP 200,000 200,000
CHRIS-CRAFT INDUSTIRES INC 61,800 61,800
COMCAST CORP-SPECIAL CL A 30,000 46,500 76,500
CONTINENTAL AIRLINES CL B 160,000 160,000
DELTA AIR LINES INC 79,600 79,600
DUKE ENERGY 60,100 60,100
EDISON INTERNATIONAL 235,700 235,700
ENTERGY CORP 252,400 252,400
GTE CORP 201,400 201,400
</TABLE>
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY GROWTH & PRO FORMA
INCOME PORTFOLIO INCOME FUND MARKET COMBINED MARKET
MARKET VALUE VALUE VALUE
<S> <C> <C> <C>
COMMON STOCKS
Mining & Energy
BURLINGTON RESOURCES INC 2,907,000 2,907,000
COFLEXIP-SPONSORED ADR 1,407,835 1,407,835
CONOCO INC -CL B 1,508,653 1,508,653
CONOCO INC-CL A 2,305,600 2,305,600
DIAMOND OFFSHORE DRILLING 6,877,475 6,877,475
ENRON CORP 7,417,500 7,417,500
FALCON DRILLING COMPANY INC 12,294,913 12,294,913
PETROLEUM GEO SERVICES ADR 4,079,644 4,079,644
SCHLUMBERGER LTD 12,081,788 12,081,788
TRANSOCEAN SEDCO FOREX INC 1,674,892 1,674,892
------------------------------------------------------------
11,231,753 41,323,545 52,555,299
------------------------------------------------------------
Retail Trade
BEST BUY INC 8,127,625 8,127,625
CIRCUIT CITY STORES INC 3,341,981 3,341,981
CVS CORP 6,368,000 6,368,000
DARDEN RESTAURANTS INC 3,347,500 3,347,500
FEDERATED DEPT STORES INC NEW 2,700,000 2,700,000
HOME DEPOT INC 3,453,178 3,453,178
RADIOSHACK CORP 4,439,038 4,439,038
TARGET CORP 3,561,200 3,561,200
TJX COMPANIES, INC 4,740,000 4,740,000
WALGREEN CO 9,012,500 9,012,500
WAL-MART STORES INC 8,643,750 8,684,088 17,327,838
------------------------------------------------------------
25,096,250 41,322,609 66,418,859
------------------------------------------------------------
Services
ADOBE SYSTEMS INC 9,555,000 9,555,000
AMERICA ONLINE INC 5,960,750 5,960,750
AUTOMATIC DATA PROCESSING INC 5,656,200 5,656,200
CHECK POINT SOFTWARE TECH 1,206,975 1,206,975
DUN & BRADSTREET CORP 6,148,650 6,148,650
FIRST DATA CORP 6,431,400 6,431,400
HARRAH'S ENTERTAINMENT INC 1,852,969 1,852,969
HERTZ CORP-CL A 1,683,750 1,683,750
INTERPUBLIC GROUP COS INC 5,211,600 5,211,600
MANPOWER 4,115,200 4,115,200
MICROSOFT CORP 12,696,000 12,696,000
NETWORK APPLIANCE INC 1,239,700 1,239,700
ORACLE CORP 12,474,875 12,474,875
SUN MICROSYSTEMS INC 11,258,063 11,258,063
TIME WARNER INC 1,246,400 1,246,400
USA NETWORKS INC 2,194,938 2,194,938
WALT DISNEY PRODUCTIONS 6,035,344 6,035,344
------------------------------------------------------------
6,895,350 88,072,463 94,967,813
------------------------------------------------------------
Transportation, Communications, Electric,
Gas and Sanitary Services
A T & T CORP 2,066,156 11,008,663 13,074,819
AMR CORP 1,321,875 1,321,875
AT & T WIRELESS CORP 4,967,325 4,967,325
BELL ATLANTIC CORP 9,670,635 6,229,613 15,900,248
BELLSOUTH CORP 6,278,663 6,278,663
BURLINGTON NORTH SANTA FE CORP 4,587,500 4,587,500
CHRIS-CRAFT INDUSTIRES INC 4,082,663 4,082,663
COMCAST CORP-SPECIAL CL A 1,215,000 1,883,250 3,098,250
CONTINENTAL AIRLINES CL B 7,520,000 7,520,000
DELTA AIR LINES INC 4,024,775 4,024,775
DUKE ENERGY 3,388,138 3,388,138
EDISON INTERNATIONAL 4,831,850 4,831,850
ENTERGY CORP 6,862,125 6,862,125
GTE CORP 12,537,150 12,537,150
</TABLE>
<PAGE> 83
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY GROWTH &
INCOME PORTFOLIO INCOME FUND PRO FORMA COMBINED
SHARES SHARES SHARES
<S> <C> <C> <C>
COMMON STOCKS
KANSAS CITY SOUTHN INDS INC 131,900 131,900
P G & E CORP 116,000 116,000
PMC-SIERRA INC 16,800 16,800
RF MICRO DEVICES INC 47,400 47,400
SBC COMMUNICATIONS INC 409,400 409,400
SPRINT CORP (FON GROUP) 189,200 189,200
TELEPHONE & DATA 24,300 24,300
TXU CORP 164,500 164,500
UAL INC 56,000 56,000
UNICOM CORPORATION 160,400 160,400
UNION PACIFIC CORP 137,900 137,900
US CELLULAR CORP 29,700 29,700
Wholesale Trade
SYSCO CORP 182,600 182,600
Total Common Stocks
CASH EQUIVALENTS Par Par Par
ASSOCIATES FIRST CAPITAL 0.00% 7/3/2000 $ 2,130,000 $ 2,130,000
WARBURG REPURCHASE AGREEMENT
6.60% 7/3/2000 $ 25,932,000 25,932,000
Total Cash Equivalents
TOTAL INVESTMENTS (COST OF $157,157,695,
$976,414,426 AND $1,133,572,121,
RESPECTIVELY)
</TABLE>
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY GROWTH & PRO FORMA
INCOME PORTFOLIO INCOME FUND MARKET COMBINED MARKET
MARKET VALUE VALUE VALUE
<S> <C> <C> <C>
COMMON STOCKS
KANSAS CITY SOUTHN INDS INC 11,697,881 11,697,881
P G & E CORP 2,856,500 2,856,500
PMC-SIERRA INC 2,985,150 2,985,150
RF MICRO DEVICES INC 4,153,425 4,153,425
SBC COMMUNICATIONS INC 17,706,550 17,706,550
SPRINT CORP (FON GROUP) 9,649,200 9,649,200
TELEPHONE & DATA 2,436,075 2,436,075
TXU CORP 4,852,750 4,852,750
UAL INC 3,258,500 3,258,500
UNICOM CORPORATION 6,205,475 6,205,475
UNION PACIFIC CORP 5,128,156 5,128,156
US CELLULAR CORP 1,871,100 1,871,100
------------------------------------------------------------
38,079,047 127,197,094 165,276,141
------------------------------------------------------------
Wholesale Trade
SYSCO CORP 7,692,025 7,692,025
-------------------------------------
Total Common Stocks 305,383,077 1,099,613,570 1,404,996,647
------------------------------------------------------------
CASH EQUIVALENTS
ASSOCIATES FIRST CAPITAL 0.00% 7/3/2000 2,129,178 2,129,178
WARBURG REPURCHASE AGREEMENT
6.60% 7/3/2000 25,932,000 25,932,000
------------------------------------------------------------
Total Cash Equivalents 2,129,178 25,932,000 28,061,178
------------------------------------------------------------
TOTAL INVESTMENTS (COST OF $157,157,695,
$976,414,426 AND $1,133,572,121,
RESPECTIVELY) $ 307,512,255 $1,125,545,570 $ 1,433,057,825
============================================================
</TABLE>
No adjustments are shown to the unaudited pro forma combined portfolio of
investments due to the fact that upon consummation of the Acquisitions, no
securities would need to be sold in order for the Acquiring Fund to comply with
its Prospectus and SEC and IRS guidelines and restrictions. However, the
foregoing sentence shall not be deemed to restrict in any way the ability of the
investment advisor of any of the funds from buying or selling securities in the
normal course of such Fund's business and operations.
<PAGE> 84
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINING CONDENSED STATEMENT OF ASSETS AND LIABILITIES
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Liberty
Liberty Growth & Income
SR&F Liberty Growth & Income Fund
Growth & Income Value Opportunities Fund Pro Forma Pro Forma
Portfolio Fund (Acquiring Fund) Adjustments Combined
--------------- ------------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Investments, at value $ 307,512,255 $ 308,179,637 $ 1,125,545,570 $ (308,179,637)(a) $ 1,433,057,825
Cash 3,884 - 176 - 4,060
Receivable for investments sold - - - - -
Payable for investments purchased - - - - -
Other assets less other liabilities 837,077 (351,328) 35,737,174 (220,709)(b) 36,002,214
Net assets $308,353,216 $ 307,828,309 $ 1,161,282,920 $ (308,400,346) $ 1,469,064,099
Class A:
Net assets $ 259,166 $ 309,356,714 (4,729) $ 309,611,151
Shares outstanding 9,814 15,017,711 2,538 $ 15,030,063
Net asset value $ 26.41 $ 20.60 $ 20.60
Class B:
Net assets $ 1,269,238 $ 822,643,366 (12,632) $ 823,899,972
Shares outstanding 48,240 41,382,562 14,973 $ 41,445,775
Net asset value $ 26.31 $ 19.88 $ 19.88
Class C:
Net assets $ 75,057 $ 29,281,763 (452) $ 29,356,368
Shares outstanding 2,853 1,465,147 880 $ 1,468,880
Net asset value $ 26.31 $ 19.99 $ 19.99
Class Z:
Net assets $ 1,004 $ 1,077 - $ 2,081
Shares outstanding 38 52 10 $ 100
Net asset value $ 26.42 $ 20.71 $ 20.71
Class S:
Net assets $ 306,223,844 (29,316) $ 306,194,528
Shares outstanding 11,601,266 3,182,500 (c) $ 14,783,766
Net asset value $ 26.40 $ 20.71
</TABLE>
Footnotes to pro forma statement of assets and liabilities
(a) - Adjustment represents the elimination the Liberty Value Opportunities
Fund's investment in the Portfolio, as the master/feeder structure will be
dissolved, with the securities held by the Portfolio withdrawn from the
Portfolio by the Liberty Value Opportunities Fund prior to the merger.
(b) - Adjustment reflects a payable to the general partner of the Portfolio for
its remaining net assets after withdrawal of the Liberty Value
Opportunities Fund's investment in the Portfolio of $173,579, in addition
to one time proxy, accounting, legal and other costs of the reorganization
of $29,470 and $17,660 to be borne by the Opportunities Fund and the Growth
& Income Fund respectively. These costs reflect each fund's share of the
total costs of the reorganization that will be shared between Liberty
Financial and the Funds, subject to the terms of each Agreement and Plan of
Reorganization, as follows:
<TABLE>
<CAPTION>
Liberty Financial Fund
----------------- ----
<S> <C> <C>
Liberty Value Opportunities Fund 75% 25%
Liberty Growth & Income Fund 75% 25%
</TABLE>
The Funds will bear their full portion of the one time costs of the
reorganization only if the expense reduction experienced as a result of the
Acquisition in the first year after Acquisition Date exceeds the one time costs.
If the one time costs exceed the expense reduction, the Fund will only bear the
share of its portion up to the amount of the expense reduction.
(c) - Opportunities Fund shares are exchanged for new Class S shares of the
Growth & Income Fund, to be established upon consummation of the merger.
Initial per share value of Class S shares is presumed to equal that of
current Class Z shares.
<PAGE> 85
PRO FORMA COMBINING CONDENSED STATEMENT OF OPERATIONS FOR THE TWELVE
MONTH PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SRF GROWTH & LIBERTY VALUE LIBERTY
INCOME OPPORTUNITIES GROWTH & PRO FORMA PRO FORMA
PORTFOLIO FUND INCOME FUND ADJUSTMENTS COMBINED
------------ ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends 4,456,261 4,451,174 15,573,131 (4,456,261)(a) 20,024,304
Interest 1,058,561 1,056,847 1,966,931 (1,058,561)(a) 3,023,778
------------ ------------ ------------ ------------
Total investment income 5,514,823 5,508,021 17,540,062 (5,514,823) 23,048,082
EXPENSES
Management fee 2,190,101 -- 9,452,952 (6,728)(b) 11,636,325
Administration fee -- 545,843 -- (545,843)(b) --
Service fee - Class A, B, C -- 866 3,099,842 - (b) 3,100,708
Distribution fee - Class A -- 23 -- (23)(b) --
Distribution fee - Class B -- 2,118 6,593,089 - (b) 6,595,207
Distribution fee - Class C -- 130 244,861 -- 244,991
Transfer agent fee - Class A, B, C, Z -- 819 -- (819)(b) --
Transfer agent fee - Class S -- 799,640 -- (799,640)(b) --
Transfer agent fee 6,000 -- 2,728,605 461,443 (c) 3,196,048
Bookkeeping fee 32,875 32,847 420,040 25,252 (b) 511,014
Trustees fee 17,578 9,169 56,473 (26,111)(d) 57,109
Expenses allocated
from SRF Growth & Income Portfolio -- 2,271,293 -- (2,271,293)(a) --
All other expenses 27,280 269,696 1,052,407 (350,383)(e) 999,000
------------ ------------ ------------ ------------ ------------
Total operating expenses 2,273,834 3,932,444 23,648,269 (3,514,145) 26,340,402
NET INVESTMENT INCOME (LOSS) 3,240,989 1,575,577 (6,108,207) (2,000,678) (3,292,320)
NET REALIZED & UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 32,232,665 32,215,860 183,532,200 (32,232,665)(a) 215,748,060
Closed futures contracts 748,773 693,167 -- (748,773)(a) 693,167
Foreign currency transactions (1,375) (749) -- 1,375 (a) (749)
------------ ------------ ------------ ------------ ------------
Net Realized Gain 32,980,063 32,908,278 183,532,200 (32,980,063) 216,440,478
Change in net unrealized appreciation/
depreciation during the period on investments 63,450,655 63,542,407 (170,105,574) (63,450,655)(a) (106,563,167)
------------ ------------ ------------ ------------ ------------
Net Gain 96,430,719 96,450,685 13,426,626 (96,430,719) 109,877,311
------------ ------------ ------------ ------------ ------------
Increase in Net Assets from Operations 99,671,708 98,026,261 7,318,419 (98,431,397) 106,584,991
</TABLE>
(a) Due to elimination of master/feeder structure.
(b) Based on the contract in effect for the surviving fund.
(c) Based on the contract in effect for the surviving fund. Note that a new
transfer agent fee structure was implemented for the Growth & Income Fund
effective January 1, 2000. The pro forma combined transfer agent fee shown
assumes this new agreement was in effect for the entire twelve-month period
ended June 30, 2000.
(d) Based on trustee compensation plan for the surviving fund.
(e) Decrease due to the elimination of duplicative expenses achieved by merging
the funds.
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 2000
1. These financial statements set forth the unaudited pro forma condensed
statement of assets and liabilities, including the portfolio of investments, as
of June 30, 2000, and the unaudited pro forma condensed statement of operations
for the twelve month period ended June 30, 2000 for SR&F Growth & Income
Portfolio, Liberty Value Opportunities Fund and Liberty Growth & Income Fund as
adjusted giving effect to the Acquisition as if it had occurred as of the
beginning of the period. These statements have been derived from the books and
records utilized in calculating daily net asset value for each fund.
<PAGE> 86
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
LIBERTY VALUE FUND MERGES INTO LIBERTY GROWTH & INCOME FUND
<TABLE>
<CAPTION>
LIBERTY GROWTH & LIBERTY VALUE
LIBERTY VALUE FUND INCOME FUND PRO FORMA FUND MARKET
SHARES SHARES COMBINED SHARES VALUE
COMMON STOCKS ------------------ ---------------- --------------- -------------
<S> <C> <C> <C> <C>
Agriculture, Forestry & Fishing
CANADIAN NATL RAILWAY CO 133,100 133,100
Finance, Insurance & Real Estate
ACE LIMITED 81,700 81,700
AETNA INC 10,900 10,900 $ 699,644
AMBAC FINANCIAL GROUP INC 40,500 40,500
AMER INTERNATIONAL GROUP INC 132,275 132,275
AMERICAN EXPRESS CO 144,000 144,000
AON CORP 33,200 33,200 1,031,275
AXA FINANCIAL INC 140,500 140,500
BANK OF AMERICA CORP 231,234 231,234
BANK ONE 31,000 31,000 823,438
BEAR STEARNS COMPANIES INC 30,173 30,173
CAPITAL ONE FINANCIAL CORP 72,100 72,100
CHASE MANHATTAN CORP (NEW) 186,450 186,450
CINCINNATI FINANCIAL CORP 188,300 188,300
CITIGROUP INC 523,300 523,300
CITY NATIONAL CORP 119,500 119,500
FANNIE MAE 163,400 163,400
FIRSTAR CORP 18,000 18,000 379,125
FLEET BOSTON FINANCIAL CORP 16,100 348,600 364,700 547,400
FREDDIE MAC 19,500 108,300 127,800 789,750
GOLDEN STATE BANCORP 171,300 171,300
GOLDEN WEST FINANCIAL CORP 89,100 89,100
HCA-THE HEALTHCARE CORP 346,100 346,100
HOUSEHOLD INTERNATIONAL INC 83,300 83,300
J P MORGAN & CO INC 55,100 55,100
KNIGHT TRADING GROUP INC 59,800 59,800
LEHMAN BROTHERS HLDG INC 100,900 100,900
LOEWS CORP 42,000 42,000
MBNA CORP 210,300 210,300
MGIC INV CORP 123,000 123,000
MORGAN STANLEY DEAN WITTER 165,900 165,900
NATIONWIDE FINANCIAL SERV A 228,700 228,700
PACIFIC CENTURY FINL CORP 145,500 145,500
PMI GROUP INC 131,100 131,100
PNC FINANCIAL SERVICES GROUP 104,900 104,900
PROVIDIAN FINANCIAL CORP 30,100 30,100
SOVEREIGN BANCORP INC 505,200 505,200
UNIONBANCAL CORPORATION 155,100 155,100
UNITED HEALTHCARE CORP 5,900 126,700 132,600 505,925
WASHINGTON MUTUAL INC 23,100 23,100 667,013
WELLS FARGO & CO 57,800 57,800
XL CAPITAL LTD-CLASS A 20,700 20,700 1,120,388
------------
6,563,956
------------
Manufacturing
ABBOTT LABS 31,600 31,600 1,408,175
ADC TELECOMMUNICATIONS INC 81,500 81,500
AGILENT TECHNOLOGIES INC 28,986 28,986
ALCOA INC 111,400 111,400
AMERADA HESS CORP 17,000 17,000 1,049,750
AMGEN INC 80,800 80,800
ANALOG DEVICES INC. 82,900 82,900
ANHEUSER BUSCH INC 162,600 162,600
APPLE COMPUTER INC 49,600 49,600
APPLIED MATLS 129,200 129,200
APPLIED MICRO CIRCUITS CORP 11,600 11,600
ATMEL CORP 116,900 116,900
</TABLE>
<TABLE>
<CAPTION>
LIBERTY GROWTH & PRO FORMA
INCOME FUND COMBINED MARKET
MARKET VALUE VALUE
COMMON STOCKS ---------------- ---------------
<S> <C> <C>
Agriculture, Forestry & Fishing
CANADIAN NATL RAILWAY CO $ 3,884,856 $ 3,884,856
-------------- ---------------
Finance, Insurance & Real Estate
ACE LIMITED 2,287,600 2,287,600
AETNA INC 699,644
AMBAC FINANCIAL GROUP INC 2,219,906 2,219,906
AMER INTERNATIONAL GROUP INC 15,542,313 15,542,313
AMERICAN EXPRESS CO 7,506,000 7,506,000
AON CORP 1,031,275
AXA FINANICAL INC 4,777,000 4,777,000
BANK OF AMERICA CORP 9,943,062 9,943,062
BANK ONE 823,438
BEAR STEARNS COMPANIES INC 1,255,951 1,255,951
CAPITAL ONE FINANCIAL CORP 3,217,463 3,217,463
CHASE MANHATTAN CORP (NEW) 8,588,353 8,588,353
CINCINNATI FINANCIAL CORP 5,919,681 5,919,681
CITIGROUP INC 31,528,825 31,528,825
CITY NATIONAL CORP 4,242,250 4,242,250
FANNIE MAE 8,527,438 8,527,438
FIRSTAR CORP 379,125
FLEET BOSTON FINANCIAL CORP 11,852,400 12,399,800
FREDDIE MAC 4,386,150 5,175,900
GOLDEN STATE BANCORP 3,083,400 3,083,400
GOLDEN WEST FINANCIAL CORP 3,636,394 3,636,394
HCA-THE HEALTHCARE CORP 10,512,788 10,512,788
HOUSEHOLD INTERNATIONAL INC 3,462,156 3,462,156
J P MORGAN & CO INC 6,067,888 6,067,888
KNIGHT TRADING GROUP INC 1,782,788 1,782,788
LEHMAN BROTHERS HLDG INC 9,541,356 9,541,356
LOEWS CORP 2,520,000 2,520,000
MBNA CORP 5,704,388 5,704,388
MGIC INV CORP 5,596,500 5,596,500
MORGAN STANLEY DEAN WITTER 13,811,175 13,811,175
NATIONWIDE FINANCIAL SERV A 7,518,513 7,518,513
PACIFIC CENTURY FINL CORP 2,127,938 2,127,938
PMI GROUP INC 6,227,250 6,227,250
PNC FINANCIAL SERVICES GROUP 4,917,188 4,917,188
PROVIDIAN FINANCIAL CORP 2,709,000 2,709,000
SOVEREIGN BANCORP INC 3,552,188 3,552,188
UNIONBANCAL CORPORATION 2,879,044 2,879,044
UNITED HEALTHCARE CORP 10,864,525 11,370,450
WASHINGTON MUTUAL INC 667,013
WELLS FARGO & CO 2,239,750 2,239,750
XL CAPITAL LTD-CLASS A 1,120,388
-------------- ---------------
230,548,616 237,112,573
-------------- ---------------
Manufacturing
ABBOTT LABS 1,408,175
ADC TELECOMMUNICATIONS INC 6,835,813 6,835,813
AGILENT TECHNOLOGIES INC 2,137,718 2,137,718
ALCOA INC 3,230,600 3,230,600
AMERADA HESS CORP 1,049,750
AMGEN INC 5,676,200 5,676,200
ANALOG DEVICES INC. 6,300,400 6,300,400
ANHEUSER BUSCH INC 12,144,188 12,144,188
APPLE COMPUTER INC 2,597,800 2,597,800
APPLIED MATLS 11,708,750 11,708,750
APPLIED MICRO CIRCUITS CORP 1,145,500 1,145,500
ATMEL CORP 4,310,688 4,310,688
</TABLE>
<PAGE> 87
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
LIBERTY VALUE FUND MERGES INTO LIBERTY GROWTH & INCOME FUND
<TABLE>
<CAPTION>
LIBERTY GROWTH & LIBERTY VALUE
LIBERTY VALUE FUND INCOME FUND PRO FORMA FUND MARKET
SHARES SHARES COMBINED SHARES VALUE
COMMON STOCKS ------------------ ---------------- --------------- -------------
<S> <C> <C> <C> <C>
BAUSCH & LOMB INC 125,200 125,200
BECKMAN COULTER INC 29,100 29,100
BESTFOODS 21,800 190,600 212,400 1,509,650
BOEING CO 25,700 332,800 358,500 1,074,581
BOSTON SCIENTIFIC CORP 19,700 19,700 432,169
BP AMOCO PLC-ADR 150,000 150,000
BRISTOL-MYERS SQUIBB CO 166,200 166,200
BRUNSWICK CORP 227,400 227,400
CHEVRON CORP 6,300 119,200 125,500 534,319
CISCO SYSTEMS INC 456,200 456,200
COCA COLA CO 19,700 19,700
COMPAQ COMPUTER CORP 18,100 18,100 462,681
COMVERSE TECH 32,200 32,200
CORNING INCORPORATED 21,100 21,100
DELPHI AUTOMOTIVE SYSTEMS 41,282 253,600 294,882 601,169
DOW CHEMICAL CO 350,500 350,500
EASTMAN KODAK CO 15,000 15,000 892,500
EI DUPONT DE NEMOURS & CO INC 60,200 60,200
ELI LILLY & CO 114,500 114,500
EMC CORP 108,400 108,400
EMERSON ELECTRIC CO 15,400 15,400 929,775
EXXON MOBIL CORPORATION 365,165 365,165
FMC CORP 43,200 43,200
FORD MOTOR CO 266,300 266,300
GATEWAY INC 51,000 51,000
GENERAL ELECTRIC CO 640,500 640,500
GENERAL MILLS INC 16,500 16,500 631,125
GEORGIA PACIFIC CORP 20,300 20,300 532,875
GRANT PRIDECO INC 164,800 164,800
HEWLETT-PACKARD CO 90,400 90,400
HONEYWELL INTERNATIONAL INC 77,437 77,437
INGERSOLL RAND CO 15,900 15,900 639,975
INTEL CORP 232,800 232,800
INTERNATIONAL GAME TECH 61,300 61,300
INTERNATIONAL PAPER CO 180,700 180,700
INTL BUSINESS MACHINES CORP 130,800 130,800
JOHNSON & JOHNSON 69,900 69,900
JOHNSON CONTROLS INC 81,500 81,500
KIMBERLY CLARK CORP 13,200 66,000 79,200 757,350
LOCKHEED MARTIN CORP 422,400 422,400
LSI LOGIC CORP 53,200 53,200
LUCENT TECHNOLOGIES INC 42,800 42,800
LYONDELL PETRO 211,300 211,300
MATTEL INC 56,800 56,800 749,050
MERCK & CO INC 14,300 155,800 170,100 1,095,738
MICROCHIP TECHNOLOGY 115,800 115,800
MINNESOTA MINING & MFG CO 9,600 130,300 139,900 792,000
MOTOROLA INC 12,900 12,900 374,906
MYLAN LABORATORIES, INC 238,600 238,600
NABISCO HOLDINGS CORP 16,800 16,800 882,000
NIKE INC CL B 25,100 25,100 999,294
NOKIA CORP ADR 112,400 112,400
PACCAR INC 137,100 137,100
PEPSI BOTTLING GROUP 324,800 324,800
PEPSICO INC 22,000 262,800 284,800 977,625
PFIZER INC 388,675 388,675
PHILIP MORRIS CO INC 48,600 280,400 329,000 1,290,938
PRAXAIR INC 15,000 15,000 561,563
PROCTER & GAMBLE CO 20,500 157,300 177,800 1,173,625
QUAKER OATS CO 121,000 121,000
ROYAL DUTCH PETRO-NY SHARES 17,600 254,300 271,900 1,083,500
SARA LEE CORP 72,100 72,100 1,392,431
SCHERING-PLOUGH CORP 24,100 86,400 110,500 1,217,050
SHERWIN WILLIAMS CO 38,700 38,700 819,956
TEMPLE INLAND INC 24,700 24,700
</TABLE>
<TABLE>
<CAPTION>
LIBERTY GROWTH & PRO FORMA
INCOME FUND COMBINED MARKET
MARKET VALUE VALUE
COMMON STOCKS ---------------- ---------------
<S> <C> <C>
BAUSCH & LOMB INC 9,687,350 9,687,350
BECKMAN COULTER INC 1,698,713 1,698,713
BESTFOODS 13,199,050 14,708,700
BOEING CO 13,915,200 14,989,781
BOSTON SCIENTIFIC CORP 432,169
BP AMOCO PLC-ADR 8,484,375 8,484,375
BRISTOL-MYERS SQUIBB CO 9,681,150 9,681,150
BRUNSWICK CORP 3,766,313 3,766,313
CHEVRON CORP 10,109,650 10,643,969
CISCO SYSTEMS INC 28,997,213 28,997,213
COCA COLA CO 1,131,519 1,131,519
COMPAQ COMPUTER CORP 462,681
COMVERSE TECH 2,994,600 2,994,600
CORNING INCORPORATED 5,694,363 5,694,363
DELPHI AUTOMOTIVE SYSTEMS 3,693,050 4,294,219
DOW CHEMICAL CO 10,580,719 10,580,719
EASTMAN KODAK CO 892,500
EI DUPONT DE NEMOURS & CO INC 2,633,750 2,633,750
ELI LILLY & CO 11,435,688 11,435,688
EMC CORP 8,340,025 8,340,025
EMERSON ELECTRIC CO 929,775
EXXON MOBIL CORPORATION 28,665,453 28,665,453
FMC CORP 2,505,600 2,505,600
FORD MOTOR CO 11,450,900 11,450,900
GATEWAY INC 2,894,250 2,894,250
GENERAL ELECTRIC CO 33,946,500 33,946,500
GENERAL MILLS INC 631,125
GEORGIA PACIFIC CORP 532,875
GRANT PRIDECO INC 4,120,000 4,120,000
HEWLETT-PACKARD CO 11,288,700 11,288,700
HONEYWELL INTERNATIONAL INC 2,608,659 2,608,659
INGERSOLL RAND CO 639,975
INTEL CORP 31,122,450 31,122,450
INTERNATIONAL GAME TECH 1,624,450 1,624,450
INTERNATIONAL PAPER CO 5,387,119 5,387,119
INTL BUSINESS MACHINES CORP 14,330,775 14,330,775
JOHNSON & JOHNSON 7,121,063 7,121,063
JOHNSON CONTROLS INC 4,181,969 4,181,969
KIMBERLY CLARK CORP 3,786,750 4,544,100
LOCKHEED MARTIN CORP 10,480,800 10,480,800
LSI LOGIC CORP 2,879,450 2,879,450
LUCENT TECHNOLOGIES INC 2,535,900 2,535,900
LYONDELL PETRO 3,539,275 3,539,275
MATTEL INC 749,050
MERCK & CO INC 11,938,175 13,033,913
MICROCHIP TECHNOLOGY 6,747,159 6,747,159
MINNESOTA MINING & MFG CO 10,749,750 11,541,750
MOTOROLA INC 374,906
MYLAN LABORATORIES, INC 4,354,450 4,354,450
NABISCO HOLDINGS CORP 882,000
NIKE INC CL B 999,294
NOKIA CORP ADR 5,612,975 5,612,975
PACCAR INC 5,441,156 5,441,156
PEPSI BOTTLING GROUP 9,480,100 9,480,100
PEPSICO INC 11,678,175 12,655,800
PFIZER INC 18,656,400 18,656,400
PHILIP MORRIS CO INC 7,448,125 8,739,063
PRAXAIR INC 561,563
PROCTER & GAMBLE CO 9,005,425 10,179,050
QUAKER OATS CO 9,090,125 9,090,125
ROYAL DUTCH PETRO-NY SHARES 15,655,344 16,738,844
SARA LEE CORP 1,392,431
SCHERING-PLOUGH CORP 4,363,200 5,580,250
SHERWIN WILLIAMS CO 819,956
TEMPLE INLAND INC 1,037,400 1,037,400
</TABLE>
<PAGE> 88
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
LIBERTY VALUE FUND MERGES INTO LIBERTY GROWTH & INCOME FUND
<TABLE>
<CAPTION>
LIBERTY GROWTH & LIBERTY VALUE
LIBERTY VALUE FUND INCOME FUND PRO FORMA FUND MARKET
SHARES SHARES COMBINED SHARES VALUE
COMMON STOCKS ------------------ ---------------- --------------- -------------
<S> <C> <C> <C> <C>
TERADYNE INC 62,400 62,400
TEXACO INC 13,800 13,800 734,850
TEXAS INSTRUMENTS INC 78,400 78,400
UNITED TECHNOLOGIES CORP 7,700 170,500 178,200 453,338
USG CORP NEW 63,300 63,300
USX-MARATHON GROUP 34,300 34,300 859,644
VISTEON CORP 33,288 33,288
WEATHERFORD INTERNATIONAL 164,800 164,800
WESTVACO CORP 268,600 268,600
WEYERHAEUSER CO 50,800 50,800
WHIRLPOOL CORP 85,100 85,100
XEROX CORP 34,400 34,400 713,800
------------
27,627,400
------------
Mining & Energy
ANADARKO PETROLEUM 19,100 19,100 941,869
BURLINGTON RESOURCES INC 76,000 76,000
COFLEXIP-SPONSORED ADR 23,270 23,270
DIAMOND OFFSHORE DRILLING 18,000 195,800 213,800 632,250
FALCON DRILLING COMPANY INC 521,800 521,800
PETROLEUM GEO SERVICES ADR 239,100 239,100
SCHLUMBERGER LTD 161,900 161,900
TRANSOCEAN SEDCO FOREX INC 31,343 31,343
------------
1,574,119
------------
Retail Trade
ALBERTSONS INC 27,500 27,500 914,375
BEST BUY INC 128,500 128,500
CIRCUIT CITY STORES INC 100,700 100,700
CVS CORP 159,200 159,200
DARDEN RESTAURANTS INC 206,000 206,000
FEDERATED DEPT STORES INC NEW 10,700 10,700 361,125
HOME DEPOT INC 69,150 69,150
MCDONALDS CORP 18,700 18,700 615,931
NORDSTROM INC 23,100 23,100 557,288
RADIOSHACK CORP 93,700 93,700
TARGET CORP 61,400 61,400
WAL-MART STORES INC 150,700 150,700
------------
2,448,719
------------
Services
ADOBE SYSTEMS INC 73,500 73,500
AMERICA ONLINE INC 113,000 113,000
AUTOMATIC DATA PROCESSING INC 105,600 105,600
CHECK POINT SOFTWARE TECH 5,700 5,700
DUN & BRADSTREET CORP 214,800 214,800
FIRST DATA CORP 19,100 129,600 148,700 947,838
HARRAH'S ENTERTAINMENT INC 88,500 88,500
MANPOWER 128,600 128,600
MICROSOFT CORP 158,700 158,700
NETWORK APPLIANCE INC 15,400 15,400
ORACLE CORP 148,400 148,400
SUN MICROSYSTEMS INC 123,800 123,800
TIME WARNER INC 16,400 16,400
USA NETWORKS INC 101,500 101,500
WALT DISNEY PRODUCTIONS 20,300 155,500 175,800 787,894
------------
1,735,731
------------
</TABLE>
<TABLE>
<CAPTION>
LIBERTY GROWTH & PRO FORMA
INCOME FUND COMBINED MARKET
MARKET VALUE VALUE
COMMON STOCKS ---------------- ---------------
<S> <C> <C>
TERADYNE INC 4,586,400 4,586,400
TEXACO INC 734,850
TEXAS INSTRUMENTS INC 5,385,100 5,385,100
UNITED TECHNOLOGIES CORP 10,038,188 10,491,525
USG CORP NEW 1,922,738 1,922,738
USX-MARATHON GROUP 859,644
VISTEON CORP 403,611 403,611
WEATHERFORD INTERNATIONAL 6,561,100 6,561,100
WESTVACO CORP 6,664,638 6,664,638
WEYERHAEUSER CO 2,184,400 2,184,400
WHIRLPOOL CORP 3,967,788 3,967,788
XEROX CORP 713,800
-------------- ---------------
559,572,362 587,199,762
-------------- ---------------
Mining & Energy
ANADARKO PETROLEUM 941,869
BURLINGTON RESOURCES INC 2,907,000 2,907,000
COFLEXIP-SPONSORED ADR 1,407,835 1,407,835
DIAMOND OFFSHORE DRILLING 6,877,475 7,509,725
FALCON DRILLING COMPANY INC 12,294,913 12,294,913
PETROLEUM GEO SERVICES ADR 4,079,644 4,079,644
SCHLUMBERGER LTD 12,081,788 12,081,788
TRANSOCEAN SEDCO FOREX INC 1,674,892 1,674,892
-------------- ---------------
41,323,545 42,897,664
-------------- ---------------
Retail Trade
ALBERTSONS INC 914,375
BEST BUY INC 8,127,625 8,127,625
CIRCUIT CITY STORES INC 3,341,981 3,341,981
CVS CORP 6,368,000 6,368,000
DARDEN RESTAURANTS INC 3,347,500 3,347,500
FEDERATED DEPT STORES INC NEW 361,125
HOME DEPOT INC 3,453,178 3,453,178
MCDONALDS CORP 615,931
NORDSTROM INC 557,288
RADIOSHACK CORP 4,439,038 4,439,038
TARGET CORP 3,561,200 3,561,200
WAL-MART STORES INC 8,684,088 8,684,088
-------------- ---------------
41,322,609 43,771,328
-------------- ---------------
Services
ADOBE SYSTEMS INC 9,555,000 9,555,000
AMERICA ONLINE INC 5,960,750 5,960,750
AUTOMATIC DATA PROCESSING INC 5,656,200 5,656,200
CHECK POINT SOFTWARE TECH 1,206,975 1,206,975
DUN & BRADSTREET CORP 6,148,650 6,148,650
FIRST DATA CORP 6,431,400 7,379,238
HARRAH'S ENTERTAINMENT INC 1,852,969 1,852,969
MANPOWER 4,115,200 4,115,200
MICROSOFT CORP 12,696,000 12,696,000
NETWORK APPLIANCE INC 1,239,700 1,239,700
ORACLE CORP 12,474,875 12,474,875
SUN MICROSYSTEMS INC 11,258,063 11,258,063
TIME WARNER INC 1,246,400 1,246,400
USA NETWORKS INC 2,194,938 2,194,938
WALT DISNEY PRODUCTIONS 6,035,344 6,823,238
-------------- ---------------
88,072,463 89,808,194
-------------- ---------------
</TABLE>
<PAGE> 89
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
LIBERTY VALUE FUND MERGES INTO LIBERTY GROWTH & INCOME FUND
<TABLE>
<CAPTION>
LIBERTY GROWTH & LIBERTY VALUE
LIBERTY VALUE FUND INCOME FUND PRO FORMA FUND MARKET
SHARES SHARES COMBINED SHARES VALUE
COMMON STOCKS ------------------ ---------------- --------------- -------------
<S> <C> <C> <C> <C>
Transportation, Communications, Electric,
Gas and Sanitary Services
A T & T CORP 26,600 348,100 374,700 841,225
AT & T WIRELESS CORP 178,200 178,200
BELL ATLANTIC CORP 122,600 122,600
BELLSOUTH CORP 147,300 147,300
CHRIS-CRAFT INDUSTRIES INC 61,800 61,800
COMCAST CORP-SPECIAL CL A 46,500 46,500
DELTA AIR LINES INC 79,600 79,600
DUKE ENERGY 60,100 60,100
EDISON INTERNATIONAL 235,700 235,700
ENTERGY CORP 18,600 252,400 271,000 505,688
GTE CORP 201,400 201,400
P G & E CORP 10,700 116,000 126,700 263,488
PMC-SIERRA INC 16,800 16,800
RF MICRO DEVICES INC 47,400 47,400
SBC COMMUNICATIONS INC 409,400 409,400
SOUTHERN CO 24,800 24,800 578,150
SPRINT CORP (FON GROUP) 189,200 189,200
TELEPHONE & DATA 24,300 24,300
TIDEWATER INC 14,900 14,900 536,400
TXU CORP 164,500 164,500
UAL INC 56,000 56,000
UNICOM CORPORATION 160,400 160,400
UNION PACIFIC CORP 11,300 137,900 149,200 420,219
US CELLULAR CORP 29,700 29,700
WORLDCOM INC 16,600 16,600 761,526
------------
3,906,695
------------
Wholesale Trade
SYSCO CORP 182,600 182,600
Total Common Stocks 43,856,620
------------
CASH EQUIVALENTS Par Par Par
WARBURG REPURCHASE AGREEMENT
6.60% 7/3/2000 $1,567,000 $ 25,932,000 $ 27,499,000 1,567,000
------------
TOTAL INVESTMENTS (COST OF $43,810,733,
$976,414,426 AND $1,020,225,159, RESPECTIVELY) $ 45,423,620
============
</TABLE>
<TABLE>
<CAPTION>
LIBERTY GROWTH & PRO FORMA
INCOME FUND COMBINED MARKET
MARKET VALUE VALUE
COMMON STOCKS ---------------- ---------------
<S> <C> <C>
Transportation, Communications, Electric,
Gas and Sanitary Services
A T & T CORP 11,008,663 11,849,888
AT & T WIRELESS CORP 4,967,325 4,967,325
BELL ATLANTIC CORP 6,229,613 6,229,613
BELLSOUTH CORP 6,278,663 6,278,663
CHRIS-CRAFT INDUSTRIES INC 4,082,663 4,082,663
COMCAST CORP-SPECIAL CL A 1,883,250 1,883,250
DELTA AIR LINES INC 4,024,775 4,024,775
DUKE ENERGY 3,388,138 3,388,138
EDISON INTERNATIONAL 4,831,850 4,831,850
ENTERGY CORP 6,862,125 7,367,813
GTE CORP 12,537,150 12,537,150
P G & E CORP 2,856,500 3,119,988
PMC-SIERRA INC 2,985,150 2,985,150
RF MICRO DEVICES INC 4,153,425 4,153,425
SBC COMMUNICATIONS INC 17,706,550 17,706,550
SOUTHERN CO 578,150
SPRINT CORP (FON GROUP) 9,649,200 9,649,200
TELEPHONE & DATA 2,436,075 2,436,075
TIDEWATER INC 536,400
TXU CORP 4,852,750 4,852,750
UAL INC 3,258,500 3,258,500
UNICOM CORPORATION 6,205,475 6,205,475
UNION PACIFIC CORP 5,128,156 5,548,375
US CELLULAR CORP 1,871,100 1,871,100
WORLDCOM INC 761,526
-------------- ---------------
127,197,094 131,103,789
-------------- ---------------
Wholesale Trade
SYSCO CORP 7,692,025 7,692,025
-------------- ---------------
Total Common Stocks 1,099,613,570 1,143,470,190
-------------- ---------------
CASH EQUIVALENTS
WARBURG REPURCHASE AGREEMENT
6.60% 7/3/2000 25,932,000 27,499,000
-------------- ---------------
TOTAL INVESTMENTS (COST OF $43,810,733,
$976,414,426 AND $1,020,225,159, RESPECTIVELY) $1,125,545,570 $ 1,170,969,190
============== ===============
</TABLE>
No adjustments are shown to the unaudited pro forma combined portfolio of
investments due to the fact that upon consummation of the Acquisitions, no
securities would need to be sold in order for the Acquiring Fund to comply with
its Prospectus and SEC and IRS guidelines and restrictions. However, the
foregoing sentence shall not be deemed to restrict in any way the ability of the
investment advisor of any of the funds from buying or selling securities in the
normal course of such Fund's business and operations.
