-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FinimFZEatcBM/wax36VLRUSknwEJfqGgzfxyhmGcTkYGnEXsHxv4tTW+1eG/B2j dXr8MnBWNAUN+d63Tmn9FA== 0000936372-98-000013.txt : 19980505 0000936372-98-000013.hdr.sgml : 19980505 ACCESSION NUMBER: 0000936372-98-000013 CONFORMED SUBMISSION TYPE: N-2 PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19980501 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY ALL STAR GROWTH FUND INC /MD/ CENTRAL INDEX KEY: 0000786035 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-2 SEC ACT: SEC FILE NUMBER: 333-51691 FILM NUMBER: 98608915 FILING VALUES: FORM TYPE: N-2 SEC ACT: SEC FILE NUMBER: 811-04537 FILM NUMBER: 98608916 BUSINESS ADDRESS: STREET 1: LIBERTY INVESTMENT SERVICES, INC STREET 2: 600 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02210-2214 BUSINESS PHONE: 3019865866 MAIL ADDRESS: STREET 1: LIBERTY INVESTMENT SERVICES INC STREET 2: 600 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02210 FORMER COMPANY: FORMER CONFORMED NAME: ALLMON CHARLES TRUST INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: GROWTH STOCK OUTLOOK TRUST INC DATE OF NAME CHANGE: 19910807 N-2 1 FORM N-2 Securities Act of 1933 File No. 333-_________ Investment Company Act of 1940 File No. 811-4537 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------------------------------------- FORM N-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X| PRE-EFFECTIVE AMENDMENT NO. |_| POST-EFFECTIVE AMENDMENT NO. |_| and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X| AMENDMENT NO. 11 |X| --------------------------------------------------------- LIBERTY ALL-STAR GROWTH FUND, INC. (Exact Name of Registrant as Specified in Articles of Incorporation) - ------------------------------------------------------------------- Federal Reserve Plaza, Boston, Massachusetts 02210 ---------------------------------------------------------- (Address of Principal Executive Offices) 617-722-6000 ------------ (Registrant's Telephone Number, Including Area Code) John L. Davenport, Esq. Vice President and Associate General Counsel Liberty Financial Companies, Inc. Federal Reserve Plaza Boston, MA 02210 ---------------------------------------------------------- (Name and Address of Agent for Service) ---------------------------------------------------------- With copy to: Jeremiah J. Bresnahan, Esq. Bingham, Dana & Gould 150 Federal Street, 24th Floor Boston, MA 02110 Approximate Date of Proposed Offering: As soon as practicable after the effective date of this Registration Statement. If any securities being registered on this form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, other than securities offered in connection with a dividend reinvestment plan, check for the following box. |X| CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933 - ----------------------------------------------------------- ============================================================================== Title of Proposed Proposed Maximum Maximum Securities Amount Offering Aggregate Amount of Being Being Price Per Offering Registration Registered Registered Unit(1) Price (1) Fee ============================================================================== Shares of Common Stock, 1,334,476 Shares $13.1875 $17,598,402 $5,192 Par Value $.10 per share ============================================================================== (1) Calculated pursuant to Rule 457(c) under the Securities Act of 1933, based on the average of the high and low sale prices reported on the consolidated reporting system on April 29, 1998. Registrant hereby amends this Registration Statement under the Securities Act of 1933 on such date or dates as may be necessary to delay its effective date until Registrant shall file a further amendment which specifically states that such Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until such Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. ================================================================================ LIBERTY ALL-STAR GROWTH FUND, INC. REGISTRATION STATEMENT ON FORM N-2 CROSS REFERENCE SHEET Item Number and Heading - ----------------------- Part A Caption in Prospectus - ------- --------------------- 1. Outside Front Cover Cover Page 2. Inside Front and Outside Back Cover Page Cover Page 3. Fee Table and Synopsis Expenses; Prospectus Summary 4. Financial Highlights Financial Highlights 5. Plan of Distribution The Offer 6. Selling Shareholders * 7. Use of Proceeds Use of Proceeds 8. General Description of Registrant General; Cover Page; The Multi-Manager Concept; Investment Objective and Policies; Description of Shares - Share Price Data 9. Management Management of All-Star; Appendix A 10. Capital Stock, Long-Term Debt, Description of Shares; Distributions; and Other Securities Automatic Reinvestment and Cash Purchase Plan; Tax Status 11. Defaults and Arrears on Senior Securities * 12. Legal Proceedings * 13. Table of Contents of the Statement of Additional Information Statement of Additional Information Part B Caption in Statement of Additional - ------ Information -------------------------------------- 14. Cover Page Cover Page 15. Table of Contents Table of Contents 16. General Information and History (See "History" in the Prospectus) 17. Investment Objective and Policies Investment Objective and Policies; Investment Restrictions 18. Management Directors and Officers of All-Star 19. Control Persons and Principal Principal Shareholders Holders of Securities Caption in Statement Part B of Additional Information - ----- ------------------------------ 20. Investment Advisory and Other Services Investment Advisory and Other Services 21. Brokerage Allocation and Other Portfolio Security Transactions Practices 22. Tax Status (See "Tax Status" in Prospectus) 23. Financial Statements Financial Statements - ---------------- * Not applicable PROSPECTUS [Logo] 1,334,476 Shares of Common Stock, par value $.10 per share Issuable Upon Exercise of Rights to Subscribe for such Shares LIBERTY ALL-STAR GROWTH FUND, INC. Liberty All-Star Growth Fund, Inc. ("All-Star") is offering to its shareholders of record as of the close of business on June __, 1998 rights ("Rights") entitling the holders thereof to subscribe for an aggregate of 1,334,476 shares of Common Stock, par value $.10 per share, of All-Star (the "Shares") at the rate of one Share for each ten Rights held (the "Offer"), and entitling such shareholders to subscribe, subject to certain limitations and subject to allotment, for any Shares not acquired by exercise of primary subscription Rights. The Rights are not transferable and will not be admitted for trading on the New York Stock Exchange. See "The Offer". THE SUBSCRIPTION PRICE PER SHARE WILL BE 95% OF THE LOWER OF (i) THE LAST REPORTED SALE PRICE ON THE NEW YORK STOCK EXCHANGE ON JULY , 1998 OF A SHARE OF ALL-STAR, OR (ii) THE NET ASSET VALUE OF A SHARE OF ALL-STAR ON THAT DATE. THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK TIME, ON JULY __, 1998 (the "Expiration Date"). SINCE THE CLOSE OF THE OFFERING ON THE EXPIRATION DATE IS PRIOR TO THE PRICING DATE, SHAREHOLDERS WHO CHOOSE TO EXERCISE THEIR RIGHTS WILL NOT KNOW THE SUBSCRIPTION PRICE PER SHARE AT THE TIME THEY EXERCISE SUCH RIGHTS. For additional information, please call Corporate Investor Communications, Inc. (the "Information Agent") toll free at (888) 501-9721. All-Star is a multi-managed diversified closed-end management investment company that allocates its portfolio assets on an approximately equal basis among several independent investment organizations (currently three in number) having different investment styles recommended and monitored by Liberty Asset Management Company, All-Star's fund manager. All-Star's investment objective is to seek long term capital appreciation. It seeks its investment objective through investment primarily in a diversified portfolio of equity securities. The address of All-Star is Federal Reserve Plaza, Boston, Massachusetts 02210 and its telephone number is 1-800-542-3863. All-Star's shares are listed on the New York Stock Exchange under the symbol "ASG". All-Star announced the terms of the Offer before the opening of trading on the New York Stock Exchange on April 24, 1998. The net asset value per share of common stock of All-Star at the close of business on April 23, 1998 and May __, 1998 was $______ and $_______, respectively, and the last reported sale price of a share on such Exchange on those dates was $__________ and $_________, respectively. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ============================================================================== Subscription Proceeds to Price (1) Sales Load All-Star(2) - ------------------------------------------------------------------------------ Per Share...$_______ NONE $________ - ------------------------------------------------------------------------------ Total.......$_______ NONE $________ ============================================================================== (1) Estimated based on an assumed Subscription Price of 95% of the last reported sale price on the New York Stock Exchange on May , 1998. (2) Before deduction of expenses payable by All-Star, estimated at $____________. --------------------------- As a result of the terms of the Offer, shareholders who do not exercise their Rights will, upon completion of the Offer, own a smaller proportional interest in All-Star. In addition, because the Subscription Price per share will be less than the then current net asset value per share, the Offer will result in some dilution of the aggregate net asset value of the shares owned by shareholders who do not fully exercise their Rights. ----------------------------------- This Prospectus sets forth concisely the information that a shareholder ought to know before exercising his or her Rights and should be retained for future reference. A Statement of Additional Information dated May __, 1998 has been filed with the Securities and Exchange Commission and is incorporated herein by reference. The table of contents of the Statement of Additional Information appears on page ___ of this Prospectus, and a copy is available at no charge by calling the Information Agent at (888) 501-9721. ------------------------------- The date of this Prospectus is May __, 1998 [End of Cover] EXPENSES Shareholder Transaction Expenses - -------------------------------- These are the expenses that an investor incurs when buying shares of All-Star, whether in this Offer, in the open-market or through All-Star's Automatic Dividend Reinvestment and Cash Purchase Plan. Sales load None(1) Dividend Reinvestment and Cash Purchase Plan Fees $1.25 per voluntary cash investment - ---------------- (1) No sales load or commission will be payable in connection with this Offer. Purchases of shares through brokers in secondary market transactions are subject to brokers' commissions and charges. Annual Expenses (as a percentage of net assets attributable to Common Stock) Management and administrative fees ____% Other Expenses ____% Total Annual Expenses ____% Example: You would pay the following expenses on an investment (at net asset value) of $1,000, assuming a 5% annual return. 