<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 on the election of eleven
Trustees. A formal Notice of Special Meeting of Shareholders appears on the next
page, 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-60/603D-1000
<PAGE> 2
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD
DECEMBER 27, 2000
LIBERTY FUNDS TRUST II
LIBERTY NEWPORT TIGER CUB FUND CLASSES A, B AND C
STEIN ROE SMALL CAP TIGER FUND CLASS S
NOTICE IS HEREBY GIVEN that a Special Meeting of the shareholders of the
Liberty Newport Tiger Cub Fund Classes A, B and C and the Stein Roe Small Cap
Tiger Fund Class S 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. To approve an Agreement and Plan of Reorganization providing for the
sale of all of the assets of the Liberty Newport Tiger Cub Fund Class
A, B and C shares and the Stein Roe Small Cap Tiger Fund Class S shares
to, and the assumption of all of the liabilities of the Liberty Newport
Tiger Cub Fund Class A, B and C shares and the Stein Roe Small Cap
Tiger Fund Class S shares by, the Liberty Newport Asia Pacific Fund in
exchange for shares of the Liberty Newport Asia Pacific Fund and the
distribution of such shares to the shareholders of the Liberty Newport
Tiger Cub Fund Classes A, B and C and the Stein Roe Small Cap Tiger
Fund Class S in complete liquidation of the Liberty Newport Tiger Cub
Fund Classes A, B and C and the Stein Roe Small Cap Tiger Fund Class S.
2. To elect eleven Trustees.
3. To consider and act upon any other matters that properly come before
the meeting and any adjourned session of the meeting.
Shareholders of record at the close of business on September 29, 2000 are
entitled to notice of and to vote at the meeting and any adjourned session.
By order of the Board of Trustees,
William J. Ballou, Secretary
November 17, 2000
NOTICE: YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. YOU
CAN VOTE EASILY AND QUICKLY BY PHONE, BY MAIL, BY FAX (NOT AVAILABLE FOR
ALL SHAREHOLDERS; REFER TO ENCLOSED PROXY INSERT) OR IN PERSON. PLEASE
HELP YOUR FUND AVOID THE EXPENSE OF A FOLLOW-UP MAILING BY VOTING TODAY!
<PAGE> 3
COMBINED PROSPECTUS AND PROXY STATEMENT
NOVEMBER 17, 2000
ACQUISITION OF THE ASSETS AND LIABILITIES OF
LIBERTY NEWPORT TIGER CUB FUND CLASSES A, B AND C AND
STEIN ROE SMALL CAP TIGER FUND CLASS S
c/o Liberty Funds Trust II
One Financial Center
Boston, Massachusetts 02111-2621
1-800-426-3750
BY AND IN EXCHANGE FOR SHARES OF
LIBERTY NEWPORT ASIA PACIFIC FUND
c/o Liberty Funds Trust VI
One Financial Center
Boston, Massachusetts 02111-2621
1-800-426-3750
TABLE OF CONTENTS
<TABLE>
<S> <C>
QUESTIONS AND ANSWERS....................................... 3
PROPOSAL 1 -- Acquisition of the Liberty Newport Tiger Cub
Fund Classes A, B and C and the Stein Roe
Small Cap Tiger Fund Class S by the Liberty
Newport Asia Pacific Fund..................... 7
Principal Investment Risks................................ 7
Information about the Acquisition......................... 8
PROPOSAL 2 -- Election of Trustees.......................... 14
GENERAL..................................................... 17
Voting Information........................................ 17
Appendix A -- Agreement and Plan of Reorganization.......... A-1
Appendix B -- Fund Information.............................. B-1
Appendix C -- Capitalization................................ C-1
</TABLE>
This combined Prospectus/Proxy Statement contains information you should
know before voting on the proposed acquisition of the Liberty Newport Tiger Cub
Fund Class A, B and C shares and the Stein Roe Small Cap Tiger Fund Class S
shares (collectively, the "Tiger Cub Fund") by the Liberty Newport Asia Pacific
Fund (the "Asia Pacific Fund") or voting on the other proposals to be considered
at a Special Meeting of Shareholders of the Tiger Cub Fund (the "Meeting"),
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 Tiger Cub Fund by the Asia Pacific Fund (the "Acquisition").
If the Acquisition occurs, you will become a shareholder of the Asia Pacific
Fund. The Asia Pacific Fund seeks long-term growth. If the Agreement and Plan of
Reorganization is approved by the shareholders of the Tiger Cub Fund and the
Acquisition occurs, the Tiger Cub Fund will transfer all of the assets and
liabilities attributable to each class of its shares to the Asia Pacific Fund in
exchange for shares of the same class of the Asia Pacific Fund with the same
aggregate net asset value as the assets and liabilities transferred. After that
exchange, shares of each class received by the Tiger Cub Fund will be
distributed pro rata to its shareholders of the same class.
Proposal 2 in this Prospectus/Proxy Statement relates to the election of
Trustees of Liberty Funds Trust II ("Trust II"), of which the Tiger Cub Fund is
a series.
Please review the enclosed Prospectus of the Asia Pacific Fund for your
class of shares and the Annual Report of the Asia Pacific Fund. Each of these
documents is incorporated in this Prospectus/Proxy Statement
1
<PAGE> 4
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 Tiger Cub Fund dated January 1, 2000, as
supplemented on July 14, 2000, August 1, 2000 and October 5, 2000,
regarding Class A, B and C shares; and dated January 1, 2000, as revised
on May 1, 2000 and as supplemented on October 5, 2000, regarding Class S
shares.
- The Statement of Additional Information of the Tiger Cub Fund dated
January 1, 2000, as revised on April 6, 2000 and as supplemented on June
23, 2000, July 14, 2000 and August 21, 2000, regarding Class A, B and C
shares; and dated January 1, 2000, as revised on May 1, 2000 and as
supplemented on August 21, 2000, regarding Class S shares.
- The Statement of Additional Information of the Asia Pacific Fund dated
November 1, 2000.
- The Report of Independent Accountants and financial statements included
in the Annual Report to Shareholders of the Tiger Cub Fund dated August
31, 1999.
- The financial statements included in the Semi-Annual Report to
shareholders of the Tiger Cub Fund dated February 29, 2000.
- The Statement of Additional Information of the Asia Pacific Fund dated
November 17, 2000 relating to the Acquisition.
The Tiger Cub Fund has previously sent its Annual Report to its
shareholders. For a free copy of this Report or any of the documents listed
above, please call 1-800-426-3750 or write to your Fund at One Financial Center,
Boston, Massachusetts 02111-2621. You may also obtain many of these documents by
accessing our web site at www.libertyfunds.com. Our hearing impaired
shareholders may call Liberty Funds Services, Inc. at 1-800-528-6979 if you have
special TTD equipment. Text-only versions of all the Tiger Cub Fund and Asia
Pacific 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.
2
<PAGE> 5
QUESTIONS AND ANSWERS
THE FOLLOWING QUESTIONS AND ANSWERS PROVIDE AN OVERVIEW OF KEY FEATURES OF THE
ACQUISITION AND OF THE OTHER MATTERS TO BE CONSIDERED AT THE MEETING 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 Trust II are recommending in Proposal 1 that the Asia
Pacific Fund acquire the Tiger Cub Fund. This means that the Asia Pacific Fund
would acquire all of the assets and liabilities of the Tiger Cub Fund in
exchange for shares of the Asia Pacific Fund representing the aggregate net
asset value of the Tiger Cub Fund's assets and liabilities. If Proposal 1 is
approved, you will receive shares of the Asia Pacific Fund with an aggregate net
asset value equal to the aggregate net asset value of your Tiger Cub Fund shares
as of the business day before the closing of the Acquisition. The Acquisition is
currently scheduled to take place on or around January 16, 2001.
In addition, the Trustees of Trust II are recommending in Proposal 2 that you
vote in favor of eleven nominees for Trustees.
2. WHY IS THE ACQUISITION BEING PROPOSED?
The Trustees of Trust II recommend approval of the Acquisition. In reviewing the
Acquisition, the Trustees considered:
- that absent the Acquisition, Liberty Financial Companies, Inc. ("Liberty
Financial"), the indirect parent of the investment advisor to the Tiger
Cub Fund, has indicated to the Trustees that it will recommend that the
Fund be liquidated;
- that the Acquisition offers shareholders of the Tiger Cub Fund an
investment in a larger fund with somewhat similar investment goals and
strategies and with a reduction in the fees and expenses of the Fund
whether or not the Tiger Cub Fund's investment advisor discontinued its
voluntary fee waiver or expense limitation, as it plans if the
Acquisition is not approved;
- that the Tiger Cub Fund has not achieved sufficient sales growth and is
not likely to do so in the near future; and
- the expected tax-free nature of the Acquisition as opposed to other
alternatives for the Fund and for shareholders and other tax
considerations.
Please review "Reasons for the Acquisition" in Proposal 1 of this
Prospectus/Proxy Statement for a full description of the factors considered by
the Trustees.
SHAREHOLDERS OF THE TIGER CUB FUND SHOULD NOTE THAT THE ASIA PACIFIC FUND
INVESTS PRIMARILY IN STOCKS OF ANY SIZE, NOT "SMALL CAP" STOCKS LIKE THE TIGER
CUB FUND.
3. HOW DO THE MANAGEMENT FEES AND EXPENSES OF THE FUNDS COMPARE AND WHAT ARE
THEY ESTIMATED TO BE FOLLOWING THE ACQUISITION?
The following tables allow you to compare the sales charges and management fees
and expenses of the Tiger Cub Fund and the Asia Pacific Fund and to analyze the
estimated expenses that Liberty Financial, the indirect parent of each Fund's
investment advisor, expects the combined fund to bear in the first year
following the Acquisition. The shareholder fees presented below for the Asia
Pacific Fund apply both before and after giving effect to the Acquisition. 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 and
administrative costs, including pricing and custody services. The Annual Fund
Operating Expenses shown in the table below represent expenses incurred by the
Tiger Cub Fund for its last fiscal year ended August 31, 2000 and by the Asia
Pacific Fund for its last fiscal year ended June 30, 2000.