<PAGE> 90
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINING CONDENSED STATEMENT OF ASSETS AND LIABILITIES
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Liberty
Liberty Growth & Income
Liberty Growth & Income Fund
Value Fund Pro Forma Pro Forma
Fund (Acquring Fund) Adjustments Combined
<S> <C> <C> <C> <C>
Investments, at value $ 45,423,620 $ 1,125,545,570 $ - $1,170,969,190
Cash 342 176 - 518
Receivable for investments sold - - - -
Payable for investments purchased - - - -
Other assets less other liabilities 18,463 35,737,174 (44,080) (a) 35,711,557
Net assets $ 45,442,425 $ 1,161,282,920 $ (44,080) $1,206,681,265
Class A:
Net assets $ 10,441,098 $ 309,356,714 (10,775) $ 319,787,037
Shares outstanding 920,529 15,017,711 (414,189) $ 15,524,051
Net asset value $ 11.34 $ 20.60 $ 20.60
Class B:
Net assets $ 19,380,181 $ 822,643,366 (23,778) $ 841,999,769
Shares outstanding 1,714,187 41,382,562 (740,475) $ 42,356,274
Net asset value $ 11.31 $ 19.88 $ 19.88
Class C:
Net assets $ 1,934,018 $ 29,281,763 (1,570) $ 31,214,211
Shares outstanding 171,022 1,465,147 (74,330) $ 1,561,839
Net asset value $ 11.31 $ 19.99 $ 19.99
Class Z:
Net assets $ 13,687,128 $ 1,077 (7,958) $ 13,680,247
Shares outstanding 1,206,557 52 (546,096) $ 660,513
Net asset value $ 11.34 $ 20.71 $ 20.71
</TABLE>
(a) Adjustment reflects one time proxy, accounting, legal and other costs of
the reorganization of $26,420 and $17,660 to be borne by Liberty Value Fund
and Liberty Growth & Income Fund, respectively. These costs reflect each
fund's share of the reorganization that will be shared between Liberty
Financial and the Funds, subject to the terms of each Agreement and Plan of
Reorganization, as follows:
<TABLE>
<CAPTION>
Liberty Financial Fund
<S> <C> <C>
Liberty Value Fund 50% 50%
Liberty Growth & Income Fund 75% 25%
</TABLE>
The Funds will bear their full portion of the one time costs of the
reorganization only if the expense reduction experienced as a result of the
Acquisition in the first year after Acquisition Date exceeds the one time costs.
If the one time costs exceed the expense reduction, the Fund will only bear the
share of its portion up to the amount of the expense reduction.
<PAGE> 91
PRO FORMA COMBINING CONDENSED STATEMENT OF OPERATIONS FOR THE TWELVE
MONTH PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY VALUE LIBERTY GROWTH PRO FORMA PRO FORMA
FUND & INCOME FUND ADJUSTMENTS COMBINED
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends 852,965 15,573,131 - 16,426,096
Interest 46,028 1,966,931 - 2,012,959
------------- -------------- ----------- -----------
Total investment income 898,993 17,540,062 - 18,439,055
EXPENSES
Management fee 356,825 9,452,952 (89,207) (a) 9,720,570
Service fee - Class A, B, C 80,902 3,099,842 - (a) 3,180,744
Distribution fee - Class B 144,648 6,593,089 - (a) 6,737,737
Distribution fee - Class C 11,951 244,861 - (a) 256,812
Transfer agent fee 94,869 2,728,605 (262,818) (d) 2,560,656
Bookkeeping fee 27,000 420,040 (15,850) (a) 431,190
Trustees fee 7,463 56,473 (17,323) (b) 46,613
All other expenses 129,672 1,052,407 (264,579) (c) 917,500
------------- -------------- ----------- -----------
Total operating expenses 853,330 23,648,269 (649,777) 23,851,822
------------- -------------- ----------- -----------
Expense reimbursement (281,305) - 281,305 (a) -
------------- -------------- ----------- -----------
Net Expenses 572,025 23,648,269 (368,472) 23,851,822
NET INVESTMENT INCOME (LOSS) 326,968 (6,108,207) 368,472 (5,412,767)
NET REALIZED & UNREALIZED GAIN (LOSS)
Net realized gain (loss) on investments (5,244,334) 183,532,200 - 178,287,866
Change in net unrealized depreciation
during the period on investments (1,924,598) (170,105,574) - (172,030,171)
------------- -------------- ----------- -----------
Net Gain (Loss) (7,168,932) 13,426,626 - 6,257,695
------------- -------------- ----------- -----------
Increase (Decrease) in Net Assets from Operations (6,841,963) 7,318,419 368,472 844,927
</TABLE>
(a) Based on the contract in effect for the surviving fund.
(b) Based on trustee compensation plan for the surviving fund.
(c) Decrease due to the elimination of duplicative expenses achieved by merging
the funds.
(d) Based on the contract in effect for the surviving fund. Note that a new
transfer agent fee structure was implemented for the Growth & Income Fund
effective January 1, 2000. The pro forma combined transfer agent fee shown
assumes this new agreement was in effect for the entire twelve-month period
ended June 30, 2000.
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 2000
1. These financial statements set forth the unaudited pro forma condensed
statement of assets and liabilities, including the portfolio of investments, as
of June 30, 2000, and the unaudited pro forma condensed statement of operations
for the twelve month period ended June 30, 2000 for Liberty Value Fund and
Liberty Growth & Income Fund as adjusted giving effect to the Acquisition as if
it had occurred as of the beginning of the period. These statements have been
derived from the books and records utilized in calculating daily net asset value
for each fund.
<PAGE> 92
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY ALL-STAR LIBERTY GROWTH &
GROWTH & INCOME INCOME FUND PRO FORMA
FUND SHARES SHARES COMBINED SHARES
<S> <C> <C> <C>
COMMON STOCKS
Agriculture, Forestry & Fishing
CANADIAN NATL RAILWAY CO 133,100 133,100
Construction
HALLIBURTON CO 2,975 2,975
Finance, Insurance & Real Estate
ABN AMRO HOLDING NV ADR 3,286 3,286
ACE LIMITED 10,950 81,700 92,650
AFLAC INC 4,271 4,271
ALLMERICA FINANCIAL CORP 3,375 3,375
AMBAC FINANCIAL GROUP INC 1,300 40,500 41,800
AMER INTERNATIONAL GROUP INC 1,100 132,275 133,375
AMERICAN EXPRESS CO 144,000 144,000
ASTORIA FINANCIAL CORP 600 600
AXA FINANICAL INC 4,300 140,500 144,800
BANK OF AMERICA CORP 700 231,234 231,934
BANK ONE 4,100 4,100
BEAR STEARNS COMPANIES INC 30,173 30,173
C.I.T. GROUP INC-A 2,000 2,000
CAPITAL ONE FINANCIAL CORP 1,000 72,100 73,100
CHASE MANHATTAN CORP (NEW) 3,250 186,450 189,700
CIGNA CORP 2,275 2,275
CINCINNATI FINANCIAL CORP 188,300 188,300
CITIGROUP INC 8,490 523,300 531,790
CITY NATIONAL CORP 119,500 119,500
COUNTRYWIDE CREDIT INDUSTRIES 10,593 10,593
FANNIE MAE 400 163,400 163,800
FIRST UNION CORP 2,800 2,800
FLEET BOSTON FINANCIAL CORP 4,000 348,600 352,600
FREDDIE MAC 9,096 108,300 117,396
GOLDEN STATE BANCORP 171,300 171,300
GOLDEN WEST FINANCIAL CORP 89,100 89,100
GOLDMAN SACHS GROUP INC 500 500
HCA-THE HEALTHCARE CORP 346,100 346,100
HOUSEHOLD INTERNATIONAL INC 83,300 83,300
J P MORGAN & CO INC 55,100 55,100
KEYCORP 1,200 1,200
KIMCO REALTY CORP 1,700 1,700
KNIGHT TRADING GROUP INC 59,800 59,800
LEHMAN BROTHERS HLDG INC 100,900 100,900
LOEWS CORP 42,000 42,000
MBNA CORP 210,300 210,300
METLIFE INC 1,700 1,700
MGIC INV CORP 123,000 123,000
MORGAN STANLEY DEAN WITTER 1,900 165,900 167,800
NATIONWIDE FINANCIAL SERV A 228,700 228,700
PACIFIC CENTURY FINL CORP 145,500 145,500
PMI GROUP INC 131,100 131,100
PNC FINANCIAL SERVICES GROUP 3,350 104,900 108,250
PROGRESSIVE CORP OHIO 4,900 4,900
PROVIDIAN FINANCIAL CORP 2,650 30,100 32,750
SCHWAB (CHARLES) CORP 7,950 7,950
SOVEREIGN BANCORP INC 505,200 505,200
STARWOOD HOTELS & RESORTS WOR 2,600 2,600
TRIZEC HAHN CORP 8,400 8,400
U.S. BANCORP 3,000 3,000
UNIONBANCAL CORPORATION 155,100 155,100
UNITED HEALTHCARE CORP 126,700 126,700
VORNADO REALTY TRUST 1,500 1,500
WASHINGTON MUTUAL INC 2,000 2,000
WELLPOINT HEALTH NETWORKS 2,100 2,100
WELLS FARGO & CO 4,193 57,800 61,993
XL CAPITAL LTD-CLASS A 4,090 4,090
ZIONS BANCORPORATION 1,300 1,300
Manufacturing
3COM CORPORATION 1,100 1,100
ADC TELECOMMUNICATIONS INC 81,500 81,500
</TABLE>
<TABLE>
<CAPTION>
LIBERTY ALL-STAR LIBERTY GROWTH & PRO FORMA
GROWTH & INCOME INCOME FUND COMBINED MARKET
FUND MARKET VALUE MARKET VALUE VALUE
<S> <C> <C> <C>
COMMON STOCKS
Agriculture, Forestry & Fishing
CANADIAN NATL RAILWAY CO $ 3,884,856 $ 3,884,856
-------------- ---------------
Construction
HALLIBURTON CO $ 140,383 140,383
------------ ---------------
Finance, Insurance & Real Estate
ABN AMRO HOLDING NV ADR 80,712 80,712
ACE LIMITED 306,600 2,287,600 2,594,200
AFLAC INC 196,199 196,199
ALLMERICA FINANCIAL CORP 176,766 176,766
AMBAC FINANCIAL GROUP INC 71,256 2,219,906 2,291,162
AMER INTERNATIONAL GROUP INC 129,250 15,542,313 15,671,563
AMERICAN EXPRESS CO 7,506,000 7,506,000
ASTORIA FINANCIAL CORP 15,450 15,450
AXA FINANICAL INC 146,200 4,777,000 4,923,200
BANK OF AMERICA CORP 30,100 9,943,062 9,973,162
BANK ONE 108,906 108,906
BEAR STEARNS COMPANIES INC 1,255,951 1,255,951
C.I.T. GROUP INC-A 32,500 32,500
CAPITAL ONE FINANCIAL CORP 44,625 3,217,463 3,262,088
CHASE MANHATTAN CORP (NEW) 149,703 8,588,353 8,738,056
CIGNA CORP 212,713 212,713
CINCINNATI FINANCIAL CORP 5,919,681 5,919,681
CITIGROUP INC 511,523 31,528,825 32,040,348
CITY NATIONAL CORP 4,242,250 4,242,250
COUNTRYWIDE CREDIT INDUSTRIES 321,100 321,100
FANNIE MAE 20,875 8,527,438 8,548,313
FIRST UNION CORP 69,475 69,475
FLEET BOSTON FINANCIAL CORP 136,000 11,852,400 11,988,400
FREDDIE MAC 368,388 4,386,150 4,754,538
GOLDEN STATE BANCORP 3,083,400 3,083,400
GOLDEN WEST FINANCIAL CORP 3,636,394 3,636,394
GOLDMAN SACHS GROUP INC 47,438 47,438
HCA-THE HEALTHCARE CORP 10,512,788 10,512,788
HOUSEHOLD INTERNATIONAL INC 3,462,156 3,462,156
J P MORGAN & CO INC 6,067,888 6,067,888
KEYCORP 21,150 21,150
KIMCO REALTY CORP 69,700 69,700
KNIGHT TRADING GROUP INC 1,782,788 1,782,788
LEHMAN BROTHERS HLDG INC 9,541,356 9,541,356
LOEWS CORP 2,520,000 2,520,000
MBNA CORP 5,704,388 5,704,388
METLIFE INC 35,806 35,806
MGIC INV CORP 5,596,500 5,596,500
MORGAN STANLEY DEAN WITTER 158,175 13,811,175 13,969,350
NATIONWIDE FINANCIAL SERV A 7,518,513 7,518,513
PACIFIC CENTURY FINL CORP 2,127,938 2,127,938
PMI GROUP INC 6,227,250 6,227,250
PNC FINANCIAL SERVICES GROUP 157,031 4,917,188 5,074,219
PROGRESSIVE CORP OHIO 362,600 362,600
PROVIDIAN FINANCIAL CORP 238,500 2,709,000 2,947,500
SCHWAB (CHARLES) CORP 267,319 267,319
SOVEREIGN BANCORP INC 3,552,188 3,552,188
STARWOOD HOTELS & RESORTS WOR 84,013 84,013
TRIZEC HAHN CORP 150,150 150,150
U.S. BANCORP 57,750 57,750
UNIONBANCAL CORPORATION 2,879,044 2,879,044
UNITED HEALTHCARE CORP 10,864,525 10,864,525
VORNADO REALTY TRUST 52,125 52,125
WASHINGTON MUTUAL INC 57,750 57,750
WELLPOINT HEALTH NETWORKS 152,119 152,119
WELLS FARGO & CO 162,479 2,239,750 2,402,229
XL CAPITAL LTD-CLASS A 221,371 221,371
ZIONS BANCORPORATION 59,658 59,658
------------ -------------- ---------------
5,483,474 230,548,616 236,032,090
------------ -------------- ---------------
Manufacturing
3COM CORPORATION 63,388 63,388
ADC TELECOMMUNICATIONS INC 6,835,813 6,835,813
</TABLE>
<PAGE> 93
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY ALL-STAR LIBERTY GROWTH &
GROWTH & INCOME INCOME FUND PRO FORMA
FUND SHARES SHARES COMBINED SHARES
<S> <C> <C> <C>
COMMON STOCKS
AGILENT TECHNOLOGIES INC 1,200 28,986 30,186
ALCAN ALUMINUM LTD 5,000 5,000
ALCOA INC 7,560 111,400 118,960
ALLEGHENY TECHNOLOGIES INC 1,200 1,200
ALZA CORP 1,500 1,500
AMERICAN HOME PRODUCTS CORP 600 600
AMGEN INC 3,250 80,800 84,050
ANALOG DEVICES INC. 82,900 82,900
ANHEUSER BUSCH INC 2,100 162,600 164,700
APPLE COMPUTER INC 49,600 49,600
APPLIED MATLS 2,900 129,200 132,100
APPLIED MICRO CIRCUITS CORP 11,600 11,600
ATMEL CORP 116,900 116,900
AVENTIS-SPON ADR 1,100 1,100
AVON PRODUCTS INC 9,184 9,184
BAKER HUGHES INC 800 800
BAUSCH & LOMB INC 125,200 125,200
BAXTER INTERNATIONAL INC 4,400 4,400
BECKMAN COULTER INC 29,100 29,100
BESTFOODS 1,100 190,600 191,700
BIOGEN INC 3,050 3,050
BOEING CO 3,793 332,800 336,593
BP AMOCO PLC-ADR 150,000 150,000
BRISTOL-MYERS SQUIBB CO 3,200 166,200 169,400
BRUNSWICK CORP 227,400 227,400
CATERPILLAR INC 3,755 3,755
CHEVRON CORP 119,200 119,200
CISCO SYSTEMS INC 7,400 456,200 463,600
CLOROX CO 500 500
COCA COLA CO 700 19,700 20,400
COMPAQ COMPUTER CORP 7,000 7,000
COMVERSE TECH 32,200 32,200
COOPER INDUSTRIES INC 700 700
CORNING INCORPORATED 21,100 21,100
DEERE & CO 9,500 9,500
DELL COMPUTER CORPORATION 8,900 8,900
DELPHI AUTOMOTIVE SYSTEMS 253,600 253,600
DIAGEO PLC ADR 5,193 5,193
DOVER CORP 3,793 3,793
DOW CHEMICAL CO 350,500 350,500
EI DUPONT DE NEMOURS & CO INC 2,900 60,200 63,100
ELI LILLY & CO 1,000 114,500 115,500
EMC CORP 1,000 108,400 109,400
EMERSON ELECTRIC CO 3,306 3,306
EXXON MOBIL CORPORATION 3,916 365,165 369,081
FMC CORP 43,200 43,200
FORD MOTOR CO 600 266,300 266,900
GATEWAY INC 51,000 51,000
GENERAL ELECTRIC CO 2,700 640,500 643,200
GILLETTE CO 4,350 4,350
GRANT PRIDECO INC 164,800 164,800
H J HEINZ CO 1,400 1,400
HEWLETT-PACKARD CO 1,600 90,400 92,000
HONEYWELL INTERNATIONAL INC 900 77,437 78,337
ILLINOIS TOOL WORKS INC 2,800 2,800
INGERSOLL RAND CO 2,525 2,525
INTEL CORP 5,450 232,800 238,250
INTERNATIONAL GAME TECH 61,300 61,300
INTERNATIONAL PAPER CO 180,700 180,700
INTL BUSINESS MACHINES CORP 1,720 130,800 132,520
INTUIT INC 1,700 1,700
JDS UNIPHASE CORP 1,050 1,050
JOHNSON & JOHNSON 69,900 69,900
JOHNSON CONTROLS INC 81,500 81,500
KIMBERLY CLARK CORP 3,400 66,000 69,400
LEAR CORP 2,800 2,800
LOCKHEED MARTIN CORP 422,400 422,400
LSI LOGIC CORP 53,200 53,200
LUCENT TECHNOLOGIES INC 2,800 42,800 45,600
LYONDELL PETRO 211,300 211,300
MAXIM INTEGRATED PRODUCTS INC 4,550 4,550
MEDTRONIC INC 2,400 2,400
MERCK & CO INC 155,800 155,800
MICROCHIP TECHNOLOGY 115,800 115,800
MINNESOTA MINING & MFG CO 4,142 130,300 134,442
MOTOROLA INC 1,560 1,560
</TABLE>
<TABLE>
<CAPTION>
LIBERTY ALL-STAR LIBERTY GROWTH & PRO FORMA
GROWTH & INCOME INCOME FUND COMBINED MARKET
FUND MARKET VALUE MARKET VALUE VALUE
<S> <C> <C> <C>
COMMON STOCKS
AGILENT TECHNOLOGIES INC 88,500 2,137,718 2,226,218
ALCAN ALUMINUM LTD 155,000 155,000
ALCOA INC 219,240 3,230,600 3,449,840
ALLEGHENY TECHNOLOGIES INC 21,600 21,600
ALZA CORP 88,688 88,688
AMERICAN HOME PRODUCTS CORP 35,250 35,250
AMGEN INC 228,313 5,676,200 5,904,513
ANALOG DEVICES INC. 6,300,400 6,300,400
ANHEUSER BUSCH INC 156,843 12,144,188 12,301,031
APPLE COMPUTER INC 2,597,800 2,597,800
APPLIED MATLS 262,813 11,708,750 11,971,563
APPLIED MICRO CIRCUITS CORP 1,145,500 1,145,500
ATMEL CORP 4,310,688 4,310,688
AVENTIS-SPON ADR 79,819 79,819
AVON PRODUCTS INC 408,688 408,688
BAKER HUGHES INC 25,600 25,600
BAUSCH & LOMB INC 9,687,350 9,687,350
BAXTER INTERNATIONAL INC 309,375 309,375
BECKMAN COULTER INC 1,698,713 1,698,713
BESTFOODS 76,175 13,199,050 13,275,225
BIOGEN INC 196,725 196,725
BOEING CO 158,595 13,915,200 14,073,795
BP AMOCO PLC-ADR 8,484,375 8,484,375
BRISTOL-MYERS SQUIBB CO 186,400 9,681,150 9,867,550
BRUNSWICK CORP 3,766,313 3,766,313
CATERPILLAR INC 127,201 127,201
CHEVRON CORP 10,109,650 10,109,650
CISCO SYSTEMS INC 470,363 28,997,212 29,467,575
CLOROX CO 22,406 22,406
COCA COLA CO 40,206 1,131,519 1,171,725
COMPAQ COMPUTER CORP 178,938 178,938
COMVERSE TECH 2,994,600 2,994,600
COOPER INDUSTRIES INC 22,794 22,794
CORNING INCORPORATED 5,694,363 5,694,363
DEERE & CO 351,500 351,500
DELL COMPUTER CORPORATION 438,881 438,881
DELPHI AUTOMOTIVE SYSTEMS 3,693,050 3,693,050
DIAGEO PLC ADR 184,676 184,676
DOVER CORP 153,854 153,854
DOW CHEMICAL CO 10,580,719 10,580,719
EI DUPONT DE NEMOURS & CO INC 126,875 2,633,750 2,760,625
ELI LILLY & CO 99,875 11,435,688 11,535,563
EMC CORP 76,938 8,340,025 8,416,963
EMERSON ELECTRIC CO 199,600 199,600
EXXON MOBIL CORPORATION 307,406 28,665,453 28,972,859
FMC CORP 2,505,600 2,505,600
FORD MOTOR CO 25,800 11,450,900 11,476,700
GATEWAY INC 2,894,250 2,894,250
GENERAL ELECTRIC CO 143,100 33,946,500 34,089,600
GILLETTE CO 151,978 151,978
GRANT PRIDECO INC 4,120,000 4,120,000
H J HEINZ CO 61,250 61,250
HEWLETT-PACKARD CO 199,800 11,288,700 11,488,500
HONEYWELL INTERNATIONAL INC 30,319 2,608,659 2,638,978
ILLINOIS TOOL WORKS INC 159,600 159,600
INGERSOLL RAND CO 101,631 101,631
INTEL CORP 728,597 31,122,450 31,851,047
INTERNATIONAL GAME TECH 1,624,450 1,624,450
INTERNATIONAL PAPER CO 5,387,119 5,387,119
INTL BUSINESS MACHINES CORP 188,448 14,330,775 14,519,223
INTUIT INC 70,338 70,338
JDS UNIPHASE CORP 125,869 125,869
JOHNSON & JOHNSON 7,121,063 7,121,063
JOHNSON CONTROLS INC 4,181,969 4,181,969
KIMBERLY CLARK CORP 195,075 3,786,750 3,981,825
LEAR CORP 56,000 56,000
LOCKHEED MARTIN CORP 10,480,800 10,480,800
LSI LOGIC CORP 2,879,450 2,879,450
LUCENT TECHNOLOGIES INC 165,900 2,535,900 2,701,800
LYONDELL PETRO 3,539,275 3,539,275
MAXIM INTEGRATED PRODUCTS INC 309,116 309,116
MEDTRONIC INC 119,550 119,550
MERCK & CO INC 11,938,175 11,938,175
MICROCHIP TECHNOLOGY 6,747,159 6,747,159
MINNESOTA MINING & MFG CO 341,715 10,749,750 11,091,465
MOTOROLA INC 45,338 45,338
</TABLE>
<PAGE> 94
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY ALL-STAR LIBERTY GROWTH &
GROWTH & INCOME INCOME FUND PRO FORMA
FUND SHARES SHARES COMBINED SHARES
<S> <C> <C> <C>
Common Stocks
MYLAN LABORATORIES, INC 238,600 238,600
NEWS CORP LTD ADR 1,400 1,400
NOKIA CORP ADR 4,500 112,400 116,900
NORTEL NETWORKS CORP 700 700
PACCAR INC 137,100 137,100
PE CORP-PE BIOSYSTEMS GROUP 300 300
PEPSI BOTTLING GROUP 324,800 324,800
PEPSICO INC 262,800 262,800
PFIZER INC 7,025 388,675 395,700
PHARMACIA CORPORATION 8,796 8,796
PHILIP MORRIS CO INC 2,800 280,400 283,200
PROCTER & GAMBLE CO 1,850 157,300 159,150
QUAKER OATS CO 121,000 121,000
ROHM & HAAS CO 1,900 1,900
ROYAL DUTCH PETRO-NY SHARES 700 254,300 255,000
SABRE HOLDINGS CORP 4,230 4,230
SARA LEE CORP 6,300 6,300
SCHERING-PLOUGH CORP 1,100 86,400 87,500
SEAGATE TECHNOLOGY INC 600 600
SEAGRAMS CO. LTD. 1,000 1,000
TELLABS INC 400 400
TEMPLE INLAND INC 1,000 24,700 25,700
TERADYNE INC 62,400 62,400
TEXAS INSTRUMENTS INC 900 78,400 79,300
TEXTRON INC 2,600 2,600
TOSCO CORP 800 800
TYCO INT'L LTD 3,600 3,600
UNITED TECHNOLOGIES CORP 170,500 170,500
USG CORP NEW 63,300 63,300
UST INC 4,200 4,200
USX-MARATHON GROUP 4,800 4,800
VISTEON CORP 75 33,288 33,363
WEATHERFORD INTERNATIONAL 164,800 164,800
WESTVACO CORP 268,600 268,600
WEYERHAEUSER CO 50,800 50,800
WHIRLPOOL CORP 85,100 85,100
Mining & Energy
APACHE CORP 2,800 2,800
BURLINGTON RESOURCES INC 7,500 76,000 83,500
COFLEXIP-SPONSORED ADR 23,270 23,270
CONOCO INC-CL B 5,800 5,800
CONOCO INC-CL A 6,450 6,450
DEVON ENERGY CORPORATION 2,708 2,708
DIAMOND OFFSHORE DRILLING 195,800 195,800
FALCON DRILLING COMPANY INC 521,800 521,800
GLOBAL MARINE INC 1,100 1,100
OCCIDENTAL PETROLEUM 7,700 7,700
PETROLEUM GEO SERVICES ADR 239,100 239,100
SCHLUMBERGER LTD 161,900 161,900
TRANSOCEAN SEDCO FOREX INC 31,343 31,343
Retail Trade
BEST BUY INC 128,500 128,500
CIRCUIT CITY STORES INC 600 100,700 101,300
COSTCO WHOLESALE CORP 2,550 2,550
CVS CORP 159,200 159,200
DARDEN RESTAURANTS INC 206,000 206,000
FEDERATED DEPT STORES INC NEW 4,500 4,500
HARCOURT GENERAL INC 4,725 4,725
HOME DEPOT INC 4,600 69,150 73,750
LIMITED INC 6,000 6,000
MAY DEPARTMENT STORES CO 5,214 5,214
MCDONALDS CORP 5,112 5,112
RADIOSHACK CORP 93,700 93,700
SAFEWAY INC 2,400 2,400
TARGET CORP 600 61,400 62,000
TIFFANY & CO 1,300 1,300
TJX COMPANIES, INC 1,400 1,400
WAL-MART STORES INC 3,150 150,700 153,850
</TABLE>
<TABLE>
<CAPTION>
LIBERTY ALL-STAR LIBERTY GROWTH & PRO FORMA
GROWTH & INCOME INCOME FUND COMBINED MARKET
FUND MARKET VALUE MARKET VALUE VALUE
<S> <C> <C> <C>
Common Stocks
MYLAN LABORATORIES, INC 4,354,450 4,354,450
NEWS CORP LTD ADR 76,300 76,300
NOKIA CORP ADR 224,719 5,612,975 5,837,694
NORTEL NETWORKS CORP 47,775 47,775
PACCAR INC 5,441,156 5,441,156
PE CORP-PE BIOSYSTEMS GROUP 19,763 19,763
PEPSI BOTTLING GROUP 9,480,100 9,480,100
PEPSICO INC 11,678,175 11,678,175
PFIZER INC 337,200 18,656,400 18,993,600
PHARMACIA CORPORATION 454,643 454,643
PHILIP MORRIS CO INC 74,375 7,448,125 7,522,500
PROCTER & GAMBLE CO 105,913 9,005,425 9,111,338
QUAKER OATS CO 9,090,125 9,090,125
ROHM & HAAS CO 65,550 65,550
ROYAL DUTCH PETRO-NY SHARES 43,094 15,655,344 15,698,438
SABRE HOLDINGS CORP 120,555 120,555
SARA LEE CORP 121,669 121,669
SCHERING-PLOUGH CORP 55,550 4,363,200 4,418,750
SEAGATE TECHNOLOGY INC 33,000 33,000
SEAGRAMS CO. LTD. 58,000 58,000
TELLABS INC 27,375 27,375
TEMPLE INLAND INC 42,000 1,037,400 1,079,400
TERADYNE INC 4,586,400 4,586,400
TEXAS INSTRUMENTS INC 61,819 5,385,100 5,446,919
TEXTRON INC 141,213 141,213
TOSCO CORP 22,650 22,650
TYCO INT'L LTD 170,550 170,550
UNITED TECHNOLOGIES CORP 10,038,188 10,038,188
USG CORP NEW 1,922,738 1,922,738
UST INC 61,688 61,688
USX-MARATHON GROUP 120,300 120,300
VISTEON CORP 909 403,611 404,520
WEATHERFORD INTERNATIONAL 6,561,100 6,561,100
WESTVACO CORP 6,664,638 6,664,638
WEYERHAEUSER CO 2,184,400 2,184,400
WHIRLPOOL CORP 3,967,788 3,967,788
------------ -------------- ---------------
11,268,551 559,572,362 570,840,912
------------ -------------- ---------------
Mining & Energy
APACHE CORP 164,675 164,675
BURLINGTON RESOURCES INC 286,875 2,907,000 3,193,875
COFLEXIP-SPONSORED ADR 1,407,835 1,407,835
CONOCO INC-CL B 142,463 142,463
CONOCO INC-CL A 141,900 141,900
DEVON ENERGY CORPORATION 152,156 152,156
DIAMOND OFFSHORE DRILLING 6,877,475 6,877,475
FALCON DRILLING COMPANY INC 12,294,913 12,294,913
GLOBAL MARINE INC 31,006 31,006
OCCIDENTAL PETROLEUM 162,181 162,181
PETROLEUM GEO SERVICES ADR 4,079,644 4,079,644
SCHLUMBERGER LTD 12,081,788 12,081,788
TRANSOCEAN SEDCO FOREX INC 1,674,892 1,674,892
------------ -------------- ---------------
1,081,256 41,323,545 42,404,801
------------ -------------- ---------------
Retail Trade
BEST BUY INC 8,127,625 8,127,625
CIRCUIT CITY STORES INC 19,913 3,341,981 3,361,894
COSTCO WHOLESALE CORP 84,150 84,150
CVS CORP 6,368,000 6,368,000
DARDEN RESTAURANTS INC 3,347,500 3,347,500
FEDERATED DEPT STORES INC NEW 151,875 151,875
HARCOURT GENERAL INC 256,922 256,922
HOME DEPOT INC 229,713 3,453,178 3,682,891
LIMITED INC 129,750 129,750
MAY DEPARTMENT STORES CO 125,136 125,136
MCDONALDS CORP 168,377 168,377
RADIOSHACK CORP 4,439,038 4,439,038
SAFEWAY INC 108,300 108,300
TARGET CORP 34,800 3,561,200 3,596,000
TIFFANY & CO 87,750 87,750
TJX COMPANIES, INC 26,250 26,250
WAL-MART STORES INC 181,519 8,684,087 8,865,606
------------ -------------- ---------------
</TABLE>
<PAGE> 95
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY ALL-STAR LIBERTY GROWTH &
GROWTH & INCOME INCOME FUND PRO FORMA
FUND SHARES SHARES COMBINED SHARES
<S> <C> <C> <C>
COMMON STOCKS
Services
ADOBE SYSTEMS INC 73,500 73,500
AMERICA ONLINE INC 1,200 113,000 114,200
AUTOMATIC DATA PROCESSING INC 105,600 105,600
CENDANT CORP 2,100 2,100
CHECK POINT SOFTWARE TECH 5,700 5,700
CITRIX SYS INC 500 500
COMPUTER ASSOCIATES INT'L INC 11,423 11,423
DUN & BRADSTREET CORP 214,800 214,800
ELECTRONIC DATA SYSTEMS CORP 900 900
FIRST DATA CORP 129,600 129,600
GENENTECH INC 800 800
HARRAH'S ENTERTAINMENT INC 88,500 88,500
MANPOWER 128,600 128,600
MICROSOFT CORP 4,250 158,700 162,950
NETWORK APPLIANCE INC 15,400 15,400
NEWS CORP LTD-SPONS ADR PRF 4,548 4,548
ORACLE CORP 600 148,400 149,000
PARAMETRIC TECHNOLOGY CORP 6,400 6,400
PAYCHEX INC 6,150 6,150
PIXAR INC 2,200 2,200
SENSORMATIC ELECTRONICS CORP 1,600 1,600
SIEBEL SYSTEMS INC 2,650 2,650
SUN MICROSYSTEMS INC 1,600 123,800 125,400
</TABLE>
<TABLE>
<CAPTION>
LIBERTY ALL-STAR LIBERTY GROWTH & PRO FORMA
GROWTH & INCOME INCOME FUND COMBINED MARKET
FUND MARKET VALUE MARKET VALUE VALUE
<S> <C> <C> <C>
COMMON STOCKS
1,604,453 41,322,609 42,927,062
------------ -------------- ---------------
Services
ADOBE SYSTEMS INC 9,555,000 9,555,000
AMERICA ONLINE INC 63,300 5,960,750 6,024,050
AUTOMATIC DATA PROCESSING INC 5,656,200 5,656,200
CENDANT CORP 29,400 29,400
CHECK POINT SOFTWARE TECH 1,206,975 1,206,975
CITRIX SYS INC 9,469 9,469
COMPUTER ASSOCIATES INT'L INC 584,715 584,715
DUN & BRADSTREET CORP 6,148,650 6,148,650
ELECTRONIC DATA SYSTEMS CORP 37,125 37,125
FIRST DATA CORP 6,431,400 6,431,400
GENENTECH INC 137,600 137,600
HARRAH'S ENTERTAINMENT INC 1,852,969 1,852,969
MANPOWER 4,115,200 4,115,200
MICROSOFT CORP 340,000 12,696,000 13,036,000
NETWORK APPLIANCE INC 1,239,700 1,239,700
NEWS CORP LTD-SPONS ADR PRF 216,030 216,030
ORACLE CORP 50,438 12,474,875 12,525,313
PARAMETRIC TECHNOLOGY CORP 70,400 70,400
PAYCHEX INC 258,300 258,300
PIXAR INC 77,550 77,550
SENSORMATIC ELECTRONICS CORP 25,300 25,300
SIEBEL SYSTEMS INC 433,441 433,441
SUN MICROSYSTEMS INC 145,500 11,258,063 11,403,563
</TABLE>
<PAGE> 96
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY ALL-STAR LIBERTY GROWTH &
