Amendment
to the
Amended and Restated Investment Advisory Agreement
Dated August 1, 2004
(adopted March 8, 2005)
As of February 10, 2005, the Amended and Restated Investment Advisory Agreement
dated August 1, 2004 between Columbia Xxxxxx Asset Management, L.P. and Columbia
Acorn Trust (the "Trust") is hereby amended to reduce the rates at which fees
are payable thereunder with respect to certain series of the Trust to the rates
indicated on Schedule A hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of March 8, 2005.
COLUMBIA ACORN TRUST
On behalf of each series listed on Schedule A hereto
By:
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Title:
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COLUMBIA XXXXXX ASSET MANAGEMENT, L.P.
By: WAM Acquisition GP, Inc., Its General Partner
By:
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Title:
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Schedule A
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Name of Fund Annual Fee Net Assets
Rate
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Columbia Acorn Fund 0.740% Up to $700 million
0.690% $700 million to $2 billion
0.640% $2 billion to $6 billion
0.630% $6 billion and over
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Columbia Acorn Select 0.850% Up to $700 million
0.800% $700 million and over
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Columbia Acorn USA 0.940% Up to $200 million
0.890% $200 million and over
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Columbia Acorn International 1.190% Up to $100 million
0.940% $100 million to $500 million
0.740% $500 million and over
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Columbia Acorn International Select 0.940% N/A
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N-SAR Exhibit
I Xxxxxx, et al. x. Xxxxxx, et al., No. 05-10065 (PBS); Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxx of
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Massachusetts
On January 11, 2005 this putative class action lawsuit was filed in
federal district court in Massachusetts against the Trustees of Columbia Acorn
Trust ("CAT") and Columbia Xxxxxx Asset Management, L.P. ("CWAM"). All of the
trustees of CAT and CWAM were dismissed from this case on April 19, 2005.
II Xxxxxxx v. Columbia Acorn Trust, et al., No. 03L1550; Circuit Court,
Third Judicial Circuit, Madison
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County, Illinois
On November 13, 2003, the above-captioned lawsuit was filed against CAT
and CWAM, in the Circuit Court of the Third Judicial Circuit, Madison County,
Illinois, ("Madison County") seeking certification of a plaintiff class
consisting of all persons in the United States who held shares in Columbia Acorn
International (the "International Fund") for a period of more than 14 days
during the five years prior to and through the filing of the lawsuit.
The Xxxxxxx Complaint is pleaded in two counts and alleges, in summary,
that CWAM and CAT exposed long-term International Fund shareholders to trading
by market timers by allegedly: (a) failing to properly evaluate daily whether a
significant event affecting the value of the International Fund's portfolio
securities had occurred after foreign markets had closed but before the
calculation of the International Fund's net asset value ("NAV"); (b) failing to
implement the International Fund's portfolio valuation and share pricing
policies and procedures; (c) allowing portfolio valuation and share pricing
policies and procedures that benefited market timers at the expense of long-term
shareholders; and (d) failing to know and implement applicable rules and
regulations concerning the calculation of NAV. Count I of the Complaint alleges
that the defendants breached duties of care owed to International Fund
shareholders, and Count II alleges that the asserted breaches were willful and
wanton. Both counts of the Complaint seek unspecified compensatory and punitive
damages, prejudgment interest, costs and attorneys' fees.
On April 5, 2005 the Seventh Circuit Court of Appeals issued its
Opinion in the "fair value pricing" cases, including Xxxxxxx. Defendants had
appealed the various district courts' remand of these cases to state court in
Madison County, Illinois. The Seventh Circuit reversed the federal district
courts' remand of these cases to state court, holding that the plaintiffs' state
law claims were preempted by federal law. The Seventh Circuit remanded the
cases, including Xxxxxxx, to the district courts with instructions to "undo" the
remand orders and dismiss the plaintiffs' complaints with prejudice. Plaintiffs
then filed a motion with the district court to amend the Xxxxxxx complaint to
"plead around" the Seventh Circuit's federal preemption ruling. However,
consistent with the mandate, the federal district court denied plaintiffs'
motion to amend and dismissed the Xxxxxxx complaint with prejudice. Plaintiffs
have appealed the district court's denial of their motion to amend to the
Seventh Circuit and intend to file a certiorari petition with the United States
Supreme Court to further appeal the federal preemption ruling.
III Xxxx Xxxxx v. FleetBoston Financial Corporation, et al., Xx. 00-00000
(XXX), X.X. Xxxx. Xx. Mass.;. Gene
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Osburn v. FleetBoston Financial Corporation, et al., Xx. 00-00000
(XXX), X.X. Xxxx. Xx. Mass. Xxxx S.B.