3
<PAGE> 6
SHAREHOLDER FEES(1)
(paid directly from your investment)
<TABLE>
<CAPTION>
TIGER CUB FUND ASIA PACIFIC FUND
-------------- -----------------
CLASS A CLASS B CLASS C CLASS S CLASS A CLASS B CLASS C CLASS S CLASS 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(2) 5.00 1.00 0.00 1.00(2) 5.00 1.00 0.00 0.00
-------------------------------------------------------------------------------------------------------------------
Redemption fee (%) (as a
percentage of amount
redeemed, if applicable) (3) (3) (3) (3) (3) (3) (3) (3) (3)
</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 certain Class A shares bought without an initial
sales charge that are sold within 18 months of purchase.
(3) There is a $7.50 charge for wiring sale proceeds to your bank.
ANNUAL FUND OPERATING EXPENSES
(deducted directly from Fund assets)
<TABLE>
<CAPTION>
TIGER CUB FUND ASIA PACIFIC FUND
-------------- -----------------
CLASS A CLASS B CLASS C CLASS S CLASS A CLASS B CLASS C CLASS S CLASS Z
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management and
administration fee(4)(5) (%) 1.40 1.40 1.40 1.40 1.25 1.25 1.25 1.25 1.25
---------------------------------------------------------------------------------------------------------------------------
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(4)(5)(6) (%) 1.57 1.57 1.57 1.57 1.61 1.61 1.61 1.61 1.61
---------------------------------------------------------------------------------------------------------------------------
Total annual fund operating
expenses(4)(5) (%) 3.22 3.97 3.97 2.97 3.11 3.86 3.86 2.86 2.86
</TABLE>
<TABLE>
<CAPTION>
ASIA PACIFIC FUND (PRO FORMA COMBINED)
--------------------------------------
CLASS A CLASS B CLASS C CLASS S CLASS Z
<S> <C> <C> <C> <C> <C>
Management and administration fee(7) (%) 1.25 1.25 1.25 1.25 1.25
----------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees (%) 0.25 1.00 1.00 0.00 0.00
----------------------------------------------------------------------------------------------------
Other expenses(7) (%) 0.94 0.94 0.94 0.94 0.94
----------------------------------------------------------------------------------------------------
Total annual fund operating expenses(7) (%) 2.44 3.19 3.19 2.19 2.19
</TABLE>
---------------
(4) The Tiger Cub Fund's investment advisor and administrator have voluntarily
agreed to waive advisory 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 2.00% for Class A, B, C and
S shares. As a result, for Class A, B, C and S shares, the actual management
and administration fee for each share class would be 0.43%, other expenses
for each share class would be 1.57% and total annual fund operating expenses
for Class A, B, C and S shares would be 2.25%, 3.00%, 3.00% and 2.00%,
respectively. This arrangement may be modified or terminated by the
investment advisor at any time.
(5) The Asia Pacific Fund's investment advisor and administrator have
voluntarily agreed to waive advisory 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 1.90%.
As a result, the actual management and administration fee for each share
class would be 0.29%, other expenses for each share class would be 1.61% and
total annual fund operating expenses for Class A, B, C, S and Z shares would
be 2.15%, 2.90%, 2.90%, 1.90% and 1.90%, respectively. This arrangement may
be modified or terminated by the investment advisor at any time.
(6) "Other expenses" for the Tiger Cub Fund's Class S shares and for the Asia
Pacific Fund's Class S shares are estimated based on the annual operating
expenses of the respective Funds' Class A, B and C shares.
4
<PAGE> 7
(7) The Asia Pacific Fund's investment advisor and administrator have
voluntarily agreed to waive advisory 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 1.90%.
As a result, the actual management and administration fees for each share
class would be 0.96%, other expenses for each share class would be 0.94% and
total annual fund operating expenses for Class A, B, C, S and Z shares would
be 2.15%, 2.90%, 2.90%, 1.90% and 1.90%, respectively. This arrangement may
be modified or terminated by the investment advisor at any time.
EXAMPLE EXPENSES
Example Expenses help you compare the cost of investing in the Tiger Cub Fund
and the Asia Pacific 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>
TIGER CUB FUND
Class A $881 $1,510 $2,161 $3,894
--------------------------------------------------------------------------------------------------
Class B: did not sell your shares $399 $1,210 $2,037 $4,021
sold all your shares at end of period $899 $1,510 $2,237 $4,021
--------------------------------------------------------------------------------------------------
Class C: did not sell your shares $399 $1,210 $2,037 $4,181
sold all your shares at end of period $499 $1,210 $2,037 $4,181
--------------------------------------------------------------------------------------------------
Class S $300 $ 918 $1,562 $3,290
--------------------------------------------------------------------------------------------------
ASIA PACIFIC FUND
Class A $871 $1,480 $2,111 $3,799
--------------------------------------------------------------------------------------------------
Class B: did not sell your shares $388 $1,178 $1,986 $3,926
sold all your shares at end of period $888 $1,478 $2,186 $3,926
--------------------------------------------------------------------------------------------------
Class C: did not sell your shares $388 $1,178 $1,986 $4,087
sold all your shares at end of period $488 $1,178 $1,986 $4,087
--------------------------------------------------------------------------------------------------
Class S $289 $ 886 $1,508 $3,185
--------------------------------------------------------------------------------------------------
Class Z $289 $ 886 $1,508 $3,185
--------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
ASIA PACIFIC FUND (pro forma combined)
Class A $808 $1,292 $1,801 $3,192
--------------------------------------------------------------------------------------------------
Class B: did not sell your shares $322 $ 983 $1,669 $3,322
sold all your shares at end of period $822 $1,283 $1,869 $3,322
--------------------------------------------------------------------------------------------------
Class C: did not sell your shares $322 $ 983 $1,669 $3,494
sold all your shares at end of period $422 $ 983 $1,669 $3,494
--------------------------------------------------------------------------------------------------
Class S $222 $ 685 $1,175 $2,524
--------------------------------------------------------------------------------------------------
Class Z $222 $ 685 $1,175 $2,524
</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 Tiger Cub
Fund are eliminated; and (3) expense ratios are based on pro forma combined
average net assets for the year ended June 30, 2000.
4. HOW DO THE INVESTMENT GOALS, STRATEGIES AND POLICIES OF THE TIGER CUB FUND
AND THE ASIA PACIFIC FUND COMPARE?
This table shows the investment goal and primary investment strategies of each
Fund:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
TIGER CUB FUND ASIA PACIFIC FUND
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT GOAL: The Tiger Cub Fund seeks capital INVESTMENT GOAL: The Asia Pacific Fund seeks
appreciation. long-term growth.
-----------------------------------------------------------------------------------------------------------
PRIMARY INVESTMENT STRATEGIES: The Tiger Cub Fund PRIMARY INVESTMENT STRATEGIES: The Asia Pacific
seeks to achieve its goal as follows: Fund seeks to achieve its goal as follows:
- The Fund invests primarily in stocks of - The Fund invests at least 80% of its total
companies located in the ten Tiger countries of assets in stocks of companies whose principal
Asia. activities are in Asia or the Pacific Basin with
a significant portion in Japan and Hong Kong.
- The Fund generally purchases stocks of
well-established smaller cap companies with - The Fund invests in stocks of companies of any
histories of consistent earnings growth in size, whose earnings the advisor believes are in
industries with attractive or improving a strong growth trend or are undervalued.
prospects.
- The Fund invests at least 65% of its total
assets in small cap companies (defined as stocks
with market caps under $2.8 billion at the time
of purchase).
- The Fund invests up to 35% of its total assets
in large cap companies.
-----------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
The following compares the primary investment strategies that each Fund uses to
achieve its investment goal:
- The Tiger Cub Fund invests primarily (at least 65% of Fund assets) in
stocks of smaller capitalization companies, while the Asia Pacific Fund
invests in stocks of companies of any size.
- While both Funds invest primarily in companies located in Asia (and, in
the case of the Asia Pacific Fund, the Pacific Basin), the Asia Pacific
Fund invests a significant portion of its assets in companies located in
Japan and Hong Kong.
The fundamental and non-fundamental investment policies of the Tiger Cub Fund
and the Asia Pacific Fund are substantially similar except that the Asia Pacific
Fund is a non-diversified fund, while the Tiger Cub Fund is diversified. As a
non-diversified mutual fund, the Asia Pacific Fund is allowed to invest a
greater percentage of its total assets in the securities of a single issuer.
This may concentrate risk and, therefore, you may be subject to an increased
risk of loss compared to a similar diversified mutual fund by becoming a
shareholder of the Asia Pacific Fund.
5. WHAT CLASS OF SHARES WILL YOU RECEIVE IN THE ASIA PACIFIC FUND IF THE
ACQUISITION OCCURS?
You will receive the same class of shares of the Asia Pacific Fund that you
currently own in the Tiger Cub 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 ACQUISITION?
The 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 Tiger Cub
Fund or its shareholders as a result of the Acquisition.
The cost basis and holding period of your Tiger Cub Fund shares are expected to
carry over to your new shares in the Asia Pacific Fund.
PROPOSAL 1 -- ACQUISITION OF THE LIBERTY NEWPORT TIGER CUB FUND
CLASSES A, B AND C AND THE STEIN ROE SMALL CAP TIGER FUND
CLASS S BY THE LIBERTY NEWPORT ASIA PACIFIC 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 Tiger Cub Fund by the Asia Pacific Fund under the Agreement and Plan of
Reorganization.
PRINCIPAL INVESTMENT RISKS
What are the principal investment risks of the Asia Pacific Fund, and how do
they compare with the Tiger Cub 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 the risks associated with value stocks. Market risk means that security
prices in a market, sector or industry may move down. Downward movements will
reduce the value of your investment. 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. While both Funds may
invest in securities of smaller capitalization companies and are therefore
subject to the risks associated with such securities, because the Tiger Cub Fund
invests primarily in such securities it is particularly susceptible to such
risks. Smaller companies are more
7
<PAGE> 10
likely than larger companies to have limited product lines, operating histories,
markets or financial resources and may depend heavily on a small management
team. Stocks of smaller companies may trade less frequently, may trade in
smaller volumes, may fluctuate more sharply in price than stocks of larger
companies and may not be widely followed by the investment community.