GROWTH & INCOME INCOME FUND PRO FORMA
FUND SHARES SHARES COMBINED SHARES
<S> <C> <C> <C>
COMMON STOCKS
SYNOPSYS INC 1,900 1,900
TIME WARNER INC 2,200 16,400 18,600
USA NETWORKS INC 101,500 101,500
WALT DISNEY PRODUCTIONS 3,600 155,500 159,100
Transportation, Communications,
Electric, Gas and Sanitary
Services
AT&T CORP 4,100 348,100 352,200
ALLEGIANCE TELECOM INC 250 250
AMFM INC 3,500 3,500
AMR CORP 4,000 4,000
AT&T WIRELESS CORP 178,200 178,200
AT&T CORP-LIBERTY MEDIA A 3,600 3,600
BELL ATLANTIC CORP 2,400 122,600 125,000
BELLSOUTH CORP 147,300 147,300
BURLINGTON NORTH SANTA FE CORP 6,647 6,647
CABLEVISION SYSTEMS CL-A 1,200 1,200
CARNIVAL CORP-CL A 4,200 4,200
CHRIS-CRAFT INDUSTRIES INC 61,800 61,800
COLUMBIA ENERGY GROUP 700 700
COMCAST CORP-SPECIAL CL A 500 46,500 47,000
COX COMMUNICATIONS INC-CL A 2,150 2,150
CSX CORP 2,500 2,500
DELTA AIR LINES INC 3,000 79,600 82,600
DTE ENERGY CO 800 800
DUKE ENERGY 60,100 60,100
DYNEGY INC 400 400
EDISON INTERNATIONAL 235,700 235,700
EL PASO ENERGY CORP 6,200 6,200
ENTERGY CORP 252,400 252,400
FLORIDA PROGRESS CORP 2,000 2,000
GLOBAL CROSSING LTD 1,000 1,000
GTE CORP 2,950 201,400 204,350
KANSAS CITY SOUTHN INDS INC 3,750 3,750
LEVEL 3 COMMUNICATIONS 250 250
P G & E CORP 900 116,000 116,900
PECO ENERGY CO 4,100 4,100
PMC-SIERRA INC 16,800 16,800
QWEST COMMUNICATIONS INTL 500 500
RELIANT ENERGY INC 5,400 5,400
RF MICRO DEVICES INC 47,400 47,400
SBC COMMUNICATIONS INC 9,959 409,400 419,359
SOUTHWEST AIRLINES CO 8,650 8,650
SPRINT CORP (FON GROUP) 3,253 189,200 192,453
SPRINT CORP PCS 500 500
TELEPHONE & DATA 24,300 24,300
TXU CORP 164,500 164,500
UAL INC 56,000 56,000
UNICOM CORPORATION 160,400 160,400
UNION PACIFIC CORP 1,400 137,900 139,300
UNITED PARCEL SERVICE-CL B 2,300 2,300
US CELLULAR CORP 29,700 29,700
WASTE MANAGEMENT INC 1,200 1,200
WILLIAMS COMPANIES INC 1,900 1,900
WORLDCOM INC 5,200 5,200
Wholesale Trade
SYSCO CORP 182,600 182,600
Total Common Stocks
CASH EQUIVALENTS Par Par Par
WARBURG REPURCHASE AGREEMENT
6.60% 7/3/2000 $ 972,000 $ 25,932,000 26,904,000
TOTAL INVESTMENTS (COST OF $25,098,509,
$976,414,426 AND $1,001,512,935,
RESPECTIVELY)
</TABLE>
<TABLE>
<CAPTION>
LIBERTY ALL-STAR LIBERTY GROWTH & PRO FORMA
GROWTH & INCOME INCOME FUND COMBINED MARKET
FUND MARKET VALUE MARKET VALUE VALUE
<S> <C> <C> <C>
COMMON STOCKS
SYNOPSYS INC 65,669 65,669
TIME WARNER INC 167,200 1,246,400 1,413,600
USA NETWORKS INC 2,194,938 2,194,938
WALT DISNEY PRODUCTIONS 139,725 6,035,344 6,175,069
------------ -------------- ---------------
2,851,160 88,072,463 90,923,623
------------ -------------- ---------------
Transportation, Communications,
Electric, Gas and Sanitary
Services
AT&T CORP 129,663 11,008,662 11,138,325
ALLEGIANCE TELECOM INC 16,000 16,000
AMFM INC 241,500 241,500
AMR CORP 105,750 105,750
AT&T WIRELESS CORP 4,967,325 4,967,325
AT&T CORP-LIBERTY MEDIA A 87,300 87,300
BELL ATLANTIC CORP 121,950 6,229,613 6,351,563
BELLSOUTH CORP 6,278,663 6,278,663
BURLINGTON NORTH SANTA FE CORP 152,466 152,466
CABLEVISION SYSTEMS CL-A 81,450 81,450
CARNIVAL CORP-CL A 81,900 81,900
CHRIS-CRAFT INDUSTRIES INC 4,082,663 4,082,663
COLUMBIA ENERGY GROUP 45,938 45,938
COMCAST CORP-SPECIAL CL A 20,250 1,883,250 1,903,500
COX COMMUNICATIONS INC-CL A 97,959 97,959
CSX CORP 52,969 52,969
DELTA AIR LINES INC 151,688 4,024,775 4,176,463
DTE ENERGY CO 24,450 24,450
DUKE ENERGY 3,388,138 3,388,138
DYNEGY INC 27,325 27,325
EDISON INTERNATIONAL 4,831,850 4,831,850
EL PASO ENERGY CORP 315,813 315,813
ENTERGY CORP 6,862,125 6,862,125
FLORIDA PROGRESS CORP 93,750 93,750
GLOBAL CROSSING LTD 26,313 26,313
GTE CORP 183,638 12,537,150 12,720,788
KANSAS CITY SOUTHN INDS INC 332,578 332,578
LEVEL 3 COMMUNICATIONS 22,000 22,000
P G & E CORP 22,163 2,856,500 2,878,663
PECO ENERGY CO 165,281 165,281
PMC-SIERRA INC 2,985,150 2,985,150
QWEST COMMUNICATIONS INTL 24,844 24,844
RELIANT ENERGY INC 159,638 159,638
RF MICRO DEVICES INC 4,153,425 4,153,425
SBC COMMUNICATIONS INC 430,727 17,706,550 18,137,277
SOUTHWEST AIRLINES CO 163,809 163,809
SPRINT CORP (FON GROUP) 165,903 9,649,200 9,815,103
SPRINT CORP PCS 29,750 29,750
TELEPHONE & DATA 2,436,075 2,436,075
TXU CORP 4,852,750 4,852,750
UAL INC 3,258,500 3,258,500
UNICOM CORPORATION 6,205,475 6,205,475
UNION PACIFIC CORP 52,063 5,128,156 5,180,219
UNITED PARCEL SERVICE-CL B 135,700 135,700
US CELLULAR CORP 1,871,100 1,871,100
WASTE MANAGEMENT INC 22,800 22,800
WILLIAMS COMPANIES INC 79,206 79,206
WORLDCOM INC 238,550 238,550
------------ -------------- ---------------
4,103,080 127,197,093 131,300,173
------------ -------------- ---------------
Wholesale Trade
SYSCO CORP 7,692,025 7,692,025
-------------- ---------------
Total Common Stocks 26,532,356 1,099,613,570 1,126,145,926
------------ -------------- ---------------
CASH EQUIVALENTS
WARBURG REPURCHASE AGREEMENT
6.60% 7/3/2000 972,000 25,932,000 26,904,000
------------ -------------- ---------------
TOTAL INVESTMENTS (COST OF $25,098,509,
$976,414,426 AND $1,001,512,935,
RESPECTIVELY) $ 27,504,356 $1,125,545,570 $ 1,153,049,926
============ ============== ===============
</TABLE>
No adjustments are shown to the unaudited pro forma combined portfolio of
investments due to the fact that upon consummation of the Acquisitions, no
securities would need to be sold in order for the Acquiring Fund to comply with
its Prospectus and SEC and IRS guidelines and restrictions. However, the
foregoing sentence shall not be deemed to restrict in any way the ability of the
investment advisor of any of the funds from buying or selling securities in the
normal course of such Fund's business and operations.
<PAGE> 97
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINING CONDENSED STATEMENT OF ASSETS AND LIABILITIES
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Liberty
Liberty Growth & Income
Liberty All-Star Growth & Income Fund
Growth & Income Fund Pro Forma Pro Forma
Fund (Acquiring Fund) Adjustments Combined
<S> <C> <C> <C> <C>
Investments, at value $ 27,504,356 $ 1,125,545,570 $ - $1,153,049,926
Cash 4,096 176 - 4,272
Receivable for investments sold - - - -
Payable for investments purchased - - - -
Other assets less other liabilities 621 35,737,174 (42,344) (a) 35,695,451
Net assets $ 27,509,073 $ 1,161,282,920 $ (42,344) $1,188,749,649
Class A:
Net assets $ 4,299,897 $ 309,356,714 (8,563) $ 313,648,048
Shares outstanding 368,742 15,017,711 (160,419) $ 15,226,034
Net asset value $ 11.66 $ 20.60 $ 20.60
Class B:
Net assets $ 16,346,839 $ 822,643,366 (27,178) $ 838,963,027
Shares outstanding 1,415,688 41,382,562 (594,738) $ 42,203,512
Net asset value $ 11.55 $ 19.88 $ 19.88
Class C:
Net assets $ 4,524,072 $ 29,281,763 (4,505) $ 33,801,330
Shares outstanding 391,868 1,465,147 (165,726) $ 1,691,289
Net asset value $ 11.54 $ 19.99 $ 19.99
Class Z:
Net assets $ 2,338,265 $ 1,077 (2,098) $ 2,337,244
Shares outstanding 199,907 52 (87,112) $ 112,847
Net asset value $ 11.70 $ 20.71 $ 20.71
</TABLE>
(a) Adjustment reflects one time proxy, accounting, legal and other costs of
the reorganization of $24,684 and $17,660 to be borne by the All Star Fund
and Growth & Income Fund, respectively. These costs reflect each fund's
share of the total costs of the reorganization that will be shared between
Liberty Financial and the Funds, subject to the terms of each Agreement and
Plan of Reorganization, as follows:
<TABLE>
<CAPTION>
Liberty Financial Fund
<S> <C> <C>
Liberty All-Star Growth & Income Fund 50% 50%
Liberty Growth & Income Fund 75% 25%
</TABLE>
The Funds will bear their full portion of the one time costs of the
reorganization only if the expense reduction experienced as a result of the
Acquisition in the first year after Acquisition Date exceeds the one time costs.
If the one time costs exceed the expense reduction, the Fund will only bear the
share of its portion up to the amount of the expense reduction.
<PAGE> 98
PRO FORMA COMBINING CONDENSED STATEMENT OF OPERATIONS FOR THE TWELVE
MONTH PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY ALL-STAR LIBERTY GROWTH PRO FORMA PRO FORMA
GROWTH & INCOME & INCOME FUND ADJUSTMENTS COMBINED
------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends 268,398 15,573,131 -- 15,841,529
Interest 37,185 1,966,931 -- 2,004,115
--------- ----------- ------- -----------
Total investment income 305,583 17,540,062 -- 17,845,645
EXPENSES
Management fee 132,571 9,452,952 -- (a) 9,585,523
Administration fee 44,190 -- (44,190) (a) --
Service fee - Class A, B, C 49,748 3,099,842 -- (a) 3,149,590
Distribution fee - Class B 95,935 6,593,089 -- (a) 6,689,024
Distribution fee - Class C 27,559 244,861 -- (a) 272,420
Transfer agent fee 46,431 2,728,605 (259,171) (d) 2,515,865
Bookkeeping fee 27,000 420,040 (21,477) (a) 425,563
Trustees fee 12,950 56,473 (23,532) (b) 45,891
All other expenses 221,950 1,052,407 (388,357) (c) 886,000
--------- ----------- ------- -----------
Total operating expenses 658,334 23,648,269 (736,727) 23,569,876
--------- ----------- ------- -----------
Expense reimbursement (208,902) -- 208,902 (a) --
--------- ----------- ------- -----------
Net Expenses 449,432 23,648,269 (527,825) 23,569,876
NET INVESTMENT LOSS (143,849) (6,108,207) 527,825 (5,724,232)
NET REALIZED & UNREALIZED GAIN (LOSS)
Net realized gain (loss) on investments (118,211) 183,532,200 -- 183,413,989
Change in net unrealized appreciation/depreciation
during the period on investments 1,816,980 (170,105,574) -- (168,288,594)
--------- ----------- ------- -----------
Net Gain 1,698,769 13,426,626 -- 15,125,395
--------- ----------- ------- -----------
Increase in Net Assets from Operations 1,554,920 7,318,419 527,825 9,401,163
</TABLE>
(a) Based on the contract in effect for the surviving fund.
(b) Based on trustee compensation plan for the surviving fund.
(c) Decrease due to the elimination of duplicative expenses achieved by
merging the funds.
(d) Based on the contract in effect for the surviving fund. Note that a new
transfer agent fee structure was implemented for the Growth & Income
Fund effective January 1, 2000. The pro forma combined transfer agent
fee shown assumes this new agreement was in effect for the entire
twelve-month period ended June 30, 2000.
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 2000
1. These financial statements set forth the unaudited pro forma condensed
statement of assets and liabilities, including the portfolio of investments, as
of June 30, 2000, and the unaudited pro forma condensed statement of operations
for the twelve month period ended June 30, 2000 for Liberty All-Star Growth &
Income Fund and Liberty Growth & Income Fund as adjusted giving effect to the
Acquisition as if it had occurred as of the beginning of the period. These
statements have been derived from the books and records utilized in calculating
daily net asset value for each fund.
<PAGE> 99
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F
GROWTH LIBERTY SR&F GROWTH LIBERTY
& INCOME LIBERTY GROWTH & PRO FORMA & INCOME VALUE FUND LIBERTY GROWTH PRO FORMA
PORTFOLIO VALUE FUND INCOME FUND COMBINED PORTFOLIO MARKET & INCOME FUND COMBINED
SHARES SHARES SHARES SHARES MARKET VALUE VALUE MARKET VALUE MARKET VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCKS
Agriculture, Forestry &
Fishing
CANADIAN NATL RAILWAY CO 133,100 133,100 $ 3,884,856 $ 3,884,856
-------------- --------------
Finance, Insurance &
Real Estate
ACE LIMITED 81,700 81,700 2,287,600 2,287,600
AETNA INC 10,900 10,900 $ 699,644 699,644
AMBAC FINANCIAL GROUP
INC 40,500 40,500 2,219,906 2,219,906
AMER INTERNATIONAL GROUP
INC 132,275 132,275 15,542,313 15,542,313
AMERICAN EXPRESS CO 240,000 144,000 384,000 $ 12,510,000 7,506,000 20,016,000
AON CORP 33,200 33,200 1,031,275 1,031,275
AXA FINANCIAL INC 140,500 140,500 4,777,000 4,777,000
BANK OF AMERICA CORP 67,896 231,234 299,130 2,919,528 9,943,062 12,862,590
BANK ONE 31,000 31,000 823,438 823,438
BEAR STEARNS COMPANIES
INC 30,173 30,173 1,255,951 1,255,951
CAPITAL ONE FINANCIAL
CORP 72,100 72,100 3,217,463 3,217,463
CHASE MANHATTAN CORP
(NEW) 193,200 186,450 379,650 8,899,275 8,588,353 17,487,628
CINCINNATI FINANCIAL
CORP 188,300 188,300 5,919,681 5,919,681
CITIGROUP INC 244,810 523,300 768,110 14,749,803 31,528,825 46,278,628
CITY NATIONAL CORP 119,500 119,500 4,242,250 4,242,250
FANNIE MAE 161,000 163,400 324,400 8,402,188 8,527,438 16,929,625
FIRSTAR CORP 18,000 18,000 379,125 379,125
FLEET BOSTON FINANCIAL
CORP 16,100 348,600 364,700 547,400 11,852,400 12,399,800
FREDDIE MAC 19,500 108,300 127,800 789,750 4,386,150 5,175,900
GOLDEN STATE BANCORP 171,300 171,300 3,083,400 3,083,400
GOLDEN WEST FINANCIAL
CORP 89,100 89,100 3,636,394 3,636,394
HCA-THE HEALTHCARE CORP 346,100 346,100 10,512,788 10,512,788
HOUSEHOLD INTERNATIONAL
INC 83,300 83,300 3,462,156 3,462,156
J P MORGAN & CO INC 55,100 55,100 6,067,888 6,067,888
KNIGHT TRADING GROUP INC 59,800 59,800 1,782,788 1,782,788
LEHMAN BROTHERS HLDG INC 100,900 100,900 9,541,356 9,541,356
LOEWS CORP 42,000 42,000 2,520,000 2,520,000
MBNA CORP 210,300 210,300 5,704,388 5,704,388
MGIC INV CORP 123,000 123,000 5,596,500 5,596,500
MORGAN STANLEY DEAN
WITTER 165,900 165,900 13,811,175 13,811,175
NATIONWIDE FINANCIAL
SERV A 228,700 228,700 7,518,513 7,518,513
PACIFIC CENTURY FINL
CORP 145,500 145,500 2,127,938 2,127,938
PMI GROUP INC 131,100 131,100 6,227,250 6,227,250
PNC FINANCIAL SERVICES
GROUP 104,900 104,900 4,917,188 4,917,188
PROVIDIAN FINANCIAL CORP 30,100 30,100 2,709,000 2,709,000
SOVEREIGN BANCORP INC 505,200 505,200 3,552,188 3,552,188
UNIONBANCAL CORPORATION 155,100 155,100 2,879,044 2,879,044
UNITED HEALTHCARE CORP 5,900 126,700 132,600 505,925 10,864,525 11,370,450
WASHINGTON MUTUAL INC 23,100 23,100 667,013 667,013
WELLS FARGO & CO 156,660 57,800 214,460 6,070,575 2,239,750 8,310,325
XL CAPITAL LTD-CLASS A 20,700 20,700 1,120,388 1,120,388
------------ ----------- -------------- --------------
53,551,368 6,563,956 230,548,616 290,663,941
------------ ----------- -------------- --------------
</TABLE>
<PAGE> 100
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F
GROWTH LIBERTY SR&F GROWTH LIBERTY
& INCOME LIBERTY GROWTH & PRO FORMA & INCOME VALUE FUND LIBERTY GROWTH PRO FORMA
PORTFOLIO VALUE FUND INCOME FUND COMBINED PORTFOLIO MARKET & INCOME FUND COMBINED
SHARES SHARES SHARES SHARES MARKET VALUE VALUE MARKET VALUE MARKET VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Manufacturing
ABBOTT LABS 31,600 31,600 1,408,175 1,408,175
ADC TELECOMMUNICATIONS
INC 81,500 81,500 6,835,813 6,835,813
AGILENT TECHNOLOGIES INC 28,986 28,986 2,137,718 2,137,718
ALCOA INC 111,400 111,400 3,230,600 3,230,600
AMERADA HESS CORP 17,000 17,000 1,049,750 1,049,750
AMGEN INC 80,800 80,800 5,676,200 5,676,200
ANALOG DEVICES INC. 82,900 82,900 6,300,400 6,300,400
ANHEUSER BUSCH INC 162,600 162,600 12,144,188 12,144,188
APPLE COMPUTER INC 49,600 49,600 2,597,800 2,597,800
APPLIED MATLS 80,000 129,200 209,200 7,250,000 11,708,750 18,958,750
APPLIED MICRO CIRCUITS
CORP 11,600 11,600 1,145,500 1,145,500
ATMEL CORP 116,900 116,900 4,310,688 4,310,688
AVON PRODUCTS INC 40,000 40,000 1,780,000 1,780,000
BAUSCH & LOMB INC 125,200 125,200 9,687,350 9,687,350
BAXTER INTERNATIONAL INC 95,000 95,000 6,679,688 6,679,688
BECKMAN COULTER INC 29,100 29,100 1,698,713 1,698,713
BESTFOODS 21,800 190,600 212,400 1,509,650 13,199,050 14,708,700
BIOMET INC 127,000 127,000 4,881,563 4,881,563
BOEING CO 99,600 25,700 332,800 458,100 4,164,525 1,074,581 13,915,200 19,154,306
BOSTON SCIENTIFIC CORP 19,700 19,700 432,169 432,169
BP AMOCO PLC-ADR 242,810 150,000 392,810 13,733,940 8,484,375 22,218,315
BRISTOL-MYERS SQUIBB CO 150,000 166,200 316,200 8,737,500 9,681,150 18,418,650
BRUNSWICK CORP 227,400 227,400 3,766,313 3,766,313
CHEVRON CORP 6,300 119,200 125,500 534,319 10,109,650 10,643,969
CISCO SYSTEMS INC 90,000 456,200 546,200 5,720,625 28,997,213 34,717,838
COCA COLA CO 19,700 19,700 1,131,519 1,131,519
COMPAQ COMPUTER CORP 195,000 18,100 213,100 4,984,688 462,681 5,447,369
COMVERSE TECH 32,200 32,200 2,994,600 2,994,600
CORNING INCORPORATED 21,100 21,100 5,694,363 5,694,363
DELPHI AUTOMOTIVE
SYSTEMS 41,282 253,600 294,882 601,169 3,693,050 4,294,219
DOW CHEMICAL CO 350,500 350,500 10,580,719 10,580,719
EASTMAN KODAK CO 15,000 15,000 892,500 892,500
ECOLAB INC 250,000 250,000 9,765,625 9,765,625
EI DUPONT DE NEMOURS &
CO INC 29,179 60,200 89,379 1,276,581 2,633,750 3,910,331
ELI LILLY & CO 114,500 114,500 11,435,688 11,435,688
EMC CORP 108,400 108,400 8,340,025 8,340,025
EMERSON ELECTRIC CO 50,000 15,400 65,400 3,018,750 929,775 3,948,525
EXXON MOBIL CORPORATION 365,165 365,165 28,665,453 28,665,453
FMC CORP 43,200 43,200 2,505,600 2,505,600
FORD MOTOR CO 266,300 266,300 11,450,900 11,450,900
GATEWAY INC 51,000 51,000 2,894,250 2,894,250
GENERAL ELECTRIC CO 234,000 640,500 874,500 12,402,000 33,946,500 46,348,500
GENERAL MILLS INC 16,500 16,500 631,125 631,125
GEORGIA PACIFIC (TIMBER
GRP) 75,000 75,000 1,621,875 1,621,875
GEORGIA PACIFIC CORP 170,000 20,300 190,300 4,462,500 532,875 4,995,375
GILLETTE CO 134,400 134,400 4,695,600 4,695,600
GRANT PRIDECO INC 164,800 164,800 4,120,000 4,120,000
HEWLETT-PACKARD CO 90,400 90,400 11,288,700 11,288,700
</TABLE>
<PAGE> 101
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F
GROWTH LIBERTY SR&F GROWTH LIBERTY
& INCOME LIBERTY GROWTH & PRO FORMA & INCOME VALUE FUND LIBERTY GROWTH PRO FORMA
PORTFOLIO VALUE FUND INCOME FUND COMBINED PORTFOLIO MARKET & INCOME FUND COMBINED
SHARES SHARES SHARES SHARES MARKET VALUE VALUE MARKET VALUE MARKET VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HONEYWELL INTERNATIONAL
INC 152,500 77,437 229,937 5,137,344 2,608,659 7,746,003
HUBBELL INC CL B 70,400 70,400 1,795,200 1,795,200
INGERSOLL RAND CO 15,900 15,900 639,975 639,975
INTEL CORP 40,000 232,800 272,800 5,347,500 31,122,450 36,469,950
INTERNATIONAL GAME TECH 61,300 61,300 1,624,450 1,624,450
INTERNATIONAL PAPER CO 180,700 180,700 5,387,119 5,387,119
INTL BUSINESS MACHINES
CORP 105,000 130,800 235,800 11,504,063 14,330,775 25,834,838
JOHNSON & JOHNSON 69,900 69,900 7,121,063 7,121,063
JOHNSON CONTROLS INC 81,500 81,500 4,181,969 4,181,969
KIMBERLY CLARK CORP 13,200 66,000 79,200 757,350 3,786,750 4,544,100
LEAR CORP 140,000 140,000 2,800,000 2,800,000
LITTLEFUSE INC 35,000 35,000 1,715,000 1,715,000
LOCKHEED MARTIN CORP 422,400 422,400 10,480,800 10,480,800
LSI LOGIC CORP 53,200 53,200 2,879,450 2,879,450
LUCENT TECHNOLOGIES INC 42,800 42,800 2,535,900 2,535,900
LYONDELL PETRO 211,300 211,300 3,539,275 3,539,275
MATTEL INC 56,800 56,800 749,050 749,050
MERCK & CO INC 14,300 155,800 170,100 1,095,738 11,938,175 13,033,913
MICROCHIP TECHNOLOGY 115,800 115,800 6,747,159 6,747,159
MINNESOTA MINING & MFG
CO 9,600 130,300 139,900 792,000 10,749,750 11,541,750
MOTOROLA INC 45,000 12,900 57,900 1,307,813 374,906 1,682,719
MYLAN LABORATORIES, INC 238,600 238,600 4,354,450 4,354,450
NABISCO HOLDINGS CORP 16,800 16,800 882,000 882,000
NIKE INC CL B 25,100 25,100 999,294 999,294
NOKIA CORP ADR 112,400 112,400 5,612,975 5,612,975
PACCAR INC 137,100 137,100 5,441,156 5,441,156
PEPSI BOTTLING GROUP 324,800 324,800 9,480,100 9,480,100
PEPSICO INC 22,000 262,800 284,800 977,625 11,678,175 12,655,800
PFIZER INC 316,250 388,675 704,925 15,180,000 18,656,400 33,836,400
PHARMACIA CORPORATION 149,500 149,500 7,727,281 7,727,281
PHILIP MORRIS CO INC 203,000 48,600 280,400 532,000 5,392,188 1,290,938 7,448,125 14,131,250
PRAXAIR INC 15,000 15,000 561,563 561,563
PROCTER & GAMBLE CO 81,000 20,500 157,300 258,800 4,637,250 1,173,625 9,005,425 14,816,300
QUAKER OATS CO 121,000 121,000 9,090,125 9,090,125
ROYAL DUTCH PETRO-NY
SHARES 17,600 254,300 271,900 1,083,500 15,655,344 16,738,844
SABRE HOLDINGS CORP 36,132 36,132 1,029,762 1,029,762
SARA LEE CORP 144,000 72,100 216,100 2,781,000 1,392,431 4,173,431
SCHERING-PLOUGH CORP 24,100 86,400 110,500 1,217,050 4,363,200 5,580,250
SHERWIN WILLIAMS CO 38,700 38,700 819,956 819,956
TEMPLE INLAND INC 24,700 24,700 1,037,400 1,037,400
TERADYNE INC 62,400 62,400 4,586,400 4,586,400
TEXACO INC 13,800 13,800 734,850 734,850
TEXAS INSTRUMENTS INC 78,400 78,400 5,385,100 5,385,100
TRIBUNE CO 100,000 100,000 3,500,000 3,500,000
UNION CARBIDE CORP 111,100 111,100 5,499,450 5,499,450
UNITED TECHNOLOGIES CORP 7,700 170,500 178,200 453,338 10,038,188 10,491,525
USG CORP NEW 63,300 63,300 1,922,738 1,922,738
USX-MARATHON GROUP 34,300 34,300 859,644 859,644
VISTEON CORP 33,288 33,288 403,611 403,611
WEATHERFORD
INTERNATIONAL 164,800 164,800 6,561,100 6,561,100
WESTVACO CORP 268,600 268,600 6,664,638 6,664,638
</TABLE>
<PAGE> 102
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F
GROWTH LIBERTY SR&F GROWTH LIBERTY
& INCOME LIBERTY GROWTH & PRO FORMA & INCOME VALUE FUND LIBERTY GROWTH PRO FORMA
PORTFOLIO VALUE FUND INCOME FUND COMBINED PORTFOLIO MARKET & INCOME FUND COMBINED
SHARES SHARES SHARES SHARES MARKET VALUE VALUE MARKET VALUE MARKET VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WEYERHAEUSER CO 50,800 50,800 2,184,400 2,184,400
WHIRLPOOL CORP 85,100 85,100 3,967,788 3,967,788
XEROX CORP 34,400 34,400 713,800 713,800
------------ ----------- -------------- --------------
170,529,308 27,627,400 559,572,362 757,729,070
------------ ----------- -------------- --------------
Mining & Energy
ANADARKO PETROLEUM 19,100 19,100 941,869 941,869
BURLINGTON RESOURCES INC 76,000 76,000 2,907,000 2,907,000
COFLEXIP-SPONSORED ADR 23,270 23,270 1,407,835 1,407,835
CONOCO INC-CL B 61,421 61,421 1,508,653 1,508,653
CONOCO INC-CL A 104,800 104,800 2,305,600 2,305,600
DIAMOND OFFSHORE
DRILLING 18,000 195,800 213,800 632,250 6,877,475 7,509,725
ENRON CORP 115,000 115,000 7,417,500 7,417,500
FALCON DRILLING COMPANY
INC 521,800 521,800 12,294,913 12,294,913
PETROLEUM GEO SERVICES
ADR 239,100 239,100 4,079,644 4,079,644
SCHLUMBERGER LTD 161,900 161,900 12,081,788 12,081,788
TRANSOCEAN SEDCO FOREX
INC 31,343 31,343 1,674,892 1,674,892
------------ ----------- -------------- --------------
11,231,753 1,574,119 41,323,545 54,129,417
------------ ----------- -------------- --------------
Retail Trade
ALBERTSONS INC 27,500 27,500 914,375 914,375
BEST BUY INC 128,500 128,500 8,127,625 8,127,625
CIRCUIT CITY STORES INC 100,700 100,700 3,341,981 3,341,981
CVS CORP 159,200 159,200 6,368,000 6,368,000
DARDEN RESTAURANTS INC 206,000 206,000 3,347,500 3,347,500
FEDERATED DEPT STORES
INC NEW 80,000 10,700 90,700 2,700,000 361,125 3,061,125
HOME DEPOT INC 69,150 69,150 3,453,178 3,453,178
MCDONALDS CORP 18,700 18,700 615,931 615,931
NORDSTROM INC 23,100 23,100 557,288 557,288
RADIOSHACK CORP 93,700 93,700 4,439,038 4,439,038
TARGET CORP 61,400 61,400 3,561,200 3,561,200
TJX COMPANIES, INC 252,800 252,800 4,740,000 4,740,000
WALGREEN CO 280,000 280,000 9,012,500 9,012,500
WAL-MART STORES INC 150,000 150,700 300,700 8,643,750 8,684,088 17,327,838
------------ ----------- -------------- --------------
25,096,250 2,448,719 41,322,609 68,867,578
------------ ----------- -------------- --------------
Services
ADOBE SYSTEMS INC 73,500 73,500 9,555,000 9,555,000
AMERICA ONLINE INC 113,000 113,000 5,960,750 5,960,750
AUTOMATIC DATA
PROCESSING INC 105,600 105,600 5,656,200 5,656,200
CHECK POINT SOFTWARE
TECH 5,700 5,700 1,206,975 1,206,975
DUN & BRADSTREET CORP 214,800 214,800 6,148,650 6,148,650
FIRST DATA CORP 19,100 129,600 148,700 947,838 6,431,400 7,379,238
HARRAH'S ENTERTAINMENT
INC 88,500 88,500 1,852,969 1,852,969
HERTZ CORP-CL A 60,000 60,000 1,683,750 1,683,750
</TABLE>
<PAGE> 103
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F
GROWTH LIBERTY SR&F GROWTH LIBERTY
& INCOME LIBERTY GROWTH & PRO FORMA & INCOME VALUE FUND LIBERTY GROWTH PRO FORMA
PORTFOLIO VALUE FUND INCOME FUND COMBINED PORTFOLIO MARKET & INCOME FUND COMBINED
SHARES SHARES SHARES SHARES MARKET VALUE VALUE MARKET VALUE MARKET VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTERPUBLIC GROUP COS
INC 121,200 121,200 5,211,600 5,211,600
MANPOWER 128,600 128,600 4,115,200 4,115,200
MICROSOFT CORP 158,700 158,700 12,696,000 12,696,000
NETWORK APPLIANCE INC 15,400 15,400 1,239,700 1,239,700
ORACLE CORP 148,400 148,400 12,474,875 12,474,875
SUN MICROSYSTEMS INC 123,800 123,800 11,258,063 11,258,063
TIME WARNER INC 16,400 16,400 1,246,400 1,246,400
USA NETWORKS INC 101,500 101,500 2,194,938 2,194,938