1 Year 3 Years 5 Years 10 Years - ------ ------- ------- -------- $---- $---- $---- $---- These figures are intended to illustrate the effect of All-Star's expenses, but are not meant to predict its future returns and expenses, which may be higher or lower than those shown. The purpose of the above tables is to assist investors in understanding the various costs and expenses that an investor in All-Star will bear directly or indirectly. The numbers shown under the Annual Expenses table are projections based on All-Star's actual expenses for the year ended December 31, 1997, and on its projected net assets assuming the offer is fully subscribed for at an assumed Subscription Price of $______ per share, and have been adjusted to assume that the increased management and administrative fees to be effective August 1, 1998 (see "Management of All-Star") were in effect for the full year ended December 31, 1997. See "Financial Highlights" for All-Star's actual ratio of expenses to average net assets for the year ended December 31, 1997. PROSPECTUS SUMMARY The following summary is qualified in its entirety by reference to the more detailed information included elsewhere in this Prospectus. Purpose of the Offer The Board of Directors of Liberty All-Star Growth Fund, Inc. ("All-Star" or the "Fund") has determined that it would be in the best interest of All-Star and its shareholders to increase the assets of All-Star available for investment. The Offer seeks to reward investors in All-Star by giving existing shareholders the opportunity to purchase additional Shares at a price below market value and without brokerage commissions. See "The Offer-Purpose of the Offer." Terms of the Offer All-Star is issuing to its shareholders of record as of the close of business on June , 1998 (the "Record Date") rights ("Rights") to subscribe for an aggregate of 1,334,476 shares (sometimes referred to herein as the "Shares") of Common Stock, par value $.10 per share, of All-Star. Each such shareholder is being issued one Right for each full share of Common Stock owned on the Record Date. The Rights entitle the holder to acquire, at the Subscription Price (as hereinafter defined), one Share for each ten Rights held. Rights may be exercised at any time during the period (the "Subscription Period") which commences on June , and ends at 5:00 p.m., New York time, on July __, 1998 (the "Expiration Date"). The right to acquire during the Subscription Period at the Subscription Price one additional Share for each ten Rights held is hereinafter referred to as the "Primary Subscription." In addition, any shareholder who fully exercises all Rights issued to him or her (other than those Rights which cannot be exercised because they represent the right to acquire less than one Share) is entitled to subscribe for Shares which were not otherwise subscribed for by others on Primary Subscription (the "Over-Subscription Privilege"). For purposes of determining the maximum number of Shares a shareholder may acquire pursuant to the Offer, broker-dealers whose shares are held of record by Cede & Co., Inc. ("Cede"), nominee for Depository Trust Company, or by any other depository or nominee will be deemed to be the holders of the Rights that are issued to Cede or such other depository or nominee. Shares acquired pursuant to the Over-Subscription Privilege are subject to allotment, which is more fully discussed under "The Offer--Over-Subscription Privilege." The subscription price per Share (the "Subscription Price") will be 95% of the lower of (i) the last reported sale price on the New York Stock Exchange on July __, 1998 (the "Pricing Date") of a share of Common Stock of All-Star, or (ii) the net asset value of a share of All-Star on the Pricing Date. Since the Expiration Date is prior to the Pricing Date, shareholders who choose to exercise their Rights will not know at the time they exercise such Rights what the purchase price for Shares acquired pursuant to such exercise will be. Shareholders will have no right to rescind their subscription after receipt of their payment for Shares by the Subscription Agent. Subscription payments will be held by the Subscription Agent pending completion of the processing of the subscription. No interest thereon will be paid to subscribers. The Rights are not transferable. Therefore, only the underlying Shares, and not the Rights, will be admitted for trading on the New York Stock Exchange. Since fractional shares will not be issued on exercise of Rights, shareholders who receive, or are left with, fewer than ten Rights will be unable to exercise such Rights and will not be entitled to receive any cash in lieu of fractional shares. Shareholders' inquiries about the Offer should be directed to their broker, bank or trust company, or to: Corporate Investor Communications, Inc. 1-888-501-9721 Important Dates to Remember Event Date - ----- ---- Record Date. . . . . . . . . . . . . . . June , 1998 Subscription Period . . . . . . . . . . . . . . . . June , 1998 through July , 1998 Expiration Date (Deadline for delivery of Subscription Certificate together with payment of estimated Subscription Price or for delivery of Notice of Guaranteed Delivery). . . . . . . . . . . . . . . July , 1998 Pricing Date . . . . . . . . . . . . . July , 1998 Deadline for payment of final Subscription Price pursuant to Notice Of Guaranteed Delivery. . . . . . . . . . July , 1998 Confirmation to Registered Shareholders. . . . . . . July , 1998 For Registered Shareholders' Subscriptions - deadline for payment of unpaid balance if final Subscription Price is higher than Estimated Subscription Price. . . . . . . July , 1998 Information about All-Star All-Star is a multi-managed diversified closed-end management investment company that allocates its assets on an approximately equal basis among a number of independent investment management organizations (currently three in number) each having a different investment style. See "The Multi-Manager Concept." All-Star's investment objective is to seek long-term capital appreciation. It seeks its objective through investment primarily (at least 65% of total assets under normal conditions) in a diversified portfolio of equity securities. The portion of All-Star's portfolio not invested in equity securities (not more than 35% of total assets under normal conditions) is invested in U.S. Government Securities, repurchase agreements with respect thereto, and certain money market mutual funds. See "Investment Objective and Policies." All-Star commenced investment operations in March 1986 under the name "Growth Stock Outlook Trust, Inc." (see "History of the Fund" below). Its outstanding shares of Common Stock are listed and traded on the New York Stock Exchange (Symbol "ASG"). The average weekly trading volume of the shares on the New York Exchange during the year ended December 31, 1997 was _________ shares. As at May , 1998 All-Star's net assets were $___________________ and 13,344,760 shares of All-Star were issued and outstanding. Information about Liberty Asset Management Company Liberty Asset Management Company ("LAMCO") provides Portfolio Manager selection, evaluation and monitoring services to All-Star, and is responsible for the provision of administrative services to the Fund, some of which are delegated to LAMCO's affiliate, Colonial Management Associates, Inc. ("Colonial"). See "Management of All-Star" for the fees paid by the Fund to LAMCO and by LAMCO to the Portfolio Managers. Since the fees of LAMCO and the Portfolio Managers are based on the average weekly net assets of All-Star, LAMCO and the Portfolio Managers will benefit from the Offer. LAMCO, organized in 1985, is an indirect wholly-owned subsidiary of Liberty Financial Companies, Inc. As of May , 1998, approximately __% of the combined voting power of the issued and outstanding voting stock of Liberty Financial Companies, Inc. was held, indirectly, by Liberty Mutual Insurance Company, and substantially all of the remaining shares are listed on the New York Stock Exchange. Special Considerations and Risk Factors The following summarizes certain matters that should be considered, among others, in connection with the Offer. Dilution............. As a result of the terms of the Offer, shareholders who do not fully exercise their Rights should expect that they will, at the completion of the Offer, own a smaller proportional interest in All-Star than if they fully exercise their Rights. In addition, some dilution of the aggregate net asset value of the shares owned by shareholders who do not fully exercise their Rights will be experienced as a result of the Offer because the Subscription Price will be less than the net asset value per share and therefore the number of shares outstanding after the Offer will increase by a greater percentage than the increase in All-Star's assets. Although it is not possible to state precisely the amount of such dilution because it is not known at this time how many shares will be subscribed for or what the net asset value or market price per share will be on the Pricing Date, All-Star estimates that such dilution should not be substantial. For example, if All-Star's Shares are trading at a discount from their net asset value of .__% (the average discount for the three month period ended _______________, 1998), and assuming all Rights are exercised, the Subscription Price would be _____% below All-Star's net asset value per share, resulting in a reduction of such net asset value of approximately $.__ per share, or less than 0.___%. Anti-takeover Provisions........... All-Star's Articles of Incorporation and By-laws have provisions (commonly referred to as "anti-takeover provisions") which are intended to have the effect of limiting the ability of other entities or persons to acquire control of All-Star, to cause it to engage in certain transactions, or to modify its structure. For instance, the affirmative vote or consent of 66 2/3 percent of the shares of the Fund is required to authorize All-Star's conversion from a closed-end to an open-end investment company, regardless of whether such conversion is approved or recommended by the Board of Directors. A similar shareholder vote or consent is required to authorize a merger, sale of a substantial part of the assets, issuance of securities for cash, or similar transaction with a person beneficially owning five percent or more of All-Star's shares, unless approved by All-Star's Board of Directors under certain conditions. These provisions cannot be amended without a similar super-majority vote. In addition, All-Star's Board of Directors is divided into three classes, each of which has a term of three years and only one of which is elected at each annual meeting of shareholders. See "Description of Shares--Certain Provisions of the Articles of Incorporation and By-laws." Distributions..........All-Star currently has a policy of paying distributions on its common stock totalling approximately 10% of its net asset value per year, payable in four quarterly distributions of 2.5% of All-Star's net asset value at the close of the New York Stock Exchange on the Friday prior to each quarterly declaration date. These fixed distributions are not related to All-Star's net investment income or net realized capital gains or losses. If, for any calendar year, the total distributions made under the 10% pay-out policy exceed All-Star's net investment income and net realized capital gains, the excess will generally be treated as a tax-free return of capital to shareholders (up to the amount of the shareholder's basis in his or her shares), and thereafter as gain from the sale of shares. The amount treated as a tax-free return of capital will reduce the shareholder's adjusted basis in his or her shares, thereby increasing his or her potential gain or reducing his or her potential loss on the sale of his or her shares. Such excess, however, will be treated first as ordinary dividend income up to the amount of All-Star's current and accumulated earnings and profits, and then as return of capital and capital gain as set forth above. All-Star may, in the discretion of the Board of Directors, retain for reinvestment net long-term capital gains in excess of net short-term capital losses for any year to the extent that its net investment income, net short-term realized gains, and net long-term realized gains exceed the minimum amount required to be distributed for such year under the 10% pay-out policy. Such retained capital gains will be taxed to both All-Star and the shareholders as long-term capital gains; however shareholders will be able to claim their proportionate share of the federal income taxes paid by All-Star as a credit against their own federal income tax liabilities, and will be entitled to increase the adjusted tax basis of their All-Star shares by the difference between their pro rata share of the undistributed capital gains and their tax credit. See "Distributions; Automatic Dividend Reinvestment and Cash Purchase Plan." Closed-end fund discounts............ Shares of closed-end investment companies such as All-Star are not redeemable and frequently trade at a discount from their net asset value. This risk is separate and distinct from the risk that All-Star's net asset value may decline. See "Share Price Data." FINANCIAL HIGHLIGHTS -------------------- The following information as to per share operating performance, total investment return and ratios for each of the ten years ended December 31, 1997 has been audited by KPMG Peat Marwick LLP, Boston, Massachusetts, independent auditors. The report of KPMG Peat Marwick LLP, together with the financial statements of All-Star, are included in the Statement of Additional Information (see cover page). The information for the three months ended March 31, 1998 is unaudited. YEAR ENDED DECEMBER 31, -------------------------------------------------------------------- Three months ended March 31, 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 -------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of period $11.27 $10.55 $9.95 $10.54 $10.28 $10.40 $9.90 $10.10 $9.59 $9.18 Income from Investment Operations: Net investment income (loss) (0.02) 0.01 0.31 0.23 0.18 0.29 0.44 0.54 0.57 0.41 Net realized and unrealized gain (loss) on investments 2.88 1.86 1.05 (0.24) 0.56 0.03 0.71 (0.12) 0.58 0.41 ---- ---- ---- ----- ---- ----- ----- ---- ---- ---- Total from Investment Operations 2.86 1.87 1.36 (0.01) 0.74 0.32 1.15 0.42 0.15 (0.82) ---- ---- ---- ----- --- ---- ----- ---- ---- ---- Less Distributions: Dividends from net investment income - (0.01) (0.31) (0.23) (0.18) (0.30) (0.44) (0.54) (0.57) (0.41) Distributions from realized capital gains (1.24)(1.01)(0.45) (0.35)(0.30)(0.14) (0.21)(0.08)(0.07) - ---- ---- ---- ------ ---- ---- ----- ----- ----- ---- Total Distributions(1.24)(1.02)(0.76) (0.58)(0.48)(0.44)(0.65)(0.62)(0.64)(0.41) Impact of shares issued in dividend reinvestment (a)- (0.13) - - - - - - - - ----- ----- ---- ---- ------ ---- --- ---- ---- ---- Total Distributions and Reinvestments (1.24)(1.15)(0.76)(0.58)(0.48)(0.44)(0.64) (0.62)(0.64)(0.41) Net asset value at end of period $12.89 $11.27 $10.55 $9.95 $10.54 $10.28 $10.40 $9.90 $10.10 $9.59 Per share market value at end of period $11.938 $9.250 $9.375 $8.500 $10.250 $10.00 $10.00 $10.25 $10.00 $9.38 TOTAL INVESTMENT RETURN FOR SHAREHOLDERS:(b) Based on net asset value 27.3% 18.3% 13.8% (1.1%) 7.2% Based on market price 43.6% 9.3% 19.3% (11.6%) 7.2% 4.43% 3.91% 8.85% 13.48% RATIOS AND SUPPLEMENTAL DATA: Net assets at end of period (millions) $167 $137 $120 $113 $125 $123 $125 $121 $124 $128 Ratio of expenses to average net assets 1.20% 1.35% 1.42% 1.51% 1.35% 1.33% 1.31% 1.48% 1.43% 1.46% Ratio of net investment income to average net assets (0.18%) 0.06% 2.87% 2.12% 1.71% 2.80% 4.17% 5.30% 5.58% 4.24% Portfolio turnover rate 57% 51% 82% 50% 47% 19% 25% 41% 25% 24% Average commission rate(d) $0.0502 $0.0555 - - - - - - - - - ---------------- (a) Effect on dividend reinvestment shares at a price below net asset value in accordance with the 1996 Automatic Dividend Reinvestment and Cash Purchase Plan. (b) Calculated assuming all distributions reinvested. (c) For fiscal years beginning on or after September 1, 1995, a fund is required to disclose its average commission rate per share for trades on which commissions are charged. See "History of the Fund" below for changes in the investment management of All-Star effective May 27, 1994 and November 6, 1995. SHARE PRICE DATA Trading in All-Star's shares on the New York Stock Exchange commenced on March , 1986. For the two years ended December 31, 1997 and the quarter ended March 31, 1998 the high and low sales prices for All-Star's shares, as reported in the consolidated transaction reporting system, and the highest discount from or premium to net asset value per share and the net asset value on the day or days when the shares traded at such high and low sales prices, were as follows: =============================================================== (Dis- (Dis- count count from) from) or or Premium Premium High Net to Net Low Net to Net Sales Asset Asset Sales Asset Asset Price Value Value Price Value Value =============================================================== 1996 - --------------------------------------------------------------- 1st Quarter - --------------------------------------------------------------- 2nd Quarter - --------------------------------------------------------------- 3rd Quarter - --------------------------------------------------------------- 4th Quarter =============================================================== 1997 - --------------------------------------------------------------- 1st Quarter - --------------------------------------------------------------- 2nd Quarter - --------------------------------------------------------------- 3rd Quarter - --------------------------------------------------------------- 1998 ============================================================= ============================================================= 1st Quarter ============================================================= All-Star's shares have historically traded at a discount from their net asset value. Certain features of and steps taken by All-Star may have tended to reduce the discount from net asset value at which its shares might otherwise have traded, although All-Star is not able to determine what effect, if any, these various features and steps may have had. All-Star's current 10% distribution policy (see "Distributions; Automatic Dividend Reinvestment and Cash Purchase Plan-10% Distribution Policy" below), begun in February, 1987, may have contributed to this effect. This trend may also have resulted in whole or in part from other factors, such as the Fund's investment performance and increased attention directed to All-Star by securities analysts and market letters. The net asset value of a share of All-Star on May __, 1998 was $______. The last reported sale price of an All-Star share on that day was $________, representing a discount from net asset value of _____%. INVESTMENT PERFORMANCE The table below shows two measures of All-Star's return to investors for periods beginning April 1, 1996 and ending March 31, 1998, the calendar quarter beginning April 1, 1996 being the first full calendar quarter during all of which the Fund was fully invested in accordance with LAMCO's multi-management methodology (see "History of the Fund" below). No. 1 ("All-Star NAV") shows All-Star's investment performance based on a valuation of its shares at net asset value ("NAV"). No. 2 ("All-Star Price") shows All-Star's investment performance based on the market price of All-Star's shares. Both measures assume reinvestment of all of the Fund's dividends and distributions in additional shares pursuant to All-Star's Automatic Dividend Reinvestment and Cash Purchase Plan (see "Distributions; Automatic Dividend Reinvestment and Cash Purchase Plan" below). The Lipper Growth Fund Average has been included so that the Fund's results may be compared with an unweighted average of the total return of open-end mutual funds classified as growth funds (i.e. mutual funds having investment objectives and policies comparable to All-Star) published by Lipper Analytical Services, Inc. The record of the S&P 500 Index has also been included so that All-Star's results may be compared with those of an unmanaged group of securities widely regarded by investors as representative of the stock market in general. The S&P 500 Index information reflects the total return (change in the market price) of the securities included in the index, and the Lipper Growth Fund Average information reflects the total return (change in net asset value) of the mutual funds included in the average, in each case assuming reinvestment of dividends and distributions. - --------------------------------------------------------------- No. 1 No. 2 Lipper All-Star All-Star Growth S&P 500 NAV Price Fund Index Average - --------------------------------------------------------------- - --------------------------------------------------------------- 1 Year Since 4/1/97 - ---------------------------------------------------------------- - ---------------------------------------------------------------- 2 Years Since 4/1/96 - --------------------------------------------------------------- - --------------------------------------------------------------- - ------------------- The return shown is the average annual return for the period indicated to March 31, 1998. The above results represent All-Star's past performance and are not intended as a prediction of its future performance. The investment return, net asset value and market value of All-Star's shares will fluctuate, so that such shares when sold may be worth more or less than their original cost. THE OFFER Terms of the Offer All-Star is issuing to the holders of its shares of Common Stock of record on the Record Date non-transferable Rights to subscribe for the Shares. Each such shareholder is being issued one Right for each share of Common Stock owned on the Record Date. The Rights entitle the holder to acquire on Primary Subscription at the Subscription Price one Share for each ten Rights held. No Rights will be issued for fractional shares. Rights may be exercised at any time during the Subscription Period, which commences on June , 1998 and ends at 5:00 p.m., New York time, on July , 1998 (the "Expiration Date"). In addition, any shareholder who fully exercises all Rights initially issued to him or her in the Primary Subscription (other than those Rights which cannot be exercised because they represent the right to acquire less than one Share) is entitled to subscribe for Shares which were not otherwise subscribed for by others on Primary Subscription. For purposes of determining the number of Shares a shareholder may acquire pursuant to the Offer, broker-dealers whose shares are held of record on the Record Date by Cede or by any other depository or nominee will be deemed to be the holders of the Rights that are issued to Cede or such other depository or nominee on their behalf. Shares acquired pursuant to the Over-Subscription Privilege are subject to allotment, which is more fully discussed below under "Over-Subscription Privilege." The Rights are not transferable. Therefore, only the underlying Shares, and not the Rights, will be admitted for trading on the New York Stock Exchange. Since fractional shares will not be issued, shareholders who receive, or who are left with, fewer than ten Rights will be unable to exercise such Rights and will not be entitled to