As both Funds invest primarily in stocks of companies located in countries
in Asia (and in the case of the Asia Pacific Fund, the Pacific Basin), they are
subject to regional risks and the special risks related to foreign securities
and emerging markets. Foreign securities involve special risks, including the
volatility of foreign markets, fluctuations in currency exchange rates and more
limited liquidity than domestic securities. The risks of foreign investments are
typically increased in less developed countries, which are sometimes referred to
as emerging markets. For example, political and economic structures in these
countries may be new and developing rapidly, which may cause instability. These
countries are also more likely to experience high levels of inflation, deflation
or currency devaluations, which could hurt their economies and securities
markets. Because the Asia Pacific Fund invests a significant portion of its
assets in companies located in Japan and Hong Kong, the Asia Pacific Fund is
particularly subject to risks related to these countries. Events in any one
country may impact the other countries within the region or the region as a
whole. As a result, events in the region and in Japan and Hong Kong,
specifically, will generally have a greater effect on the Fund than if the Fund
were more geographically diversified, which may result in greater losses and
volatility. At different times over the last several years, the markets in each
of the Asian countries have suffered significant downturns and significant
volatility. Increased social or political unrest in some or all of these
countries could cause further economic and market uncertainty. Furthermore, the
Asia Pacific Fund is a non-diversified fund, while the Tiger Cub Fund is
diversified. As a non-diversified mutual fund, the Asia Pacific Fund is allowed
to invest a greater percentage of its total assets in the securities of a single
issuer. This may concentrate risk and, therefore, you may be subject to an
increased risk of loss compared to a similar diversified mutual fund by becoming
a shareholder of the Asia Pacific Fund. For more information about the principal
risks associated with the Asia Pacific Fund, please see the enclosed Prospectus
of the Asia Pacific 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
Terms of the Agreement and Plan of Reorganization
If approved by the shareholders of the Tiger Cub Fund, the Acquisition is
expected to occur on or around January 16, 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:
- The Tiger Cub Fund will transfer all of the assets and liabilities
attributable to each class of shares of the Tiger Cub Fund to the Asia
Pacific Fund in exchange for shares of the same class of the Asia Pacific
Fund with an aggregate net asset value equal to the net asset value of
the transferred assets and liabilities.
- The Acquisition will occur on the next business day after the time
(currently scheduled to be 4:00 p.m. Eastern Time on January 12, 2001 or
such other date and time as the parties may determine) when the assets of
each Fund are valued for purposes of the Acquisition (the "Valuation
Date").
- The shares of each class of the Asia Pacific Fund received by the Tiger
Cub Fund will be distributed to the shareholders of the same class of the
Tiger Cub Fund pro rata in accordance with their percentage ownership of
each class of the Tiger Cub Fund in full liquidation of the Tiger Cub
Fund.
- After the Acquisition, the Tiger Cub Fund will be terminated, and its
affairs will be wound up in an orderly fashion.
8
<PAGE> 11
- The Acquisition requires approval by the Tiger Cub Fund's shareholders
and satisfaction of a number of other conditions; the Acquisition may be
terminated at any time with the approval of the Trustees of Trust II and
of Liberty Funds Trust VI ("Trust VI").
A shareholder who objects to the Acquisition will not be entitled under
Massachusetts law or Trust II's Declaration of Trust (the "Declaration") to
demand payment for, or an appraisal of, his or her shares. However, shareholders
should be aware that the Acquisition as proposed is not expected to result in
recognition of gain or loss to shareholders for federal income tax purposes and
that, if the Acquisition is 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 Acquisition.
Shares You Will Receive
If the Acquisition occurs, you will receive shares in the Asia Pacific Fund
of the same class as the shares that you currently own in the Tiger Cub 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 Valuation
Date.
- If applicable, your Asia Pacific 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 Tiger Cub
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 Asia Pacific 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 Asia Pacific
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 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 Tiger Cub Fund to enter into the Acquisition:
- Absent the Acquisition, Liberty Financial indicated to the Trustees that
it will discontinue subsidizing the Tiger Cub Fund's operations (through
fee waivers or expense reductions) and that it will
9
<PAGE> 12
recommend to the Trustees that the Tiger Cub Fund be liquidated. Liberty
Financial indicated to the Trustees that the Tiger Cub 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 Tiger Cub Fund's shareholders
to exchange their investment for an investment in a larger fund with
somewhat similar investment goals and strategies to the Tiger Cub Fund
without recognizing gain or loss for federal income tax purposes. By
contrast, if a Tiger Cub Fund shareholder redeemed his or her shares to
invest in another fund, like the Asia Pacific Fund, the transaction would
likely be a taxable event for such shareholder. Similarly, if the Tiger
Cub 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 Asia
Pacific 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 Tiger Cub Fund, the expense ratio of the Tiger Cub Fund
will increase significantly if the Acquisition does not occur. If the
Acquisition does occur, then the expense ratio of the combined Asia
Pacific Fund is expected to be lower than the Tiger Cub 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 Tiger Cub
and Asia Pacific Funds on July 31, 2000 and the Funds' current expense
structures, the Asia Pacific Fund's annualized expense ratio (excluding
12b-1 fees) immediately after the Acquisition would be about 0.10% lower
than the Tiger Cub Fund's current expense ratio and about 0.93% lower
than the Tiger Cub Fund's expense ratio would be after removal of the
subsidy (for example, for Class A shares, a 2.83% expense ratio for the
Tiger Cub Fund on a subsidized basis and a 2.00% expense ratio for the
Tiger Cub Fund on an unsubsidized basis, as compared to 1.90% currently
for the Asia Pacific Fund). 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 Class Z shares.
In reviewing the Acquisition, the Trustees also considered the change for
Tiger Cub Fund shareholders from a small cap fund that generally does not invest
in Japan and Hong Kong to a fund with an investment program which permits
investment in stocks of companies of any size and which invests in Japan and
Hong Kong. The Trustees also considered the possible limitation on the future
use of losses of the Tiger Cub Fund to offset future taxable capital gains
required to be distributed to shareholders. This means that the combined Fund in
the future could conceivably distribute to its shareholders more taxable gain as
a result of this limitation than the Tiger Cub Fund may have otherwise been
required to distribute if the Acquisition had not occurred. The Trustees
determined, despite these considerations, that on balance the Acquisition is in
the best interests of the Tiger Cub 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 Asia Pacific Fund will achieve any particular
level of performance after the Acquisition.
The projected post-Acquisition expense reductions presented above are based
on the Asia Pacific 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; and (2) certain duplicate
costs involved in operating the Tiger Cub Fund are eliminated. 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 Asia Pacific Fund
or Liberty Financial.
10
<PAGE> 13
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 Tiger Cub Fund and the Class A shares of the Asia Pacific 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.
TIGER CUB FUND
[BAR CHART]
<TABLE>
<CAPTION>
TIGER CUB FUND
--------------
<S> <C>
1997 28.22%
1998 -14.67%
1999 68.81%
</TABLE>
The Fund's year-to-date total return through September 30, 2000 was -18.57%.
For period shown in bar chart:
Best quarter: Second quarter 1999, +51.51%
Worst quarter: Second quarter 1998, -31.28%
ASIA PACIFIC FUND
[BAR CHART]
<TABLE>
<S> <C>
Asia Pacific Fund
1999 121.46%
</TABLE>
The Fund's year-to-date total return through September 30, 2000 was -19.75%.
For period shown in bar chart:
Best quarter: Fourth quarter 1999, +35.67%
Worst quarter: First quarter 1999, +12.51%
11
<PAGE> 14
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, including the applicable sales charge for Class A, B and C
shares of the Tiger Cub Fund and Asia Pacific Fund. (Class S shares of the Asia
Pacific 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.
TIGER CUB FUND(1)
<TABLE>
<CAPTION>
INCEPTION LIFE OF
DATE 1 YEAR FUND
<S> <C> <C> <C>
Class A (%) 6/3/96 68.81 (0.09)
----------------------------------------------------------------------------------------------
Class B (%) 6/3/96 67.65 (0.88)
----------------------------------------------------------------------------------------------
Class C (%) 6/3/96 67.59 (0.79)
----------------------------------------------------------------------------------------------
Class S (%) 6/3/96 69.20 0.11
----------------------------------------------------------------------------------------------
MSCI Pacific Index (%) N/A 42.58 (0.17)(2)
</TABLE>
ASIA PACIFIC FUND(3)
<TABLE>
<CAPTION>
INCEPTION LIFE OF
DATE 1 YEAR FUND
<S> <C> <C> <C>
Class A (%) 8/19/98 121.46 120.34
----------------------------------------------------------------------------------------------
Class B (%) 8/19/98 120.10 118.84
----------------------------------------------------------------------------------------------
Class C (%) 8/19/98 119.95 118.73
----------------------------------------------------------------------------------------------
Class Z (%) 8/13/99 121.68(4) 120.50(4)
----------------------------------------------------------------------------------------------
MSCI Free Index (%) N/A 56.65 (5)
</TABLE>
---------------
(1) The Tiger Cub Fund's return is compared to the MSCI Pacific Region
(ex-Japan) Index ("MSCI Pacific Index"), a broad-based, unmanaged index that
tracks the performance of stocks in the Pacific Rim in countries other than
Japan. 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.
(2) Performance information is from May 31, 1996 through December 31, 1999.
(3) The Asia Pacific Fund's return is compared to the MSCI AC Asia Pacific Free
Index ("MSCI Free Index"), an unmanaged index that tracks the performance of
Asian Pacific Securities. 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.
(4) Class Z is a newer class of shares. Performance information for Class Z
includes returns of the Asia Pacific Fund's Class A shares (the oldest
existing fund class) for periods prior to the inception of Class Z shares.
These Class A share returns are not restated to reflect any differences in
expenses (such as Rule 12b-1 fees) between Class A shares and Class Z
shares. If differences in expenses were reflected, the returns for periods
prior to the inception of Class Z shares would be higher. Class A, B and C
shares were initially offered on August 19, 1998, and Class Z shares were
initially offered on August 13, 1999.
(5) The MSCI Free Index was not in existence as of August 19, 1998.