WALT DISNEY PRODUCTIONS 20,300 155,500 175,800 787,894 6,035,344 6,823,238
------------ ----------- -------------- --------------
6,895,350 1,735,731 88,072,463 96,703,544
------------ ----------- -------------- --------------
Transportation,
Communications,
Electric, Gas and
Sanitary Services
A T & T CORP 65,333 26,600 348,100 440,033 2,066,156 841,225 11,008,663 13,916,044
AMR CORP 50,000 50,000 1,321,875 1,321,875
AT & T WIRELESS CORP 178,200 178,200 4,967,325 4,967,325
BELL ATLANTIC CORP 190,320 122,600 312,920 9,670,635 6,229,613 15,900,248
BELLSOUTH CORP 147,300 147,300 6,278,663 6,278,663
BURLINGTON NORTH SANTA
FE CORP 200,000 200,000 4,587,500 4,587,500
CHRIS-CRAFT INDUSTRIES
INC 61,800 61,800 4,082,663 4,082,663
COMCAST CORP-SPECIAL CL
A 30,000 46,500 76,500 1,215,000 1,883,250 3,098,250
CONTINENTAL AIRLINES CL
B 160,000 160,000 7,520,000 7,520,000
DELTA AIR LINES INC 79,600 79,600 4,024,775 4,024,775
DUKE ENERGY 60,100 60,100 3,388,138 3,388,138
EDISON INTERNATIONAL 235,700 235,700 4,831,850 4,831,850
ENTERGY CORP 18,600 252,400 271,000 505,688 6,862,125 7,367,813
GTE CORP 201,400 201,400 12,537,150 12,537,150
KANSAS CITY SOUTHN INDS
INC 131,900 131,900 11,697,881 11,697,881
P G & E CORP 10,700 116,000 126,700 263,488 2,856,500 3,119,988
PMC-SIERRA INC 16,800 16,800 2,985,150 2,985,150
RF MICRO DEVICES INC 47,400 47,400 4,153,425 4,153,425
SBC COMMUNICATIONS INC 409,400 409,400 17,706,550 17,706,550
SOUTHERN CO 24,800 24,800 578,150 578,150
SPRINT CORP (FON GROUP) 189,200 189,200 9,649,200 9,649,200
TELEPHONE & DATA 24,300 24,300 2,436,075 2,436,075
TIDEWATER INC 14,900 14,900 536,400 536,400
TXU CORP 164,500 164,500 4,852,750 4,852,750
UAL INC 56,000 56,000 3,258,500 3,258,500
UNICOM CORPORATION 160,400 160,400 6,205,475 6,205,475
UNION PACIFIC CORP 11,300 137,900 149,200 420,219 5,128,156 5,548,375
US CELLULAR CORP 29,700 29,700 1,871,100 1,871,100
WORLDCOM INC 16,600 16,600 761,526 761,526
------------ ----------- -------------- --------------
38,079,047 3,906,695 127,197,094 169,182,836
------------ ----------- -------------- --------------
Wholesale Trade
SYSCO CORP 182,600 182,600 7,692,025 7,692,025
-------------- --------------
Total Common Stocks 305,383,077 43,856,620 1,099,613,570 1,448,853,267
------------ ----------- -------------- --------------
</TABLE>
<PAGE> 104
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F
GROWTH LIBERTY SR&F GROWTH LIBERTY
& INCOME LIBERTY GROWTH & PRO FORMA & INCOME VALUE FUND LIBERTY GROWTH PRO FORMA
PORTFOLIO VALUE FUND INCOME FUND COMBINED PORTFOLIO MARKET & INCOME FUND COMBINED
SHARES SHARES SHARES SHARES MARKET VALUE VALUE MARKET VALUE MARKET VALUE
CASH EQUIVALENTS Par Par Par Par
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSOCIATES FIRST CAPITAL
0.00% 7/3/2000 $2,130,000 2,130,000 2,129,178 2,129,178
WARBURG REPURCHASE
AGREEMENT 6.60%
7/3/2000 $1,567,000 $25,932,000 27,499,000 1,567,000 25,932,000 27,499,000
------------ ----------- -------------- --------------
Total Cash Equivalents 2,129,178 1,567,000 25,932,000 29,628,178
------------ ----------- -------------- --------------
TOTAL INVESTMENTS (COST
OF $157,157,695,
$43,810,733,
$976,414,426 AND
$1,177,382,854,
RESPECTIVELY) $307,512,255 $45,423,620 $1,125,545,570 $1,478,481,445
============ =========== ============== ==============
</TABLE>
No adjustments are shown to the unaudited pro forma combined portfolio of
investments due to the fact that upon consummation of the Acquisitions, no
securities would need to be sold in order for the Acquiring Fund to comply with
its Prospectus and SEC and IRS guidelines and restrictions. However, the
foregoing sentence shall not be deemed to restrict in any way the ability of the
investment advisor of any of the funds from buying or selling securities in the
normal course of such Fund's business and operations.
<PAGE> 105
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINING CONDENSED STATEMENT OF ASSETS AND LIABILITIES
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Liberty
Liberty Growth & Income
SR&F Liberty Value Liberty Growth & Income Fund
Growth & Income Opportunities Value Fund Pro Forma Pro Forma
Portfolio Fund Fund (Acquring Fund) Adjustments Combined
--------------- ------------- ----------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Investments, at value $ 307,512,255 $ 308,179,637 $45,423,620 $ 1,125,545,570 $(308,179,637)(a) $ 1,478,481,445
Cash 3,884 -- 342 176 -- 4,402
Receivable for investments
sold -- -- -- -- -- --
Payable for investments
purchased -- -- -- -- -- --
Other assets less other
liabilities 837,077 (351,328) 18,463 35,737,174 (247,129)(b) 35,994,257
Net assets $ 308,353,216 $ 307,828,309 $45,442,425 $ 1,161,282,920 $(308,426,766) $ 1,514,480,104
Class A:
Net assets $ 259,166 $10,441,098 $ 309,356,714 (10,800) $ 320,046,178
Shares outstanding 9,814 920,529 15,017,711 (411,423) $ 15,536,631
Net asset value $ 26.41 $ 11.34 $ 20.60 $ 20.60
Class B:
Net assets $ 1,269,238 $19,380,181 $ 822,643,366 (23,899) $ 843,268,886
Shares outstanding 48,240 1,714,187 41,382,562 (724,873) $ 42,420,116
Net asset value $ 26.31 $ 11.31 $ 19.88 $ 19.88
Class C:
Net assets $ 75,057 $ 1,934,018 $ 29,281,763 (1,577) $ 31,289,261
Shares outstanding 2,853 171,022 1,465,147 (73,428) $ 1,565,594
Net asset value $ 26.31 $ 11.31 $ 19.99 $ 19.99
Class Z:
Net assets $ 1,004 $13,687,128 $ 1,077 (7,958) $ 13,681,251
Shares outstanding 38 1,206,557 52 (546,085) $ 660,562
Net asset value $ 26.42 $ 11.34 $ 20.71 $ 20.71
Class S:
Net assets $ 306,223,844 (29,316) $ 306,194,528
Shares outstanding 11,601,266 3,182,500 (c) $ 14,783,766
Net asset value $ 26.40 $ 20.71
</TABLE>
Footnotes to pro forma statement of assets and liabilities
(a) - Adjustment represents the elimination the Liberty Value Opportunities
Fund's investment in the Portfolio, as the master/feeder structure will be
dissolved, with the the securities held by the Portfolio withdrawn from
the Portfolio by the Liberty Value Opportunities Fund prior to the merger.
(b) - Adjustment reflects a payable to the general partner of the Portfolio
for its remaining net assets after withdrawal of the Liberty Value
Opportunities Fund's investment in the Portfolio of $173,579, in addition
to one time proxy, accounting, legal and other costs of the reorganization
of $29,470, $26,420 and and $17,660 to be borne by Liberty Value
Opportunities Fund, Liberty Value Fund and Liberty Growth & Income Fund
respectively. These costs reflect each fund's share of the total costs of
the reorganization that will be shared between Liberty Financial and the
Funds subject to the terms of each Agreement and Plan of Reorganization,
as follows:
<TABLE>
<CAPTION>
Liberty Financial Fund
----------------- ----
<S> <C> <C>
Liberty Value Opportunities Fund 75% 25%
Liberty Value Fund 50% 50%
Liberty Growth & Income Fund 75% 25%
</TABLE>
The Funds will bear their full portion of the one time costs of the
reorganization only if the expense reduction experienced as a result of the
Acquisition in the first year after Acquisition Date exceeds the one time costs.
If the one time costs exceed the expense reduction, the Fund will only bear the
share of its portion up to the amount of the expense reduction.
(c) - Liberty Value Opportunities Fund shares are exchanged for new Class S
shares of Liberty Growth & Income Fund, to be established upon
consummation of the merger. Initial per share value of Class S shares is
presumed to equal that of current Class Z shares.
<PAGE> 106
PRO FORMA COMBINING CONDENSED STATEMENT OF OPERATIONS FOR THE TWELVE
MONTH PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SRF GROWTH & LIBERTY VALUE LIBERTY
INCOME OPPORTUNITIES LIBERTY VALUE GROWTH & PRO FORMA PRO FORMA
PORTFOLIO FUND FUND INCOME FUND ADJUSTMENTS COMBINED
------------ ------------ ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends 4,456,261 4,451,174 852,965 15,573,131 (4,456,261)(c) 20,877,270
Interest 1,058,561 1,056,847 46,028 1,966,931 (1,058,561)(c) 3,069,806
------------ ------------ ------------ ------------ ------------ ------------
Total investment income 5,514,823 5,508,021 898,993 17,540,062 (5,514,823) 23,947,075
EXPENSES
Management fee 2,190,101 -- 356,825 9,452,952 (95,934)(a) 11,903,944
Administration fee -- 545,843 -- -- (545,843)(a) --
Service fee - Class A, B, C -- 866 80,902 3,099,842 -- (a) 3,181,610
Distribution fee - Class A -- 23 -- -- (23)(a) --
Distribution fee - Class B -- 2,118 144,648 6,593,089 -- (a) 6,739,855
Distribution fee - Class C -- 130 11,951 244,861 -- (a) 256,942
Transfer agent fee - Class A, B, C, Z -- 819 -- -- (819)(a) --
Transfer agent fee - Class S -- 799,640 -- -- (799,640)(a) --
Transfer agent fee 6,000 -- 94,869 2,728,605 455,334(e) 3,284,808
Bookkeeping fee 32,875 32,847 27,000 420,040 9,402(a) 522,164
Trustees fee 17,578 9,169 7,463 56,473 (32,131)(b) 58,552
Expenses allocated --
from SRF Growth & Income Portfolio -- 2,271,293 -- -- (2,271,293)(c) --
All other expenses 27,280 269,696 129,672 1,052,407 (403,775)(d) 1,048,000
------------ ------------ ------------ ------------ ------------ ------------
Total operating expenses 2,273,834 3,932,444 853,330 23,648,269 (1,438,168) 26,995,875
------------ ------------ ------------ ------------ ------------ ------------
Expense reimbursement -- -- (281,305) -- 281,305(a) --
------------ ------------ ------------ ------------ ------------ ------------
Net Expenses 2,273,834 3,932,444 572,025 23,648,269 (1,156,863) 26,995,875
NET INVESTMENT INCOME (LOSS) 3,240,989 1,575,577 326,968 (6,108,207) 1,156,863 (3,048,800)
NET REALIZED & UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 32,232,665 32,215,860 (5,244,334) 183,532,200 (32,232,665)(c) 210,503,726
Closed futures contracts 748,773 693,167 -- -- (748,773)(c) 693,167
Foreign currency transactions (1,375) (749) -- -- 1,375(c) (749)
------------ ------------ ------------ ------------ ------------ ------------
Net Realized Gain (Loss) 32,980,063 32,908,278 (5,244,334) 183,532,200 (32,980,063) 211,196,143
Change in net unrealized appreciation/
depreciation during the period on
investments 63,450,655 63,542,407 (1,924,598) (170,105,574) (63,450,655)(c) (108,487,764)
------------ ------------ ------------ ------------ ------------ ------------
Net Gain (Loss) 96,430,719 96,450,685 (7,168,932) 13,426,626 (96,430,719) 102,708,379
------------ ------------ ------------ ------------ ------------ ------------
Increase (Decrease) in Net Assets
from Operations 99,671,708 98,026,261 (6,841,963) 7,318,419 (95,273,856) 99,659,579
</TABLE>
(a) Based on the contract in effect for the surviving fund.
(b) Based on trustee compensation plan for the surviving fund.
(c) Due to elimination of master/feeder structure.
(d) Decrease due to the elimination of duplicative expenses achieved by merging
the funds.
(e) Based on the contract in effect for the surviving fund. Note that a new
transfer agent fee structure was implemented for the Growth & Income Fund
effective January 1, 2000. The pro forma combined transfer agent fee shown
assumes this new agreement was in effect for the entire twelve-month period
ended June 30, 2000.
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 2000
1. These financial statements set forth the unaudited pro forma condensed
statement of assets and liabilities, including the portfolio of investments, as
of June 30, 2000, and the unaudited pro forma condensed statement of operations
for the twelve month period ended June 30, 2000 for SR&F Growth & Income
Portfolio, Liberty Value Opportunities Fund, Liberty Value Fund and Liberty
Growth & Income Fund as adjusted giving effect to the Acquisition as if it had
occurred as of the beginning of the period. These statements have been derived
from the books and records utilized in calculating daily net asset value for
each fund.
<PAGE> 107
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION> LIBERTY
LIBERTY LIBERTY SR&F GROWTH ALL-STAR
SR&F GROWTH ALL-STAR GROWTH & INCOME GROWTH
& INCOME GROWTH & INCOME PRO FORMA PORTFOLIO & INCOME
PORTFOLIO & INCOME FUND COMBINED MARKET FUND MARKET
SHARES FUND SHARES SHARES SHARES VALUE VALUE
----------- ----------- -------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS
Agriculture, Forestry & Fishing
CANADIAN NATL RAILWAY CO 133,100 133,100
Construction
HALLIBURTON CO 2,975 2,975 $ 140,383
------------
Finance, Insurance & Real Estate
ABN AMRO HOLDING NV ADR 3,286 3,286 80,712
ACE LIMITED 10,950 81,700 92,650 306,600
AFLAC INC 4,271 4,271 196,199
ALLMERICA FINANCIAL CORP 3,375 3,375 176,766
AMBAC FINANCIAL GROUP INC 1,300 40,500 41,800 71,256
AMER INTERNATIONAL GROUP INC 1,100 132,275 133,375 129,250
AMERICAN EXPRESS CO 240,000 144,000 384,000 $ 12,510,000
ASTORIA FINANCIAL CORP 600 600 15,450
AXA FINANCIAL INC 4,300 140,500 144,800 146,200
BANK OF AMERICA CORP 67,896 700 231,234 299,830 2,919,528 30,100
BANK ONE 4,100 4,100 108,906
BEAR STEARNS COMPANIES INC 30,173 30,173
C.I.T. GROUP INC-A 2,000 2,000 32,500
CAPITAL ONE FINANCIAL CORP 1,000 72,100 73,100 44,625
CHASE MANHATTAN CORP (NEW) 193,200 3,250 186,450 382,900 8,899,275 149,703
CIGNA CORP 2,275 2,275 212,713
CINCINNATI FINANCIAL CORP 188,300 188,300
CITIGROUP INC 244,810 8,490 523,300 776,600 14,749,803 511,523
CITY NATIONAL CORP 119,500 119,500
COUNTRYWIDE CREDIT INDUSTRIES 10,593 10,593 321,100
FANNIE MAE 161,000 400 163,400 324,800 8,402,188 20,875
FIRST UNION CORP 2,800 2,800 69,475
FLEET BOSTON FINANCIAL CORP 4,000 348,600 352,600 136,000
FREDDIE MAC 9,096 108,300 117,396 368,388
GOLDEN STATE BANCORP 171,300 171,300
GOLDEN WEST FINANCIAL CORP 89,100 89,100
GOLDMAN SACHS GROUP INC 500 500 47,438
HCA-THE HEALTHCARE CORP 346,100 346,100
HOUSEHOLD INTERNATIONAL INC 83,300 83,300
J P MORGAN & CO INC 55,100 55,100
</TABLE>
<TABLE>
<CAPTION>
LIBERTY
GROWTH & PRO FORMA
INCOME FUND COMBINED
MARKET VALUE MARKET VALUE
-------------- ---------------
<S> <C> <C>
COMMON STOCKS
Agriculture, Forestry & Fishing
CANADIAN NATL RAILWAY CO $ 3,884,856 $ 3,884,856
-------------- ---------------
Construction
HALLIBURTON CO $ 140,383
---------------
Finance, Insurance & Real Estate
ABN AMRO HOLDING NV ADR 80,712
ACE LIMITED 2,287,600 2,594,200
AFLAC INC 196,199
ALLMERICA FINANCIAL CORP 176,766
AMBAC FINANCIAL GROUP INC 2,219,906 2,291,163
AMER INTERNATIONAL GROUP INC 15,542,313 15,671,563
AMERICAN EXPRESS CO 7,506,000 20,016,000
ASTORIA FINANCIAL CORP 15,450
AXA FINANICAL INC 4,777,000 4,923,200
BANK OF AMERICA CORP 9,943,062 12,892,690
BANK ONE 108,906
BEAR STEARNS COMPANIES INC 1,255,951 1,255,951
C.I.T. GROUP INC-A 32,500
CAPITAL ONE FINANCIAL CORP 3,217,463 3,262,088
CHASE MANHATTAN CORP (NEW) 8,588,353 17,637,331
CIGNA CORP 212,713
CINCINNATI FINANCIAL CORP 5,919,681 5,919,681
CITIGROUP INC 31,528,825 46,790,150
CITY NATIONAL CORP 4,242,250 4,242,250
COUNTRYWIDE CREDIT INDUSTRIES 321,100
FANNIE MAE 8,527,438 16,950,500
FIRST UNION CORP 69,475
FLEET BOSTON FINANCIAL CORP 11,852,400 11,988,400
FREDDIE MAC 4,386,150 4,754,538
GOLDEN STATE BANCORP 3,083,400 3,083,400
GOLDEN WEST FINANCIAL CORP 3,636,394 3,636,394
GOLDMAN SACHS GROUP INC 47,438
HCA-THE HEALTHCARE CORP 10,512,788 10,512,788
HOUSEHOLD INTERNATIONAL INC 3,462,156 3,462,156
J P MORGAN & CO INC 6,067,888 6,067,888
</TABLE>
<PAGE> 108
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F
GROWTH LIBERTY
LIBERTY LIBERTY & ALL-STAR
SR&F GROWTH ALL-STAR GROWTH INCOME GROWTH
& INCOME GROWTH & INCOME PRO FORMA PORTFOLIO & INCOME
PORTFOLIO & INCOME FUND COMBINED MARKET FUND MARKET
SHARES FUND SHARES SHARES SHARES VALUE VALUE
----------- ----------- -------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Common Stocks
KEYCORP 1,200 1,200 21,150
KIMCO REALTY CORP 1,700 1,700 69,700
KNIGHT TRADING GROUP INC 59,800 59,800
LEHMAN BROTHERS HLDG INC 100,900 100,900
LOEWS CORP 42,000 42,000
MBNA CORP 210,300 210,300
METLIFE INC 1,700 1,700 35,806
MGIC INV CORP 123,000 123,000
MORGAN STANLEY DEAN WITTER 1,900 165,900 167,800 158,175
NATIONWIDE FINANCIAL SERV A 228,700 228,700
PACIFIC CENTURY FINL CORP 145,500 145,500
PMI GROUP INC 131,100 131,100
PNC FINANCIAL SERVICES GROUP 3,350 104,900 108,250 157,031
PROGRESSIVE CORP OHIO 4,900 4,900 362,600
PROVIDIAN FINANCIAL CORP 2,650 30,100 32,750 238,500
SCHWAB (CHARLES) CORP 7,950 7,950 267,319
SOVEREIGN BANCORP INC 505,200 505,200
STARWOOD HOTELS & RESORTS WOR 2,600 2,600 84,013
TRIZEC HAHN CORP 8,400 8,400 150,150
U.S. BANCORP 3,000 3,000 57,750
UNIONBANCAL CORPORATION 155,100 155,100
UNITED HEALTHCARE CORP 126,700 126,700
VORNADO REALTY TRUST 1,500 1,500 52,125
WASHINGTON MUTUAL INC 2,000 2,000 57,750
WELLPOINT HEALTH NETWORKS 2,100 2,100 152,119
WELLS FARGO & CO 156,660 4,193 57,800 218,653 6,070,575 162,479
XL CAPITAL LTD-CLASS A 4,090 4,090 221,371
ZIONS BANCORPORATION 1,300 1,300 59,658
------------ -----------
53,551,368 5,483,474
------------ -----------
Manufacturing
3COM CORPORATION 1,100 1,100 63,388
ADC TELECOMMUNICATIONS INC 81,500 81,500
AGILENT TECHNOLOGIES INC 1,200 28,986 30,186 88,500
ALCAN ALUMINUM LTD 5,000 5,000 155,000
ALCOA INC 7,560 111,400 118,960 219,240
ALLEGHENY TECHNOLOGIES INC 1,200 1,200 21,600
ALZA CORP 1,500 1,500 88,688
AMERICAN HOME PRODUCTS CORP 600 600 35,250
</TABLE>
<TABLE>
<CAPTION>
LIBERTY
GROWTH & PRO FORMA
INCOME FUND COMBINED
MARKET VALUE MARKET VALUE
-------------- ---------------
<S> <C> <C>
Common Stocks
KEYCORP 21,150
KIMCO REALTY CORP 69,700
KNIGHT TRADING GROUP INC 1,782,788 1,782,788
LEHMAN BROTHERS HLDG INC 9,541,356 9,541,356
LOEWS CORP 2,520,000 2,520,000
MBNA CORP 5,704,388 5,704,388
METLIFE INC 35,806
MGIC INV CORP 5,596,500 5,596,500
MORGAN STANLEY DEAN WITTER 13,811,175 13,969,350
NATIONWIDE FINANCIAL SERV A 7,518,513 7,518,513
PACIFIC CENTURY FINL CORP 2,127,938 2,127,938
PMI GROUP INC 6,227,250 6,227,250
PNC FINANCIAL SERVICES GROUP 4,917,188 5,074,219
PROGRESSIVE CORP OHIO 362,600
PROVIDIAN FINANCIAL CORP 2,709,000 2,947,500
SCHWAB (CHARLES) CORP 267,319
SOVEREIGN BANCORP INC 3,552,188 3,552,188
STARWOOD HOTELS & RESORTS WOR 84,013
TRIZEC HAHN CORP 150,150
U.S. BANCORP 57,750
UNIONBANCAL CORPORATION 2,879,044 2,879,044
UNITED HEALTHCARE CORP 10,864,525 10,864,525
VORNADO REALTY TRUST 52,125
WASHINGTON MUTUAL INC 57,750
WELLPOINT HEALTH NETWORKS 152,119
WELLS FARGO & CO 2,239,750 8,472,804
XL CAPITAL LTD-CLASS A 221,371
ZIONS BANCORPORATION 59,658
------------- --------------
230,548,616 289,583,458
------------- --------------
Manufacturing
3COM CORPORATION 63,388
ADC TELECOMMUNICATIONS INC 6,835,813 6,835,813
AGILENT TECHNOLOGIES INC 2,137,718 2,226,218
ALCAN ALUMINUM LTD 155,000
ALCOA INC 3,230,600 3,449,840
ALLEGHENY TECHNOLOGIES INC 21,600
ALZA CORP 88,688
AMERICAN HOME PRODUCTS CORP 35,250
</TABLE>
<PAGE> 109
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY
LIBERTY LIBERTY SR&F GROWTH ALL-STAR
SR&F GROWTH ALL-STAR GROWTH & INCOME GROWTH
& INCOME GROWTH & INCOME PRO FORMA PORTFOLIO & INCOME
PORTFOLIO & INCOME FUND COMBINED MARKET FUND MARKET
SHARES FUND SHARES SHARES SHARES VALUE VALUE
----------- ----------- -------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS
AMGEN INC 3,250 80,800 84,050 228,313
ANALOG DEVICES INC. 82,900 82,900
ANHEUSER BUSCH INC 2,100 162,600 164,700 156,844
APPLE COMPUTER INC 49,600 49,600
APPLIED MATLS 80,000 2,900 129,200 212,100 7,250,000 262,813
APPLIED MICRO CIRCUITS CORP 11,600 11,600
ATMEL CORP 116,900 116,900
AVENTIS -SPON ADR 1,100 1,100 79,819
AVON PRODUCTS INC 40,000 9,184 49,184 1,780,000 408,688
BAKER HUGHES INC 800 800 25,600
BAUSCH & LOMB INC 125,200 125,200
BAXTER INTERNATIONAL INC 95,000 4,400 99,400 6,679,688 309,375
BECKMAN COULTER INC 29,100 29,100
BESTFOODS 1,100 190,600 191,700 76,175
BIOGEN INC 3,050 3,050 196,725
BIOMET INC 127,000 127,000 4,881,563
BOEING CO 99,600 3,793 332,800 436,193 4,164,525 158,595
BP AMOCO PLC-ADR 242,810 150,000 392,810 13,733,940
BRISTOL-MYERS SQUIBB CO 150,000 3,200 166,200 319,400 8,737,500 186,400
BRUNSWICK CORP 227,400 227,400
CATERPILLAR INC 3,755 3,755 127,201
CHEVRON CORP 119,200 119,200
CISCO SYSTEMS INC 90,000 7,400 456,200 553,600 5,720,625 470,363
CLOROX CO 500 500 22,406
COCA COLA CO 700 19,700 20,400 40,206
COMPAQ COMPUTER CORP 195,000 7,000 202,000 4,984,688 178,938
COMVERSE TECH 32,200 32,200
COOPER INDUSTRIES INC 700 700 22,794
CORNING INCORPORATED 21,100 21,100
DEERE & CO 9,500 9,500 351,500
DELL COMPUTER CORPORATION 8,900 8,900 438,881
DELPHI AUTOMOTIVE SYSTEMS 253,600 253,600
DIAGEO PLC ADR 5,193 5,193 184,676
DOVER CORP 3,793 3,793 153,854
DOW CHEMICAL CO 350,500 350,500
ECOLAB INC 250,000 250,000 9,765,625
EI DUPONT DE NEMOURS & CO INC 29,179 2,900 60,200 92,279 1,276,581 126,875
ELI LILLY & CO 1,000 114,500 115,500 99,875
EMC CORP 1,000 108,400 109,400 76,938
EMERSON ELECTRIC CO 50,000 3,306 53,306 3,018,750 199,600
EXXON MOBIL CORPORATION 3,916 365,165 369,081 307,406
</TABLE>
<TABLE>
<CAPTION>
LIBERTY
GROWTH & PRO FORMA
INCOME FUND COMBINED
MARKET VALUE MARKET VALUE
-------------- ---------------
<S> <C> <C>
COMMON STOCKS
AMGEN INC 5,676,200 5,904,513
ANALOG DEVICES INC. 6,300,400 6,300,400
ANHEUSER BUSCH INC 12,144,188 12,301,031
APPLE COMPUTER INC 2,597,800 2,597,800
APPLIED MATLS 11,708,750 19,221,563
APPLIED MICRO CIRCUITS CORP 1,145,500 1,145,500
ATMEL CORP 4,310,688 4,310,688
AVENTIS -SPON ADR 79,819
AVON PRODUCTS INC 2,188,688
BAKER HUGHES INC 25,600
BAUSCH & LOMB INC 9,687,350 9,687,350
BAXTER INTERNATIONAL INC 6,989,063
BECKMAN COULTER INC 1,698,713 1,698,713
BESTFOODS 13,199,050 13,275,225
BIOGEN INC 196,725
BIOMET INC 4,881,563
BOEING CO 13,915,200 18,238,320
BP AMOCO PLC-ADR 8,484,375 22,218,315
BRISTOL-MYERS SQUIBB CO 9,681,150 18,605,050
BRUNSWICK CORP 3,766,313 3,766,313
CATERPILLAR INC 127,201
CHEVRON CORP 10,109,650 10,109,650
CISCO SYSTEMS INC 28,997,213 35,188,200
CLOROX CO 22,406
COCA COLA CO 1,131,519 1,171,725
COMPAQ COMPUTER CORP 5,163,625
COMVERSE TECH 2,994,600 2,994,600
COOPER INDUSTRIES INC 22,794
CORNING INCORPORATED 5,694,363 5,694,363
DEERE & CO 351,500
DELL COMPUTER CORPORATION 438,881
DELPHI AUTOMOTIVE SYSTEMS 3,693,050 3,693,050
DIAGEO PLC ADR 184,676
DOVER CORP 153,854
DOW CHEMICAL CO 10,580,719 10,580,719
ECOLAB INC 9,765,625
EI DUPONT DE NEMOURS & CO INC 2,633,750 4,037,206
ELI LILLY & CO 11,435,688 11,535,563
EMC CORP 8,340,025 8,416,963
EMERSON ELECTRIC CO 3,218,350
EXXON MOBIL CORPORATION 28,665,453 28,972,859
</TABLE>
<PAGE> 110
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION> Liberty
Liberty Liberty SR&F Growth All-Star
SR&F Growth All-Star Growth & Income Growth
& Income Growth & Income Pro Forma Portfolio & Income
Portfolio & Income Fund Combined Market Fund Market
Shares Fund Shares Shares Shares Value Value
----------- ----------- -------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS
FMC CORP 43,200 43,200
FORD MOTOR CO 600 266,300 266,900 25,800
GATEWAY INC 51,000 51,000
GENERAL ELECTRIC CO 234,000 2,700 640,500 877,200 12,402,000 143,100
GEORGIA PACIFIC (TIMBER GRP) 75,000 75,000 1,621,875
GEORGIA PACIFIC CORP 170,000 170,000 4,462,500
GILLETTE CO 134,400 4,350 138,750 4,695,600 151,978
GRANT PRIDECO INC 164,800 164,800
H J HEINZ CO 1,400 1,400 61,250
HEWLETT-PACKARD CO 1,600 90,400 92,000 199,800
HONEYWELL INTERNATIONAL INC 152,500 900 77,437 230,837 5,137,344 30,319
HUBBELL INC CL B 70,400 70,400 1,795,200
ILLINOIS TOOL WORKS INC 2,800 2,800 159,600
INGERSOLL RAND CO 2,525 2,525 101,631
INTEL CORP 40,000 5,450 232,800 278,250 5,347,500 728,597
INTERNATIONAL GAME TECH 61,300 61,300
INTERNATIONAL PAPER CO 180,700 180,700
INTL BUSINESS MACHINES CORP 105,000 1,720 130,800 237,520 11,504,063 188,448
INTUIT INC 1,700 1,700 70,338
JDS UNIPHASE CORP 1,050 1,050 125,869
JOHNSON & JOHNSON 69,900 69,900
JOHNSON CONTROLS INC 81,500 81,500
KIMBERLY CLARK CORP 3,400 66,000 69,400 195,075
LEAR CORP 140,000 2,800 142,800 2,800,000 56,000
LITTLEFUSE INC 35,000 35,000 1,715,000
LOCKHEED MARTIN CORP 422,400 422,400
LSI LOGIC CORP 53,200 53,200
LUCENT TECHNOLOGIES INC 2,800 42,800 45,600 165,900
LYONDELL PETRO 211,300 211,300
MAXIM INTEGRATED PRODUCTS INC 4,550 4,550 309,116
MEDTRONIC INC 2,400 2,400 119,550
MERCK & CO INC 155,800 155,800
MICROCHIP TECHNOLOGY 115,800 115,800
MINNESOTA MINING & MFG CO 4,142 130,300 134,442 341,715
MOTOROLA INC 45,000 1,560 46,560 1,307,813 45,338
MYLAN LABORATORIES, INC 238,600 238,600