receive any cash in lieu of such fractional shares. The Rights will be evidenced by Subscription Certificates which will be mailed to Record Date shareholders. Rights may be exercised by completing a Subscription Certificate and delivering it, together with payment by means of (i) a check or money order, or (ii) a Notice of Guaranteed Delivery, to the Subscription Agent during the Subscription Period. The method by which Rights may be exercised and the Shares paid for is set forth below under "Method of Exercise of Rights" and "Payment for Shares." Purpose of the Offer The Board of Directors of All-Star has determined that it would be in the best interests of All-Star and its shareholders to increase the assets of All-Star available for investment, and that the potential benefits of the Offer to All-Star and its shareholders will outweigh the dilution to shareholders who do not fully exercise their rights. The proceeds of the Offer will enable All-Star's Portfolio Managers to take advantage of perceived investment opportunities without having to sell existing portfolio holdings which they otherwise would retain. The Offer seeks to reward investors by giving existing shareholders the opportunity to purchase additional Shares at a price below market value and without brokerage commissions. Increasing the size of All-Star should result in lowering its total expenses as a percentage of average net assets. In addition, the Offer will enhance the likelihood that All-Star will continue to have sufficient assets remaining after the distributions called for by its current 10% distribution policy to permit the Fund to maintain the current ratio of its fixed expenses to its net assets. All-Star's Fund Manager and Portfolio Managers will benefit from the Offer because their fees are based on the average weekly net assets of All-Star. See "Management of All-Star." It is not possible to state precisely the amount of additional compensation they will receive as a result of the Offer because it is not known how many Shares will be subscribed for and because the net proceeds of the Offer will be invested in additional portfolio securities that will fluctuate in value. One of All-Star's Directors who voted to authorize the Offer is an "interested person," within the meaning of the 1940 Act, of LAMCO, and therefore could benefit indirectly from the Offer. The other four Directors are not "interested persons" of All-Star or LAMCO. All-Star may, in the future and at its discretion, choose to make additional rights offerings from time to time for a number of shares and on terms which may or may not be similar to the Offer. Any such future rights offering will be made in accordance with the 1940 Act. Over-Subscription Privilege If some shareholders do not exercise all of their Rights initially issued to them in the Primary Subscription, the remaining unsubscribed Shares ("Excess Shares") will be offered, by means of the Over-Subscription Privilege, to holders of Rights who have exercised all the Rights initially issued to them and who wish to acquire more than the number of Shares to which their Rights entitle them. Holders of Rights who exercise all their Rights initially issued to them (other than those Rights which cannot be exercised because they represent the right to acquire less than one Share) will have the opportunity to indicate on their Subscription Certificate how many Shares they are willing to acquire pursuant to this Over-Subscription Privilege. If there are sufficient Excess Shares, all over-subscriptions will be honored in full. If the Excess Shares are insufficient to honor all over-subscriptions, the available Excess Shares will be allocated (subject to the elimination of fractional Shares) among those holders of Rights exercising the Over-Subscription Privilege, in proportion, not to the number of Shares requested pursuant to the Over-Subscription Privilege, but to the number of shares held by them on the Record Date; provided, however, that if such pro rata allocation results in any holder being allocated a greater number of Excess Shares than such holder subscribed for pursuant to the exercise of such holder's Over-Subscription Privilege, then such holder will be allocated only such number of Excess Shares as such holder subscribed for and the remaining Excess Shares will be allocated among all other holders exercising Over-Subscription Privileges. The formula to be used in allocating the Excess Shares is as follows: Holder's Record Date Position ------------------------------ Total Record Date Position x Excess Shares of all Oversubscribers Remaining The allocation process may involve a series of allocations in order to assure that the total number of shares available for Over-Subscription is distributed on a pro rata basis. The Fund will not offer or sell any Shares which are not subscribed for under the Primary Subscription or the Over-Subscription Privilege. The Subscription Price The Subscription Price for the Shares to be issued pursuant to the Rights will be 95% of the lower of (i) the last reported sale price of a share of Common Stock of All-Star on the New York Stock Exchange on July , 1998 (the "Pricing Date"), or (ii) the net asset value of a share of All-Star on the Pricing Date. All-Star announced the terms of the Offer before the opening of trading on the New York Stock Exchange on April 24, 1998. The net asset value per share of All-Star at the close of business on April 24, 1998 and on May , 1998 was $_____ and $_____, respectively, and the last reported sale price of a share on such Exchange on those dates was $_______ and $_________, respectively. Expiration of the Offer The Offer will expire at 5:00 p.m., New York time, on July , 1998 (the "Expiration Date"). Rights will expire on the Expiration Date and thereafter may not be exercised, unless the Offer is extended. Since the Expiration Date is prior to the Pricing Date, shareholders who decide to acquire Shares on Primary Subscription or pursuant to the Over-Subscription Privilege will not know, when they make such decision, what the purchase price for such Shares will be. Any extension, termination, or amendment of the Offer will be followed as promptly as practical by announcement thereof, such announcement in the case of an extension to be issued no later than 9:00 a.m., New York City time, on the next business day following the previously scheduled Expiration Date. The Fund will not, unless otherwise required by law, have any obligation to publish, advertise, or otherwise communicate any such announcement other than by making a release to the Dow Jones New Service or such other means of announcement as the Fund deems appropriate. Subscription Agent The Subscription Agent is State Street Bank and Trust Company, P.O. Box 8200, Boston, Massachusetts 02266-8200. State Street Bank and Trust Company is also the Fund's dividend paying agent, transfer agent and registrar. The Subscription Agent will receive from All-Star a fee estimated to be $______ and reimbursement for its out-of-pocket expenses related to the Offer. Information Agent Any questions or requests for assistance regarding the Offer may be directed to the Information Agent at its telephone number and address listed below: Corporate Investor Communications, Inc. 111 Commerce Road Carlstadt, NJ 07072-2586 Call Toll Free (888) 501-9721 The Information Agent will receive a fee estimated at approximately $_________. Method of Exercise of Rights Rights may be exercised by filling in and signing the Subscription Certificate and mailing it in the envelope provided, or otherwise delivering the completed and signed Subscription Certificate to the Subscription Agent, together with payment for the Shares as described below under "Payment for Shares." Rights may also be exercised through a Rights holder's broker, who may charge such Rights holder a servicing fee in connection with such exercise. Fractional Shares will not be issued, and Rights holders who receive, or who are left with, fewer than ten Rights will not be able to exercise such Rights. Completed Subscription Certificates and related payments must be received by the Subscription Agent prior to 5:00 p.m., New York time, on the Expiration Date (unless payment is effected by means of a notice of guaranteed delivery as described below under "Payment for Shares")at the offices of the Subscription Agent at one of the addresses set forth below. The Subscription Certificate and payment should be sent to STATE STREET BANK AND TRUST COMPANY by one of the following methods: Subscription Certificate Delivery Method Address/Number - ----------------------- -------------- By First Class Mail State Street Bank and Trust Company Corporate Reorganization P.O. Box 9061 Boston, MA 02205-8686 By Hand State Street Bank and Trust Company Securities Transfer and Reporting Services One Exchange Place 55 Broadway, 3rd Floor New York, New York 10006 By Overnight Courier State Street Bank and Trust Company or Express Mail Corporate Reorganization Department 70 Campanelli Drive Braintree, MA 02184 By Broker-Dealer or Shareholders whose Shares are held in other Nominee a brokerage, bank or trust account (Notice of Guaranteed may contact their broker or other Delivery) nominee and instruct them to submit a Notice of Guaranteed Delivery and payment on their behalf. Delivery by any method or to any address not listed above will not constitute good delivery. All questions as to the validity, form, eligibility (including times of receipt and matters pertaining to beneficial ownership) and the acceptance of subscription forms and the Subscription Price will be determined by All-Star, which determinations will be final and binding. No alternative, conditional or contingent subscriptions will be accepted. All-Star reserves the absolute right to reject any or all subscriptions not properly submitted or the acceptance of which would, in the opinion of the Fund's counsel, be unlawful. All-Star also reserves the right to waive any irregularities or conditions, and the Fund's interpretations of the terms and conditions of the Offer shall be final and binding. Any irregularities in connection with subscriptions must be cured within such time, if any, as the Fund shall determine unless waived. Neither All-Star nor the Subscription Agent shall be under any duty to give notification of defects in such subscriptions or incur any liability for failure to give such notification. Subscriptions will not be deemed to have been made until such irregularities have been cured or waived. Payment for Shares Holders of Rights who subscribe for Shares on Primary Subscription or pursuant to the Over-Subscription Privilege may choose between the following methods of payment: (1) If, prior to 5:00 p.m., New York time, on the Expiration Date, the Subscription Agent shall have received a notice of guaranteed delivery by facsimile or otherwise, from a bank or trust company or a New York Stock Exchange or National Association of Securities Dealers member firm, guaranteeing delivery of (a) payment of the full Subscription Price for the Shares subscribed for on Primary Subscription and any additional Shares subscribed for pursuant to the Over-Subscription Privilege and (b) a properly completed and executed Subscription Certificate, the subscription will be accepted by the Subscription Agent. The Subscription Agent will not honor a notice of guaranteed delivery if a properly completed and executed Subscription Certificate and full payment for the Shares is not received by the Subscription Agent by July __, 1998. (2) Alternatively, a holder of rights can, together with