Federal Income Tax Consequences
The Acquisition is intended to be a tax-free reorganization. Ropes & Gray
has delivered to the Tiger Cub Fund and the Asia Pacific Fund an opinion, and
the closing of the Acquisition will be conditioned on receipt of a letter from
Ropes & Gray 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 Tiger Cub Fund or the shareholders of the
Tiger Cub Fund as a result of the Acquisition;
- under Section 358 of the Code, the tax basis of the Asia Pacific Fund
shares you receive will be the same, in the aggregate, as the aggregate
tax basis of your Tiger Cub Fund shares;
12
<PAGE> 15
- under Section 1223(1) of the Code, your holding period for the Asia
Pacific Fund shares you receive will include the holding period for your
Tiger Cub Fund shares if you hold Tiger Cub Fund shares as a capital
asset;
- under Section 1032 of the Code, no gain or loss will be recognized by the
Asia Pacific Fund as a result of the Acquisition;
- under Section 362(b) of the Code, the Asia Pacific Fund's tax basis in
the assets that the Asia Pacific Fund receives from the Tiger Cub Fund
will be the same as the Tiger Cub Fund's basis in such assets; and
- under Section 1223(2) of the Code, the Asia Pacific Fund's holding period
in such assets will include the Tiger Cub Fund's holding period in such
assets.
The opinion is, and the confirmation letter will be, based on certain
factual certifications made by officers of each Trust. The opinion is not a
guarantee that the tax consequences of the Acquisition will be as described
above.
Prior to the closing of the Acquisition, the Tiger Cub Fund and the Asia
Pacific 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 Acquisition
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.
THE TRUSTEES OF TRUST II UNANIMOUSLY RECOMMEND APPROVAL OF THE
AGREEMENT AND PLAN OF REORGANIZATION.
The Declaration establishing Trust II provides that any series of Trust II
(such as the Tiger Cub 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
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 Declaration to provide that the Tiger Cub Fund may be
terminated by majority vote of the Tiger Cub Fund's shares entitled to vote (or
by Trustee notice to shareholders), and will so amend the Declaration if a
majority of the Tiger Cub Fund's shareholders entitled to vote on the proposal
vote in favor of such proposal.
Required Vote for Proposal 1
Approval of the Agreement and Plan of Reorganization dated October 26, 2000
among Trust II on behalf of the Tiger Cub Fund, Trust VI on behalf of the Asia
Pacific Fund, and Liberty Financial will require the affirmative vote of a
majority of the shares of the Tiger Cub Fund outstanding at the record date for
the Meeting.
13
<PAGE> 16
PROPOSAL 2 -- ELECTION OF TRUSTEES
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 II, of
which the Tiger Cub Fund is a series. All of the nominees listed below, except
for the proposed four new members (Ms. Kelly and Messrs. Hacker, Nelson and
Theobald), are currently members of the Board of Trustees of Trust II, 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 II. 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 II until the next
meeting of shareholders of Trust II 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 Trust II'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 Meeting in
favor of the election of the nominees named below as Trustees of Trust II (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 Officer New nominee
(43) 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 Development, New nominee
(41) 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 Chairman and 1995
(64) Chief Executive Officer of U.S. Plywood Corporation
(building products producer) from August 1985 to
August 1987.)
Salvatore Macera Private Investor since 1981. (Formerly Executive 1998
(69) Vice President and Director of Itek Corporation
(electronics) from 1975 to 1981.)
</TABLE>
14
<PAGE> 17
<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 Economics, New nominee
(57) University of Washington; Consultant on economic and
statistical matters.
John J. Neuhauser Academic Vice President and Dean of Faculties, 1985
(57) 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 October 2000
(47) 2000; Executive Vice President and Director of
Colonial and Stein Roe & Farnham Incorporated 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 Finance 1998
(64) and Dean, College of Business, Boise State
University, prior thereto; Chartered Financial
Analyst.
Thomas C. Theobald Managing Director, William Blair Capital Partners New nominee
(62) (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, Global 1998
(55) 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.
15
<PAGE> 18
The following persons who are currently serving on the Board of Trustees of
Trust II 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 Chief 1987
(70) 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 Naftalis & 1991
(65) 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, Hannaford 1986
(70) 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 the Liberty Mutual Funds,
consisting of Ms. Verville (Chairperson) and Messrs. Bleasdale, Grinnell, Lowry,
Macera and Moody, all of whom are non-interested Trustees, recommends to the
Board of Trustees the independent accountants to serve as auditors, reviews with
the independent accountants the results of the auditing engagement and internal
accounting procedures and considers the independence of the independent
accountants, the range of their audit services and their fees.
16
<PAGE> 19
Compensation Committee. The Compensation Committee of the Liberty Mutual
Funds, 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 the Liberty Mutual
Funds, 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 II, Attention: Secretary, One Financial Center, Boston,
Massachusetts 02111-2621.
Record of Board and Committee Meetings. During the fiscal year ended
August 31, 2000, the Board of Trustees of Trust II (excluding the Liberty Money
Market Fund, which has a different fiscal year end) 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 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 TIGER CUB FUND
VOTE FOR EACH NOMINEE IN PROPOSAL 2.
Required Vote for Proposal 2
A plurality of the votes cast at the Meeting for Trust II, if a quorum is
represented, is required for the election of each Trustee to the Board of
Trustees of Trust II. 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 Trust II are soliciting proxies from the shareholders of
the Tiger Cub Fund in connection with the Meeting, which has 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 Meeting
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 Tiger Cub Fund or by employees or agents of Newport
Fund Management, Inc., investment advisor to the Asia Pacific Fund, and its
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.
17
<PAGE> 20
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 Meeting.
Shareholders who owned shares on the record date, September 29, 2000, are
entitled to vote at the Meeting. Shareholders are entitled to cast one vote for
each share owned on the record date. If you choose to vote by mail or by fax,
and you are an individual account owner, please sign exactly as your name
appears on the proxy card. Either owner of a joint account may sign the proxy
card, but the signer's name must exactly match the name that appears on the
card.
Costs. The estimated costs of the Meeting, including the costs of
soliciting proxies, and the costs of the Acquisition to be borne by the Tiger
Cub Fund and the Asia Pacific Fund are approximately $26,000 and $27,000,
respectively. Liberty Financial is also bearing a portion of such costs. This
portion to be borne by Liberty Financial is in addition to 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 the
Tiger Cub Fund, by properly executing and submitting a later-dated proxy or by
attending the Meeting and voting in person.
Votes cast in person or by proxy at the Meeting will be counted by persons
appointed by the Tiger Cub Fund as tellers for the Meeting (the "Tellers").
Thirty percent (30%) of the shares of the Tiger Cub Fund outstanding on the
record date, present in person or represented by proxy, constitutes a quorum for
the transaction of business by the shareholders of the Tiger Cub Fund at the
Meeting. Shareholders of the Tiger Cub Fund vote together with the shareholders
of the other series of Trust II for the election of Trustees; thirty percent
(30%) of the outstanding shares of Trust II 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 Proposal 1
and will have no effect on the outcome of Proposal 2. "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.
Advisor's, Underwriter's and Administrator's Addresses. The address of
each Fund's investment advisor, Newport Fund Management, Inc., is 580 California
Street, Suite 1960, San Francisco, California 94104. The address of each Fund's
principal underwriter, Liberty Funds Distributor, Inc., is One Financial Center,
Boston, Massachusetts 02111-2621. The address of each Fund's administrator,
Colonial Management Associates, 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 Tiger Cub Fund and Trust II the total
number of shares outstanding as of September 29, 2000 for each class of the
shares of the Fund and the Trust entitled to vote at the Meeting. It also lists
for the Asia Pacific Fund and Trust VI the total number of shares outstanding as
of September 29, 2000. It also identifies holders
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<PAGE> 21
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 the Tiger Cub Fund or Trust II, as
applicable, has not received enough votes by the time of the Meeting to approve
any Proposal, the persons named as proxies may propose that the Meeting 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 the Tiger Cub Fund or Trust II, 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 Proposal 2). 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 Proposal 2). They will not vote any proxy that
directs them to abstain from voting on the Proposal in question.
The Meeting has been called to transact any business that properly comes
before it. The only business that management of the Tiger Cub Fund intends to
present or knows that others will present is Proposal 1 and Proposal 2, as
described above. If any other matters properly come before the Meeting, and on
all matters incidental to the conduct of the Meeting, the persons named as
proxies intend to vote the proxies in accordance with their judgment, unless the
Secretary of the Tiger Cub Fund has previously received written contrary
instructions from the shareholder entitled to vote the shares.
Shareholder Proposals at Future Meetings. Trust II, of which the Tiger Cub
Fund is a series, does not hold annual or other regular meetings of
shareholders. Shareholder proposals to be presented at any future meeting of
shareholders of the Tiger Cub Fund or Trust II must be received by the Tiger Cub
Fund or Trust II 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 the
Tiger Cub Fund, care of Trust II, Attention: Secretary, One Financial Center,
Boston, Massachusetts 02111-2621.
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APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of October 26, 2000 is
by and among Liberty Funds Trust II (the "Trust"), a Massachusetts business
trust established under a Declaration of Trust dated February 14, 1980, as
amended, on behalf of Liberty Newport Tiger Cub Fund, Classes A, B and C shares
and Stein Roe Small Cap Tiger Fund, Class S shares (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 Newport Asia Pacific 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 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.
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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 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 16, 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
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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
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;
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(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
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 of the Acquired Fund as at and for the year
ended August 31, 1999, audited by PricewaterhouseCoopers LLP, and
for the year ended August 31, 2000, audited by Ernst & Young LLP
and the statement of assets, the statement of changes in net assets
and the schedule of investments for the six months ended February
29, 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
February 29, 2000;
(g) Since February 29, 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
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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 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
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the schedule of its investments as of February 29, 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 in
compliance with such mandatory investment restrictions as are set
forth in the Acquiring Fund Prospectus, as amended through the
Closing Date; and
(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
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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 June 30, 2000;
(h) Since June 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;
(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 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;
A-7
<PAGE> 29
(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).
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
A-8
<PAGE> 30
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.
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 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
A-9
<PAGE> 31
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.
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, 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
A-10
<PAGE> 32
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.
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 August 31, 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
August 31, 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 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
A-11
<PAGE> 33
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 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%) of such
expenses shall be borne by the Trust, on behalf of the Acquired Fund,
and fifty percent (50%) 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, fifty percent (50%) of such expenses
shall be borne by the Acquiring Trust, on behalf of the Acquiring Fund,
and fifty percent (50%) of such expenses shall be borne by Liberty
A-12
<PAGE> 34
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.