NEWS CORP LTD ADR 1,400 1,400 76,300
NOKIA CORP ADR 4,500 112,400 116,900 224,719
NORTEL NETWORKS CORP 700 700 47,775
PACCAR INC 137,100 137,100
PE CORP-PE BIOSYSTEMS GROUP 300 300 19,763
</TABLE>
<TABLE>
<CAPTION>
Liberty
Growth & Pro Forma
Income Fund combined
Market Value Market Value
-------------- ---------------
<S> <C> <C>
COMMON STOCKS
FMC CORP 2,505,600 2,505,600
FORD MOTOR CO 11,450,900 11,476,700
GATEWAY INC 2,894,250 2,894,250
GENERAL ELECTRIC CO 33,946,500 46,491,600
GEORGIA PACIFIC (TIMBER GRP) 1,621,875
GEORGIA PACIFIC CORP 4,462,500
GILLETTE CO 4,847,578
GRANT PRIDECO INC 4,120,000 4,120,000
H J HEINZ CO 61,250
HEWLETT-PACKARD CO 11,288,700 11,488,500
HONEYWELL INTERNATIONAL INC 2,608,659 7,776,321
HUBBELL INC CL B 1,795,200
ILLINOIS TOOL WORKS INC 159,600
INGERSOLL RAND CO 101,631
INTEL CORP 31,122,450 37,198,547
INTERNATIONAL GAME TECH 1,624,450 1,624,450
INTERNATIONAL PAPER CO 5,387,119 5,387,119
INTL BUSINESS MACHINES CORP 14,330,775 26,023,285
INTUIT INC 70,338
JDS UNIPHASE CORP 125,869
JOHNSON & JOHNSON 7,121,063 7,121,063
JOHNSON CONTROLS INC 4,181,969 4,181,969
KIMBERLY CLARK CORP 3,786,750 3,981,825
LEAR CORP 2,856,000
LITTLEFUSE INC 1,715,000
LOCKHEED MARTIN CORP 10,480,800 10,480,800
LSI LOGIC CORP 2,879,450 2,879,450
LUCENT TECHNOLOGIES INC 2,535,900 2,701,800
LYONDELL PETRO 3,539,275 3,539,275
MAXIM INTEGRATED PRODUCTS INC 309,116
MEDTRONIC INC 119,550
MERCK & CO INC 11,938,175 11,938,175
MICROCHIP TECHNOLOGY 6,747,159 6,747,159
MINNESOTA MINING & MFG CO 10,749,750 11,091,465
MOTOROLA INC 1,353,150
MYLAN LABORATORIES, INC 4,354,450 4,354,450
NEWS CORP LTD ADR 76,300
NOKIA CORP ADR 5,612,975 5,837,694
NORTEL NETWORKS CORP 47,775
PACCAR INC 5,441,156 5,441,156
PE CORP-PE BIOSYSTEMS GROUP 19,763
</TABLE>
<PAGE> 111
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY
LIBERTY LIBERTY SR&F GROWTH ALL-STAR
SR&F GROWTH ALL-STAR GROWTH & INCOME GROWTH
& INCOME GROWTH & INCOME PRO FORMA PORTFOLIO & INCOME
PORTFOLIO & INCOME FUND COMBINED MARKET FUND MARKET
SHARES FUND SHARES SHARES SHARES VALUE VALUE
----------- ----------- -------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS
PEPSI BOTTLING GROUP 324,800 324,800
PEPSICO INC 262,800 262,800
PFIZER INC 316,250 7,025 388,675 711,950 15,180,000 337,200
PHARMACIA CORPORATION 149,500 8,796 158,296 7,727,281 454,643
PHILIP MORRIS CO INC 203,000 2,800 280,400 486,200 5,392,188 74,375
PROCTER & GAMBLE CO 81,000 1,850 157,300 240,150 4,637,250 105,913
QUAKER OATS CO 121,000 121,000
ROHM & HAAS CO 1,900 1,900 65,550
ROYAL DUTCH PETRO-NY SHARES 700 254,300 255,000 43,094
SABRE HOLDINGS CORP 36,132 4,230 40,362 1,029,762 120,555
SARA LEE CORP 144,000 6,300 150,300 2,781,000 121,669
SCHERING-PLOUGH CORP 1,100 86,400 87,500 55,550
SEAGATE TECHNOLOGY INC 600 600 33,000
SEAGRAMS CO. LTD. 1,000 1,000 58,000
TELLABS INC 400 400 27,375
TEMPLE INLAND INC 1,000 24,700 25,700 42,000
TERADYNE INC 62,400 62,400
TEXAS INSTRUMENTS INC 900 78,400 79,300 61,819
TEXTRON INC 2,600 2,600 141,213
TOSCO CORP 800 800 22,650
TRIBUNE CO 100,000 100,000 3,500,000
TYCO INT'L LTD 3,600 3,600 170,550
UNION CARBIDE CORP 111,100 111,100 5,499,450
UNITED TECHNOLOGIES CORP 170,500 170,500
USG CORP NEW 63,300 63,300
UST INC 4,200 4,200 61,688
USX-MARATHON GROUP 4,800 4,800 120,300
VISTEON CORP 75 33,288 33,363 909
WEATHERFORD INTERNATIONAL 164,800 164,800
WESTVACO CORP 268,600 268,600
WEYERHAEUSER CO 50,800 50,800
WHIRLPOOL CORP 85,100 85,100
170,529,308 11,268,551
------------ -----------
Mining & Energy
APACHE CORP 2,800 2,800 164,675
BURLINGTON RESOURCES INC 7,500 76,000 83,500 286,875
COFLEXIP-SPONSORED ADR 23,270 23,270
CONOCO INC-CL B 61,421 5,800 67,221 1,508,653 142,463
</TABLE>
<TABLE>
<CAPTION>
LIBERTY
GROWTH & PRO FORMA
INCOME FUND COMBINED
MARKET VALUE MARKET VALUE
-------------- ---------------
<S> <C> <C>
COMMON STOCKS
PEPSI BOTTLING GROUP 9,480,100 9,480,100
PEPSICO INC 11,678,175 11,678,175
PFIZER INC 18,656,400 34,173,600
PHARMACIA CORPORATION 8,181,925
PHILIP MORRIS CO INC 7,448,125 12,914,688
PROCTER & GAMBLE CO 9,005,425 13,748,588
QUAKER OATS CO 9,090,125 9,090,125
ROHM & HAAS CO 65,550
ROYAL DUTCH PETRO-NY SHARES 15,655,344 15,698,438
SABRE HOLDINGS CORP 1,150,317
SARA LEE CORP 2,902,669
SCHERING-PLOUGH CORP 4,363,200 4,418,750
SEAGATE TECHNOLOGY INC 33,000
SEAGRAMS CO. LTD. 58,000
TELLABS INC 27,375
TEMPLE INLAND INC 1,037,400 1,079,400
TERADYNE INC 4,586,400 4,586,400
TEXAS INSTRUMENTS INC 5,385,100 5,446,919
TEXTRON INC 141,213
TOSCO CORP 22,650
TRIBUNE CO 3,500,000
TYCO INT'L LTD 170,550
UNION CARBIDE CORP 5,499,450
UNITED TECHNOLOGIES CORP 10,038,188 10,038,188
USG CORP NEW 1,922,738 1,922,738
UST INC 61,688
USX-MARATHON GROUP 120,300
VISTEON CORP 403,611 404,520
WEATHERFORD INTERNATIONAL 6,561,100 6,561,100
WESTVACO CORP 6,664,638 6,664,638
WEYERHAEUSER CO 2,184,400 2,184,400
WHIRLPOOL CORP 3,967,788 3,967,788
------------- --------------
559,572,362 741,370,221
------------- --------------
Mining & Energy
APACHE CORP 164,675
BURLINGTON RESOURCES INC 2,907,000 3,193,875
COFLEXIP-SPONSORED ADR 1,407,835 1,407,835
CONOCO INC-CL B 1,651,116
</TABLE>
<PAGE> 112
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY
LIBERTY LIBERTY SR&F GROWTH ALL-STAR
SR&F GROWTH ALL-STAR GROWTH & INCOME GROWTH
& INCOME GROWTH & INCOME PRO FORMA PORTFOLIO & INCOME
PORTFOLIO & INCOME FUND COMBINED MARKET FUND MARKET
SHARES FUND SHARES SHARES SHARES VALUE VALUE
----------- ----------- -------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Common Stocks
CONOCO INC-CL A 104,800 6,450 111,250 2,305,600 141,900
DEVON ENERGY CORPORATION 2,708 2,708 152,156
DIAMOND OFFSHORE DRILLING 195,800 195,800
ENRON CORP 115,000 115,000 7,417,500
FALCON DRILLING COMPANY INC 521,800 521,800
GLOBAL MARINE INC 1,100 1,100 31,006
OCCIDENTAL PETROLEUM 7,700 7,700 162,181
PETROLEUM GEO SERVICES ADR 239,100 239,100
SCHLUMBERGER LTD 161,900 161,900
TRANSOCEAN SEDCO FOREX INC 31,343 31,343
------------ -----------
11,231,753 1,081,256
------------ -----------
Retail Trade
BEST BUY INC 128,500 128,500
CIRCUIT CITY STORES INC 600 100,700 101,300 19,913
COSTCO WHOLESALE CORP 2,550 2,550 84,150
CVS CORP 159,200 159,200
DARDEN RESTAURANTS INC 206,000 206,000
FEDERATED DEPT STORES INC NEW 80,000 4,500 84,500 2,700,000 151,875
HARCOURT GENERAL INC 4,725 4,725 256,922
HOME DEPOT INC 4,600 69,150 73,750 229,713
LIMITED INC 6,000 6,000 129,750
MAY DEPARTMENT STORES CO 5,214 5,214 125,136
MCDONALDS CORP 5,112 5,112 168,377
RADIOSHACK CORP 93,700 93,700
SAFEWAY INC 2,400 2,400 108,300
TARGET CORP 600 61,400 62,000 34,800
TIFFANY & CO 1,300 1,300 87,750
TJX COMPANIES, INC 252,800 1,400 254,200 4,740,000 26,250
WALGREEN CO 280,000 280,000 9,012,500
WAL-MART STORES INC 150,000 3,150 150,700 303,850 8,643,750 181,519
------------ -----------
25,096,250 1,604,453
------------ -----------
Services
ADOBE SYSTEMS INC 73,500 73,500
AMERICA ONLINE INC 1,200 113,000 114,200 63,300
AUTOMATIC DATA PROCESSING INC 105,600 105,600
</TABLE>
<TABLE>
<CAPTION>
LIBERTY
GROWTH & PRO-FORMA
INCOME FUND COMBINED
MARKET VALUE MARKET VALUE
-------------- ---------------
<S> <C> <C>
Common Stocks
CONOCO INC-CL A 2,447,500
DEVON ENERGY CORPORATION 152,156
DIAMOND OFFSHORE DRILLING 6,877,475 6,877,475
ENRON CORP 7,417,500
FALCON DRILLING COMPANY INC 12,294,913 12,294,913
GLOBAL MARINE INC 31,006
OCCIDENTAL PETROLEUM 162,181
PETROLEUM GEO SERVICES ADR 4,079,644 4,079,644
SCHLUMBERGER LTD 12,081,788 12,081,788
TRANSOCEAN SEDCO FOREX INC 1,674,892 1,674,892
------------- --------------
41,323,545 53,636,554
------------- --------------
Retail Trade
BEST BUY INC 8,127,625 8,127,625
CIRCUIT CITY STORES INC 3,341,981 3,361,894
COSTCO WHOLESALE CORP 84,150
CVS CORP 6,368,000 6,368,000
DARDEN RESTAURANTS INC 3,347,500 3,347,500
FEDERATED DEPT STORES INC NEW 2,851,875
HARCOURT GENERAL INC 256,922
HOME DEPOT INC 3,453,178 3,682,891
LIMITED INC 129,750
MAY DEPARTMENT STORES CO 125,136
MCDONALDS CORP 168,377
RADIOSHACK CORP 4,439,038 4,439,038
SAFEWAY INC 108,300
TARGET CORP 3,561,200 3,596,000
TIFFANY & CO 87,750
TJX COMPANIES, INC 4,766,250
WALGREEN CO 9,012,500
WAL-MART STORES INC 8,684,088 17,509,356
------------- --------------
41,322,609 68,023,313
------------- --------------
Services
ADOBE SYSTEMS INC 9,555,000 9,555,000
AMERICA ONLINE INC 5,960,750 6,024,050
AUTOMATIC DATA PROCESSING INC 5,656,200 5,656,200
</TABLE>
<PAGE> 113
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY
LIBERTY LIBERTY SR&F GROWTH ALL-STAR
SR&F GROWTH ALL-STAR GROWTH & INCOME GROWTH
& INCOME GROWTH & INCOME PRO FORMA PORTFOLIO & INCOME
PORTFOLIO & INCOME FUND COMBINED MARKET FUND MARKET
SHARES FUND SHARES SHARES SHARES VALUE VALUE
----------- ----------- -------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS
CENDANT CORP 2,100 2,100 29,400
CHECK POINT SOFTWARE TECH 5,700 5,700
CITRIX SYS INC 500 500 9,469
COMPUTER ASSOCIATES INT'L INC 11,423 11,423 584,715
DUN & BRADSTREET CORP 214,800 214,800
ELECTRONIC DATA SYSTEMS CORP 900 900 37,125
FIRST DATA CORP 129,600 129,600
GENENTECH INC 800 800 137,600
HARRAH'S ENTERTAINMENT INC 88,500 88,500
HERTZ CORP-CL A 60,000 60,000 1,683,750
INTERPUBLIC GROUP COS INC 121,200 121,200 5,211,600
MANPOWER 128,600 128,600
MICROSOFT CORP 4,250 158,700 162,950 340,000
NETWORK APPLIANCE INC 15,400 15,400
NEWS CORP LTD-SPONS ADR PRF 4,548 4,548 216,030
ORACLE CORP 600 148,400 149,000 50,438
PARAMETRIC TECHNOLOGY CORP 6,400 6,400 70,400
PAYCHEX INC 6,150 6,150 258,300
PIXAR INC 2,200 2,200 77,550
SENSORMATIC ELECTRONICS CORP 1,600 1,600 25,300
SIEBEL SYSTEMS INC 2,650 2,650 433,441
SUN MICROSYSTEMS INC 1,600 123,800 125,400 145,500
SYNOPSYS INC 1,900 1,900 65,669
TIME WARNER INC 2,200 16,400 18,600 167,200
USA NETWORKS INC 101,500 101,500
WALT DISNEY PRODUCTIONS 3,600 155,500 159,100 139,725
------------ -----------
6,895,350 2,851,160
------------ -----------
Transportation, Communications,
Electric, Gas and
Sanitary Services
A T & T CORP 65,333 4,100 348,100 417,533 2,066,156 129,663
ALLEGIANCE TELECOM INC 250 250 16,000
AMFM INC 3,500 3,500 241,500
AMR CORP 50,000 4,000 54,000 1,321,875 105,750
AT & T WIRELESS CORP 178,200 178,200
AT&T CORP-LIBERTY MEDIA A 3,600 3,600 87,300
BELL ATLANTIC CORP 190,320 2,400 122,600 315,320 9,670,635 121,950
BELLSOUTH CORP 147,300 147,300
BURLINGTON NORTH SANTA FE CORP 200,000 6,647 206,647 4,587,500 152,466
CABLEVISION SYSTEMS CL-A 1,200 1,200 81,450
</TABLE>
<TABLE>
<CAPTION>
LIBERTY
GROWTH & PRO FORMA
INCOME FUND COMBINED
MARKET VALUE MARKET VALUE
-------------- ---------------
<S> <C> <C>
COMMON STOCKS
CENDANT CORP 29,400
CHECK POINT SOFTWARE TECH 1,206,975 1,206,975
CITRIX SYS INC 9,469
COMPUTER ASSOCIATES INT'L INC 584,715
DUN & BRADSTREET CORP 6,148,650 6,148,650
ELECTRONIC DATA SYSTEMS CORP 37,125
FIRST DATA CORP 6,431,400 6,431,400
GENENTECH INC 137,600
HARRAH'S ENTERTAINMENT INC 1,852,969 1,852,969
HERTZ CORP-CL A 1,683,750
INTERPUBLIC GROUP COS INC 5,211,600
MANPOWER 4,115,200 4,115,200
MICROSOFT CORP 12,696,000 13,036,000
NETWORK APPLIANCE INC 1,239,700 1,239,700
NEWS CORP LTD-SPONS ADR PRF 216,030
ORACLE CORP 12,474,875 12,525,313
PARAMETRIC TECHNOLOGY CORP 70,400
PAYCHEX INC 258,300
PIXAR INC 77,550
SENSORMATIC ELECTRONICS CORP 25,300
SIEBEL SYSTEMS INC 433,441
SUN MICROSYSTEMS INC 11,258,063 11,403,563
SYNOPSYS INC 65,669
TIME WARNER INC 1,246,400 1,413,600
USA NETWORKS INC 2,194,938 2,194,938
WALT DISNEY PRODUCTIONS 6,035,344 6,175,069
------------- --------------
88,072,463 97,818,973
------------- --------------
Transportation, Communications,
Electric, Gas and
Sanitary Services
A T & T CORP 11,008,663 13,204,481
ALLEGIANCE TELECOM INC 16,000
AMFM INC 241,500
AMR CORP 1,427,625
AT & T WIRELESS CORP 4,967,325 4,967,325
AT&T CORP-LIBERTY MEDIA A 87,300
BELL ATLANTIC CORP 6,229,613 16,022,198
BELLSOUTH CORP 6,278,663 6,278,663
BURLINGTON NORTH SANTA FE CORP 4,739,966
CABLEVISION SYSTEMS CL-A 81,450
</TABLE>
<PAGE> 114
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY
LIBERTY LIBERTY SR&F GROWTH ALL-STAR
SR&F GROWTH ALL-STAR GROWTH & INCOME GROWTH
& INCOME GROWTH & INCOME PRO FORMA PORTFOLIO & INCOME
PORTFOLIO & INCOME FUND COMBINED MARKET FUND MARKET
SHARES FUND SHARES SHARES SHARES VALUE VALUE
----------- ----------- -------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Common Stocks
CARNIVAL CORP-CL A 4,200 4,200 81,900
CHRIS-CRAFT INDUSTRIES INC 61,800 61,800
COLUMBIA ENERGY GROUP 700 700 45,938
COMCAST CORP-SPECIAL CL A 30,000 500 46,500 77,000 1,215,000 20,250
CONTINENTAL AIRLINES CL B 160,000 160,000 7,520,000
COX COMMUNICATIONS INC-CL A 2,150 2,150 97,959
CSX CORP 2,500 2,500 52,969
DELTA AIR LINES INC 3,000 79,600 82,600 151,688
DTE ENERGY CO 800 800 24,450
DUKE ENERGY 60,100 60,100
DYNEGY INC 400 400 27,325
EDISON INTERNATIONAL 235,700 235,700
EL PASO ENERGY CORP 6,200 6,200 315,813
ENTERGY CORP 252,400 252,400
FLORIDA PROGRESS CORP 2,000 2,000 93,750
GLOBAL CROSSING LTD 1,000 1,000 26,313
GTE CORP 2,950 201,400 204,350 183,638
KANSAS CITY SOUTHN INDS INC 131,900 3,750 135,650 11,697,881 332,578
LEVEL 3 COMMUNICATIONS 250 250 22,000
P G & E CORP 900 116,000 116,900 22,163
PECO ENERGY CO 4,100 4,100 165,281
PMC-SIERRA INC 16,800 16,800
QWEST COMMUNICATIONS INTL 500 500 24,844
RELIANT ENERGY INC 5,400 5,400 159,638
RF MICRO DEVICES INC 47,400 47,400
SBC COMMUNICATIONS INC 9,959 409,400 419,359 430,727
SOUTHWEST AIRLINES CO 8,650 8,650 163,809
SPRINT CORP (FON GROUP) 3,253 189,200 192,453 165,903
SPRINT CORP PCS 500 500 29,750
TELEPHONE & DATA 24,300 24,300
TXU CORP 164,500 164,500
UAL INC 56,000 56,000
UNICOM CORPORATION 160,400 160,400
UNION PACIFIC CORP 1,400 137,900 139,300 52,063
UNITED PARCEL SERVICE-CL B 2,300 2,300 135,700
US CELLULAR CORP 29,700 29,700
WASTE MANAGEMENT INC 1,200 1,200 22,800
WILLIAMS COMPANIES INC 1,900 1,900 79,206
WORLDCOM INC 5,200 5,200 238,550
------------ -----------
38,079,047 4,103,080
------------ -----------
</TABLE>
<TABLE>
<CAPTION>
LIBERTY
GROWTH & PRO FORMA
INCOME FUND COMBINED
MARKET VALUE MARKET VALUE
-------------- ---------------
<S> <C> <C>
Common Stocks
CARNIVAL CORP-CL A 81,900
CHRIS-CRAFT INDUSTRIES INC 4,082,663 4,082,663
COLUMBIA ENERGY GROUP 45,938
COMCAST CORP-SPECIAL CL A 1,883,250 3,118,500
CONTINENTAL AIRLINES CL B 7,520,000
COX COMMUNICATIONS INC-CL A 97,959
CSX CORP 52,969
DELTA AIR LINES INC 4,024,775 4,176,463
DTE ENERGY CO 24,450
DUKE ENERGY 3,388,138 3,388,138
DYNEGY INC 27,325
EDISON INTERNATIONAL 4,831,850 4,831,850
EL PASO ENERGY CORP 315,813
ENTERGY CORP 6,862,125 6,862,125
FLORIDA PROGRESS CORP 93,750
GLOBAL CROSSING LTD 26,313
GTE CORP 12,537,150 12,720,788
KANSAS CITY SOUTHN INDS INC 12,030,459
LEVEL 3 COMMUNICATIONS 22,000
P G & E CORP 2,856,500 2,878,663
PECO ENERGY CO 165,281
PMC-SIERRA INC 2,985,150 2,985,150
QWEST COMMUNICATIONS INTL 24,844
RELIANT ENERGY INC 159,638
RF MICRO DEVICES INC 4,153,425 4,153,425
SBC COMMUNICATIONS INC 17,706,550 18,137,277
SOUTHWEST AIRLINES CO 163,809
SPRINT CORP (FON GROUP) 9,649,200 9,815,103
SPRINT CORP PCS 29,750
TELEPHONE & DATA 2,436,075 2,436,075
TXU CORP 4,852,750 4,852,750
UAL INC 3,258,500 3,258,500
UNICOM CORPORATION 6,205,475 6,205,475
UNION PACIFIC CORP 5,128,156 5,180,219
UNITED PARCEL SERVICE-CL B 135,700
US CELLULAR CORP 1,871,100 1,871,100
WASTE MANAGEMENT INC 22,800
WILLIAMS COMPANIES INC 79,206
WORLDCOM INC 238,550
------------- --------------
127,197,094 169,379,221
------------- --------------
</TABLE>
<PAGE> 115
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY
LIBERTY LIBERTY SR&F GROWTH ALL-STAR
SR&F GROWTH ALL-STAR GROWTH & INCOME GROWTH
& INCOME GROWTH & INCOME PRO FORMA PORTFOLIO & INCOME
PORTFOLIO & INCOME FUND COMBINED MARKET FUND MARKET
SHARES FUND SHARES SHARES SHARES VALUE VALUE
----------- ----------- -------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS
Wholesale Trade
SYSCO CORP 182,600 182,600
Total Common Stocks 305,383,077 26,532,356
------------ -----------
CASH EQUIVALENTS Par Par Par Par
ASSOCIATES FIRST CAPITAL 0.00%
7/3/2000 $ 2,130,000 $ 2,130,000 2,129,178
WARBURG REPURCHASE AGREEMENT
6.60% 7/3/2000 $ 972,000 $25,932,000 26,904,000 972,000
------------ ------------
Total Cash Equivalents 2,129,178 972,000
------------ ------------
TOTAL INVESTMENTS (COST OF
$157,157,695, $25,098,509,
$976,414,426 AND $1,158,670,630,
RESPECTIVELY) $307,512,255 $ 27,504,356
============ ============
</TABLE>
<TABLE>
<CAPTION>
LIBERTY
GROWTH & PRO FORMA
INCOME FUND COMBINED
MARKET VALUE MARKET VALUE
-------------- ---------------
<S> <C> <C>
COMMON STOCKS
Wholesale Trade
SYSCO CORP 7,692,025 7,692,025
------------- --------------
Total Common Stocks 1,099,613,570 1,431,529,004
------------- --------------
CASH EQUIVALENTS
ASSOCIATES FIRST CAPITAL 0.00%
7/3/2000 2,129,178
WARBURG REPURCHASE AGREEMENT
6.60% 7/3/2000 25,932,000 26,904,000
-------------- ---------------
Total Cash Equivalents 25,932,000 29,033,178
-------------- ---------------
TOTAL INVESTMENTS (COST OF
$157,157,695, $25,098,509,
$976,414,426 AND $1,158,670,630,
RESPECTIVELY) $1,125,545,570 $ 1,460,562,181
============== ===============
</TABLE>
No adjustments are shown to the unaudited pro forma combined portfolio of
investments due to the fact that upon consummation of the Acquisitions, no
securities would need to be sold in order for the Acquiring Fund to comply with
its Prospectus and SEC and IRS guidelines and restrictions. However, the
foregoing sentence shall not be deemed to restrict in any way the ability of the
investment advisor of any of the funds from buying or selling securities in the
normal course of such Fund's business and operations.
<PAGE> 116
PRO FORMA COMBINING CONDENSED STATEMENT OF ASSETS AND LIABILITIES
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Liberty Liberty
All-Star Liberty Growth & Income
SR&F Liberty Value Growth & Growth & Income Fund
Growth & Income Opportunities Income Fund Pro Forma Pro Forma
Portfolio Fund Fund (Acquring Fund) Adjustments Combined
--------------- ------------- ----------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Investments, at value $307,512,255 $308,179,637 $27,504,356 $ 1,125,545,570 $(308,179,637)(a) $ 1,460,562,181
Cash 3,884 -- 4,096 176 -- 8,156
Receivable for investments
sold -- -- -- -- -- --
Payable for investments
purchased -- -- -- -- -- --
Other assets less other
liabilities 837,077 (351,328) 621 35,737,174 (245,393) (b) 35,978,151
Net assets $308,353,216 $307,828,309 $27,509,073 $ 1,161,282,920 $(308,425,030) $ 1,496,548,488
Class A:
Net assets $ 259,166 $ 4,299,897 $ 309,356,714 (8,588) $ 313,907,189
Shares outstanding 9,814 368,742 15,017,711 (157,653) $ 15,238,614
Net asset value $ 26.41 $ 11.66 $ 20.60 $ 20.60
Class B:
Net assets $ 1,269,238 $16,346,839 $ 822,643,366 (27,300) $ 840,232,143
Shares outstanding 48,240 1,415,688 41,382,562 (579,136) $ 42,267,354
Net asset value $ 26.31 $ 11.55 $ 19.88 $ 19.88
Class C:
Net assets $ 75,057 $ 4,524,072 $ 29,281,763 (4,512) $ 33,876,380
Shares outstanding 2,853 391,868 1,465,147 (164,824) $ 1,695,044
Net asset value $ 26.31 $ 11.54 $ 19.99 $ 19.99
Class Z:
Net assets $ 1,004 $ 2,338,265 $ 1,077 (2,098) $ 2,338,248
Shares outstanding 38 199,907 52 (87,101) $ 112,896
Net asset value $ 26.42 $ 11.70 $ 20.71 $ 20.71
Class S:
Net assets $306,223,844 (29,316) $ 306,194,528
Shares outstanding 11,601,266 3,182,500(c) $ 14,783,766
Net asset value $ 26.40 $ 20.71
</TABLE>
Footnotes to pro forma statement of assets and liabilities
(a) - Adjustment represents the elimination the Liberty Value Opportunities
Fund's investment in the Portfolio, as the master/feeder structure will be
dissolved, with the the securities held by the Portfolio withdrawn from
the Portfolio by the Liberty Value Opportunities Fund prior to the merger.
(b) - Adjustment reflects a payable to the general partner of the Portfolio
for its remaining net assets after withdrawal of the Liberty Value
Opportunities Fund's investment in the Portfolio of $173,579, in addition
to one time proxy, accounting, legal and other costs of the reorganization
of $29,470, $24,684 and $17,660 to be borne by Liberty Value Opportunities
Fund, Liberty All Star Growth & Income Fund and Liberty Growth & Income
Fund respectively. These costs reflect each fund's share of the total
costs of the reorganization that will be shared between Liberty Financial
and the Funds, subject to the terms of each Agreement and Plan of
Reorganization, as follows:
<TABLE>
<CAPTION>
Liberty Financial Fund
----------------- ----
<S> <C> <C>
Liberty Value Opportunities Fund 75% 25%
Liberty All-Star Growth & Income Fund 50% 50%
Liberty Growth & Income Fund 75% 25%
</TABLE>
The Funds will bear their full portion of the one time costs of the
reorganization only if the expense reduction experienced as a result of the
Acquisition in the first year after Acquisition Date exceeds the one time costs.
If the one time costs exceed the expense reduction, the Fund will only bear the
share of its portion up to the amount of the expense reduction.
(c) - Liberty Value Opportunities Fund shares are exchanged for new Class S
shares of Liberty Growth & Income Fund, to be established upon
consummation of the merger. Initial per share value of Class S shares is
presumed to equal that of current Class Z shares.
<PAGE> 117
PRO FORMA COMBINING CONDENSED STATEMENT OF OPERATIONS FOR THE TWELVE
MONTH PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SRF GROWTH & LIBERTY VALUE LIBERTY ALL-STAR LIBERTY
INCOME OPPORTUNITIES GROWTH & GROWTH & PRO FORMA PRO FORMA
PORTFOLIO FUND INCOME INCOME FUND ADJUSTMENTS COMBINED
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends 4,456,261 4,451,174 268,398 15,573,131 (4,456,261) (c) 20,292,703
Interest 1,058,561 1,056,847 37,185 1,966,931 (1,058,561) (c) 3,060,962
---------- ---------- -------- ----------- -----------
Total investment income 5,514,823 5,508,021 305,583 17,540,062 (5,514,823) 23,353,665
EXPENSES
Management fee 2,190,101 -- 132,571 9,452,952 (6,727) (a) 11,768,897
Administration fee -- 545,843 44,190 -- (590,033) (a) --
Service fee - Class A, B, C -- 866 49,748 3,099,842 -- (a) 3,150,456
Distribution fee - Class A -- 23 -- -- (23) (a) --
Distribution fee - Class B -- 2,118 95,935 6,593,089 -- (a) 6,691,142
Distribution fee - Class C -- 130 27,559 244,861 -- (a) 272,550
Transfer agent fee - Class
A, B, C, Z -- 819 -- -- (819) (a) --
Transfer agent fee - Class S -- 799,640 -- -- (799,640) (a) --
Transfer agent fee 6,000 -- 46,431 2,728,605 458,981 (e) 3,240,017
Bookkeeping fee 32,875 32,847 27,000 420,040 3,775 (a) 516,537
Trustees fee 17,578 9,169 12,950 56,473 (38,340) (b) 57,830
Expenses allocated --
from SRF Growth & Income
Portfolio -- 2,271,293 -- -- (2,271,293) (c) --
All other expenses 27,280 269,696 221,950 1,052,407 (551,833) (d) 1,019,500
---------- ---------- -------- ----------- ----------- -----------
Total operating expenses 2,273,834 3,932,444 658,334 23,648,269 (3,795,952) 26,716,929
---------- ---------- -------- ----------- ----------- -----------
Expense reimbursement -- -- (208,902) -- 208,902 (a) --
---------- ---------- -------- ----------- ----------- -----------
Net Expenses 2,273,834 3,932,444 449,432 23,648,269 (3,587,050) 26,716,929
NET INVESTMENT INCOME (LOSS) 3,240,989 1,575,577 (143,849) (6,108,207) 1,927,773 (3,363,264)
NET REALIZED & UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investments 32,232,665 32,215,860 (118,211) 183,532,200 (32,232,665) (c) 215,629,848
Closed futures contracts 748,773 693,167 -- -- (748,773) (c) 693,167
Foreign currency transactions (1,375) (749) -- -- 1,375 (c) (749)
---------- ---------- -------- ----------- -----------
Net Realized Gain (Loss) 32,980,063 32,908,278 (118,211) 183,532,200 (32,980,063) 216,322,266
Change in net unrealized
appreciation/depreciation
during the period on investments 63,450,655 63,542,407 1,816,980 (170,105,574) (63,450,655) (c) (104,746,187)
---------- ---------- -------- ----------- ----------- -----------
Net Gain 96,430,719 96,450,685 1,698,769 13,426,626 (96,430,719) 111,576,079
---------- ---------- -------- ----------- ----------- -----------
Increase in Net Assets from
Operations 99,671,708 98,026,261 1,554,920 7,318,419 (94,502,946) 108,212,815
</TABLE>
(a) Based on the contract in effect for the surviving fund.