the Subscription Certificate, send payment for the Shares acquired on Primary Subscription and any additional shares subscribed for pursuant to the Over-Subscription Privilege to the Subscription Agent based on an estimated purchase price of $________ per Share. To be accepted, such payment, together with the Subscription Certificate, must be received by the Subscription Agent prior to 5:00 p.m., New York time, on the Expiration Date. A PAYMENT BY CHECK OR MONEY ORDER, PURSUANT TO THE SECOND METHOD DESCRIBED ABOVE, MUST ACCOMPANY ANY SUBSCRIPTION CERTIFICATE FOR SUCH EXERCISE TO BE ACCEPTED. The check or money order must be drawn on a bank located in the United States and must be made payable to Liberty All-Star Growth Fund, Inc.. On July __, 1998 (the "Confirmation Date"), a confirmation will be sent by the Subscription Agent to each shareholder exercising his or her Rights (or, if the All-Star shares on the Record Date are held by Cede or any other depository or nominee, to Cede or such other depository or nominee), showing (i) the number of Shares acquired pursuant to the Primary Subscription; (ii) the number of Shares, if any, acquired pursuant to the Over-Subscription Privilege; (iii) the per Share and total purchase price for the Shares; and (iv) any additional amount payable by such shareholder to All-Star or any excess to be refunded by All-Star to such shareholder, in each case based on the Subscription Price as determined on the Pricing Date. Any additional payment required from a shareholder must be received by the Subscription Agent prior to 5:00 p.m., New York time, on July __, 1998, and any excess payment to be refunded by All-Star to such shareholder will be mailed by the Subscription Agent with the confirmation. All payments by a shareholder must be in United States dollars by money order or check drawn on a bank located in the United States of America and be payable to Liberty All-Star Growth Fund, Inc.. Such payments will be held by the Subscription Agent pending completion of the processing of the subscription, and will then be paid to All-Star. Any interest earned on such amounts will accrue to All-Star and none will be paid to the subscriber. Whichever of the above two methods of payment is used, issuance and delivery of the Shares subscribed for are subject to collection of checks and actual payment pursuant to any notice of guaranteed delivery. Rights holders will have no right to rescind their subscription after receipt of their payment for Shares by the Subscription Agent. If a holder of Rights who acquires Shares pursuant to the Primary Subscription or the Over-Subscription Privilege does not make payment of any amounts due, All-Star reserves the right to take any or all of the following actions: (i) find other purchasers for such subscribed and unpaid for Shares; (ii) apply any payment actually received by it toward the purchase of the greatest number of whole Shares which could be acquired by such holder upon exercise of the Primary Subscription or the Over-Subscription Privilege; (iii) sell in the open market all or a portion of the Shares purchased by the holder, and apply the proceeds to the amounts owed; and (iv) exercise any and all other rights or remedies to which it may be entitled, including, without limitation, the right to set off against payments actually received by it with respect to such subscribed Shares to enforce the relevant guaranty of payment or monetary damages. All-Star shareholders whose shares are held by a broker-dealer, bank, trust company or other nominee should contact the nominee to exercise their Rights and request the nominee to exercise their Rights in accordance with their instructions. Brokers, banks, trust companies, depositories and other nominees who hold All-Star shares for the account of others should notify the respective beneficial owners of such shares as soon as possible to ascertain such beneficial owners' intentions and to obtain instructions with respect to exercising the Rights. If the beneficial owner so instructs, the record holder of such Right should complete Subscription Certificates and submit them to the Subscription Agent with the proper payment. The instructions contained on the Subscription Certificate should be read carefully and followed in detail. DO NOT SEND SUBSCRIPTION CERTIFICATES TO ALL-STAR. (They should be sent to State Street Bank and Trust Company as indicated above). Delivery of Share Certificates Participants in All-Star's Automatic Dividend Reinvestment and Cash Purchase Plan (the "Plan") who exercise the Rights issued on the shares held in their accounts in the Plan will have their Shares acquired on Primary Subscription and pursuant to the Over-Subscription Privilege credited to their shareholder distribution reinvestment accounts in the Plan. Shareholders whose shares are held of record by Cede or by any other depository or nominee on their behalf or their broker-dealers' behalf will have their Shares acquired on Primary Subscription and pursuant to the Over-Subscription Privilege credited to the account of Cede or such other depository or nominee. With respect to all other shareholders, share certificates for all Shares acquired on Primary Subscription and pursuant to the Over-Subscription Privilege will be mailed on or about July __, 1998, provided that any additional amount owed by such shareholders has been paid and payment for the Shares subscribed for has cleared, which clearance may take up to five days from the date of receipt of the payment. If such payment does not clear within five days from the date of receipt, All-Star may exercise its rights in the event of non-payment under "Payment for Shares" above. Federal Income Tax Consequences For federal income tax purposes, neither the receipt nor the exercise of the Rights will result in taxable income to holders of shares, and no loss will be realized if the Rights expire without being exercised. All-Star will realize no gain or loss on the issuance, exercise or expiration of the Rights. The holding period for a Share acquired upon exercise of a Right begins with the date of exercise. In the absence of a special election by the shareholder, the shareholder's basis for determining gain or loss upon the sale of that Share will be the per share Subscription Price. The gain or loss recognized upon such sale will be capital gain or loss if the Share was held as a capital asset at the time of sale taxable, in the case of noncorporate shareholders, at a maximum rate of 20% if the shareholder's holding period for the Share is more than eighteen months, or 28% if the shareholder's holding period for the Share is more than twelve months but less than or equal to eighteen months. The foregoing does not cover the state or local tax consequences of receiving or exercising a Right or address tax aspects of the Offer that may be relevant to shareholders subject to special treatment under the Internal Revenue Code (such as insurance companies, financial institutions, tax-exempt entities, employee benefit plans, dealers in securities, foreign corporations, and persons who are not citizens or residents of the U.S.). The foregoing is intended solely as general information, based on the Internal Revenue Code, applicable regulations and judicial precedent as of the date hereof, and each shareholder is advised to consult his or her own tax adviser regarding tax consequences. Special Considerations and Risk Factors As a result of the terms of the Offer, shareholders who do not exercise their Rights will, at the completion of the Offer, own a smaller proportional interest in All-Star. In addition, because the Subscription Price will be less than the then current net asset value per Share, the Offer will result in a dilution of net asset value, which will disproportionately affect shareholders who do not exercise their Rights. Possible Suspension of the Offer All-Star has, as required by the Securities and Exchange Commission's registration form, undertaken to suspend the Offer until it amends this Prospectus if subsequent to May __, 1998,- the effective date of the Fund's Registration Statement,- All-Star's net asset value declines more than 10% from its net asset value as of May __, 1998. Accordingly, All-Star will notify shareholders of any such decline and thereby permit them to cancel their exercise of Rights. USE OF PROCEEDS The net proceeds of the Offer, assuming that all Shares offered hereby are sold at an assumed Subscription Price of $________ per share, are estimated to be approximately $_____________, after deducting expenses payable by All-Star estimated at $__________. Such net proceeds will be invested by All-Star's Portfolio Managers in portfolio securities in accordance with All-Star's investment objective and policies. It is anticipated that investment of such net proceeds under normal market conditions will take place during a period of approximately 30 days from their receipt by All-Star, and would in any event be completed within three months. Pending such investment the net proceeds will be invested in Short-Term Money Market Instruments (as defined under "Investment Objective and Policies" below). HISTORY OF THE FUND The Fund commenced investment operations on March 14, 1986 under the name "Growth Stock Outlook Trust, Inc." and under the management of Growth Stock Outlook, Inc. ("GSO"), a corporation owned by Mr. Charles Allmon and his wife. In May, 1990 the Fund's original investment objective of long-term capital appreciation (with income being a consideration in the selection of investments but not an investment objective) was changed to long-term capital appreciation as a primary objective and current income as a secondary objective, in each case with an emphasis on the preservation of capital, and in May, 1991 the Fund's name was changed to "The Charles Allmon Trust, Inc." During GSO's management of the Fund, a substantial portion of the Fund's portfolio was invested in U.S. Government Securities and other short-term cash equivalents. Pursuant to an Asset Acquisition and Fund Transition Agreement among LAMCO, GSO and Mr. Allmon, on May 27, 1994 the Fund entered into a Fund Management Agreement with LAMCO pursuant to which LAMCO provided its multi-manager services described under "The Multi-Manager Concept" below with respect to an initial amount equal to 20% of the Fund's total assets, with GSO continuing to manage the remaining 80%. LAMCO also assumed administrative responsibility for the Fund. On November 6, 1995 LAMCO assumed investment management responsibility for 100% of the Fund's assets, the Fund's name was changed to "Liberty All-Star Growth Fund, Inc.", the Fund's investment objective was returned to the original objective of long-term capital appreciation, eliminating the secondary objective of current income and the emphasis on preservation of capital, and the Fund's Board of Directors was reconstituted. The approximately 79% of the Fund's assets then being managed by GSO, over 80% of which had been invested in U.S. Treasury bills and other short-term cash equivalents, was assigned in substantially equal portions to the Fund's then three Portfolio Managers under LAMCO's supervision and within three months was substantially fully invested in equity securities in accordance with their respective investment styles. THE MULTI-MANAGER CONCEPT All-Star allocates its portfolio assets on an approximately equal basis among a number of independent investment management firms ("Portfolio Managers"),currently three in number,- recommended by LAMCO, each of which employs a different investment style, and from time