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 II, One
Financial Center, Boston, Massachusetts 02111, Attention: Secretary, or to
Liberty Funds Trust VI, One Financial Center, Boston, Massachusetts 02111,
Attention: Secretary.
A-13
<PAGE> 35
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.
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> 36
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.
LIBERTY FUNDS TRUST II,
on behalf of Liberty Newport Tiger Cub
Fund, Class A, B and C shares and
Stein Roe Small Cap Tiger Fund, Class
S shares
By:
------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
ATTEST:
---------------------------------------------------------
Name:
-------------------------------------------------------
Title:
-------------------------------------------------------
LIBERTY FUNDS TRUST VI,
on behalf of Liberty Newport Asia
Pacific Fund
By:
------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
ATTEST:
---------------------------------------------------------
Name:
-------------------------------------------------------
Title:
-------------------------------------------------------
A-15
<PAGE> 37
Solely for purposes of Section 9.2
of the Agreement:
LIBERTY FINANCIAL COMPANIES, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
ATTEST:
---------------------------------------------------------
Name:
-------------------------------------------------------
Title:
-------------------------------------------------------
A-16
<PAGE> 38
APPENDIX B
FUND INFORMATION
SHARES OUTSTANDING AND ENTITLED TO VOTE OF THE TIGER CUB FUND AND TRUST II AND
SHARES OUTSTANDING OF THE ASIA PACIFIC FUND AND TRUST VI
For each class of the Tiger Cub Fund's shares and Trust II's shares
entitled to vote at the Meeting, and for each class of the Asia Pacific Fund's
shares and Trust VI's shares, the number of shares outstanding as of September
29, 2000 was as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES
OUTSTANDING AND
FUND OR TRUST CLASS ENTITLED TO VOTE
------------- ----- ----------------
<S> <C> <C>
TIGER CUB FUND............................. A 454,618
B 731,504
C 93,673
S 42,916
TRUST II................................... 1,322,710
ASIA PACIFIC FUND.......................... A 425,886
B 52,040
C 236,850
S 0
Z 91,433
TRUST VI................................... 72,651,978
</TABLE>
OWNERSHIP OF SHARES
As of September 29, 2000, each Trust believes that the Trustees and
officers of each Trust, 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 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 OF CLASS SHARES OF CLASS
FUND AND CLASS NAME AND ADDRESS OF SHAREHOLDER OWNED OWNED
-------------- ------------------------------- --------------- ---------------
<S> <C> <C> <C>
TIGER CUB FUND
CLASS A.............. Merrill Lynch Pierce Fenner & Smith 57,689.649 12.69%
For the Sole Benefit of its
Customers
Attn: Fund Administration #97KF8
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484
CLASS B.............. Merrill Lynch Pierce Fenner & Smith 133,319.380 18.23%
For the Sole Benefit of its
Customers
Attn: Fund Administration #97KF8
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484
CLASS C.............. Merrill Lynch Pierce Fenner & Smith 30,732.970 32.81%
For the Sole Benefit of its
Customers
Attn: Fund Administration #97KF8
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484
</TABLE>
B-1
<PAGE> 39
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
OUTSTANDING OUTSTANDING
SHARES OF CLASS SHARES OF CLASS
FUND AND CLASS NAME AND ADDRESS OF SHAREHOLDER OWNED OWNED
-------------- ------------------------------- --------------- ---------------
<S> <C> <C> <C>
T. Graham Christopher MD 5,547.463 5.92%
Vaira Pelekis-Christopher MD
8727 Talbot Road
Edmonds, WA 98026
Raymond James & Assoc. Inc. Cust.... 5,509.587 5.88%
N. 28 W. 24398 Watertown Road
Pewaukee, WI 53072
CLASS S.............. US Bank NA Custodian IRA 3,201.677 7.46%
Nathan Schlessinger
1 E. Wacker Drive
Suite 2600
Chicago, IL 60601
Diane G. Haglund 3,340.757 7.78%
Terrence G. Haglund
149 Stone Lake Ct.
Yorktown, VA 23693-3715
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ASIA PACIFIC FUND
CLASS A.............. Colonial Management Associates, Inc. 244,505.198 57.41%*
Attn: Phil Iudice/Controller
One Financial Center
11th Floor
Boston, MA 02111-2621
CLASS C.............. Colonial Management Associates, Inc. 10,605.322 20.38%*
Attn: Phil Iudice/Controller
One Financial Center
11th Floor
Boston, MA 02111-2621
Merrill Lynch Pierce Fenner & Smith 8,378.478 16.10%
For the Sole Benefit of its
Customers
Attn: Fund Administration
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484
CLASS Z.............. Colonial Counselor Growth Portfolio 61,928.635 67.73%
c/o Christie McCullough
245 Summer Street
Boston, MA 02111
Colonial Counselor Balanced 29,225.670 31.96%
Portfolio
c/o Christie McCullough
245 Summer Street
Boston, MA 02111
</TABLE>
---------------
* Entity owned 25% or more of the outstanding shares of beneficial interest of
the Asia Pacific Fund, and therefore may be presumed to "control" such Fund,
as that term is defined in the 1940 Act.
B-2
<PAGE> 40
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 Asia Pacific 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>
TIGER CUB FUND
CLASS A....................... Merrill Lynch Pierce Fenner & Smith 3.56%
For the Sole Benefit of its
Customers
Attn: Fund Administration #97KF8
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484
CLASS B....................... Merrill Lynch Pierce Fenner & Smith 9.58%
For the Sole Benefit of its
Customers
Attn: Fund Administration #97KF8
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484
CLASS C....................... Merrill Lynch Pierce Fenner & Smith 13.67%
For the Sole Benefit of its
Customers
Attn: Fund Administration #97KF8
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484
T. Graham Christopher MD 2.47%
Vaira Pelekis-Christopher MD
8727 Talbot Road
Edmonds, WA 98026
Raymond James & Assoc. Inc. Cust.... 2.45%
N. 28 W. 24398 Watertown Road
Pewaukee, WI 53072
CLASS S....................... US Bank NA Custodian IRA 7.47%
Nathan Schlessinger
1 E. Wacker Drive
Suite 2600
Chicago, IL 60601
Diane G. Haglund 7.79%
Terrence G. Haglund
149 Stone Lake Ct.
Yorktown, VA 23693-3715
ASIA PACIFIC FUND
CLASS A....................... Colonial Management Associates, Inc. 41.31%
Attn: Phil Iudice/Controller
One Financial Center
11th Floor
Boston, MA 02111-2621
CLASS C....................... Colonial Management Associates, Inc. 13.14%
Attn: Phil Iudice/Controller
One Financial Center
11th Floor
Boston, MA 02111-2621
</TABLE>
B-3
<PAGE> 41
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING SHARES OF
CLASS OWNED UPON
CONSUMMATION OF
FUND AND CLASS NAME AND ADDRESS OF SHAREHOLDER ACQUISITION
-------------- ------------------------------- ---------------------
<S> <C> <C>
Merrill Lynch Pierce Fenner & Smith 10.38%
For the Sole Benefit of its
Customers
Attn: Fund Administration #97KF8
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484
CLASS Z....................... Colonial Counselor Growth Portfolio 67.73%
c/o Christie McCullough
245 Summer Street
Boston, MA 02111
Colonial Counselor Balanced 31.96%
Portfolio
c/o Christie McCullough
245 Summer Street
Boston, MA 02111
</TABLE>
INFORMATION CONCERNING EXECUTIVE OFFICERS
The following table sets forth certain information about the executive
officers of each Fund:
<TABLE>
<CAPTION>
YEAR OF
ELECTION
EXECUTIVE OFFICER AS EXECUTIVE
NAME & AGE OFFICE AND PRINCIPAL OCCUPATION** 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 & Farnham Incorporated
("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.)
</TABLE>
B-4
<PAGE> 42
<TABLE>
<CAPTION>
YEAR OF
ELECTION
EXECUTIVE OFFICER AS EXECUTIVE
NAME & AGE OFFICE AND PRINCIPAL OCCUPATION** OFFICER
----------------- --------------------------------- ------------
<S> <C> <C>
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.
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>
---------------
** Except as otherwise noted, each individual has held the office indicated or
other offices in the same company for the last five years.
B-5
<PAGE> 43
ADDITIONAL INFORMATION CONCERNING TRUSTEE COMPENSATION
The current Board of Trustees of the Liberty Mutual Funds received the
following compensation from each Fund as of each Fund's fiscal year end(1):
<TABLE>
<CAPTION>
TIGER CUB FUND ASIA PACIFIC FUND
TRUSTEE 8/31/00 6/30/00
------- -------------- -----------------
<S> <C> <C>
Mr. Bleasdale......................................... $579(2) $588(3)
Ms. Collins........................................... 525 533
Mr. Grinnell.......................................... 552 555
Mr. Lowry............................................. 541 549
Mr. Macera............................................ 528 530
Mr. Mayer............................................. 547 555
Mr. Moody............................................. 551(4) 561(5)
Mr. Neuhauser......................................... 555 564
Mr. Stitzel........................................... 529 536
Ms. Verville.......................................... 532(6) 528(7)
</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(8)
Ms. Collins................................................. 96,000
Mr. Grinnell................................................ 100,000
Mr. Lowry................................................... 97,000
Mr. Macera.................................................. 95,000
Mr. Mayer................................................... 101,000
Mr. Moody................................................... 91,000(9)
Mr. Neuhauser............................................... 101,252
Mr. Stitzel................................................. 95,000
Ms. Verville................................................ 96,000(10)
</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
Liberty Funds Trust IX (together, the "Liberty All-Star Funds"):
<TABLE>
<CAPTION>
TRUSTEE TOTAL COMPENSATION(11)
------- ----------------------
<S> <C>
Mr. Grinnell............................................. $25,000
Mr. Lowry................................................ 25,000
Mr. Mayer................................................ 25,000
Mr. Neuhauser............................................ 25,000
</TABLE>
---------------
(1) The Liberty Mutual Funds do not currently provide pension or retirement
plan benefits to the Trustees.
(2) Includes $287 payable in later years as deferred compensation.
(3) Includes $290 payable in later years as deferred compensation.