(b) Based on trustee compensation plan for the surviving fund.
(c) Due to elimination of master/feeder structure.
(d) Decrease due to the elimination of duplicative expenses achieved by merging
the funds.
(e) Based on the contract in effect for the surviving fund. Note that a new
transfer agent fee structure was implemented for the Growth & Income Fund
effective January 1, 2000. The pro forma combined transfer agent fee shown
assumes this new agreement was in effect for the entire twelve-month period
ended June 30, 2000.
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 2000
1. These financial statements set forth the unaudited pro forma condensed
statement of assets and liabilities, including the portfolio of investments, as
of June 30, 2000, and the unaudited pro forma condensed statement of operations
for the twelve month period ended June 30, 2000 for SR&F Growth & Income
Portfolio, Liberty Value Opportunities Fund, Liberty All-Star Growth & Income
Fund and Liberty Growth & Income Fund as adjusted giving effect to the
Acquisition as if it had occurred as of the beginning of the period. These
statements have been derived from the books and records utilized in calculating
daily net asset value for each fund.
<PAGE> 118
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY
LIBERTY ALL-STAR LIBERTY
ALL-STAR LIBERTY LIBERTY GROWTH & GROWTH &
LIBERTY GROWTH & GROWTH & VALUE INCOME INCOME PRO FORMA
VALUE INCOME INCOME PRO FORMA FUND FUND FUND COMBINED
FUND FUND FUND COMBINED MARKET MARKET MARKET MARKET
SHARES SHARES SHARES SHARES VALUE VALUE VALUE VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCKS
Agriculture, Forestry &
Fishing
CANADIAN NATL RAILWAY CO 133,100 133,100 $ 3,884,856 $ 3,884,856
----------- -----------
Construction
HALLIBURTON CO 2,975 2,975 $ 140,383 140,383
--------- -----------
Finance, Insurance & Real
Estate
ABN AMRO HOLDING NV ADR 3,286 3,286 80,712 80,712
ACE LIMITED 10,950 81,700 92,650 306,600 2,287,600 2,594,200
AETNA INC 10,900 10,900 $ 699,644 699,644
AFLAC INC 4,271 4,271 196,199 196,199
ALLMERICA FINANCIAL CORP 3,375 3,375 176,766 176,766
AMBAC FINANCIAL GROUP INC 1,300 40,500 41,800 71,256 2,219,906 2,291,162
AMER INTERNATIONAL GROUP INC 1,100 132,275 133,375 129,250 15,542,313 15,671,563
AMERICAN EXPRESS CO 144,000 144,000 7,506,000 7,506,000
AON CORP 33,200 33,200 1,031,275 1,031,275
ASTORIA FINANCIAL CORP 600 600 15,450 15,450
AXA FINANICAL INC 4,300 140,500 144,800 146,200 4,777,000 4,923,200
BANK OF AMERICA CORP 700 231,234 231,934 30,100 9,943,062 9,973,162
BANK ONE 31,000 4,100 35,100 823,438 108,906 932,344
BEAR STEARNS COMPANIES INC 30,173 30,173 1,255,951 1,255,951
C.I.T. GROUP INC-A 2,000 2,000 32,500 32,500
CAPITAL ONE FINANCIAL CORP 1,000 72,100 73,100 44,625 3,217,463 3,262,088
CHASE MANHATTAN CORP (NEW) 3,250 186,450 189,700 149,703 8,588,353 8,738,056
CIGNA CORP 2,275 2,275 212,713 212,713
CINCINNATI FINANCIAL CORP 188,300 188,300 5,919,681 5,919,681
CITIGROUP INC 8,490 523,300 531,790 511,523 31,528,825 32,040,348
CITY NATIONAL CORP 119,500 119,500 4,242,250 4,242,250
COUNTRYWIDE CREDIT INDUSTRIES 10,593 10,593 321,100 321,100
FANNIE MAE 400 163,400 163,800 20,875 8,527,438 8,548,313
FIRST UNION CORP 2,800 2,800 69,475 69,475
FIRSTAR CORP 18,000 18,000 379,125 379,125
FLEET BOSTON FINANCIAL CORP 16,100 4,000 348,600 368,700 547,400 136,000 11,852,400 12,535,800
FREDDIE MAC 19,500 9,096 108,300 136,896 789,750 368,388 4,386,150 5,544,288
GOLDEN STATE BANCORP 171,300 171,300 3,083,400 3,083,400
GOLDEN WEST FINANCIAL CORP 89,100 89,100 3,636,394 3,636,394
GOLDMAN SACHS GROUP INC 500 500 47,438 47,438
HCA-THE HEALTHCARE CORP 346,100 346,100 10,512,788 10,512,788
HOUSEHOLD INTERNATIONAL INC 83,300 83,300 3,462,156 3,462,156
J P MORGAN & CO INC 55,100 55,100 6,067,888 6,067,888
KEYCORP 1,200 1,200 21,150 21,150
KIMCO REALTY CORP 1,700 1,700 69,700 69,700
KNIGHT TRADING GROUP INC 59,800 59,800 1,782,788 1,782,788
LEHMAN BROTHERS HLDG INC 100,900 100,900 9,541,356 9,541,356
LOEWS CORP 42,000 42,000 2,520,000 2,520,000
MBNA CORP 210,300 210,300 5,704,388 5,704,388
</TABLE>
<PAGE> 119
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY
LIBERTY ALL-STAR LIBERTY
ALL-STAR LIBERTY LIBERTY GROWTH & GROWTH &
LIBERTY GROWTH & GROWTH & VALUE INCOME INCOME PRO FORMA
VALUE INCOME INCOME PRO FORMA FUND FUND FUND COMBINED
FUND FUND FUND COMBINED MARKET MARKET MARKET MARKET
SHARES SHARES SHARES SHARES VALUE VALUE VALUE VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCKS
METLIFE INC 1,700 1,700 35,806 35,806
MGIC INV CORP 123,000 123,000 5,596,500 5,596,500
MORGAN STANLEY DEAN WITTER 1,900 165,900 167,800 158,175 13,811,175 13,969,350
NATIONWIDE FINANCIAL SERV A 228,700 228,700 7,518,513 7,518,513
PACIFIC CENTURY FINL CORP 145,500 145,500 2,127,938 2,127,938
PMI GROUP INC 131,100 131,100 6,227,250 6,227,250
PNC FINANCIAL SERVICES GROUP 3,350 104,900 108,250 157,031 4,917,188 5,074,219
PROGRESSIVE CORP OHIO 4,900 4,900 362,600 362,600
PROVIDIAN FINANCIAL CORP 2,650 30,100 32,750 238,500 2,709,000 2,947,500
SCHWAB (CHARLES) CORP 7,950 7,950 267,319 267,319
SOVEREIGN BANCORP INC 505,200 505,200 3,552,188 3,552,188
STARWOOD HOTELS & RESORTS WOR 2,600 2,600 84,013 84,013
TRIZEC HAHN CORP 8,400 8,400 150,150 150,150
U.S. BANCORP 3,000 3,000 57,750 57,750
UNIONBANCAL CORPORATION 155,100 155,100 2,879,044 2,879,044
UNITED HEALTHCARE CORP 5,900 126,700 132,600 505,925 10,864,525 11,370,450
VORNADO REALTY TRUST 1,500 1,500 52,125 52,125
WASHINGTON MUTUAL INC 23,100 2,000 25,100 667,013 57,750 724,763
WELLPOINT HEALTH NETWORKS 2,100 2,100 152,119 152,119
WELLS FARGO & CO 4,193 57,800 61,993 162,479 2,239,750 2,402,229
XL CAPITAL LTD-CLASS A 20,700 4,090 24,790 1,120,388 221,371 1,341,759
ZIONS BANCORPORATION 1,300 1,300 59,658 59,658
----------- ---------- ------------- ------------
6,563,956 5,483,474 230,548,616 242,596,046
----------- ---------- ------------- ------------
Manufacturing
3COM CORPORATION 1,100 1,100 63,388 63,388
ABBOTT LABS 31,600 31,600 1,408,175 1,408,175
ADC TELECOMMUNICATIONS INC 81,500 81,500 6,835,813 6,835,813
AGILENT TECHNOLOGIES INC 1,200 28,986 30,186 88,500 2,137,718 2,226,218
ALCAN ALUMINUM LTD 5,000 5,000 155,000 155,000
ALCOA INC 7,560 111,400 118,960 219,240 3,230,600 3,449,840
ALLEGHENY TECHNOLOGIES INC 1,200 1,200 21,600 21,600
ALZA CORP 1,500 1,500 88,688 88,688
AMERADA HESS CORP 17,000 17,000 1,049,750 1,049,750
AMERICAN HOME PRODUCTS CORP 600 600 35,250 35,250
AMGEN INC 3,250 80,800 84,050 228,313 5,676,200 5,904,513
ANALOG DEVICES INC. 82,900 82,900 6,300,400 6,300,400
ANHEUSER BUSCH INC 2,100 162,600 164,700 156,843 12,144,188 12,301,031
APPLE COMPUTER INC 49,600 49,600 2,597,800 2,597,800
APPLIED MATLS 2,900 129,200 132,100 262,813 11,708,750 11,971,563
APPLIED MICRO CIRCUITS CORP 11,600 11,600 1,145,500 1,145,500
ATMEL CORP 116,900 116,900 4,310,688 4,310,688
AVENTIS -SPON ADR 1,100 1,100 79,819 79,819
AVON PRODUCTS INC 9,184 9,184 408,688 408,688
BAKER HUGHES INC 800 800 25,600 25,600
BAUSCH & LOMB INC 125,200 125,200 9,687,350 9,687,350
BAXTER INTERNATIONAL INC 4,400 4,400 309,375 309,375
BECKMAN COULTER INC 29,100 29,100 1,698,713 1,698,713
</TABLE>
<PAGE> 120
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY
LIBERTY ALL-STAR LIBERTY
ALL-STAR LIBERTY LIBERTY GROWTH & GROWTH &
LIBERTY GROWTH & GROWTH & VALUE INCOME INCOME PRO FORMA
VALUE INCOME INCOME PRO FORMA FUND FUND FUND COMBINED
FUND FUND FUND COMBINED MARKET MARKET MARKET MARKET
SHARES SHARES SHARES SHARES VALUE VALUE VALUE VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCKS
BESTFOODS 21,800 1,100 190,600 213,500 1,509,650 76,175 13,199,050 14,784,875
BIOGEN INC 3,050 3,050 196,725 196,725
BOEING CO 25,700 3,793 332,800 362,293 1,074,581 158,595 13,915,200 15,148,376
BOSTON SCIENTIFIC CORP 19,700 19,700 432,169 432,169
BP AMOCO PLC-ADR 150,000 150,000 8,484,375 8,484,375
BRISTOL-MYERS SQUIBB CO 3,200 166,200 169,400 186,400 9,681,150 9,867,550
BRUNSWICK CORP 227,400 227,400 3,766,313 3,766,313
CATERPILLAR INC 3,755 3,755 127,201 127,201
CHEVRON CORP 6,300 119,200 125,500 534,319 10,109,650 10,643,969
CISCO SYSTEMS INC 7,400 456,200 463,600 470,363 28,997,212 29,467,575
CLOROX CO 500 500 22,406 22,406
COCA COLA CO 700 19,700 20,400 40,206 1,131,519 1,171,725
COMPAQ COMPUTER CORP 18,100 7,000 25,100 462,681 178,938 641,619
COMVERSE TECH 32,200 32,200 2,994,600 2,994,600
COOPER INDUSTRIES INC 700 700 22,794 22,794
CORNING INCORPORATED 21,100 21,100 5,694,363 5,694,363
DEERE & CO 9,500 9,500 351,500 351,500
DELL COMPUTER CORPORATION 8,900 8,900 438,881 438,881
DELPHI AUTOMOTIVE SYSTEMS 41,282 253,600 294,882 601,169 3,693,050 4,294,219
DIAGEO PLC ADR 5,193 5,193 184,676 184,676
DOVER CORP 3,793 3,793 153,854 153,854
DOW CHEMICAL CO 350,500 350,500 10,580,719 10,580,719
EASTMAN KODAK CO 15,000 15,000 892,500 892,500
EI DUPONT DE NEMOURS &
CO INC 2,900 60,200 63,100 126,875 2,633,750 2,760,625
ELI LILLY & CO 1,000 114,500 115,500 99,875 11,435,688 11,535,563
EMC CORP 1,000 108,400 109,400 76,938 8,340,025 8,416,963
EMERSON ELECTRIC CO 15,400 3,306 18,706 929,775 199,600 1,129,375
EXXON MOBIL CORPORATION 3,916 365,165 369,081 307,406 28,665,453 28,972,859
FMC CORP 43,200 43,200 2,505,600 2,505,600
FORD MOTOR CO 600 266,300 266,900 25,800 11,450,900 11,476,700
GATEWAY INC 51,000 51,000 2,894,250 2,894,250
GENERAL ELECTRIC CO 2,700 640,500 643,200 143,100 33,946,500 34,089,600
GENERAL MILLS INC 16,500 16,500 631,125 631,125
GEORGIA PACIFIC CORP 20,300 20,300 532,875 532,875
GILLETTE CO 4,350 4,350 151,978 151,978
GRANT PRIDECO INC 164,800 164,800 4,120,000 4,120,000
H J HEINZ CO 1,400 1,400 61,250 61,250
HEWLETT-PACKARD CO 1,600 90,400 92,000 199,800 11,288,700 11,488,500
HONEYWELL INTERNATIONAL INC 900 77,437 78,337 30,319 2,608,659 2,638,978
ILLINOIS TOOL WORKS INC 2,800 2,800 159,600 159,600
INGERSOLL RAND CO 15,900 2,525 18,425 639,975 101,631 741,606
INTEL CORP 5,450 232,800 238,250 728,597 31,122,450 31,851,047
INTERNATIONAL GAME TECH 61,300 61,300 1,624,450 1,624,450
INTERNATIONAL PAPER CO 180,700 180,700 5,387,119 5,387,119
INTL BUSINESS MACHINES CORP 1,720 130,800 132,520 188,448 14,330,775 14,519,223
INTUIT INC 1,700 1,700 70,338 70,338
JDS UNIPHASE CORP 1,050 1,050 125,869 125,869
JOHNSON & JOHNSON 69,900 69,900 7,121,063 7,121,063
JOHNSON CONTROLS INC 81,500 81,500 4,181,969 4,181,969
KIMBERLY CLARK CORP 13,200 3,400 66,000 82,600 757,350 195,075 3,786,750 4,739,175
</TABLE>
<PAGE> 121
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY
LIBERTY ALL-STAR LIBERTY
ALL-STAR LIBERTY LIBERTY GROWTH & GROWTH &
LIBERTY GROWTH & GROWTH & VALUE INCOME INCOME PRO FORMA
VALUE INCOME INCOME PRO FORMA FUND FUND FUND COMBINED
FUND FUND FUND COMBINED MARKET MARKET MARKET MARKET
SHARES SHARES SHARES SHARES VALUE VALUE VALUE VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCKS
LEAR CORP 2,800 2,800 56,000 56,000
LOCKHEED MARTIN CORP 422,400 422,400 10,480,800 10,480,800
LSI LOGIC CORP 53,200 53,200 2,879,450 2,879,450
LUCENT TECHNOLOGIES INC 2,800 42,800 45,600 165,900 2,535,900 2,701,800
LYONDELL PETRO 211,300 211,300 3,539,275 3,539,275
MATTEL INC 56,800 56,800 749,050 749,050
MAXIM INTEGRATED PRODUCTS INC 4,550 4,550 309,116 309,116
MEDTRONIC INC 2,400 2,400 119,550 119,550
MERCK & CO INC 14,300 155,800 170,100 1,095,738 11,938,175 13,033,913
MICROCHIP TECHNOLOGY 115,800 115,800 6,747,159 6,747,159
MINNESOTA MINING & MFG CO 9,600 4,142 130,300 144,042 792,000 341,715 10,749,750 11,883,465
MOTOROLA INC 12,900 1,560 14,460 374,906 45,338 420,244
MYLAN LABORATORIES, INC 238,600 238,600 4,354,450 4,354,450
NABISCO HOLDINGS CORP 16,800 16,800 882,000 882,000
NEWS CORP LTD ADR 1,400 1,400 76,300 76,300
NIKE INC CL B 25,100 25,100 999,294 999,294
NOKIA CORP ADR 4,500 112,400 116,900 224,719 5,612,975 5,837,694
NORTEL NETWORKS CORP 700 700 47,775 47,775
PACCAR INC 137,100 137,100 5,441,156 5,441,156
PE CORP-PE BIOSYSTEMS GROUP 300 300 19,763 19,763
PEPSI BOTTLING GROUP 324,800 324,800 9,480,100 9,480,100
PEPSICO INC 22,000 262,800 284,800 977,625 11,678,175 12,655,800
PFIZER INC 7,025 388,675 395,700 337,200 18,656,400 18,993,600
PHARMACIA CORPORATION 8,796 8,796 454,643 454,643
PHILIP MORRIS CO INC 48,600 2,800 280,400 331,800 1,290,938 74,375 7,448,125 8,813,438
PRAXAIR INC 15,000 15,000 561,563 561,563
PROCTER & GAMBLE CO 20,500 1,850 157,300 179,650 1,173,625 105,913 9,005,425 10,284,963
QUAKER OATS CO 121,000 121,000 9,090,125 9,090,125
ROHM & HAAS CO 1,900 1,900 65,550 65,550
ROYAL DUTCH PETRO-NY SHARES 17,600 700 254,300 272,600 1,083,500 43,094 15,655,344 16,781,938
SABRE HOLDINGS CORP 4,230 4,230 120,555 120,555
SARA LEE CORP 72,100 6,300 78,400 1,392,431 121,669 1,514,100
SCHERING-PLOUGH CORP 24,100 1,100 86,400 111,600 1,217,050 55,550 4,363,200 5,635,800
SEAGATE TECHNOLOGY INC 600 600 33,000 33,000
SEAGRAMS CO. LTD. 1,000 1,000 58,000 58,000
SHERWIN WILLIAMS CO 38,700 38,700 819,956 819,956
TELLABS INC 400 400 27,375 27,375
TEMPLE INLAND INC 1,000 24,700 25,700 42,000 1,037,400 1,079,400
TERADYNE INC 62,400 62,400 4,586,400 4,586,400
TEXACO INC 13,800 13,800 734,850 734,850
TEXAS INSTRUMENTS INC 900 78,400 79,300 61,819 5,385,100 5,446,919
TEXTRON INC 2,600 2,600 141,213 141,213
TOSCO CORP 800 800 22,650 22,650
TYCO INT'L LTD 3,600 3,600 170,550 170,550
UNITED TECHNOLOGIES CORP 7,700 170,500 178,200 453,338 10,038,187 10,491,525
USG CORP NEW 63,300 63,300 1,922,738 1,922,738
UST INC 4,200 4,200 61,688 61,688
USX-MARATHON GROUP 34,300 4,800 39,100 859,644 120,300 979,944
VISTEON CORP 75 33,288 33,363 909 403,611 404,520
WEATHERFORD INTERNATIONAL 164,800 164,800 6,561,100 6,561,100
</TABLE>
<PAGE> 122
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY
LIBERTY ALL-STAR LIBERTY
ALL-STAR LIBERTY LIBERTY GROWTH & GROWTH &
LIBERTY GROWTH & GROWTH & VALUE INCOME INCOME PRO FORMA
VALUE INCOME INCOME PRO FORMA FUND FUND FUND COMBINED
FUND FUND FUND COMBINED MARKET MARKET MARKET MARKET
SHARES SHARES SHARES SHARES VALUE VALUE VALUE VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCKS
WESTVACO CORP 268,600 268,600 6,664,638 6,664,638
WEYERHAEUSER CO 50,800 50,800 2,184,400 2,184,400
WHIRLPOOL CORP 85,100 85,100 3,967,788 3,967,788
XEROX CORP 34,400 34,400 713,800 713,800
---------- ---------- ----------- -----------
27,627,400 11,268,551 559,572,362 598,468,313
---------- ---------- ----------- -----------
Mining & Energy
ANADARKO PETROLEUM 19,100 19,100 941,869 941,869
APACHE CORP 2,800 2,800 164,675 164,675
BURLINGTON RESOURCES INC 7,500 76,000 83,500 286,875 2,907,000 3,193,875
COFLEXIP-SPONSORED ADR 23,270 23,270 1,407,835 1,407,835
CONOCO INC-CL B 5,800 5,800 142,463 142,463
CONOCO INC-CL A 6,450 6,450 141,900 141,900
DEVON ENERGY CORPORATION 2,708 2,708 152,156 152,156
DIAMOND OFFSHORE DRILLING 18,000 195,800 213,800 632,250 6,877,475 7,509,725
FALCON DRILLING COMPANY INC 521,800 521,800 12,294,913 12,294,913
GLOBAL MARINE INC 1,100 1,100 31,006 31,006
OCCIDENTAL PETROLEUM 7,700 7,700 162,181 162,181
PETROLEUM GEO SERVICES ADR 239,100 239,100 4,079,644 4,079,644
SCHLUMBERGER LTD 161,900 161,900 12,081,788 12,081,788
TRANSOCEAN SEDCO FOREX INC 31,343 31,343 1,674,892 1,674,892
---------- ---------- ----------- -----------
1,574,119 1,081,256 41,323,545 43,978,920
---------- ---------- ----------- -----------
Retail Trade
ALBERTSONS INC 27,500 27,500 914,375 914,375
BEST BUY INC 128,500 128,500 8,127,625 8,127,625
CIRCUIT CITY STORES INC 600 100,700 101,300 19,913 3,341,981 3,361,894
COSTCO WHOLESALE CORP 2,550 2,550 84,150 84,150
CVS CORP 159,200 159,200 6,368,000 6,368,000
DARDEN RESTAURANTS INC 206,000 206,000 3,347,500 3,347,500
FEDERATED DEPT STORES INC NEW 10,700 4,500 15,200 361,125 151,875 513,000
HARCOURT GENERAL INC 4,725 4,725 256,922 256,922
HOME DEPOT INC 4,600 69,150 73,750 229,713 3,453,178 3,682,891
LIMITED INC 6,000 6,000 129,750 129,750
MAY DEPARTMENT STORES CO 5,214 5,214 125,136 125,136
MCDONALDS CORP 18,700 5,112 23,812 615,931 168,377 784,308
NORDSTROM INC 23,100 23,100 557,288 557,288
RADIOSHACK CORP 93,700 93,700 4,439,038 4,439,038
SAFEWAY INC 2,400 2,400 108,300 108,300
TARGET CORP 600 61,400 62,000 34,800 3,561,200 3,596,000
TIFFANY & CO 1,300 1,300 87,750 87,750
TJX COMPANIES, INC 1,400 1,400 26,250 26,250
WAL-MART STORES INC 3,150 150,700 153,850 181,519 8,684,088 8,865,606
---------- ---------- ----------- -----------
2,448,719 1,604,453 41,322,609 45,375,781
---------- ---------- ----------- -----------
</TABLE>
<PAGE> 123
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY
LIBERTY ALL-STAR LIBERTY
ALL-STAR LIBERTY LIBERTY GROWTH & GROWTH &
LIBERTY GROWTH & GROWTH & VALUE INCOME INCOME PRO FORMA
VALUE INCOME INCOME PRO FORMA FUND FUND FUND COMBINED
FUND FUND FUND COMBINED MARKET MARKET MARKET MARKET
SHARES SHARES SHARES SHARES VALUE VALUE VALUE VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCKS
Services
ADOBE SYSTEMS INC 73,500 73,500 9,555,000 9,555,000
AMERICA ONLINE INC 1,200 113,000 114,200 63,300 5,960,750 6,024,050
AUTOMATIC DATA PROCESSING INC 105,600 105,600 5,656,200 5,656,200
CENDANT CORP 2,100 2,100 29,400 29,400
CHECK POINT SOFTWARE TECH 5,700 5,700 1,206,975 1,206,975
CITRIX SYS INC 500 500 9,469 9,469
COMPUTER ASSOCIATES INT'L INC 11,423 11,423 584,715 584,715
DUN & BRADSTREET CORP 214,800 214,800 6,148,650 6,148,650
ELECTRONIC DATA SYSTEMS CORP 900 900 37,125 37,125
FIRST DATA CORP 19,100 129,600 148,700 947,838 6,431,400 7,379,238
GENENTECH INC 800 800 137,600 137,600
HARRAH'S ENTERTAINMENT INC 88,500 88,500 1,852,969 1,852,969
MANPOWER 128,600 128,600 4,115,200 4,115,200
MICROSOFT CORP 4,250 158,700 162,950 340,000 12,696,000 13,036,000
NETWORK APPLIANCE INC 15,400 15,400 1,239,700 1,239,700
NEWS CORP LTD-SPONS ADR PRF 4,548 4,548 216,030 216,030
ORACLE CORP 600 148,400 149,000 50,438 12,474,875 12,525,313
PARAMETRIC TECHNOLOGY CORP 6,400 6,400 70,400 70,400
PAYCHEX INC 6,150 6,150 258,300 258,300
PIXAR INC 2,200 2,200 77,550 77,550
SENSORMATIC ELECTRONICS CORP 1,600 1,600 25,300 25,300
SIEBEL SYSTEMS INC 2,650 2,650 433,441 433,441
SUN MICROSYSTEMS INC 1,600 123,800 125,400 145,500 11,258,063 11,403,563
SYNOPSYS INC 1,900 1,900 65,669 65,669
TIME WARNER INC 2,200 16,400 18,600 167,200 1,246,400 1,413,600
USA NETWORKS INC 101,500 101,500 2,194,938 2,194,938
WALT DISNEY PRODUCTIONS 20,300 3,600 155,500 179,400 787,894 139,725 6,035,344 6,962,963
--------- --------- ---------- ----------
1,735,731 2,851,160 88,072,463 92,659,354
--------- --------- ---------- ----------
Transportation, Communications, Electric, Gas and Sanitary Services
A T & T CORP 26,600 4,100 348,100 378,800 841,225 129,663 11,008,663 11,979,550
ALLEGIANCE TELECOM INC 250 250 16,000 16,000
AMFM INC 3,500 3,500 241,500 241,500
AMR CORP 4,000 4,000 105,750 105,750
AT & T WIRELESS CORP 178,200 178,200 4,967,325 4,967,325
AT&T CORP-LIBERTY MEDIA A 3,600 3,600 87,300 87,300
BELL ATLANTIC CORP 2,400 122,600 125,000 121,950 6,229,613 6,351,563
BELLSOUTH CORP 147,300 147,300 6,278,663 6,278,663
BURLINGTON NORTH SANTA FE CORP 6,647 6,647 152,466 152,466
CABLEVISION SYSTEMS CL-A 1,200 1,200 81,450 81,450
CARNIVAL CORP-CL A 4,200 4,200 81,900 81,900
CHRIS-CRAFT INDUSTRIES INC 61,800 61,800 4,082,663 4,082,663
COLUMBIA ENERGY GROUP 700 700 45,938 45,938
COMCAST CORP-SPECIAL CL A 500 46,500 47,000 20,250 1,883,250 1,903,500
COX COMMUNICATIONS INC-CL A 2,150 2,150 97,959 97,959
CSX CORP 2,500 2,500 52,969 52,969
</TABLE>
<PAGE> 124
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY
LIBERTY ALL-STAR LIBERTY
ALL-STAR LIBERTY LIBERTY GROWTH & GROWTH &
LIBERTY GROWTH & GROWTH & VALUE INCOME INCOME PRO FORMA
VALUE INCOME INCOME PRO FORMA FUND FUND FUND COMBINED
FUND FUND FUND COMBINED MARKET MARKET MARKET MARKET
SHARES SHARES SHARES SHARES VALUE VALUE VALUE VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCKS
DELTA AIR LINES INC 3,000 79,600 82,600 151,688 4,024,775 4,176,463
DTE ENERGY CO 800 800 24,450 24,450
DUKE ENERGY 60,100 60,100 3,388,138 3,388,138
DYNEGY INC 400 400 27,325 27,325
EDISON INTERNATIONAL 235,700 235,700 4,831,850 4,831,850
EL PASO ENERGY CORP 6,200 6,200 315,813 315,813
ENTERGY CORP 18,600 252,400 271,000 505,688 6,862,125 7,367,813
FLORIDA PROGRESS CORP 2,000 2,000 93,750 93,750
GLOBAL CROSSING LTD 1,000 1,000 26,313 26,313
GTE CORP 2,950 201,400 204,350 183,638 12,537,150 12,720,788
KANSAS CITY SOUTHN
INDS INC 3,750 3,750 332,578 332,578
LEVEL 3 COMMUNICATIONS 250 250 22,000 22,000
P G & E CORP 10,700 900 116,000 127,600 263,488 22,163 2,856,500 3,142,150
PECO ENERGY CO 4,100 4,100 165,281 165,281
PMC-SIERRA INC 16,800 16,800 2,985,150 2,985,150
QWEST COMMUNICATIONS
INTL 500 500 24,844 24,844
RELIANT ENERGY INC 5,400 5,400 159,638 159,638
RF MICRO DEVICES INC 47,400 47,400 4,153,425 4,153,425
SBC COMMUNICATIONS INC 9,959 409,400 419,359 430,727 17,706,550 18,137,277
SOUTHERN CO 24,800 24,800 578,150 578,150
SOUTHWEST AIRLINES CO 8,650 8,650 163,809 163,809
SPRINT CORP (FON GROUP) 3,253 189,200 192,453 165,903 9,649,200 9,815,103
SPRINT CORP PCS 500 500 29,750 29,750
TELEPHONE & DATA 24,300 24,300 2,436,075 2,436,075
TIDEWATER INC 14,900 14,900 536,400 536,400
TXU CORP 164,500 164,500 4,852,750 4,852,750
UAL INC 56,000 56,000 3,258,500 3,258,500
UNICOM CORPORATION 160,400 160,400 6,205,475 6,205,475
UNION PACIFIC CORP 11,300 1,400 137,900 150,600 420,219 52,063 5,128,156 5,600,438
UNITED PARCEL SERVICE-
CL B 2,300 2,300 135,700 135,700
US CELLULAR CORP 29,700 29,700 1,871,100 1,871,100
WASTE MANAGEMENT INC 1,200 1,200 22,800 22,800
WILLIAMS COMPANIES INC 1,900 1,900 79,206 79,206
WORLDCOM INC 16,600 5,200 21,800 761,526 238,550 1,000,076
----------- ----------- -------------- --------------
3,906,695 4,103,080 127,197,094 135,206,868
----------- ----------- -------------- --------------
Wholesale Trade
SYSCO CORP 182,600 182,600 7,692,025 7,692,025
-------------- --------------
Total Common Stocks 43,856,620 26,532,356 1,099,613,570 1,170,002,546
----------- ----------- -------------- --------------
CASH EQUIVALENTS Par Par Par Par
WARBURG REPURCHASE
AGREEMENT
6.60% 7/3/2000 $ 1,567,000 $ 972,000 $ 25,932,000 28,471,000 1,567,000 972,000 25,932,000 28,471,000
----------- ----------- -------------- --------------
TOTAL INVESTMENTS (COST OF $43,810,733, $25,098,509, $976,414,426
AND $1,045,323,668, RESPECTIVELY) $45,423,620 $27,504,356 $1,125,545,570 $1,198,473,546
=========== =========== ============== ==============
</TABLE>
<PAGE> 125
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY
LIBERTY ALL-STAR LIBERTY
ALL-STAR LIBERTY LIBERTY GROWTH & GROWTH &
LIBERTY GROWTH & GROWTH & VALUE INCOME INCOME PRO FORMA
VALUE INCOME INCOME PRO FORMA FUND FUND FUND COMBINED
FUND FUND FUND COMBINED MARKET MARKET MARKET MARKET
SHARES SHARES SHARES SHARES VALUE VALUE VALUE VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCKS
</TABLE>
No adjustments are shown to the unaudited pro forma combined portfolio of
investments due to the fact that upon consummation of the Acquisitions, no
securities would need to be sold in order for the Acquiring Fund to comply with
its Prospectus and SEC and IRS guidelines and restrictions. However, the
foregoing sentence shall not be deemed to restrict in any way the ability of the
investment advisor of any of the funds from buying or selling securities in the
normal course of such Fund's business and operations.