to time rebalances the portfolio among the Portfolio Managers so as to maintain an approximately equal allocation of the portfolio among them throughout all market cycles. In the opinion of LAMCO, the multi-manager concept provides advantages over the use of a single manager because of the following primary factors: (i) most equity investment management firms consistently employ a distinct investment style which causes them to emphasize stocks with particular characteristics; (ii) because of changing investor preferences, any given investment style will move into and out of market favor and will result in better investment performance under certain market conditions but less successful performance under other conditions; (iii) consequently, by allocating All-Star's portfolio on an approximately equal basis among Portfolio Managers employing different styles, the impact of any one such style on investment performance will be diluted, and the investment performance of the total portfolio will be more consistent and less volatile over the long-term than if a single style were employed throughout the entire period; (iv) consistent performance at a given annual rate of return over time produces a higher rate of return for the long-term than more volatile performance having the same average annual rate of return. LAMCO, based on the foregoing principles and on its analysis and evaluation of information regarding the personnel and investment styles and performance of a universe of several hundred professional investment management firms, has selected for appointment by All-Star a group of Portfolio Managers representing a blending of different investment styles which, in its opinion, is appropriate to All-Star's investment objective. LAMCO continuously monitors the performance and investment styles of All-Star's Portfolio Managers and from time to time recommends changes of Portfolio Managers based on factors such as changes in a Portfolio Manager's investment style or a departure by a Portfolio Manager from the investment style for which it had been selected, a deterioration in a Portfolio Manager's performance relative to that of other investment management firms practicing a similar style, or adverse changes in its ownership or personnel. Portfolio Manager changes may also be made to change the mix of investment styles employed by All-Star's Portfolio Managers. Since inception All-Star has had ______ Portfolio Manager changes. All-Star Portfolio Manager changes, as well as the periodic rebalancings of its portfolio among the Portfolio Managers and the need to raise cash for All-Star's quarterly distributions, may result in some portfolio turnover in excess of what would otherwise be the case (see "Financial Highlights" above). Increased portfolio turnover would cause increased brokerage commission costs to the Fund, and may result in realization of capital gains, which are taxable to shareholders. Under the terms of an exemptive order issued to All-Star and LAMCO by the Securities and Exchange Commission, a portfolio management agreement with a new or additional Portfolio Manager may be entered into in advance of shareholder approval, provided that the new agreement is at a fee no higher than that provided in, and is on other terms and conditions substantially similar to, All-Star's agreements with its other Portfolio Managers, and that its continuance is subject to approval by shareholders at All-Star's regularly scheduled annual shareholder meeting (normally held in April) next following the date of the new or additional portfolio management agreement. Information about Portfolio Manager changes or additions made in advance of shareholder approval will be announced to the press following Board of Director action and will be included in the next report to shareholders. All-Star's current Portfolio Managers are: Oppenheimer Capital William Blair & Company, L.L.C. Mississippi Valley Advisers, Inc. See Appendix A for information about these Portfolio Managers, including the employees primarily responsible for the day-to-day management of the portion of All-Star's portfolio allocated to each. INVESTMENT OBJECTIVE AND POLICIES All-Star's investment objective is to seek long-term capital appreciation. It seeks its investment objective through investment primarily in a diversified portfolio of equity securities. See "History of the Fund" above for its prior investment objectives. All-Star invests primarily (at least 65% under normal market conditions) in equity securities, including securities convertible into or exchangeable for equity securities. Although under normal market conditions All-Star will remain substantially fully invested in equity securities, up to 35% of the value of All-Star's total assets may be invested in obligations of the U.S. Government and its agencies and instrumentalities ("U.S. Government Securities"), repurchase agreements with respect to U.S. Government Securities, and, to an extent not greater than 10% of the market value of the Fund's total assets, money market mutual funds that invest primarily in U.S. Government Securities. All-Star may temporarily invest without limit in U.S. Government Securities, repurchase agreements and money market mutual funds for defensive purposes when LAMCO or the Portfolio Managers deem that market conditions are such that a more conservative approach to investment is desirable. All-Star's investment objective of long-term capital appreciation, as well as certain of its investment restrictions referred to under Reducing Risk below and in the Statement of Additional Information, are fundamental and may not be changed without a majority vote of All-Star's outstanding shares. Under the 1940 Act, a "majority vote" means the vote of the lesser of (a) 67% of the shares of All-Star represented at a meeting at which the holders of more than 50% of the outstanding shares of All-Star are present or represented, or (b) more than 50% of the outstanding shares of All-Star. Non-fundamental policies may be changed by vote of the Board of Directors. Repurchase Agreements All-Star may enter into repurchase agreements with banks or broker-dealer firms whereby such institutions sell U.S. Government Securities to All-Star and agree at the time of sale to repurchase them at a mutually agreed upon time and price. The resale price is greater than the purchase price, reflecting an agreed-upon interest rate which is effective during the time between the purchase and resale and is not related to the stated interest rate on the purchased securities. All-Star requires the seller of the securities to maintain on deposit with All-Star's custodian bank securities in an amount at all times equal to or in excess of the value of the repurchase agreement. In the event that the seller of the securities defaults on its repurchase obligation or becomes bankrupt, All-Star could receive less than the repurchase price on the sale of the securities to another party or could be subjected to delays in selling the securities. Under normal market conditions, not more than 35% of All-Star's total assets will be invested in Short-Term Money Market Instruments, including repurchase agreements, and not more than 10% of All-Star's net assets will be invested in repurchase agreements maturing in more than seven days. Foreign Securities Although to date it has not done so, All-Star may invest up to 25% percent of its net assets in foreign securities, provided that it will not purchase the securities of a foreign issuer if as a result more than 50% of the Fund's investments in equity securities would consist of securities of foreign issuers. Investment in foreign securities involves considerations and risks not typically associated with investing in securities of domestic companies. See "Investment Objectives and Policies - Foreign Securities" in the Statement of Additional Information. Risks As an investment company that holds common stocks, All-Star's portfolio is subject to the possibility that common stock prices will decline over short or even extended periods. All-Star may remain substantially fully invested during periods when stock prices generally rise and also during periods when they generally decline. Risks are inherent in investment in equities, and Fund shareholders should be able to tolerate significant fluctuations in the value of their investment in All-Star. All-Star is intended to be a long-term investment vehicle and is not designed to provide investors with a means of speculating on short-term stock market movements. Investors should not consider the Fund a complete investment program. In addition to the foregoing investment risks, shares of closed-end investment companies such as All-Star are not redeemable and frequently trade at a discount from their net asset value. This risk is separate and distinct from the risk that All-Star's net asset value may decline. See "Share Price Data" for information about the market price and net asset value of All-Star's shares since January 1, 1996. Reducing Investment Risk As a matter of fundamental policy, All-Star will not (i), as to 75% of its total assets, purchase the securities (other than U.S. Government Securities) of any one issuer if after such purchase more than 5% of its assets would be invested in the securities of that issuer, (ii) purchase more than 10% of the outstanding voting securities of such issuer, (iii) invest 25% more of its total assets in the securities of issuers in the same industry, or (iv) invest more than 10% of its total assets in securities that at the time of purchase have legal or contractual restrictions on resale (including unregistered securities that are eligible for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933). See "Investment Restrictions" in the Statement of Additional Information. MANAGEMENT OF ALL-STAR The management of All-Star's business and affairs is the responsibility of its Board of Directors. All-Star has a Fund Management Agreement with Liberty Asset Management Company (the "Fund Manager") pursuant to which LAMCO provides the Portfolio Manager selection, evaluation, monitoring and rebalancing services ("investment management services") described above under "The Multi-Manager Concept." No single individual at LAMCO is responsible for LAMCO's decisions with respect to the retention or replacement of the Portfolio Managers. LAMCO is also responsible for the provision of administrative services to All-Star, including the provision of office space, shareholder and broker-dealer communications, compensation of all officers of All-Star who are officers or employees of LAMCO or its affiliates, and the supervision of transfer agency, dividend disbursing, custodial and other services provided to others. Certain of LAMCO's administrative responsibilities have been delegated to Colonial. LAMCO has its offices at 600 Atlantic Avenue, 23rd Floor, Boston, Massachusetts 02210. LAMCO was organized in 1985 and is an indirect wholly-owned subsidiary of Liberty Financial Companies, Inc., which in turn is an indirect majority-owned subsidiary of Liberty Mutual Insurance Company, an international multi-line insurance carrier. Under All-Star's Portfolio Management Agreements with each of its Portfolio Managers and LAMCO, each Portfolio Manager has discretionary authority (including for the selection of brokers and dealers for the execution of All-Star's portfolio transactions) with respect to the portion of All-Star's assets allocated to it by LAMCO from time to time, subject to All-Star's investment objective and policies, to the supervision and control of the Directors, and