(4) Total compensation of $551 for the fiscal year ended August 31, 2000 will
be payable in later years as deferred compensation.
(5) Total compensation of $561 for the fiscal year ended June 30, 2000 will be
payable in later years as deferred compensation.
(6) Total compensation of $532 for the fiscal year ended August 31, 2000 will
be payable in later years as deferred compensation.
(7) Total compensation of $528 for the fiscal year ended June 30, 2000 will be
payable in later years as deferred compensation.
(8) Includes $52,000 payable in later years as deferred compensation.
(9) Total compensation of $91,000 for the calendar year ended December 31, 1999
will be payable in later years as deferred compensation.
(10) Total compensation of $96,000 for the calendar year ended December 31, 1999
will be payable in later years as deferred compensation.
(11) The Liberty All-Star Funds are advised by Liberty Asset Management Company
("LAMCO"). LAMCO is an indirect wholly-owned subsidiary of Liberty
Financial.
B-6
<PAGE> 44
APPENDIX C
CAPITALIZATION
The following table shows on an unaudited basis the capitalization of the
Tiger Cub Fund and the Asia Pacific 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 Tiger Cub Fund by the Asia Pacific Fund at net asset value as of that
date:
<TABLE>
<CAPTION>
ASIA PACIFIC
ASIA PACIFIC FUND
TIGER CUB FUND PRO FORMA PRO FORMA
FUND (ACQUIRING FUND) ADJUSTMENTS(1) COMBINED(2)
---------- ---------------- -------------- ------------
<S> <C> <C> <C> <C>
Class A
Net asset value..................... $4,897,892 $10,205,355 $ (23,686) $15,079,562
Shares outstanding.................. 527,298 415,705 (328,000) 615,002
Net asset value per share........... $ 9.29 $ 24.55 $ 24.52
Class B
Net asset value..................... $6,979,125 $ 5,832,909 $ (21,738) $12,790,296
Shares outstanding.................. 775,216 240,066 (488,220) 527,062
Net asset value per share........... $ 9.00 $ 24.30 $ 24.27
Class C
Net asset value..................... $ 905,753 $ 1,383,496 $ (3,685) $ 2,285,564
Shares outstanding.................. 100,390 56,997 (63,110) 94,277
Net asset value per share........... $ 9.02 $ 24.27 $ 24.24
Class S(3)
Net asset value..................... $ 229,625 $ (450) $ 229,175
Shares outstanding.................. 24,608 (15,275) 9,332
Net asset value per share........... $ 9.33 $ 24.56
Class Z
Net asset value..................... $ 1,984,923 $ (2,738) $ 1,982,185
Shares outstanding.................. 80,730 (13) 80,717
Net asset value per share........... $ 24.59 $ 24.56
</TABLE>
---------------
(1) Adjustments reflect estimated one time proxy, accounting, legal and other
costs of the reorganization of $25,528 and $26,769 to be borne by the Tiger
Cub Fund and the Asia Pacific 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 Asia Pacific Fund will be received by the shareholders of the Tiger
Cub Fund on the date the Acquisition takes place, and the foregoing should
not be relied upon to reflect the number of shares of the Asia Pacific 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 Asia Pacific Fund
outstanding.
C-1
<PAGE> 45
LIBERTY FUNDS TRUST VI
LIBERTY NEWPORT ASIA PACIFIC 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 Liberty Newport Tiger Cub Fund
Class A, B and C shares and the Stein Roe Small Cap Tiger Fund Class S shares
(together, the "Acquired Fund"), a series of Liberty Funds Trust II, by the
Liberty Newport Asia Pacific 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 Fund in exchange
for shares of the Acquiring Fund and the assumption of all the liabilities of
the Acquired Fund. The Acquired Fund 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
<TABLE>
<S> <C>
I. Additional Information about the Acquiring Fund............................................. 2
II. Additional Information about the Acquired Funds............................................. 2
III. Financial Statements........................................................................ 2
</TABLE>
<PAGE> 46
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 Fund.
Incorporated by reference to Post-Effective Amendment No. 44 to the
Registrant's Registration Statement Form N-1A (filed on December 22, 1999) of
Liberty Funds Trust II (Registration Nos. 2-66976 and 811-3009).
III. Financial Statements.
This SAI is accompanied by the Annual Report for the year ended June
30, 2000 of the Acquiring Fund and the Semi-Annual Report for the six months
ended February 29, 2000 and the Annual Report for the year ended August 31, 1999
of the Acquired Fund, 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> 47
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS STEIN ROE LIBERTY NEWPORT
JUNE 30, 2000 SMALL CAP TIGER FUND ASIA PACIFIC FUND
-------------------------- -----------------------
COUNTRY SHARES VALUE SHARES VALUE
<S> <C> <C> <C> <C> <C>
COMMON STOCK - 94.0%
CONSTRUCTION - 18.5%
Special Trade Contractors - 0.7%
Zhejaing Expressway Co. Ltd. HK 1,000,000 $ 170,609 328,000 $ 55,960
FINANCE, INSURANCE AND REAL ESTATE - 17.8%
DEPOSITORY INSTITUTIONS - 5.9%
Commonwealth Bank of Australia Au 8,650 142,957
DBS Bank Ltd. Si 50,771 652,134
Hang Seng Bank Ltd. HK 25,000 237,313 14,000 132,895
HSBC Holdings PLC HK 48,193 552,430
Overseas-Chinese Banking Corp. Ltd. Si 16,850 116,015
Suruga Bank, Ltd. Ja 8,000 132,504
------------ --------------
237,313 1,728,935
FINANCIAL SERVICES - 0.1%
Aeon Credit Service Ltd. Ja 800 47,538
HOLDING COMPANIES - 4.6%
Citic Pacific Ltd. HK 44,000 230,284
Dickson Concepts International Ltd. HK 500,000 455,385
Hutchison Whampoa Ltd. HK 47,000 590,846
Singapore Tech Engineering Ltd. Si 156,000 229,259
------------ --------------
455,385 1,050,389
INSURANCE CARRIERS - 0.6%
Thai Reinsurance Co Ltd. Th 239,850 208,060
NONDEPOSITORY CREDIT INSTITUTIONS - 1.5%
Acom Co., Ltd. Ja 3,600 302,886
Aiful Corporation Ja 1,350 124,533
Takefuji Corp. Ja 600 72,496
--------------
499,915
REAL ESTATE - 5.1%
Cheung Kong Holdings Ltd. HK 25,000 276,598 53,000 586,388
City Developments Ltd. Si 54,000 209,333
HKR International Ltd. HK 349,200 139,983
Sun Hung Kai Properties Ltd. HK 29,000 208,323 39,000 280,158
------------ --------------
834,237 866,546
MANUFACTURING - 27.1%
CHEMICALS & ALLIED PRODUCTS - 1.2%
Takeda Chemical Industries Ltd. Ja 6,000 393,888
COMMUNICATIONS EQUIPMENT - 3.2%
AsiaInfo Holdings, Inc.(a) 3,000 134,063 2,300 102,781
Matsushita Communication Industrial Co. Ja 1,000 116,770
Sony Corp. Ja 7,500 700,339
------------ --------------
134,063 919,890
ELECTRONIC & ELECTRICAL EQUIPMENT - 0.9%
Yamaichi Electronics Co., Ltd. Ja 5,000 161,762
Yokowo Co., Ltd. Ja 5,000 127,570
--------------
289,332
ELECTRONIC COMPONENTS - 6.6%
Kyocera Corp. Ja 2,100 356,338
Murata Manufacturing Co., Ltd. Ja 2,000 287,116
Rohm Company Ltd. Ja 1,000 292,397
Samsung Electronics Ko 2,030 671,871
TCL International Holdings HK 500,000 182,795
Tokyo Denpa Co. Ltd. Ja 3,000 187,323
United Microelectronics Corp., Ltd. Tw 68,400 190,340
------------ --------------
182,795 1,985,385
ELECTRICAL INDUSTRIAL EQUIPMENT - 0.3%
Sodick Co., Ltd. (a) Ja 10,000 82,437
FOOD & KINDRED PRODUCTS - 1.3%
Ito En Ltd. Ja 1,000 73,854
Thai Union Frozen Products Th 160,000 340,860
------------ --------------
340,860 73,854
HOUSEHOLD APPLIANCES - 0.6%
Guangdong Kelon Electric Holdings, Class H HK 379,000 205,408
MACHINERY & COMPUTER EQUIPMENT - 3.2%
Canon, Inc. Ja 9,000 448,217
Fujitsu Ltd. Ja 7,000 242,313
Union Tool Ja 1,100 119,317
WYSE Technology Taiwan Ltd. Tw 139,000 248,820
------------ --------------
248,820 809,847
MEASURING & ANALYZING INSTRUMENTS - 6.1%
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS PRO-FORMA
JUNE 30, 2000 COMBINED FUND
-------------------------------
SHARES VALUE
<S> <C> <C>
COMMON STOCK - 94.0%
CONSTRUCTION - 18.5%
Special Trade Contractors - 0.7%
Zhejaing Expressway Co. Ltd. 1,328,000 $ 226,569
FINANCE, INSURANCE AND REAL ESTATE - 17.8%
DEPOSITORY INSTITUTIONS - 5.9%
Commonwealth Bank of Australia 8,650 142,957
DBS Bank Ltd. 50,771 652,134
Hang Seng Bank Ltd. 39,000 370,208
HSBC Holdings PLC 48,193 552,430
Overseas-Chinese Banking Corp. Ltd. 16,850 116,015
Suruga Bank, Ltd. 8,000 132,504