<PAGE> 126
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINING CONDENSED STATEMENT OF ASSETS AND LIABILITIES
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Liberty
Liberty Growth & Income
Liberty Liberty All-Star Growth & Income Fund
Value Growth & Income Fund Pro Forma Pro Forma
Fund Fund (Acquring Fund) Adjustments Combined
<S> <C> <C> <C> <C> <C>
Investments, at value $45,423,620 $27,504,356 $1,125,545,570 $ -- $1,198,473,546
Cash 342 4,096 176 -- 4,614
Receivable for investments sold -- -- -- -- --
Payable for investments purchased -- -- -- -- --
Other assets less other liabilities 18,463 621 35,737,174 (68,764)(a) 35,687,494
Net assets $45,442,425 $27,509,073 $1,161,282,920 $ (68,764) $1,234,165,654
Class A:
Net assets $10,441,098 $ 4,299,897 $ 309,356,714 (14,633) $ 324,083,076
Shares outstanding 920,529 368,742 15,017,711 (578,395) $ 15,732,602
Net asset value $ 11.34 $ 11.66 $ 20.60 $ 20.60
Class B:
Net assets $19,380,181 $16,346,839 $ 822,643,366 (38,446) $ 858,331,940
Shares outstanding 1,714,187 1,415,688 41,382,562 (1,346,712) $ 43,177,853
Net asset value $ 11.31 $ 11.55 $ 19.88 $ 19.88
Class C:
Net assets $ 1,934,018 $ 4,524,072 $ 29,281,763 (5,629) $ 35,734,224
Shares outstanding 171,022 391,868 1,465,147 (240,874) $ 1,788,003
Net asset value $ 11.31 $ 11.54 $ 19.99 $ 19.99
Class Z:
Net assets $13,687,128 $ 2,338,265 $ 1,077 (10,056) $ 16,016,414
Shares outstanding 1,206,557 199,907 52 (633,337) $ 773,309
Net asset value $ 11.34 $ 11.70 $ 20.71 $ 20.71
</TABLE>
(a) Adjustment reflects one time proxy, accounting, legal and other costs of
the reorganization of $26,420, $24,684 and $17,660 to be borne by Liberty
Value Fund, Liberty All Star Growth & Income Fund and Liberty Growth &
Income Fund, respectively. These costs reflect each fund's share of the
total costs of the reorganization that will be shared between Liberty
Financial and the Funds, subject to the terms of each Agreement and Plan of
Reorganization, as follows:
<TABLE>
<CAPTION>
Liberty Financial Fund
----------------- ----
<S> <C> <C>
Liberty Value Fund 50% 50%
Liberty All-Star Growth & Income Fund 50% 50%
Liberty Growth & Income Fund 75% 25%
</TABLE>
The Funds will bear their full portion of the one time costs of the
reorganization only if the expense reduction experienced as a result of the
Acquisition in the first year after Acquisition Date exceeds the one time costs.
If the one time costs exceed the expense reduction, the Fund will only bear the
share of its portion up to the amount of the expense reduction.
<PAGE> 127
PRO FORMA COMBINING CONDENSED STATEMENT OF OPERATIONS FOR THE TWELVE
MONTH PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
LIBERTY ALL-STAR
LIBERTY VALUE GROWTH & LIBERTY GROWTH & PRO FORMA PRO FORMA
FUND INCOME INCOME FUND ADJUSTMENTS COMBINED
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends 852,965 268,398 15,573,131 -- 16,694,494
Interest 46,028 37,185 1,966,931 -- 2,050,144
---------- ---------- ------------ ------------- ------------
Total investment income 898,993 305,583 17,540,062 -- 18,744,638
EXPENSES
Management fee 356,825 132,571 9,452,952 (89,206) (a) 9,853,142
Administration fee -- 44,190 -- (44,190) (a) --
Service fee - Class A, B, C 80,902 49,748 3,099,842 -- (a) 3,230,492
Distribution fee - Class B 144,648 95,935 6,593,089 -- (a) 6,833,672
Distribution fee - Class C 11,951 27,559 244,861 -- (a) 284,371
Transfer agent fee 94,869 46,431 2,728,605 (265,280) (d) 2,604,625
Bookkeeping fee 27,000 27,000 420,040 (37,326) (a) 436,714
Trustees fee 7,463 12,950 56,473 (29,552) (b) 47,334
All other expenses 129,672 221,950 1,052,407 (463,029) (c) 941,000
---------- ---------- ------------ ------------- ------------
Total operating expenses 853,330 658,334 23,648,269 (928,583) 24,231,350
---------- ---------- ------------ ------------- ------------
Expense reimbursement (281,305) (208,902) -- 490,207 (a) --
---------- ---------- ------------ ------------- ------------
Net Expenses 572,025 449,432 23,648,269 (438,376) 24,231,350
NET INVESTMENT INCOME (LOSS) 326,968 (143,849) (6,108,207) 438,376 (5,486,712)
NET REALIZED & UNREALIZED GAIN (LOSS)
Net realized gain (loss) on investments (5,244,334) (118,211) 183,532,200 -- 178,169,654
Change in net unrealized appreciation/
depreciation during the period
on investments (1,924,598) 1,816,980 (170,105,574) -- (170,213,191)
---------- ---------- ------------ ------------- ------------
Net Gain (Loss) (7,168,932) 1,698,769 13,426,626 -- 7,956,463
---------- ---------- ------------ ------------- ------------
Increase (Decrease) in Net Assets from
Operations (6,841,963) 1,554,920 7,318,419 438,376 2,469,751
</TABLE>
(a) Based on the contract in effect for the surviving fund.
(b) Based on trustee compensation plan for the surviving fund.
(c) Decrease due to the elimination of duplicative expenses achieved by merging
the funds.
(d) Based on the contract in effect for the surviving fund. Note that a new
transfer agent fee structure was implemented for the Growth & Income Fund
effective January 1, 2000. The pro forma combined transfer agent fee shown
assumes this new agreement was in effect for the entire twelve-month period
ended June 30, 2000.
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 2000
1. These financial statements set forth the unaudited pro forma condensed
statement of assets and liabilities, including the portfolio of investments, as
of June 30, 2000, and the unaudited pro forma condensed statement of operations
for the twelve month period ended June 30, 2000 for Liberty Value Fund, Liberty
All-Star Growth & Income Fund and Liberty Growth & Income Fund as adjusted
giving effect to the Acquisition as if it had occurred as of the beginning of
the period. These statements have been derived from the books and records
utilized in calculating daily net asset value for each fund.
<PAGE> 128
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY ALL-STAR LIBERTY GROWTH &
INCOME PORTFOLIO LIBERTY VALUE FUND GROWTH & INCOME INCOME FUND PRO FORMA
SHARES SHARES FUND SHARES SHARES COMBINED SHARES
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
Agriculture, Forestry & Fishing
CANADIAN NATL RAILWAY CO 133,100 133,100
Construction
HALLIBURTON CO 2,975 2,975
Finance, Insurance & Real Estate
ABN AMRO HOLDING NV ADR 3,286 3,286
ACE LIMITED 10,950 81,700 92,650
AETNA INC 10,900 10,900
AFLAC INC 4,271 4,271
ALLMERICA FINANCIAL CORP 3,375 3,375
AMBAC FINANCIAL GROUP INC 1,300 40,500 41,800
AMER INTERNATIONAL GROUP INC 1,100 132,275 133,375
AMERICAN EXPRESS CO 240,000 144,000 384,000
AON CORP 33,200 33,200
ASTORIA FINANCIAL CORP 600 600
AXA FINANICAL INC 4,300 140,500 144,800
BANK OF AMERICA CORP 67,896 700 231,234 299,830
BANK ONE 31,000 4,100 35,100
BEAR STEARNS COMPANIES INC 30,173 30,173
C.I.T. GROUP INC-A 2,000 2,000
CAPITAL ONE FINANCIAL CORP 1,000 72,100 73,100
CHASE MANHATTAN CORP (NEW) 193,200 3,250 186,450 382,900
CIGNA CORP 2,275 2,275
CINCINNATI FINANCIAL CORP 188,300 188,300
CITIGROUP INC 244,810 8,490 523,300 776,600
CITY NATIONAL CORP 119,500 119,500
COUNTRYWIDE CREDIT INDUSTRIES 10,593 10,593
FANNIE MAE 161,000 400 163,400 324,800
FIRST UNION CORP 2,800 2,800
FIRSTAR CORP 18,000 18,000
FLEET BOSTON FINANCIAL CORP 16,100 4,000 348,600 368,700
FREDDIE MAC 19,500 9,096 108,300 136,896
GOLDEN STATE BANCORP 171,300 171,300
GOLDEN WEST FINANCIAL CORP 89,100 89,100
GOLDMAN SACHS GROUP INC 500 500
HCA-THE HEALTHCARE CORP 346,100 346,100
HOUSEHOLD INTERNATIONAL INC 83,300 83,300
J P MORGAN & CO INC 55,100 55,100
KEYCORP 1,200 1,200
KIMCO REALTY CORP 1,700 1,700
KNIGHT TRADING GROUP INC 59,800 59,800
LEHMAN BROTHERS HLDG INC 100,900 100,900
LOEWS CORP 42,000 42,000
MBNA CORP 210,300 210,300
METLIFE INC 1,700 1,700
MGIC INV CORP 123,000 123,000
MORGAN STANLEY DEAN WITTER 1,900 165,900 167,800
NATIONWIDE FINANCIAL SERV A 228,700 228,700
PACIFIC CENTURY FINL CORP 145,500 145,500
PMI GROUP INC 131,100 131,100
PNC FINANCIAL SERVICES GROUP 3,350 104,900 108,250
PROGRESSIVE CORP OHIO 4,900 4,900
PROVIDIAN FINANCIAL CORP 2,650 30,100 32,750
SCHWAB (CHARLES) CORP 7,950 7,950
SOVEREIGN BANCORP INC 505,200 505,200
</TABLE>
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY VALUE LIBERTY ALL-STAR LIBERTY GROWTH &
INCOME PORTFOLIO FUND MARKET GROWTH & INCOME INCOME FUND PRO FORMA COMBINED
MARKET VALUE VALUE FUND MARKET VALUE MARKET VALUE MARKET VALUE
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
Agriculture, Forestry & Fishing
CANADIAN NATL RAILWAY CO $ 3,884,856 $ 3,884,856
---------------- -----------------
Construction
HALLIBURTON CO $ 140,383 140,383
--------------- -----------------
Finance, Insurance & Real Estate
ABN AMRO HOLDING NV ADR 80,712 80,712
ACE LIMITED 306,600 2,287,600 2,594,200
AETNA INC $ 699,644 699,644
AFLAC INC 196,199 196,199
ALLMERICA FINANCIAL CORP 176,766 176,766
AMBAC FINANCIAL GROUP INC 71,256 2,219,906 2,291,163
AMER INTERNATIONAL GROUP INC 129,250 15,542,313 15,671,563
AMERICAN EXPRESS CO $ 12,510,000 7,506,000 20,016,000
AON CORP 1,031,275 1,031,275
ASTORIA FINANCIAL CORP 15,450 15,450
AXA FINANICAL INC 146,200 4,777,000 4,923,200
BANK OF AMERICA CORP 2,919,528 30,100 9,943,062 12,892,690
BANK ONE 823,438 108,906 932,344
BEAR STEARNS COMPANIES INC 1,255,951 1,255,951
C.I.T. GROUP INC-A 32,500 32,500
CAPITAL ONE FINANCIAL CORP 44,625 3,217,463 3,262,088
CHASE MANHATTAN CORP (NEW) 8,899,275 149,703 8,588,353 17,637,331
CIGNA CORP 212,713 212,713
CINCINNATI FINANCIAL CORP 5,919,681 5,919,681
CITIGROUP INC 14,749,803 511,523 31,528,825 46,790,150
CITY NATIONAL CORP 4,242,250 4,242,250
COUNTRYWIDE CREDIT INDUSTRIES 321,100 321,100
FANNIE MAE 8,402,188 20,875 8,527,438 16,950,500
FIRST UNION CORP 69,475 69,475
FIRSTAR CORP 379,125 379,125
FLEET BOSTON FINANCIAL CORP 547,400 136,000 11,852,400 12,535,800
FREDDIE MAC 789,750 368,388 4,386,150 5,544,288
GOLDEN STATE BANCORP 3,083,400 3,083,400
GOLDEN WEST FINANCIAL CORP 3,636,394 3,636,394
GOLDMAN SACHS GROUP INC 47,438 47,438
HCA-THE HEALTHCARE CORP 10,512,788 10,512,788
HOUSEHOLD INTERNATIONAL INC 3,462,156 3,462,156
J P MORGAN & CO INC 6,067,888 6,067,888
KEYCORP 21,150 21,150
KIMCO REALTY CORP 69,700 69,700
KNIGHT TRADING GROUP INC 1,782,788 1,782,788
LEHMAN BROTHERS HLDG INC 9,541,356 9,541,356
LOEWS CORP 2,520,000 2,520,000
MBNA CORP 5,704,388 5,704,388
METLIFE INC 35,806 35,806
MGIC INV CORP 5,596,500 5,596,500
MORGAN STANLEY DEAN WITTER 158,175 13,811,175 13,969,350
NATIONWIDE FINANCIAL SERV A 7,518,513 7,518,513
PACIFIC CENTURY FINL CORP 2,127,938 2,127,938
PMI GROUP INC 6,227,250 6,227,250
PNC FINANCIAL SERVICES GROUP 157,031 4,917,188 5,074,219
PROGRESSIVE CORP OHIO 362,600 362,600
PROVIDIAN FINANCIAL CORP 238,500 2,709,000 2,947,500
SCHWAB (CHARLES) CORP 267,319 267,319
SOVEREIGN BANCORP INC 3,552,188 3,552,188
</TABLE>
<PAGE> 129
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY ALL-STAR LIBERTY GROWTH &
INCOME PORTFOLIO LIBERTY VALUE FUND GROWTH & INCOME INCOME FUND PRO FORMA
SHARES SHARES FUND SHARES SHARES COMBINED SHARES
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
STARWOOD HOTELS & RESORTS WOR 2,600 2,600
TRIZEC HAHN CORP 8,400 8,400
U.S. BANCORP 3,000 3,000
UNIONBANCAL CORPORATION 155,100 155,100
UNITED HEALTHCARE CORP 5,900 126,700 132,600
VORNADO REALTY TRUST 1,500 1,500
WASHINGTON MUTUAL INC 23,100 2,000 25,100
WELLPOINT HEALTH NETWORKS 2,100 2,100
WELLS FARGO & CO 156,660 4,193 57,800 218,653
XL CAPITAL LTD-CLASS A 20,700 4,090 24,790
ZIONS BANCORPORATION 1,300 1,300
Manufacturing
3COM CORPORATION 1,100 1,100
ABBOTT LABS 31,600 31,600
ADC TELECOMMUNICATIONS INC 81,500 81,500
AGILENT TECHNOLOGIES INC 1,200 28,986 30,186
ALCAN ALUMINUM LTD 5,000 5,000
ALCOA INC 7,560 111,400 118,960
ALLEGHENY TECHNOLOGIES INC 1,200 1,200
ALZA CORP 1,500 1,500
AMERADA HESS CORP 17,000 17,000
AMERICAN HOME PRODUCTS CORP 600 600
AMGEN INC 3,250 80,800 84,050
ANALOG DEVICES INC 82,900 82,900
ANHEUSER BUSCH INC 2,100 162,600 164,700
APPLE COMPUTER INC 49,600 49,600
APPLIED MATLS 80,000 2,900 129,200 212,100
APPLIED MICRO CIRCUITS CORP 11,600 11,600
ATMEL CORP 116,900 116,900
AVENTIS-SPON ADR 1,100 1,100
AVON PRODUCTS INC 40,000 9,184 49,184
BAKER HUGHES INC 800 800
BAUSCH & LOMB INC 125,200 125,200
BAXTER INTERNATIONAL INC 95,000 4,400 99,400
BECKMAN COULTER INC 29,100 29,100
BESTFOODS 21,800 1,100 190,600 213,500
BIOGEN INC 3,050 3,050
BIOMET INC 127,000 127,000
BOEING CO 99,600 25,700 3,793 332,800 461,893
BOSTON SCIENTIFIC CORP 19,700 19,700
BP AMOCO PLC-ADR 242,810 150,000 392,810
BRISTOL-MYERS SQUIBB CO 150,000 3,200 166,200 319,400
BRUNSWICK CORP 227,400 227,400
CATERPILLAR INC 3,755 3,755
CHEVRON CORP 6,300 119,200 125,500
CISCO SYSTEMS INC 90,000 7,400 456,200 553,600
CLOROX CO 500 500
COCA COLA CO 700 19,700 20,400
COMPAQ COMPUTER CORP 195,000 18,100 7,000 220,100
COMVERSE TECH 32,200 32,200
COOPER INDUSTRIES INC 700 700
CORNING INCORPORATED 21,100 21,100
DEERE & CO 9,500 9,500
DELL COMPUTER CORPORATION 8,900 8,900
DELPHI AUTOMOTIVE SYSTEMS 41,282 253,600 294,882
DIAGEO PLC ADR 5,193 5,193
DOVER CORP 3,793 3,793
</TABLE>
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY VALUE LIBERTY ALL-STAR LIBERTY GROWTH &
INCOME PORTFOLIO FUND MARKET GROWTH & INCOME INCOME FUND PRO FORMA COMBINED
MARKET VALUE VALUE FUND MARKET VALUE MARKET VALUE MARKET VALUE
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
STARWOOD HOTELS & RESORTS WOR 84,013 84,013
TRIZEC HAHN CORP 150,150 150,150
U.S. BANCORP 57,750 57,750
UNIONBANCAL CORPORATION 2,879,044 2,879,044
UNITED HEALTHCARE CORP 505,925 10,864,525 11,370,450
VORNADO REALTY TRUST 52,125 52,125
WASHINGTON MUTUAL INC 667,013 57,750 724,763
WELLPOINT HEALTH NETWORKS 152,119 152,119
WELLS FARGO & CO 6,070,575 162,479 2,239,750 8,472,804
XL CAPITAL LTD-CLASS A 1,120,388 221,371 1,341,759
ZIONS BANCORPORATION 59,658 59,658
---------------- ------------- --------------- ---------------- -----------------
53,551,368 6,563,956 5,483,474 230,548,616 296,147,414
---------------- ------------- --------------- ---------------- -----------------
Manufacturing
3COM CORPORATION 63,388 63,388
ABBOTT LABS 1,408,175 1,408,175
ADC TELECOMMUNICATIONS INC 6,835,813 6,835,813
AGILENT TECHNOLOGIES INC 88,500 2,137,718 2,226,218
ALCAN ALUMINUM LTD 155,000 155,000
ALCOA INC 219,240 3,230,600 3,449,840
ALLEGHENY TECHNOLOGIES INC 21,600 21,600
ALZA CORP 88,688 88,688
AMERADA HESS CORP 1,049,750 1,049,750
AMERICAN HOME PRODUCTS CORP 35,250 35,250
AMGEN INC 228,313 5,676,200 5,904,513
ANALOG DEVICES INC 6,300,400 6,300,400
ANHEUSER BUSCH INC 156,844 12,144,188 12,301,031
APPLE COMPUTER INC 2,597,800 2,597,800
APPLIED MATLS 7,250,000 262,813 11,708,750 19,221,563
APPLIED MICRO CIRCUITS CORP 1,145,500 1,145,500
ATMEL CORP 4,310,688 4,310,688
AVENTIS-SPON ADR 79,819 79,819
AVON PRODUCTS INC 1,780,000 408,688 2,188,688
BAKER HUGHES INC 25,600 25,600
BAUSCH & LOMB INC 9,687,350 9,687,350
BAXTER INTERNATIONAL INC 6,679,688 309,375 6,989,063
BECKMAN COULTER INC 1,698,713 1,698,713
BESTFOODS 1,509,650 76,175 13,199,050 14,784,875
BIOGEN INC 196,725 196,725
BIOMET INC 4,881,563 4,881,563
BOEING CO 4,164,525 1,074,581 158,595 13,915,200 19,312,901
BOSTON SCIENTIFIC CORP 432,169 432,169
BP AMOCO PLC-ADR 13,733,940 8,484,375 22,218,315
BRISTOL-MYERS SQUIBB CO 8,737,500 186,400 9,681,150 18,605,050
BRUNSWICK CORP 3,766,313 3,766,313
CATERPILLAR INC 127,201 127,201
CHEVRON CORP 534,319 10,109,650 10,643,969
CISCO SYSTEMS INC 5,720,625 470,363 28,997,213 35,188,200
CLOROX CO 22,406 22,406
COCA COLA CO 40,206 1,131,519 1,171,725
COMPAQ COMPUTER CORP 4,984,688 462,681 178,938 5,626,306
COMVERSE TECH 2,994,600 2,994,600
COOPER INDUSTRIES INC 22,794 22,794
CORNING INCORPORATED 5,694,363 5,694,363
DEERE & CO 351,500 351,500
DELL COMPUTER CORPORATION 438,881 438,881
DELPHI AUTOMOTIVE SYSTEMS 601,169 3,693,050 4,294,219
DIAGEO PLC ADR 184,676 184,676
DOVER CORP 153,854 153,854
</TABLE>
<PAGE> 130
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY ALL-STAR LIBERTY GROWTH &
INCOME PORTFOLIO LIBERTY VALUE FUND GROWTH & INCOME INCOME FUND PRO FORMA
SHARES SHARES FUND SHARES SHARES COMBINED SHARES
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
DOW CHEMICAL CO 350,500 350,500
EASTMAN KODAK CO 15,000 15,000
ECOLAB INC 250,000 250,000
EI DUPONT DE NEMOURS & CO INC 29,179 2,900 60,200 92,279
ELI LILLY & CO 1,000 114,500 115,500
EMC CORP 1,000 108,400 109,400
EMERSON ELECTRIC CO 50,000 15,400 3,306 68,706
EXXON MOBIL CORPORATION 3,916 365,165 369,081
FMC CORP 43,200 43,200
FORD MOTOR CO 600 266,300 266,900
GATEWAY INC 51,000 51,000
GENERAL ELECTRIC CO 234,000 2,700 640,500 877,200
GENERAL MILLS INC 16,500 16,500
GEORGIA PACIFIC (TIMBER GRP) 75,000 75,000
GEORGIA PACIFIC CORP 170,000 20,300 190,300
GILLETTE CO 134,400 4,350 138,750
GRANT PRIDECO INC 164,800 164,800
H J HEINZ CO 1,400 1,400
HEWLETT-PACKARD CO 1,600 90,400 92,000
HONEYWELL INTERNATIONAL INC 152,500 900 77,437 230,837
HUBBELL INC CL B 70,400 70,400
ILLINOIS TOOL WORKS INC 2,800 2,800
INGERSOLL RAND CO 15,900 2,525 18,425
INTEL CORP 40,000 5,450 232,800 278,250
INTERNATIONAL GAME TECH 61,300 61,300
INTERNATIONAL PAPER CO 180,700 180,700
INTL BUSINESS MACHINES CORP 105,000 1,720 130,800 237,520
INTUIT INC 1,700 1,700
JDS UNIPHASE CORP 1,050 1,050
JOHNSON & JOHNSON 69,900 69,900
JOHNSON CONTROLS INC 81,500 81,500
KIMBERLY CLARK CORP 13,200 3,400 66,000 82,600
LEAR CORP 140,000 2,800 142,800
LITTLEFUSE INC 35,000 35,000
LOCKHEED MARTIN CORP 422,400 422,400
LSI LOGIC CORP 53,200 53,200
LUCENT TECHNOLOGIES INC 2,800 42,800 45,600
LYONDELL PETRO 211,300 211,300
MATTEL INC 56,800 56,800
MAXIM INTEGRATED PRODUCTS INC 4,550 4,550
MEDTRONIC INC 2,400 2,400
MERCK & CO INC 14,300 155,800 170,100
MICROCHIP TECHNOLOGY 115,800 115,800
MINNESOTA MINING & MFG CO 9,600 4,142 130,300 144,042
MOTOROLA INC 45,000 12,900 1,560 59,460
MYLAN LABORATORIES, INC 238,600 238,600
NABISCO HOLDINGS CORP 16,800 16,800
NEWS CORP LTD ADR 1,400 1,400
NIKE INC CL B 25,100 25,100
NOKIA CORP ADR 4,500 112,400 116,900
NORTEL NETWORKS CORP 700 700
PACCAR INC 137,100 137,100
PE CORP-PE BIOSYSTEMS GROUP 300 300
PEPSI BOTTLING GROUP 324,800 324,800
PEPSICO INC 22,000 262,800 284,800
PFIZER INC 316,250 7,025 388,675 711,950
PHARMACIA CORPORATION 149,500 8,796 158,296
PHILIP MORRIS CO INC 203,000 48,600 2,800 280,400 534,800
PRAXAIR INC 15,000 15,000
PROCTER & GAMBLE CO 81,000 20,500 1,850 157,300 260,650
QUAKER OATS CO 121,000 121,000
</TABLE>
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY VALUE LIBERTY ALL-STAR LIBERTY GROWTH &
INCOME PORTFOLIO FUND MARKET GROWTH & INCOME INCOME FUND PRO FORMA COMBINED
MARKET VALUE VALUE FUND MARKET VALUE MARKET VALUE MARKET VALUE
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
DOW CHEMICAL CO 10,580,719 10,580,719
EASTMAN KODAK CO 892,500 892,500
ECOLAB INC 9,765,625 9,765,625
EI DUPONT DE NEMOURS & CO INC 1,276,581 126,875 2,633,750 4,037,206
ELI LILLY & CO 99,875 11,435,688 11,535,563
EMC CORP 76,938 8,340,025 8,416,963
EMERSON ELECTRIC CO 3,018,750 929,775 199,600 4,148,125
EXXON MOBIL CORPORATION 307,406 28,665,453 28,972,859
FMC CORP 2,505,600 2,505,600
FORD MOTOR CO 25,800 11,450,900 11,476,700
GATEWAY INC 2,894,250 2,894,250
GENERAL ELECTRIC CO 12,402,000 143,100 33,946,500 46,491,600
GENERAL MILLS INC 631,125 631,125
GEORGIA PACIFIC (TIMBER GRP) 1,621,875 1,621,875
GEORGIA PACIFIC CORP 4,462,500 532,875 4,995,375
GILLETTE CO 4,695,600 151,978 4,847,578
GRANT PRIDECO INC 4,120,000 4,120,000
H J HEINZ CO 61,250 61,250
HEWLETT-PACKARD CO 199,800 11,288,700 11,488,500
HONEYWELL INTERNATIONAL INC 5,137,344 30,319 2,608,659 7,776,321
HUBBELL INC CL B 1,795,200 1,795,200
ILLINOIS TOOL WORKS INC 159,600 159,600
INGERSOLL RAND CO 639,975 101,631 741,606
INTEL CORP 5,347,500 728,597 31,122,450 37,198,547
INTERNATIONAL GAME TECH 1,624,450 1,624,450
INTERNATIONAL PAPER CO 5,387,119 5,387,119
INTL BUSINESS MACHINES CORP 11,504,063 188,448 14,330,775 26,023,285
INTUIT INC 70,338 70,338
JDS UNIPHASE CORP 125,869 125,869
JOHNSON & JOHNSON 7,121,063 7,121,063
JOHNSON CONTROLS INC 4,181,969 4,181,969
KIMBERLY CLARK CORP 757,350 195,075 3,786,750 4,739,175
LEAR CORP 2,800,000 56,000 2,856,000
LITTLEFUSE INC 1,715,000 1,715,000
LOCKHEED MARTIN CORP 10,480,800 10,480,800
LSI LOGIC CORP 2,879,450 2,879,450
LUCENT TECHNOLOGIES INC 165,900 2,535,900 2,701,800
LYONDELL PETRO 3,539,275 3,539,275
MATTEL INC 749,050 749,050
MAXIM INTEGRATED PRODUCTS INC 309,116 309,116
MEDTRONIC INC 119,550 119,550
MERCK & CO INC 1,095,738 11,938,175 13,033,913
MICROCHIP TECHNOLOGY 6,747,159 6,747,159
MINNESOTA MINING & MFG CO 792,000 341,715 10,749,750 11,883,465
MOTOROLA INC 1,307,813 374,906 45,338 1,728,056
MYLAN LABORATORIES, INC 4,354,450 4,354,450
NABISCO HOLDINGS CORP 882,000 882,000
NEWS CORP LTD ADR 76,300 76,300
NIKE INC CL B 999,294 999,294
NOKIA CORP ADR 224,719 5,612,975 5,837,694
NORTEL NETWORKS CORP 47,775 47,775
PACCAR INC 5,441,156 5,441,156
PE CORP-PE BIOSYSTEMS GROUP 19,763 19,763
PEPSI BOTTLING GROUP 9,480,100 9,480,100
PEPSICO INC 977,625 11,678,175 12,655,800
PFIZER INC 15,180,000 337,200 18,656,400 34,173,600
PHARMACIA CORPORATION 7,727,281 454,643 8,181,925
PHILIP MORRIS CO INC 5,392,188 1,290,938 74,375 7,448,125 14,205,625
PRAXAIR INC 561,563 561,563
PROCTER & GAMBLE CO 4,637,250 1,173,625 105,913 9,005,425 14,922,213
QUAKER OATS CO 9,090,125 9,090,125
</TABLE>
<PAGE> 131
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY ALL-STAR LIBERTY GROWTH &
INCOME PORTFOLIO LIBERTY VALUE FUND GROWTH & INCOME INCOME FUND PRO FORMA
SHARES SHARES FUND SHARES SHARES COMBINED SHARES
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
ROHM & HAAS CO 1,900 1,900
ROYAL DUTCH PETRO-NY SHARES 17,600 700 254,300 272,600
SABRE HOLDINGS CORP 36,132 4,230 40,362
SARA LEE CORP 144,000 72,100 6,300 222,400
SCHERING-PLOUGH CORP 24,100 1,100 86,400 111,600
SEAGATE TECHNOLOGY INC 600 600
SEAGRAMS CO. LTD. 1,000 1,000
SHERWIN WILLIAMS CO 38,700 38,700
TELLABS INC 400 400
TEMPLE INLAND INC 1,000 24,700 25,700
TERADYNE INC 62,400 62,400
TEXACO INC 13,800 13,800
TEXAS INSTRUMENTS INC 900 78,400 79,300
TEXTRON INC 2,600 2,600
TOSCO CORP 800 800
TRIBUNE CO 100,000 100,000
TYCO INT'L LTD 3,600 3,600
UNION CARBIDE CORP 111,100 111,100
UNITED TECHNOLOGIES CORP 7,700 170,500 178,200
USG CORP NEW 63,300 63,300
UST INC 4,200 4,200
USX-MARATHON GROUP 34,300 4,800 39,100
VISTEON CORP 75 33,288 33,363
WEATHERFORD INTERNATIONAL 164,800 164,800
WESTVACO CORP 268,600 268,600
WEYERHAEUSER CO 50,800 50,800
WHIRLPOOL CORP 85,100 85,100
XEROX CORP 34,400 34,400
MINING & ENERGY
ANADARKO PETROLEUM 19,100 19,100
APACHE CORP 2,800 2,800
BURLINGTON RESOURCES INC 7,500 76,000 83,500
COFLEXIP-SPONSORED ADR 23,270 23,270
CONOCO INC -CL B 61,421 5,800 67,221
CONOCO INC-CL A 104,800 6,450 111,250
DEVON ENERGY CORPORATION 2,708 2,708
DIAMOND OFFSHORE DRILLING 18,000 195,800 213,800
ENRON CORP 115,000 115,000
FALCON DRILLING COMPANY INC 521,800 521,800
GLOBAL MARINE INC 1,100 1,100
OCCIDENTAL PETROLEUM 7,700 7,700
PETROLEUM GEO SERVICES ADR 239,100 239,100
SCHLUMBERGER LTD 161,900 161,900
TRANSOCEAN SEDCO FOREX INC 31,343 31,343
RETAIL TRADE
ALBERTSONS INC 27,500 27,500
BEST BUY INC 128,500 128,500
CIRCUIT CITY STORES INC 600 100,700 101,300
COSTCO WHOLESALE CORP 2,550 2,550
CVS CORP 159,200 159,200
DARDEN RESTAURANTS INC 206,000 206,000
FEDERATED DEPT STORES INC NEW 80,000 10,700 4,500 95,200
HARCOURT GENERAL INC 4,725 4,725
</TABLE>
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY VALUE LIBERTY ALL-STAR LIBERTY GROWTH &
INCOME PORTFOLIO FUND MARKET GROWTH & INCOME INCOME FUND PRO FORMA COMBINED
MARKET VALUE VALUE FUND MARKET VALUE MARKET VALUE MARKET VALUE
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
ROHM & HAAS CO 65,550 65,550
ROYAL DUTCH PETRO-NY SHARES 1,083,500 43,094 15,655,344 16,781,938
SABRE HOLDINGS CORP 1,029,762 120,555 1,150,317
SARA LEE CORP 2,781,000 1,392,431 121,669 4,295,100
SCHERING-PLOUGH CORP 1,217,050 55,550 4,363,200 5,635,800
SEAGATE TECHNOLOGY INC 33,000 33,000
SEAGRAMS CO. LTD. 58,000 58,000
SHERWIN WILLIAMS CO 819,956 819,956
TELLABS INC 27,375 27,375
TEMPLE INLAND INC 42,000 1,037,400 1,079,400
TERADYNE INC 4,586,400 4,586,400
TEXACO INC 734,850 734,850
TEXAS INSTRUMENTS INC 61,819 5,385,100 5,446,919
TEXTRON INC 141,213 141,213
TOSCO CORP 22,650 22,650
TRIBUNE CO 3,500,000 3,500,000
TYCO INT'L LTD 170,550 170,550
UNION CARBIDE CORP 5,499,450 5,499,450
UNITED TECHNOLOGIES CORP 453,338 10,038,188 10,491,525
USG CORP NEW 1,922,738 1,922,738
UST INC 61,688 61,688
USX-MARATHON GROUP 859,644 120,300 979,944
VISTEON CORP 909 403,611 404,520
WEATHERFORD INTERNATIONAL 6,561,100 6,561,100
WESTVACO CORP 6,664,638 6,664,638
WEYERHAEUSER CO 2,184,400 2,184,400
WHIRLPOOL CORP 3,967,788 3,967,788
XEROX CORP 713,800 713,800
---------------- ------------- --------------- ---------------- -----------------
170,529,308 27,627,400 11,268,551 559,572,362 768,997,621
---------------- ------------- --------------- ---------------- -----------------
MINING & ENERGY
ANADARKO PETROLEUM 941,869 941,869
APACHE CORP 164,675 164,675
BURLINGTON RESOURCES INC 286,875 2,907,000 3,193,875
COFLEXIP-SPONSORED ADR 1,407,835 1,407,835
CONOCO INC -CL B 1,508,653 142,463 1,651,116
CONOCO INC-CL A 2,305,600 141,900 2,447,500
DEVON ENERGY CORPORATION 152,156 152,156
DIAMOND OFFSHORE DRILLING 632,250 6,877,475 7,509,725
ENRON CORP 7,417,500 7,417,500
FALCON DRILLING COMPANY INC 12,294,913 12,294,913
GLOBAL MARINE INC 31,006 31,006
OCCIDENTAL PETROLEUM 162,181 162,181
PETROLEUM GEO SERVICES ADR 4,079,644 4,079,644
SCHLUMBERGER LTD 12,081,788 12,081,788
TRANSOCEAN SEDCO FOREX INC 1,674,892 1,674,892
---------------- ------------- --------------- ---------------- -----------------
11,231,753 1,574,119 1,081,256 41,323,545 55,210,673
---------------- ------------- --------------- ---------------- -----------------
RETAIL TRADE
ALBERTSONS INC 914,375 914,375
BEST BUY INC 8,127,625 8,127,625
CIRCUIT CITY STORES INC 19,913 3,341,981 3,361,894
COSTCO WHOLESALE CORP 84,150 84,150
CVS CORP 6,368,000 6,368,000
DARDEN RESTAURANTS INC 3,347,500 3,347,500
FEDERATED DEPT STORES INC NEW 2,700,000 361,125 151,875 3,213,000
HARCOURT GENERAL INC 256,922 256,922
</TABLE>
<PAGE> 132
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY ALL-STAR LIBERTY GROWTH &
INCOME PORTFOLIO LIBERTY VALUE FUND GROWTH & INCOME INCOME FUND PRO FORMA
SHARES SHARES FUND SHARES SHARES COMBINED SHARES
<S> <C> <C> <C> <C> <C>
Common Stocks
HOME DEPOT INC 4,600 69,150 73,750
LIMITED INC 6,000 6,000
MAY DEPARTMENT STORES CO 5,214 5,214
MCDONALDS CORP 18,700 5,112 23,812
NORDSTROM INC 23,100 23,100
RADIOSHACK CORP 93,700 93,700
SAFEWAY INC 2,400 2,400
TARGET CORP 600 61,400 62,000
TIFFANY & CO 1,300 1,300
TJX COMPANIES, INC 252,800 1,400 254,200
WALGREEN CO 280,000 280,000
WAL-MART STORES INC 150,000 3,150 150,700 303,850
Services
ADOBE SYSTEMS INC 73,500 73,500
AMERICA ONLINE INC 1,200 113,000 114,200
AUTOMATIC DATA PROCESSING INC 105,600 105,600
CENDANT CORP 2,100 2,100
CHECK POINT SOFTWARE TECH 5,700 5,700
CITRIX SYS INC 500 500
COMPUTER ASSOCIATES INT'L INC 11,423 11,423
DUN & BRADSTREET CORP 214,800 214,800
ELECTRONIC DATA SYSTEMS CORP 900 900
FIRST DATA CORP 19,100 129,600 148,700
GENENTECH INC 800 800
HARRAH'S ENTERTAINMENT INC 88,500 88,500
HERTZ CORP-CL A 60,000 60,000
INTERPUBLIC GROUP COS INC 121,200 121,200
MANPOWER 128,600 128,600
MICROSOFT CORP 4,250 158,700 162,950
NETWORK APPLIANCE INC 15,400 15,400
NEWS CORP LTD-SPONS ADR PRF 4,548 4,548
ORACLE CORP 600 148,400 149,000
PARAMETRIC TECHNOLOGY CORP 6,400 6,400
PAYCHEX INC 6,150 6,150
PIXAR INC 2,200 2,200
SENSORMATIC ELECTRONICS CORP 1,600 1,600
SIEBEL SYSTEMS INC 2,650 2,650
SUN MICROSYSTEMS INC 1,600 123,800 125,400
SYNOPSYS INC 1,900 1,900
TIME WARNER INC 2,200 16,400 18,600
USA NETWORKS INC 101,500 101,500
WALT DISNEY PRODUCTIONS 20,300 3,600 155,500 179,400
Transportation, Communications,
Electric, Gas and Sanitary
Services
A T & T CORP 65,333 26,600 4,100 348,100 444,133
ALLEGIANCE TELECOM INC 250 250
AMFM INC 3,500 3,500
AMR CORP 50,000 4,000 54,000
AT & T WIRELESS CORP 178,200 178,200
AT&T CORP-LIBERTY MEDIA A 3,600 3,600
BELL ATLANTIC CORP 190,320 2,400 122,600 315,320