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Xxxxxxxx, et al. v. FleetBoston Financial Corporation, et al.,
Xx. 00-00000 (XXX), X.X. Xxxx. Xx.
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Mass.; Xxxxx Xxxxxxx v. FleetBoston Financial Corporation, et al.,
Xx. 00-00000 (XXX), X.X. Xxxx. Xx.
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Mass.
Four lawsuits were filed in the District Court for the District of
Massachusetts which are hybrid class and derivative actions, naming among
others, the various series of CAT (the "Funds") as "nominal defendants," and the
CAT Trustees as defendants. These cases have been consolidated under the caption
"In re: Columbia Entites Litigation, U.S. Dist. Ct. Mass. 04 c 11704 (REK)."
These cases allege that the various investment advisers within Columbia
Management Group utilized fund assets to pay broker-dealers to recommend and
sell the Funds in preference to other funds, thereby increasing the assets under
management and resultant fees to CWAM and affiliated advisors. The cases seek
recovery of compensatory and punitive damages, rescission of CWAM's contract
with the Funds and recovery of all fees paid to CWAM by the Funds, as well as
attorneys' fees and costs.
The class claims assert violations of Sections 34(a), 36(a) and 36(b)
of the Investment Company Act of 1940 ("ICA"), and for common law breach of
fiduciary duty and unjust enrichment. The derivative claims allege violations of
Section 48(a) of the ICA by all defendants.
Plaintiffs have filed a consolidated amended complaint and a renewed
motion to appoint lead and liaison plaintiff's counsel. The trustees and CAT
have filed a motion to dismiss the consolidated amended compliant and a response
in opposition to the renewed motion to appoint counsel. The Court has set an
October 20, 2005 hearing date on plaintiffs' motions.
IV In re: Mutual Funds Investment Litigation, No. 04-MD-1586; United
States District Court for the
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District of Maryland
Commencing in late 2003, several class action and derivative lawsuits
were filed in federal district courts naming, among others, CAT and the Trustees
of CAT challenging the existence of consensual market timing arrangements,
frequent trading and late trading. In September 2003, motions were filed by
various mutual fund defendants seeking to centralize or consolidate al actions
filed in federal district courts involving market timing-related allegations to
one MDL proceeding pursuant to 28 U.S.C. ss.1407. On February 20, 2004, an Order
was entered transferring all federal district court cases involving market
timing-related allegations to the United States District Court for the District
of Maryland.
On September 29, 2004, plaintiffs in the class action track filed a
Consolidated Amended Complaint in the Multi-District Litigation styled Xxxxx, et
al. v. Columbia Acorn Funds, et al., No. 04-CV-01763, which names as defendants
CAT, and Xxxxx Xxxxxx and Xxxxxxx XxXxxxx as interested Trustees of CAT. The
independent CAT trustees are not named as defendants (although certain
independent trustees of the Columbia Funds trusts are named). Also on September
29, 2004, plaintiffs in the derivative actions brought on behalf of shareholders
in numerous fund complexes a Consolidated Amended Fund Derivative Complaint
styled Slaybe, et al. v. Columbia Management Advisers, Inc., et al., No.
04-CV-1768, which names CAT and the Columbia Acorn Fund as "nominal defendants"
(the action is brought by plaintiffs on their behalf), and the ten CAT Trustees
as defendants. The judges assigned to hear the MDL cases are J. Xxxxxxxxx Xxxx,
Xxxxx X. Xxxxx, Xxxxxxxxx X. Xxxxx and Xxxxxxxx X. Stamp (sitting in the
District of Maryland pursuant to intra circuit assignment). Judge Xxxx is
assigned to the Columbia track.
On June 16 and 17, 2005, an oral argument on the various motions to
dismiss the consolidated amended class and derivative complaints was held before
the MDL panel in Baltimore. No decision on the motions to dismiss has yet been
issued by the MDL panel.
V Xxxx Xxxxxxxxxxx v. Columbia Acorn Trust, et al., Superior Court,
Commonwealth of Massachusetts, No.
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05-1093
On March 21, 2005, a 1-count breach of contract class action complaint
was filed against several of the Columbia Registrants, including CAT, seeking to
rescind the Contingent Deferred Sales Charges assessed upon redemption of Class
B shares of Columbia mutual funds due to the alleged market timing "misconduct"
of defendants. The trustees are not named as defendants. In addition to the
rescission of sales charges, plaintiffs seek recovery of actual damages,
attorneys' fees and costs.
This case was previously removed to federal district court, and
defendants have also sought transfer of this case to the MDL market timing
proceeding in Baltimore, Maryland. Plaintiffs then filed a motion to remand the
case to state court, which was fully briefed and argued before the Court. On
July 28, 2005, the Court denied plaintiffs' motion to remand the case to state
court.