------------
1,966,248
FINANCIAL SERVICES - 0.1%
Aeon Credit Service Ltd. 800 47,538
HOLDING COMPANIES - 4.6%
Citic Pacific Ltd. 44,000 230,284
Dickson Concepts International Ltd. 500,000 455,385
Hutchison Whampoa Ltd. 47,000 590,846
Singapore Tech Engineering Ltd. 156,000 229,259
------------
1,505,774
INSURANCE CARRIERS - 0.6%
Thai Reinsurance Co Ltd. 239,850 208,060
NONDEPOSITORY CREDIT INSTITUTIONS - 1.5%
Acom Co., Ltd. 3,600 302,886
Aiful Corporation 1,350 124,533
Takefuji Corp. 600 72,496
------------
499,915
REAL ESTATE - 5.1%
Cheung Kong Holdings Ltd. 78,000 862,986
City Developments Ltd. 54,000 209,333
HKR International Ltd. 349,200 139,983
Sun Hung Kai Properties Ltd. 68,000 488,481
------------
1,700,783
MANUFACTURING - 27.1%
CHEMICALS & ALLIED PRODUCTS - 1.2%
Takeda Chemical Industries Ltd. 6,000 393,888
COMMUNICATIONS EQUIPMENT - 3.2%
AsiaInfo Holdings, Inc.(a) 5,300 236,844
Matsushita Communication Industrial Co. 1,000 116,770
Sony Corp. 7,500 700,339
------------
1,053,953
ELECTRONIC & ELECTRICAL EQUIPMENT - 0.9%
Yamaichi Electronics Co., Ltd. 5,000 161,762
Yokowo Co., Ltd. 5,000 127,570
------------
289,332
ELECTRONIC COMPONENTS - 6.6%
Kyocera Corp. 2,100 356,338
Murata Manufacturing Co., Ltd. 2,000 287,116
Rohm Company Ltd. 1,000 292,397
Samsung Electronics 2,030 671,871
TCL International Holdings 500,000 182,795
Tokyo Denpa Co. Ltd. 3,000 187,323
United Microelectronics Corp., Ltd. 68,400 190,340
------------
2,168,180
ELECTRICAL INDUSTRIAL EQUIPMENT - 0.3%
Sodick Co., Ltd. (a) 10,000 82,437
FOOD & KINDRED PRODUCTS - 1.3%
Ito En Ltd. 1,000 73,854
Thai Union Frozen Products 160,000 340,860
------------
414,714
HOUSEHOLD APPLIANCES - 0.6%
Guangdong Kelon Electric Holdings, Class H 379,000 205,408
MACHINERY & COMPUTER EQUIPMENT - 3.2%
Canon, Inc. 9,000 448,217
Fujitsu Ltd. 7,000 242,313
Union Tool 1,100 119,317
WYSE Technology Taiwan Ltd. 139,000 248,820
------------
1,058,667
MEASURING & ANALYZING INSTRUMENTS - 6.1%
</TABLE>
<PAGE> 48
<TABLE>
<S> <C> <C> <C> <C> <C>
Avimo Singapore Ltd. Si 380,000 716,753
China Hong Kong Photo Products Holdings Ltd. HK 2,898,000 360,596
Keyence Corp. Ja 600 198,076
PT Modern Photo Film - Foreign Shares In 1,293,000 236,174
Venture Manufacturing Singapore Ltd. Si 50,000 509,156
------------ --------------
1,822,679 198,076
MISCELLANEOUS MANUFACTURING - 0.4%
Secom Co., Ltd. Ja 2,000 146,199
PRINTING & PUBLISHING - 2.7%
Singapore Press Holdings Ltd. Si 31,400 490,526
South China Morning Post HK 340,000 263,867 194,000 150,559
------------ --------------
263,867 641,085
RUBBER & PLASTIC - 0.6%
PT Dynaplast - Foreign Shares In 1,397,500 191,446
MINING & ENERGY - 3.4%
NONMETALLIC, EXCEPT FUELS - 0.7%
Eastern Water Resources Development
& Management Ltd. - Foreign Shares Th 332,000 241,408
OIL & GAS EXTRACTION - 2.7%
PetroChina Co., Ltd.(a) HK 4,248,000 882,775
RETAIL TRADE - 10.2%
APPAREL & ACCESSORY STORES - 4.6%
Esprit Holdings Ltd. HK 278,000 288,855 259,000 269,113
Giordano International Ltd. HK 200,000 304,018 262,000 398,263
Glorious Sun Enterprises HK 900,000 251,103
------------ --------------
843,976 667,376
FOOD STORES - 0.5%
President Chain Store Corp. Tw 43,680 163,489
GENERAL MERCHANDISE STORES - 1.6%
Don Quijote Co., Ltd. Ja 1,200 209,394
RYOHIN KEIKAKU CO LTD Ja 1,200 152,801
Seven-Eleven Japan Co. Ltd. Ja 2,000 167,327
------------ --------------
529,522
HOME FURNISHINGS & EQUIPMENT - 0.5%
Yamada Denki Co. Ja 2,000 179,400
MISCELLANEOUS RETAIL - 2.0%
Foster's Brewing Group Ltd. Au 62,857 176,326
Matsumotokiyoshi Ja 2,600 272,703
Sa Sa International Holdings Ltd. HK 1,500,000 215,506
------------ --------------
215,506 449,029
RESTAURANTS - 1.0%
Cafe de Coral Holdings Ltd. HK 500,000 179,588 410,000 147,263
SERVICES - 11.0%
AMUSEMENT & RECREATION - 0.3%
People Co., Ltd. Ja 1,200 96,208
AUTO REPAIR, RENTAL & PARKING - 1.1%
Park24 Co. Ltd. Ja 3,000 376,627
BUSINESS SERVICES - 0.3%
Oracle Corp. Japan Ja 200 72,439
Oracle Corp. Japan - New Shares Ja 100 36,739
--------------
109,178
COMPUTER RELATED SERVICES - 7.5%
AsiaContent.Com HK 4,800 18,300
Bellsystem 24, Inc. Ja 200 98,095
Computer & Technologies Hldg. HK 270,000 275,348
Datacraft Asia Ltd. Si 136,980 1,205,424 3,120 27,456
Fujitsu Support & Services, Inc. Ja 1,800 178,268
Gigamedia ADR Tw 600 7,275
Orix Corp. Ja 3,120 460,555
SINA.Com (a) HK 1,200 30,750 1,700 43,563
Sunevision Holdings HK 41,207 33,037
Synnex Technology International Corp. Tw 22,000 118,145
------------ --------------
1,562,859 933,357
COMPUTER SOFTWARE - 1.8%
NIIT Ltd. In 5,500 272,272
Taiwan Semiconductor Manufacturing Co. (a) Tw 67,840 322,364
--------------
594,636
TRANSPORTATION, COMMUNICATIONS, ELECTRIC,
GAS & SANITARY SERVICES - 12.3%
AIR TRANSPORTATION - 0.8%
</TABLE>
<TABLE>
<S> <C> <C>
Avimo Singapore Ltd. 380,000 716,753
China Hong Kong Photo Products Holdings Ltd. 2,898,000 360,596
Keyence Corp. 600 198,076
PT Modern Photo Film - Foreign Shares 1,293,000 236,174
Venture Manufacturing Singapore Ltd. 50,000 509,156
------------
2,020,755
MISCELLANEOUS MANUFACTURING - 0.4%
Secom Co., Ltd. 2,000 146,199
PRINTING & PUBLISHING - 2.7%
Singapore Press Holdings Ltd. 31,400 490,526
South China Morning Post 534,000 414,426
------------
904,952
RUBBER & PLASTIC - 0.6%
PT Dynaplast - Foreign Shares 1,397,500 191,446
MINING & ENERGY - 3.4%
NONMETALLIC, EXCEPT FUELS - 0.7%
Eastern Water Resources Development
& Management Ltd. - Foreign Shares 332,000 241,408
OIL & GAS EXTRACTION - 2.7%
PetroChina Co., Ltd.(a) 4,248,000 882,775
RETAIL TRADE - 10.2%
APPAREL & ACCESSORY STORES - 4.6%
Esprit Holdings Ltd. 537,000 557,968
Giordano International Ltd. 462,000 702,281
Glorious Sun Enterprises 900,000 251,103
------------
1,511,352
FOOD STORES - 0.5%
President Chain Store Corp. 43,680 163,489
GENERAL MERCHANDISE STORES - 1.6%
Don Quijote Co., Ltd. 1,200 209,394
RYOHIN KEIKAKU CO LTD 1,200 152,801
Seven-Eleven Japan Co. Ltd. 2,000 167,327
------------
529,522
HOME FURNISHINGS & EQUIPMENT - 0.5%
Yamada Denki Co. 2,000 179,400
MISCELLANEOUS RETAIL - 2.0%
Foster's Brewing Group Ltd. 62,857 176,326
Matsumotokiyoshi 2,600 272,703
Sa Sa International Holdings Ltd. 1,500,000 215,506
------------
664,535
RESTAURANTS - 1.0%
Cafe de Coral Holdings Ltd. 910,000 326,851
SERVICES - 11.0%
AMUSEMENT & RECREATION - 0.3%
People Co., Ltd. 1,200 96,208
AUTO REPAIR, RENTAL & PARKING - 1.1%
Park24 Co. Ltd. 3,000 376,627
BUSINESS SERVICES - 0.3%
Oracle Corp. Japan 200 72,439
Oracle Corp. Japan - New Shares 100 36,739
------------
109,178
COMPUTER RELATED SERVICES - 7.5%
AsiaContent.Com 4,800 18,300
Bellsystem 24, Inc. 200 98,095
Computer & Technologies Hldg. 270,000 275,348
Datacraft Asia Ltd. 140,100 1,232,880
Fujitsu Support & Services, Inc. 1,800 178,268
Gigamedia ADR 600 7,275
Orix Corp. 3,120 460,555
SINA.Com (a) 2,900 74,313
Sunevision Holdings 41,207 33,037
Synnex Technology International Corp. 22,000 118,145
------------
2,496,216
COMPUTER SOFTWARE - 1.8%
NIIT Ltd. 5,500 272,272
Taiwan Semiconductor Manufacturing Co. (a) 67,840 322,364
------------
594,636
TRANSPORTATION, COMMUNICATIONS, ELECTRIC,
GAS & SANITARY SERVICES - 12.3%
AIR TRANSPORTATION - 0.8%
</TABLE>
<PAGE> 49
<TABLE>
<S> <C> <C> <C> <C> <C>
Beijing Capital International Airport Co., Ltd. CH 400,000 75,940
China Unicom Ltd. (a) HK 88,000 186,823
------------ --------------
75,940 186,823
COMMUNICATIONS - 0.1%
Advanced Information Services Th 3,600 44,822
ELECTRIC SERVICES - 0.1%
Hong Kong Electric Holdings Ltd. HK 10,500 33,808
GAS SERVICES - 2.0%
Hong Kong & China Gas Co., Ltd. HK 229,508 257,607 366,190 411,022
SANITARY SERVICES - 0.2%
Sanix, Inc. Ja - 1,200 63,384
TELECOMMUNICATIONS - 9.1%
China Telecom Ltd. (a)(b) HK 100,000 889,989 101,000 898,889
Korea Telecom Corp. ADR Ko 3,600 174,150
Locus Corp. Ko 2,300 186,699
Nippon Telegraph & Telephone Corp. Ja 28 372,383
SK Telecom Ko 1,450 474,705
------------ --------------
1,076,688 1,920,127
WHOLESALE TRADE - 11.5%
DURABLE GOODS - 11.5%
Johnson Electric Holdings Ltd. HK 131,800 1,246,889 34,000 321,657
Li & Fung Ltd. HK 269,000 1,345,759 152,000 760,429
Softbank Corp. Ja 900 122,241
------------ --------------
2,592,648 1,204,327