BELLSOUTH CORP 147,300 147,300
BURLINGTON NORTH SANTA FE CORP 200,000 6,647 206,647
CABLEVISION SYSTEMS CL-A 1,200 1,200
</TABLE>
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY VALUE LIBERTY ALL-STAR LIBERTY GROWTH &
INCOME PORTFOLIO FUND MARKET GROWTH & INCOME INCOME FUND PRO FORMA COMBINED
MARKET VALUE VALUE FUND MARKET VALUE MARKET VALUE MARKET VALUE
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
HOME DEPOT INC 229,713 3,453,178 3,682,891
LIMITED INC 129,750 129,750
MAY DEPARTMENT STORES CO 125,136 125,136
MCDONALDS CORP 615,931 168,377 784,308
NORDSTROM INC 557,288 557,288
RADIOSHACK CORP 4,439,038 4,439,038
SAFEWAY INC 108,300 108,300
TARGET CORP 34,800 3,561,200 3,596,000
TIFFANY & CO 87,750 87,750
TJX COMPANIES, INC 4,740,000 26,250 4,766,250
WALGREEN CO 9,012,500 9,012,500
WAL-MART STORES INC 8,643,750 181,519 8,684,088 17,509,356
---------------- ------------- --------------- ---------------- -----------------
25,096,250 2,448,719 1,604,453 41,322,609 70,472,031
---------------- ------------- --------------- ---------------- -----------------
Services
ADOBE SYSTEMS INC 9,555,000 9,555,000
AMERICA ONLINE INC 63,300 5,960,750 6,024,050
AUTOMATIC DATA PROCESSING INC 5,656,200 5,656,200
CENDANT CORP 29,400 29,400
CHECK POINT SOFTWARE TECH 1,206,975 1,206,975
CITRIX SYS INC 9,469 9,469
COMPUTER ASSOCIATES INT'L INC 584,715 584,715
DUN & BRADSTREET CORP 6,148,650 6,148,650
ELECTRONIC DATA SYSTEMS CORP 37,125 37,125
FIRST DATA CORP 947,838 6,431,400 7,379,238
GENENTECH INC 137,600 137,600
HARRAH'S ENTERTAINMENT INC 1,852,969 1,852,969
HERTZ CORP-CL A 1,683,750 1,683,750
INTERPUBLIC GROUP COS INC 5,211,600 5,211,600
MANPOWER 4,115,200 4,115,200
MICROSOFT CORP 340,000 12,696,000 13,036,000
NETWORK APPLIANCE INC 1,239,700 1,239,700
NEWS CORP LTD-SPONS ADR PRF 216,030 216,030
ORACLE CORP 50,438 12,474,875 12,525,313
PARAMETRIC TECHNOLOGY CORP 70,400 70,400
PAYCHEX INC 258,300 258,300
PIXAR INC 77,550 77,550
SENSORMATIC ELECTRONICS CORP 25,300 25,300
SIEBEL SYSTEMS INC 433,441 433,441
SUN MICROSYSTEMS INC 145,500 11,258,063 11,403,563
SYNOPSYS INC 65,669 65,669
TIME WARNER INC 167,200 1,246,400 1,413,600
USA NETWORKS INC 2,194,938 2,194,938
WALT DISNEY PRODUCTIONS 787,894 139,725 6,035,344 6,962,963
---------------- ------------- --------------- ---------------- -----------------
6,895,350 1,735,731 2,851,160 88,072,463 99,554,704
---------------- ------------- --------------- ---------------- -----------------
Transportation, Communications,
Electric, Gas and Sanitary
Services
A T & T CORP 2,066,156 841,225 129,663 11,008,663 14,045,706
ALLEGIANCE TELECOM INC 16,000 16,000
AMFM INC 241,500 241,500
AMR CORP 1,321,875 105,750 1,427,625
AT & T WIRELESS CORP 4,967,325 4,967,325
AT&T CORP-LIBERTY MEDIA A 87,300 87,300
BELL ATLANTIC CORP 9,670,635 121,950 6,229,613 16,022,198
BELLSOUTH CORP 6,278,663 6,278,663
BURLINGTON NORTH SANTA FE CORP 4,587,500 152,466 4,739,966
CABLEVISION SYSTEMS CL-A 81,450 81,450
</TABLE>
<PAGE> 133
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY ALL-STAR LIBERTY GROWTH &
INCOME PORTFOLIO LIBERTY VALUE FUND GROWTH & INCOME INCOME FUND PRO FORMA
SHARES SHARES FUND SHARES SHARES COMBINED SHARES
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
CARNIVAL CORP-CL A 4,200 4,200
CHRIS-CRAFT INDUSTRIES INC 61,800 61,800
COLUMBIA ENERGY GROUP 700 700
COMCAST CORP-SPECIAL CL A 30,000 500 46,500 77,000
CONTINENTAL AIRLINES CL B 160,000 160,000
COX COMMUNICATIONS INC-CL A 2,150 2,150
CSX CORP 2,500 2,500
DELTA AIR LINES INC 3,000 79,600 82,600
DTE ENERGY CO 800 800
DUKE ENERGY 60,100 60,100
DYNEGY INC 400 400
EDISON INTERNATIONAL 235,700 235,700
EL PASO ENERGY CORP 6,200 6,200
ENTERGY CORP 18,600 252,400 271,000
FLORIDA PROGRESS CORP 2,000 2,000
GLOBAL CROSSING LTD 1,000 1,000
GTE CORP 2,950 201,400 204,350
KANSAS CITY SOUTHN INDS INC 131,900 3,750 135,650
LEVEL 3 COMMUNICATIONS 250 250
P G & E CORP 10,700 900 116,000 127,600
PECO ENERGY CO 4,100 4,100
PMC-SIERRA INC 16,800 16,800
QWEST COMMUNICATIONS INTL 500 500
RELIANT ENERGY INC 5,400 5,400
RF MICRO DEVICES INC 47,400 47,400
SBC COMMUNICATIONS INC 9,959 409,400 419,359
SOUTHERN CO 24,800 24,800
SOUTHWEST AIRLINES CO 8,650 8,650
SPRINT CORP (FON GROUP) 3,253 189,200 192,453
SPRINT CORP PCS 500 500
TELEPHONE & DATA 24,300 24,300
TIDEWATER INC 14,900 14,900
TXU CORP 164,500 164,500
UAL INC 56,000 56,000
UNICOM CORPORATION 160,400 160,400
UNION PACIFIC CORP 11,300 1,400 137,900 150,600
UNITED PARCEL SERVICE-CL B 2,300 2,300
US CELLULAR CORP 29,700 29,700
WASTE MANAGEMENT INC 1,200 1,200
WILLIAMS COMPANIES INC 1,900 1,900
WORLDCOM INC 16,600 5,200 21,800
Wholesale Trade
SYSCO CORP 182,600 182,600
Total Common Stocks
CASH EQUIVALENTS Par Par Par Par Par
ASSOCIATES FIRST CAPITAL
0.00% 7/3/2000 $ 2,130,000 $ 2,130,000
WARBURG REPURCHASE AGREEMENT
6.60% 7/3/2000 $ 1,567,000 $ 972,000 $ 25,932,000 28,471,000
Total Cash Equivalents
TOTAL INVESTMENTS (COST OF
$157,157,695, $43,810,733,
$25,098,509, $976,414,426
AND $1,202,481,363,
RESPECTIVELY)
</TABLE>
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY VALUE LIBERTY ALL-STAR LIBERTY GROWTH &
INCOME PORTFOLIO FUND MARKET GROWTH & INCOME INCOME FUND PRO FORMA COMBINED
MARKET VALUE VALUE FUND MARKET VALUE MARKET VALUE MARKET VALUE
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
CARNIVAL CORP-CL A 81,900 81,900
CHRIS-CRAFT INDUSTRIES INC 4,082,663 4,082,663
COLUMBIA ENERGY GROUP 45,938 45,938
COMCAST CORP-SPECIAL CL A 1,215,000 20,250 1,883,250 3,118,500
CONTINENTAL AIRLINES CL B 7,520,000 7,520,000
COX COMMUNICATIONS INC-CL A 97,959 97,959
CSX CORP 52,969 52,969
DELTA AIR LINES INC 151,688 4,024,775 4,176,463
DTE ENERGY CO 24,450 24,450
DUKE ENERGY 3,388,138 3,388,138
DYNEGY INC 27,325 27,325
EDISON INTERNATIONAL 4,831,850 4,831,850
EL PASO ENERGY CORP 315,813 315,813
ENTERGY CORP 505,688 6,862,125 7,367,813
FLORIDA PROGRESS CORP 93,750 93,750
GLOBAL CROSSING LTD 26,313 26,313
GTE CORP 183,638 12,537,150 12,720,788
KANSAS CITY SOUTHN INDS INC 11,697,881 332,578 12,030,459
LEVEL 3 COMMUNICATIONS 22,000 22,000
P G & E CORP 263,488 22,163 2,856,500 3,142,150
PECO ENERGY CO 165,281 165,281
PMC-SIERRA INC 2,985,150 2,985,150
QWEST COMMUNICATIONS INTL 24,844 24,844
RELIANT ENERGY INC 159,638 159,638
RF MICRO DEVICES INC 4,153,425 4,153,425
SBC COMMUNICATIONS INC 430,727 17,706,550 18,137,277
SOUTHERN CO 578,150 578,150
SOUTHWEST AIRLINES CO 163,809 163,809
SPRINT CORP (FON GROUP) 165,903 9,649,200 9,815,103
SPRINT CORP PCS 29,750 29,750
TELEPHONE & DATA 2,436,075 2,436,075
TIDEWATER INC 536,400 536,400
TXU CORP 4,852,750 4,852,750
UAL INC 3,258,500 3,258,500
UNICOM CORPORATION 6,205,475 6,205,475
UNION PACIFIC CORP 420,219 52,063 5,128,156 5,600,438
UNITED PARCEL SERVICE-CL B 135,700 135,700
US CELLULAR CORP 1,871,100 1,871,100
WASTE MANAGEMENT INC 22,800 22,800
WILLIAMS COMPANIES INC 79,206 79,206
WORLDCOM INC 761,526 238,550 1,000,076
---------------- ------------- --------------- ---------------- -----------------
38,079,047 3,906,695 4,103,080 127,197,094 173,285,916
---------------- ------------- --------------- ---------------- -----------------
Wholesale Trade
SYSCO CORP 7,692,025 7,692,025
---------------- -----------------
Total Common Stocks 305,383,077 43,856,620 26,532,356 1,099,613,570 1,475,385,624
---------------- ------------- --------------- ---------------- -----------------
CASH EQUIVALENTS
ASSOCIATES FIRST CAPITAL
0.00% 7/3/2000 2,129,178 2,129,178
WARBURG REPURCHASE AGREEMENT
6.60% 7/3/2000 1,567,000 972,000 25,932,000 28,471,000
---------------- ------------- --------------- ---------------- -----------------
Total Cash Equivalents 2,129,178 1,567,000 972,000 25,932,000 30,600,178
---------------- ------------- --------------- ---------------- -----------------
TOTAL INVESTMENTS (COST OF
$157,157,695, $43,810,733,
$25,098,509, $976,414,426
AND $1,202,481,363,
RESPECTIVELY) $ 307,512,255 $ 45,423,620 $ 27,504,356 $1,125,545,570 $ 1,505,985,801
================ ============= =============== ================ =================
</TABLE>
<PAGE> 134
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY ALL-STAR LIBERTY GROWTH &
INCOME PORTFOLIO LIBERTY VALUE FUND GROWTH & INCOME INCOME FUND PRO FORMA
SHARES SHARES FUND SHARES SHARES COMBINED SHARES
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
</TABLE>
<TABLE>
<CAPTION>
SR&F GROWTH & LIBERTY VALUE LIBERTY ALL-STAR LIBERTY GROWTH &
INCOME PORTFOLIO FUND MARKET GROWTH & INCOME INCOME FUND PRO FORMA COMBINED
MARKET VALUE VALUE FUND MARKET VALUE MARKET VALUE MARKET VALUE
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
</TABLE>
No adjustments are shown to the unaudited pro forma combined portfolio of
investments due to the fact that upon consummation of the Acquisitions, no
securities would need to be sold in order for the Acquiring Fund to comply with
its Prospectus and SEC and IRS guidelines and restrictions. However, the
foregoing sentence shall not be deemed to restrict in any way the ability of the
investment advisor of any of the funds from buying or selling securities in the
normal course of such Fund's business and operations.
<PAGE> 135
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINING CONDENSED STATEMENT OF ASSETS AND LIABILITIES
AS OF JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SR&F Liberty Liberty
Growth & Income Value Opportunities Value
Portfolio Fund Fund
<S> <C> <C> <C>
Investments, at value $ 307,512,255 $ 308,179,637 $45,423,620
Cash 3,884 - 342
Receivable for investments sold - - -
Payable for investments purchased - - -
Other assets less other liabilities 837,077 (351,328) 18,463
Net assets $ 308,353,216 $ 307,828,309 $45,442,425
Class A:
Net assets $ 259,166 $10,441,098
Shares outstanding 9,814 920,529
Net asset value $ 26.41 $ 11.34
Class B:
Net assets $ 1,269,238 $19,380,181
Shares outstanding 48,240 1,714,187
Net asset value $ 26.31 $ 11.31
Class C:
Net assets $ 75,057 $1,934,018
Shares outstanding 2,853 171,022
Net asset value $ 26.31 $ 11.31
Class Z:
Net assets $ 1,004 $13,687,128
Shares outstanding 38 1,206,557
Net asset value $ 26.42 $ 11.34
Class S:
Net assets $ 306,223,844
Shares outstanding 11,601,266
Net asset value $ 26.40
</TABLE>
<TABLE>
<CAPTION>
Liberty
Liberty Growth & Income
Liberty All-Star Growth & Income Fund
Growth & Income Fund Pro Forma Pro Forma
Fund (Acquring Fund) Adjustments Combined
<S> <C> <C> <C> <C>
Investments, at value $ 27,504,356 $ 1,125,545,570 $(308,179,637) (a) $1,505,985,801
Cash 4,096 176 - 8,498
Receivable for investments sold - - - -
Payable for investments purchased - - - -
Other assets less other liabilities 621 35,737,174 (271,813) (b) 35,970,194
Net assets $ 27,509,073 $ 1,161,282,920 $(308,451,450) $1,541,964,493
Class A:
Net assets $ 4,299,897 $ 309,356,714 (14,658) $ 324,342,217
Shares outstanding 368,742 15,017,711 (571,614) $ 15,745,182
Net asset value $ 11.66 $ 20.60 $ 20.60
Class B:
Net assets $ 16,346,839 $ 822,643,366 (38,567) $ 859,601,057
Shares outstanding 1,415,688 41,382,562 (1,318,981) $ 43,241,696
Net asset value $ 11.55 $ 19.88 $ 19.88
Class C:
Net assets $ 4,524,072 $ 29,281,763 (5,636) $ 35,809,274
Shares outstanding 391,868 1,465,147 (239,131) $ 1,791,759
Net asset value $ 11.54 $ 19.99 $ 19.99
Class Z:
Net assets $ 2,338,265 $ 1,077 (10,056) $ 16,017,418
Shares outstanding 199,907 52 (633,197) $ 773,357
Net asset value $ 11.70 $ 20.71 $ 20.71
Class S:
Net assets (29,316) $ 306,194,528
Shares outstanding 3,182,500 (c) $ 14,783,766
Net asset value $ 20.71
</TABLE>
Footnotes to pro forma statement of assets and liabilities
(a)- Adjustment represents the elimination the Liberty Value Opportunities
Fund's investment in the Portfolio, as the master/feeder structure will be
dissolved, with the the securities held by the Portfolio withdrawn from
the Portfolio by the Liberty Value Opportunities Fund prior to the merger.
(b)- Adjustment reflects a payable to the general partner of the Portfolio
for its remaining net assets after withdrawal of the Liberty Value
Opportunities Fund's investment in the Portfolio of $173,579, in addition
to one time proxy, accounting, legal and other costs of the reorganization
of $29,470, $26,420, $24,684 and $17,660 to be borne by Liberty Value
Opportunities Fund, Liberty Value Fund, Liberty All-Star Growth & Income
Fund and Liberty Growth & Income Fund respectively. These costs reflect
each fund's share of the total costs of the reorganization that will be
shared between Liberty Financial and the Funds, subject to the terms of
each Agreement and Plan of Reorganization, as follows:
<TABLE>
<CAPTION>
Liberty Financial Fund
<S> <C> <C>
Liberty Value Opportunities Fund 75% 25%
Liberty Value Fund 50% 50%
Liberty All-Star Growth & Income Fund 50% 50%
Liberty Growth & Income Fund 75% 25%
</TABLE>
The Funds will bear their full portion of the one time costs of the
reorganization only if the expense reduction experienced as a result of the
Acquisition in the first year after Acquisition Date exceeds the one time costs.
If the one time costs exceed the expense reduction, the Fund will only bear the
share of its portion up to the amount of the expense reduction.
(c)- Liberty Value Opportunities Fund shares are exchanged for new Class S
shares of Liberty Growth & Income Fund, to be established upon
consummation of the merger. Initial per share value of Class S shares is
presumed to equal that of current Class Z shares.
<PAGE> 136
PRO FORMA COMBINING CONDENSED STATEMENT OF OPERATIONS FOR THE TWELVE
MONTH PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SRF GROWTH & LIBERTY VALUE LIBERTY VALUE LIBERTY ALL-STAR
INCOME PORTFOLIO OPPORTUNITIES FUND FUND GROWTH & INCOME
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends 4,456,261 4,451,174 852,965 268,398
Interest 1,058,561 1,056,847 46,028 37,185
---------------- ---------------- ------------- ----------------
Total investment income 5,514,823 5,508,021 898,993 305,583
EXPENSES
Management fee 2,190,101 - 356,825 132,571
Administration fee - 545,843 - 44,190
Service fee - Class A, B, C - 866 80,902 49,748
Distribution fee - Class A - 23 - -
Distribution fee - Class B - 2,118 144,648 95,935
Distribution fee - Class C - 130 11,951 27,559
Transfer agent fee - Class A, B, C, Z - 819 - -
Transfer agent fee - Class S - 799,640 - -
Transfer agent fee 6,000 - 94,869 46,431
Bookkeeping fee 32,875 32,847 27,000 27,000
Trustees fee 17,578 9,169 7,463 12,950
Expenses allocated
from SRF Growth & Income Portfolio - 2,271,293 - -
All other expenses 27,280 269,696 129,672 221,950
---------------- ---------------- ------------- ----------------
Total operating expenses 2,273,834 3,932,444 853,330 658,334
---------------- ---------------- ------------- ----------------
Expense reimbursement - - (281,305) (208,902)
---------------- ---------------- ------------- ----------------
Net Expenses 2,273,834 3,932,444 572,025 449,432
NET INVESTMENT INCOME (LOSS) 3,240,989 1,575,577 326,968 (143,849)
NET REALIZED & UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 32,232,665 32,215,860 (5,244,334) (118,211)
Closed futures contracts 748,773 693,167 - -
Foreign currency transactions (1,375) (749) - -
---------------- ---------------- ------------- ----------------
Net Realized Gain (Loss) 32,980,063 32,908,278 (5,244,334) (118,211)
Change in net unrealized appreciation/depreciation
during the period on investments 63,450,655 63,542,407 (1,924,598) 1,816,980
---------------- ---------------- ------------- ----------------
Net Gain (Loss) 96,430,719 96,450,685 (7,168,932) 1,698,769
---------------- ---------------- ------------- ----------------
Increase (Decrease) in Net Assets from Operations 99,671,708 98,026,261 (6,841,963) 1,554,920
</TABLE>
<TABLE>
<CAPTION>
LIBERTY GROWTH PRO FORMA PRO FORMA
& INCOME FUND ADJUSTMENTS COMBINED
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends 15,573,131 (4,456,261) (c) 21,145,668
Interest 1,966,931 (1,058,561) (c) 3,106,991
--------------- -------------- -------------
Total investment income 17,540,062 (5,514,823) 24,252,658
EXPENSES
Management fee 9,452,952 (95,934) (a) 12,036,515
Administration fee - (590,033) (a) -
Service fee - Class A, B, C 3,099,842 - (a) 3,231,358
Distribution fee - Class A - (23) (a)
Distribution fee - Class B 6,593,089 - (a) 6,835,790
Distribution fee - Class C 244,861 - (a) 284,501
Transfer agent fee - Class A, B, C, Z - (819) (a) -
Transfer agent fee - Class S - (799,640) (a) -
Transfer agent fee 2,728,605 452,873 (e) 3,328,778
Bookkeeping fee 420,040 (12,074) (a) 527,688
Trustees fee 56,473 (44,359) (b) 59,274
Expenses allocated - -
from SRF Growth & Income Portfolio - (2,271,293) (c) -
All other expenses 1,052,407 (622,005) (d) 1,079,000
--------------- -------------
Total operating expenses 23,648,269 (3,983,307) 27,382,904
--------------- -------------- -------------
Expense reimbursement - 490,207 (a) -
--------------- -------------- -------------
Net Expenses 23,648,269 (3,493,100) 27,382,904
NET INVESTMENT INCOME (LOSS) (6,108,207) 1,219,266 (3,130,246)
NET REALIZED & UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 183,532,200 (32,232,665) (c) 210,385,514
Closed futures contracts - (748,773) (c) 693,167
Foreign currency transactions - 1,375 (c) (749)
--------------- -------------
Net Realized Gain (Loss) 183,532,200 (32,980,063) 211,077,932
Change in net unrealized appreciation/depreciation
during the period on investments (170,105,574) (63,450,655) (c) (106,670,785)
--------------- -------------- -------------
Net Gain (Loss) 13,426,626 (96,430,719) 104,407,148
--------------- -------------- -------------
Increase (Decrease) in Net Assets from Operations 7,318,419 1,219,266 101,276,902
</TABLE>
(a) Based on the contract in effect for the surviving fund.
(b) Based on trustee compensation plan for the surviving fund.
(c) Decrease due to the elimination of duplicative expenses achieved by
merging the funds.
(d) Based on the contract in effect for the surviving fund. Note that a new
transfer agent fee structure was implemented for the Growth & Income
Fund effective January 1, 2000. The pro forma combined transfer agent
fee shown assumes this new agreement was in effect for the entire
twelve-month period ended June 30, 2000.
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 2000
1. These financial statements set forth the unaudited pro forma condensed
statement of assets and liabilities, including the portfolio of investments, as
of June 30, 2000, and the unaudited pro forma condensed statement of operations
for the twelve month period ended June 30, 2000 for SR&F Growth & Income
Portfolio, Liberty Value Opportunities Fund, Liberty Value Fund, Liberty
All-Star Growth & Income Fund and Liberty Growth & Income Fund as adjusted
giving effect to the Acquisition as if it had occurred as of the beginning of
the period. These statements have been derived from the books and records
utilized in calculating daily net asset value for each fund.
<PAGE> 137
[Liberty Logo] LIBERTY
LIBERTY FUNDS SERVICES, INC.
LIBERTY ALL-STAR GROWTH & INCOME FUND
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN AND, ABSENT DIRECTION, WILL BE VOTED FOR EACH ITEM
BELOW. THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE HOLDER'S BEST
JUDGEMENT AS TO ANY OTHER MATTER. THE BOARD OF TRUSTEES RECOMMENDS A
VOTE FOR THE FOLLOWING ITEMS:
1. To approve or disapprove the Agreement and Plan of Reorganization
with respect to the acquisition of Liberty All-Star Growth & Income
Fund by Liberty Growth & Income Fund (Item 3 of the Notice).
For Against Abstain
[ ] [ ] [ ]
MARK BOX AT RIGHT FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE MARK, SIGN DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE. Please sign exactly as name or names appear hereon.
Joint owners should each sign personally. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Date_________________
______________________ ________________________
Shareholder sign here Co-owner sign here
Detach Card
<PAGE> 138
[Liberty Logo] LIBERTY
Liberty Funds Services, Inc.
LIBERTY VALUE FUND
This proxy, when properly executed, will be voted in the manner
directed herein and, absent direction, will be voted FOR each Item
below. This proxy will be voted in accordance with the holder's best
judgement as to any other matter. The Board of Trustees recommends a
vote FOR the following Items:
1. To approve or disapprove the Agreement and Plan of Reorganization
with respect to the acquisition of Liberty Value Fund by Liberty Growth
& Income Fund (Item 2 of the Notice).
For Against Abstain
[ ] [ ] [ ]
2. To elect eleven Trustees (Item 5 of the Notice).
(01) Douglas A. Hacker
(02) Janet Langford Kelly
(03) Richard W. Lowry
(04) Salvatore Macera
(05) William E. Mayer
(06) Charles R. Nelson
(07) John J. Neuhauser
(08) Joseph R. Palombo
(09) Thomas E. Stitzel
(10) Thomas C. Theobald
(11) Anne-Lee Verville
For
All For All
Nominees Withheld Except
[ ] [ ] [ ]
Instruction: To withhold authority to vote for any individual
nominee(s), mark the "For All Except" box and strike a line through the
name(s) of the nominee(s). Your shares will be voted for the remaining
nominee(s).
MARK BOX AT RIGHT FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE MARK, SIGN DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE. Please sign exactly as name or names appear hereon.
Joint owners should each sign personally. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Date_________________
_________________________ ______________________
Shareholder sign here Co-owner sign here
Detach Card
<PAGE> 139
[Liberty Logo] LIBERTY
Liberty Funds Services, Inc.
LIBERTY VALUE OPPORTUNITIES FUND
This proxy, when properly executed, will be voted in the manner
directed herein and, absent direction, will be voted FOR each Item
below. This proxy will be voted in accordance with the holder's best
judgement as to any other matter. The Board of Trustees recommends a
vote FOR the following Items:
1. To approve or disapprove the Agreement and Plan of Reorganization
with respect to the acquisition of Liberty Value Opportunities Fund by
Liberty Growth & Income Fund (Item 1 of the Notice).
For Against Abstain
[ ] [ ] [ ]
2. To elect eleven Trustees (Item 4 of the Notice).
(01) Douglas A. Hacker
(02) Janet Langford Kelly
(03) Richard W. Lowry
(04) Salvatore Macera
(05) William E. Mayer
(06) Charles R. Nelson
(07) John J. Neuhauser
(08) Joseph R. Palombo
(09) Thomas E. Stitzel
(10) Thomas C. Theobald
(11) Anne-Lee Verville
For
All For All
Nominees Withheld Except
[ ] [ ] [ ]
Instruction: To withhold authority to vote for any individual
nominee(s), mark the "For All Except" box and strike a line through the
name(s) of the nominee(s). Your shares will be voted for the remaining
nominee(s).
3. To authorize the Fund to cast votes for the same nominees for
whom you voted above for the election of a Board of Trustees
of SR&F Base Trust (Item 4 of the Notice).
For Against Abstain
[ ] [ ] [ ]
MARK BOX AT RIGHT FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE MARK, SIGN DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE. Please sign exactly as name or names appear hereon.
Joint owners should each sign personally. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Date_________________
______________________ ______________________
Shareholder sign here Co-owner sign here
Detach Card
<PAGE> 140
[Liberty Logo] LIBERTY
Liberty Funds Services, Inc.
STEIN ROE GROWTH & INCOME FUND
This proxy, when properly executed, will be voted in the manner
directed herein and, absent direction, will be voted FOR each Item
below. This proxy will be voted in accordance with the holder's best
judgement as to any other matter. The Board of Trustees recommends a
vote FOR the following Items:
1. To approve or disapprove the Agreement and Plan of Reorganization
with respect to the acquisition of Stein Roe Growth & Income Fund by
Liberty Growth & Income Fund Fund (Item 1 of the Notice).
For Against Abstain
[ ] [ ] [ ]
2. To elect eleven Trustees (Item 4 of the Notice).
(01) Douglas A. Hacker
(02) Janet Langford Kelly
(03) Richard W. Lowry
(04) Salvatore Macera
(05) William E. Mayer
(06) Charles R. Nelson
(07) John J. Neuhauser
(08) Joseph R. Palombo
(09) Thomas E. Stitzel
(10) Thomas C. Theobald
(11) Anne-Lee Verville
For
All For All
Nominees Withheld Except
[ ] [ ] [ ]
Instruction: To withhold authority to vote for any individual
nominee(s), mark the "For All Except" box and strike a line through the
name(s) of the nominee(s). Your shares will be voted for the remaining
nominee(s).
2. To authorize the Fund to cast votes for the same nominees for
whom you voted above for the election of a Board of Trustees
of SR&F Base Trust (Item 4 of the Notice).
For Against Abstain
[ ] [ ] [ ]
MARK BOX AT RIGHT FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE MARK, SIGN DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE. Please sign exactly as name or names appear hereon.
Joint owners should each sign personally. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Date_________________
_________________________ ______________________
Shareholder sign here Co-owner sign here
Detach Card
<PAGE> 141
PLEASE VOTE PROMPTLY
*********************************
Your vote is important, no matter how many shares you own. Please vote
on the reverse side of this proxy card and sign in the space(s)
provided. Return your completed proxy card in the enclosed envelope
today.
You may receive additional proxies for other accounts. These are not
duplicates; you should sign and return each proxy card in order for
your votes to be counted.
This proxy is solicited on behalf of the Board of Trustees. The signers
of this proxy hereby appoint William J. Ballou, Suzan M. Barron,
Stephen E. Gibson, Russell L. Kane, Pamela A. McGrath, and Vincent P.
Pietropaolo each of them proxies of the signers, with power of
substitution to vote at the Special Meeting of Shareholders to be held
at Boston, Massachusetts, on Wednesday, December 27, 2000, and at any
adjournments, as specified herein, and in accordance with their best
judgement, on any other business that may properly come before this
meeting.
After careful review, the Board of Trustees unanimously has recommended
a vote "FOR" all matters.
<PAGE> 142
Two Convenient Ways to Vote Your Proxy
The enclosed proxy statement provides details on important issues affecting
your Stein Roe Funds. The Board of Trustees recommends that you vote for all
proposals. We are offering two additional ways to vote: by telephone or fax.
These methods may be faster and more convenient than the traditional method of
mailing back your proxy card.
If you are voting by telephone or fax, you SHOULD NOT mail your proxy card.
Vote by Telephone:
- Read the proxy statement and have your proxy card available.
- When you are ready to vote, call toll free 1-877-518-9416 between
9:00 a.m. and 11:00 p.m. EST.
- Follow the instructions provided to cast your vote. A representative
will be available to answer questions.
Vote by Fax:
- Read the proxy statement.
- Complete the enclosed proxy card.
- Fax your proxy card to 1-800-733-1885.
YOUR PROXY VOTE IS IMPORTANT!
SHM-43/622D-1000 (11/00) 00/2024
<PAGE> 143
Two Convenient Ways to Vote Your Proxy
The enclosed proxy statement provides details on important issues affecting
your Liberty Funds. The Board of Trustees recommends that you vote for all
proposals.
We are offering two additional ways to vote: by telephone or fax.
These methods may be faster and more convenient than the traditional method of
mailing back your proxy card.
If you are voting by telephone or fax, you SHOULD NOT mail your proxy card.
Vote by Telephone:
* Read the proxy statement and have your proxy card available.
* When you are ready to vote, call toll free 1-877-518-9416
between 9:00 a.m. and 11:00 p.m. EST.
* Follow the instructions provided to cast your vote. A
representative will be available to answer questions.
Vote by Fax:
* Read the proxy statement.
* Complete the enclosed proxy card.
* Fax your proxy card to 1-800-733-1885.
YOUR PROXY VOTE IS IMPORTANT!
SHM-43/623D-1000 (11/00) 00/2027