TOTAL COMMON STOCKS (COST $9,833,517,
$14,327,139 AND $24,160,656) 12,341,762 18,782,449
WARRANTS - 0.6%
RETAIL TRADE - 0.6%
RESTAURANTS
Jollibee Foods Corp. (cost $294,000) Ph 669,500 185,757
SHORT-TERM OBLIGATIONS - 2.0% PAR PAR
Lehman Brothers Repurchase Agreement 418,000 418,000 254,000 254,000
------------ --------------
TOTAL INVESTMENTS - 96.6% 12,945,519 19,036,449
OTHER ASSETS, LESS LIABILITIES - 3.4% 66,876 370,234
------------ --------------
NET ASSETS - 100.0% $ 13,012,395 $ 19,406,683
============ ============
</TABLE>
<TABLE>
<S> <C> <C>
Beijing Capital International Airport Co., Ltd. 400,000 75,940
China Unicom Ltd. (a) 88,000 186,823
------------
262,763
COMMUNICATIONS - 0.1%
Advanced Information Services 3,600 44,822
ELECTRIC SERVICES - 0.1%
Hong Kong Electric Holdings Ltd. 10,500 33,808
GAS SERVICES - 2.0%
Hong Kong & China Gas Co., Ltd. 595,698 668,629
SANITARY SERVICES - 0.2%
Sanix, Inc. 1,200 63,384
TELECOMMUNICATIONS - 9.1%
China Telecom Ltd. (a)(b) 201,000 1,788,878
Korea Telecom Corp. ADR 3,600 174,150
Locus Corp. 2,300 186,699
Nippon Telegraph & Telephone Corp. 28 372,383
SK Telecom 1,450 474,705
------------
2,996,815
WHOLESALE TRADE - 11.5%
DURABLE GOODS - 11.5%
Johnson Electric Holdings Ltd. 165,800 1,568,546
Li & Fung Ltd. 421,000 2,106,188
Softbank Corp. 900 122,241
------------
3,796,975
TOTAL COMMON STOCKS (COST $9,833,517,
$14,327,139 AND $24,160,656) 31,560,354
WARRANTS - 0.6%
RETAIL TRADE - 0.6%
RESTAURANTS
Jollibee Foods Corp. (cost $294,000) 669,500 185,757
SHORT-TERM OBLIGATIONS - 2.0% PAR
Lehman Brothers Repurchase Agreement 672,000 672,000
------------
TOTAL INVESTMENTS - 96.6% 31,981,968
OTHER ASSETS, LESS LIABILITIES - 3.4% 384,813(c)
------------
NET ASSETS - 100.0% $ 32,366,781
============
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) The value of this security represents fair value as determined in good
faith under the direction of the Trustees.
(c) Adjusted for one time proxy, accounting, legal and other costs of the
reorganization of $25,528 and $26,769 to be borne by Stein Roe Small Cap
Tiger Fund and Liberty Newport Asia Pacific Fund respectively.
(d) 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.
ADR American Depositary Receipts
Au Australia
CH People's Republic of China
HK Hong Kong
In Indonesia
Ja Japan
Ko South Korea
Ph Philippines
Si Singapore
Th Thailand
Tw Taiwan
<PAGE> 50
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINING CONDENSED STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 2000 (Unaudited)
Stein Roe Small Cap Tiger Fund merges into Liberty Newport Asia Pacific Fund
<TABLE>
<CAPTION>
STEIN ROE LIBERTY
SMALL CAP NEWPORT ASIA
TIGER PACIFIC PRO FORMA PRO FORMA
FUND FUND ADJUSTMENTS COMBINED
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investments, at market value $ 12,945,519 $ 19,036,449 31,981,968
Cash -- -- --
Receivable for investments sold -- -- --
Payable for investments purchased -- -- --
Other assets less other liabilities 66,876 370,234 (52,297) (a) 384,813
Net assets $ 13,012,395 $ 19,406,683 $ 32,366,781
Class A
Net assets $ 4,897,892 $ 10,205,355 ($23,686) 15,079,561
Shares outstanding 527,298 415,705 (328,000) 615,002
Net asset value $ 9.29 $ 24.55 $ 24.52
Class B
Net assets $ 6,979,125 $ 5,832,909 ($21,738) 12,790,296
Shares outstanding 775,216 240,066 (488,220) 527,062
Net asset value $ 9.00 $ 24.30 $ 24.27
Class C
Net assets $ 905,753 $ 1,383,496 (3,685) 2,285,564
Shares outstanding 100,390 56,997 (63,110) 94,277
Net asset value $ 9.02 $ 24.27 $ 24.24
Class S (b)
Net assets $ 229,625 ($450) 229,175
Shares outstanding 24,608 (15,275) 9,332
Net asset value $ 9.33 $ 24.56
Net Assets - Class Z $ 1,984,923 (2,738) $ 1,982,185
Shares - Class Z 80,730 (13) 80,717
Net asset value per share - Class Z $ 24.59 $ 24.56
</TABLE>
(a) Adjustment reflects one time proxy, accounting, legal and other costs of
the reorganization of $25,528 and $26,769 to be borne by the Tiger Cub Fund
and the Asia Pacific 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>
Stein Roe Small Cap Tiger Fund 50% 50%
Liberty Newport Asia Pacific Fund 50% 50%
</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.
(b) Class S shares of Stein Roe Small Cap Tiger fund are exchanged for new S
shares of Liberty Newport Asia Pacific Fund, to be established upon
consummation of the merger. Initial per share values of Class S shares are
presumed to equal that of Class Z shares.
<PAGE> 51
PRO FORMA COMBINING CONDENSED STATEMENT OF OPERATIONS FOR THE TWELVE MONTH
PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
STEIN ROE SMALL CAP LIBERTY NEWPORT ASIA PRO FORMA PRO FORMA
TIGER FUND PACIFIC FUND ADJUSTMENTS COMBINED
------------------- -------------------- ----------- ------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends 325,886 153,566 -- 479,452
Interest 40,869 58,040 -- 98,909
---------- ---------- ---------- ----------
Total investment income 366,755 211,607 -- 578,361
EXPENSES
Management fee 158,391 140,737 (20,659)(a) 278,469
Administration fee 34,433 35,184 - (a) 69,617
Service fee - Class A, B, C 34,278 30,798 - (a) 65,076
Distribution fee - Class B 55,784 26,808 - (a) 82,592
Distribution fee - Class C 7,552 6,918 - (a) 14,470
Transfer agent fee 33,229 34,941 3,034 (b) 71,204
Bookkeeping fee 27,000 27,000 (27,000)(a) 27,000
Trustees fee 5,898 6,271 (6,819)(c) 5,350
All other expenses 167,497 158,210 (167,207)(d) 158,500
---------- ---------- ---------- ----------
Total operating expenses 524,062 466,867 (218,651) 772,278
---------- ---------- ---------- ----------
Expense reimbursement (150,985) (134,943) 204,878 (e) (81,050)
---------- ---------- ---------- ----------
Net Expenses 373,077 331,924 (13,773) 691,228
NET INVESTMENT LOSS (6,322) (120,317) 13,773 (112,867)
NET REALIZED & UNREALIZED GAIN (LOSS)
Net realized gain on:
Investments 1,633,995 453,115 -- 2,087,110
Foreign currency transactions (10,803) (42,669) -- (53,471)
---------- ---------- ---------- ----------
Net Realized Gain 1,623,193 410,446 -- 2,033,638
Change in net unrealized appreciation/
depreciation during the period on:
Investments (410,614) 2,323,797 -- 1,913,182
Foreign currency transactions (3,039) 443 -- (2,596)
---------- ---------- ---------- ----------
Net Change in Unrealized Appreciation/
Depreciation (413,653) 2,324,240 -- 1,910,586
---------- ---------- ---------- ----------
Net Gain 1,209,539 2,734,685 -- 3,944,225
---------- ---------- ---------- ----------
Increase in Net Assets from Operations 1,203,217 2,614,368 13,773 3,831,358
</TABLE>
(a) Based on the contract in effect for the surviving Fund.
(b) Based on the contract in effect for the surviving Fund. Note that a new
transfer agent fee structure was implemented for the Asia Pacific Fund
effective January 1, 2000. The pro forma combined transfer agent fee shown
assumes this new arrangement was in effect for the entire twelve-month
period ended June 30, 2000.
(c) Based on trustee compensation plan for the surviving fund.
(d) Decrease due to the elimination of duplicative expenses achieved by merging
the Funds.
(e) Based on the voluntary expense limitation currently in effect for the
surviving Fund.
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 Stein Roe Small Cap Tiger
Fund and Liberty Newport Asia Pacific 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> 52
[Liberty Logo] LIBERTY
LIBERTY FUNDS SERVICES, INC.
STEIN ROE SMALL CAP TIGER 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 Small Cap Tiger Fund by Liberty
Newport Asia Pacific Fund (Item 1 of the Notice).
For Against Abstain
[ ] [ ] [ ]
2. To elect eleven Trustees (Item 2 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> 53
[Liberty Logo] LIBERTY
LIBERTY FUNDS SERVICES, INC.
LIBERTY NEWPORT TIGER CUB 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 Newport Tiger Cub Fund by Liberty
Newport Asia Pacific Fund (Item 1 of the Notice).
For Against Abstain
[ ] [ ] [ ]
2. To elect eleven Trustees (Item 2 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> 54
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> 55
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> 56
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