to instructions from LAMCO. As described under "The Multi-Manager Concept", LAMCO from time to time reallocates All-Star's portfolio assets in order to maintain an approximately equal allocation of them among the Portfolio Managers and to preserve an approximately equal weighting among the different investment styles practiced by the Portfolio Managers. Although the Portfolio Managers' activities are subject to general oversight by LAMCO and the Directors and officers of All-Star, neither LAMCO nor such Directors and officers evaluate the investment merits of the Portfolio Managers' selections of individual securities. Although All-Star does not permit a Portfolio Manager to act or have a broker-dealer affiliate act as broker for Fund portfolio transactions initiated by it, All-Star's Portfolio Managers are permitted to place portfolio transactions initiated by them with another Portfolio Manager or its broker-dealer affiliate for execution on an agency basis, provided the commission does not exceed the usual and customary broker's commission being paid to other brokers for comparable transactions and is otherwise in accordance with All-Star's procedures adopted under Rule 17e-1 under the 1940 Act. Under All-Star's Fund Management Agreement with LAMCO and its Portfolio Management Agreements with the Portfolio Managers, All-Star pays LAMCO a fund management fee and an administrative fee, and LAMCO in turn pays the fees of the Portfolio Managers from the fund management fees paid to it. The shareholders of the Fund at their 1998 annual meeting approved a new Fund Management Agreement with LAMCO and new Portfolio Management Agreements with the Portfolio Managers increasing, effective August 1, 1998, the fees payable to LAMCO and the Portfolio Managers on net assets in excess of $125 million. The annual fees that are paid under the current agreements and that will be paid under the new agreements effective August 1, 1998 are shown below (fees are payable quarterly based on the indicated percentage of the Fund's average weekly net assets during the prior quarter). Fund Management Fee Paid to LAMCO and Portfolio Manage- Average weekly ment Fee Paid to Port- Administrative Net Asset Value folio Managers Fee Paid to LAMCO Total Fees - ----------------- ------------------- ----------------- ------------ Fee schedule under current Agreements First $125 million 0.75% (0.40% to 0.25% 1.00% Portfolio Managers) Next $125 million 0.5625% (0.30% to 0.1875% 0.75% Portfolio Managers) Over $250 million 0.375% (0.20% to 0.125% 0.50% Portfolio Managers) Fee schedule under new Agreements effective August 1, 1998 First $300 million 0.80% (0.40% to 0.20% 1.00% Portfolio Managers) Over $300 million 0.72% (0.36% to 0.18% 0.90% Portfolio Managers) Colonial provides pricing and bookkeeping services to All-Star for an annual fee of $21,000 plus an annual asset-based fee of 0.0233% of net assets in excess of $50 million, with breakpoint reductions at $500 million and $1 billion. Custodian and Transfer Agent The Chase Manhattan Bank, 4 Chase MetroTech Center, Brooklyn, New York 11245, is All-Star's custodian. State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, is the transfer and dividend disbursing agent and registrar for All-Star. Expenses of the Fund LAMCO provides the Portfolio Manager selection, evaluation, monitoring and rebalancing services and assumes responsibility for the administrative services described above, pays the compensation of and furnishes office space for the officers of All-Star who are affiliated with LAMCO, and pays the management fees of the Portfolio Managers. All-Star pays all its expenses, other than those expressly assumed by LAMCO. The expenses payable by All-Star include: management and administrative fees payable to LAMCO; pricing and bookkeeping fees payable to Colonial; fees and expenses of independent auditors; fees for transfer agent and registrar, dividend disbursing, custodian and portfolio recordkeeping services; expenses in connection with the Automatic Dividend Reinvestment and Cash Purchase Plan; expenses in connection with obtaining quotations for calculating the value of All-Star's net assets; taxes (if any) and the preparation of All-Star's tax returns; brokerage fees and commissions; interest; costs of director and shareholder meetings (including expenses of printing and mailing proxy material therefor); expenses of printing and mailing reports to shareholders; fees for filing reports with regulatory bodies and the maintenance of All-Star's existence; membership dues for investment company industry trade associations; legal fees; stock exchange listing fees and expenses; fees to federal and state authorities for the registration of shares; fees and expenses of Directors who are not directors, officers, employees or stockholders of LAMCO or its affiliates; insurance and fidelity bond premiums; and any extraordinary expenses of a non-recurring nature. Year 2000 Many existing computer programs and systems, including some used by LAMCO, by All-Star's custodian bank, transfer and dividend dispersing agent, and by Colonial in connection with its pricing and bookkeeping services to the Fund, have been written in such a way that, without modification, they will not properly process and calculate date-related information and data from and after January 1, 2000. All-Star has been advised that LAMCO, Colonial, and the Fund's custodian bank and transfer agent (neither of which are affiliated with LAMCO) are in the process of making any required modifications of their programs and systems and that they believe that they will complete such modifications on a timely basis and will be able properly to process such information and data for All-Star after that date. The cost of these modifications will not affect All-Star. However, failure by LAMCO or any of All-Star's other service providers to successfully complete the required modifications in a timely manner could have a materially adverse impact on All-Star. DESCRIPTION OF SHARES General All-Star's capitalization consists of 20,000,000 shares of Common Stock, par value $.10 per share, of which 13,344,760 shares were outstanding on the date of this Prospectus. The currently outstanding shares are, and the Shares offered hereby when issued and paid for pursuant to the terms of the Offer will be, fully paid and non-assessable. Shareholders would be entitled to share pro rata in the net assets of All-Star available for distribution to shareholders upon liquidation of All-Star. Shareholders are entitled to one vote for each share held. All-Star's shares do not have cumulative voting rights, which means that the holders of more than 50% of the shares of All-Star voting for the election of Directors can elect all the Directors standing for election, and, in such event, the holders of the remaining shares will not be able to elect any of such Directors. Repurchase of Shares All-Star is a closed-end investment company and as such its shareholders do not have the right to cause All-Star to redeem their All-Star shares. All-Star, however, is authorized to repurchase its shares on the open market when its shares are trading at a discount from their net asset value. All-Star has no current plans to repurchase its shares. Anti-takeover Provisions of the Articles of Incorporation and By-Laws; Super-majority Vote Requirement to Conversion to Open-End Status All-Star's Articles of Incorporation and By-laws contain provisions (commonly referred to as "anti-takeover" provisions) which are intended to have the effect of limiting the ability of other entities or persons to acquire control of All-Star, to cause it to engage in certain transactions, or to modify its structure. The Board of Directors is divided into three classes, each having a term of three years. On the date of the annual meeting of shareholders in each year the term of one class expires. This provision could delay for up to three years the replacement of a majority of the Board of Directors. In addition, the affirmative vote or consent of the holders of 66 2/3% of the shares of the Fund will be required generally to authorize any of the following transactions: (i) All-Star's merger or consolidation with or into any other corporation; (ii) the issuance of any securities of All-Star to any person or entity for cash; (iii) the sale, lease or exchange of all or any substantial part of All-Star's assets to any entity or person (except assets having an aggregate fair market value of less than $1,000,000); or (iv) the sale, lease or exchange to All-Star, in exchange for securities of All-Star, of any assets of any entity or person (except assets having an aggregate fair market value of less than $1,000,000); if such corporation, person or entity is directly, or indirectly through affiliates, the beneficial owner of five percent or more of the outstanding shares of All-Star. Such 66 2/3% vote or consent will not be required with respect to the transactions listed in (i) through (iv) above where the Board of Directors under certain conditions approves the transaction. However, depending upon the transaction, a different shareholder vote may nevertheless be required under Maryland law. The affirmative vote or consent of the holders of 66 2/3rds percent of the outstanding shares of Common Stock will be required to authorize All-Star's conversion from a closed-end to an open-end investment company, regardless of whether approved or recommended by the Fund's Board of Directors. As part of the settlement of litigation relating to the Fund's 1995 annual meeting, LAMCO agreed to recommend to All-Star's Board of Directors that the Fund's proxy statement for the annual meeting of shareholders to be held in the year 2000 include a proposal to change the Fund from a closed-end investment company to an open-end mutual fund. Neither LAMCO nor the Fund's Directors are obligated, however, to recommend that proposal to shareholders. The super-majority vote referred to above would be required for such conversion regardless of whether or not recommended by the Board of Directors. The foregoing super-majority vote requirements may not be amended except with a similar super-majority vote of the shareholders. These provisions will make more difficult a change in All-Star's structure or management or consummation of the foregoing transactions without the Directors' approval. The anti-takeover provisions could have the effect of depriving shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging a third party from seeking to obtain control of All-Star in a tender offer or similar transaction. However, the Board of Directors continues to believe that the anti-takeover provisions are in the best interests of All-Star and its shareholders because they provide the advantage of potentially requiring persons seeking control of All-Star to negotiate with its management regarding the price to be paid and facilitating the continuity of All-Star's management and its continuing application of the multi-manager concept. The Board also believes that the super majority vote requirement for conversion to an open-end investment company is in the best interest of All-Star and its shareholders because it will allow All-Star to continue to benefit from the advantages of its closed-end structure until such time that, based on relevant factors including the then current relationship of the market price of All-Star's shares to their net asset value, the Board determines to recommend to shareholders All-Star's conversion to an open-end investment company. DISTRIBUTIONS; AUTOMATIC DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN 10% Distribution Policy All-Star's current distribution policy, announced in February, 1997, is to pay distributions on its Common Stock totaling approximately 10% of its net asset value per year, payable in four quarterly distributions of 2.5% of All-Star's net asset value at the close of the New York Stock Exchange on the Friday prior to each quarterly declaration date. These fixed distributions are not related to the Fund's net investment income or net realized capital gains or losses. If, for any calendar year, the total distributions required by the 10% pay-out policy exceed All-Star's net investment income and net realized capital gains, the excess will generally be treated as a tax-free return of capital to the extent of the shareholder's basis in his or her shares, and thereafter, to the extent of any excess over such basis, as capital gain. The amount treated as a tax-free return of capital will reduce the shareholder's adjusted basis in his or her shares, thereby increasing his or her potential gain or reducing his or her potential loss on the sale of his or her shares. To the extent All-Star's 10% payout policy results in distributions in excess of its net investment income and net realized capital gains, such distributions will decrease All-Star's total assets and increase its expense ratio to a greater extent than would have been the case without the 10% payout policy. In addition, in order to make distributions under the 10% payout policy, All-Star may have to sell portfolio securities at times when the particular investment styles of its Portfolio Managers would dictate not doing so. All-Star may, in the discretion of the Board of Directors, retain for reinvestment, and not distribute, net long-term capital gains in excess of net short-term capital losses for any year to the extent that its net investment income, net short-term realized gains and net long-term realized gains exceed the minimum amount required to be distributed for such year under the 10% pay-out policy, although All-Star reserves the right to distribute such excess. Any such retained capital gains would be taxed to shareholders as long-term capital gains and shareholders would be able to claim their proportionate share of the federal income taxes paid by All-Star with respect to such retained gains as a credit against their own federal income tax liabilities, and would be entitled to increase the adjusted tax basis of their All-Star shares by the difference between their pro rata share of the undistributed capital gains and their tax credit. All-Star intends to pay all or a substantial portion of its distributions in each year to shareholders in the form of newly issued shares (plus cash in lieu of any fractional shares that would otherwise be issuable), to all shareholders except those non-participants in All-Star's Automatic Dividend Reinvestment and Cash Purchase Plan who specifically elect to receive their distribution in cash by completing and signing an option card, a copy of which will be enclosed with the notice of each such distribution payable in shares, and returning it on a timely basis to State Street Bank and Trust Company, All-Star's transfer agent and dividend paying agent. The number of shares to be issued in payment of distributions declared payable in shares will be determined by dividing the total dollar amount of the distribution payable to the shareholder by the lower of the market value or the net asset value per share on the valuation date for the distribution (but not at a discount of more than 5% from the market value). Market value per share for this purpose will be the last sales price on the New York Stock Exchange on the valuation date or, if there are no sales on that day, the mean between the closing bid and closing asked quotations for that date. Automatic Dividend Reinvestment and Cash Purchase Plan Each shareholder of the Fund will automatically be a participant in All-Star's Automatic Dividend Reinvestment and Cash Purchase Plan, as amended (the "Plan"),unless the shareholder specifically elects otherwise by writing or calling the Plan Agent, State Street Bank & Trust Company, P.O. Box 8200, Boston, Massachusetts 02266-8200 (1-800-542-3863). Shareholders whose shares are held in the name of a brokerage firm, bank or other nominee must notify their brokerage firm, bank or nominee if they do not want to participate in the Plan. Shareholders who want to receive their distributions in cash should elect not to participate in the Plan and, as noted above, will be required to elect to receive in cash each distribution declared payable in shares or cash. Under the Plan, distributions declared payable in shares or cash at the option of shareholders are paid to participants in the Plan entirely in newly issued full and fractional shares valued at the lower of market value or net asset value per share on the valuation date for the distribution (but not a discount of more than 5% from market price). Distributions declared payable in cash will be reinvested for the accounts of participants in the Plan in additional shares purchased by the Plan Agent on the open market, on the New York Stock Exchange or elsewhere at prevailing market prices (if the Fund's shares are trading at a discount to their net asset value), or in newly issued shares (if the Fund's shares are trading at or above their net asset value). Dividends and distributions are subject to taxation, whether received in cash or in shares (see "Tax Status" below). Participants in the Plan have the option of making additional cash payments in any amount from $100 to $3000 on a monthly basis for investment in All-Star shares purchased on the open market. These voluntary cash payments will be invested on or about the 15th day of each calendar month, and voluntary payments should be sent so as to be received by the Plan Agent no later than ten business days before the next investment date. Barring suspension of trading, voluntary cash payments will be invested within 45 days of receipt. A participant may withdraw a voluntary cash payment by written notice received by the Plan Agent at least 48 hours before such payment is to be invested. The Plan Agent maintains all shareholder accounts in the Plan and furnishes written confirmations of all transactions in the account, including information needed by shareholders for tax records. Shares in the account of each Plan participant will be held by the Plan Agent in non-certificated form in the name of the participant, and each shareholder's proxy will include those shares purchased or received pursuant to the Plan. In the case of shareholders such as banks, brokers or nominees which hold shares for others who are the beneficial owners, the Plan Agent will administer the Plan on the basis of the number of shares certified from time to time by the record shareholder as representing the total amount registered in the record shareholder's name and held for the account of beneficial owners who participant in the Plan. There is no charge to participants for reinvesting distributions payable in either shares or cash. The Plan Agent's fees for handling the reinvestment of such distributions are paid by All-Star. There are no brokerage charges with respect to shares issued directly by All-Star as a result of distributions payable in shares or in cash. However, each participant bears a pro rata share of brokerage commissions incurred with respect to the Plan Agent's open market purchases in connection with the reinvestment of distributions declared payable in cash. With respect to purchases from voluntary cash payments, the Plan Agent will charge $1.25 for each such purchase for a participant, plus a pro rata share of the brokerage commissions. Brokerage charges for purchasing small amounts of shares for individual accounts through the Plan are expected to be less than the usual brokerage charges for such transactions, as the Plan Agent will be purchasing shares for all participants in blocks and prorating the lower commission thus attainable. The automatic reinvestment of dividends and distributions will not relieve plan participants of any income tax which may be payable on such dividends or distributions. See "Tax Status" below. A participant may elect to withdraw from the Plan at any time by notifying the Plan Agent in writing. There will be no penalty for withdrawal from the Plan and shareholders who have previously withdrawn from the Plan may rejoin it at any time. A withdrawal will only be effective for subsequent distributions with a record date at least ten days after the notice of withdrawal is received by the Plan Agent. Experience under the Plan may indicate that changes are desirable. Accordingly, All-Star reserves the right to amend or terminate the Plan. TAX STATUS The following discussion summarizes the general rules applicable to taxation of All-Star and its shareholders. Shareholders are urged to consult with their own tax advisors concerning the tax consequences of their continued investment in All-Star and of their receipt and exercise of the Rights. All-Star intends to elect and to qualify each year for federal income tax treatment as a regulated investment company under the Internal Revenue Code of 1986, as amended (the "Code"), and to make distributions to the shareholders in accordance with the timing requirements set out in the Code. As a result, it is expected that All-Star will be relieved of federal income taxes on its net investment income and net realized capital gains to the extent distributed to shareholders. (See "Distributions; Automatic Dividend Reinvestment and Cash Purchase Plan--10% Distribution Policy" regarding the authority of All-Star to retain and pay taxes on, and not distribute, net realized capital gains). If All-Star should fail to qualify as a regulated investment company in any year, it would incur a federal corporate income tax upon its taxable income and its distributions would generally be taxable as ordinary dividend income to the shareholders. Dividends and distributions by All-Star from net investment income and net realized capital gains are subject to taxation whether received by shareholders in cash or in shares of All-Star. Shareholders receiving a dividend or distribution in the form of newly issued shares will be treated for federal income tax purposes as receiving a distribution in an amount equal to the fair market value, determined as of the distribution date, of the shares received. Such shareholders will have a cost basis in each newly issued share equal to the fair market value of a share of All-Star on the distribution date. Distributions are generally taken into account for tax purposes when paid, except that distributions paid in January but declared in the last quarter of the preceding calendar year must be taken into account as if paid on December 31 of such preceding calendar year. A portion of All-Star's net investment income paid to corporate shareholders which is attributable to dividends from domestic corporations may be eligible for the 70% dividends received deduction available to corporations. Availability of the deduction for particular corporate shareholders is subject to certain limitations, and deducted amounts may be subject to the alternative minimum tax or result in certain basis adjustments. Distributions from net realized capital gains are taxable as long-term capital gains, regardless of how long the shareholder has held the shares, and are not eligible for the dividends received deduction for corporations. Net long-term capital gains are taxable, in the case of noncorporate shareholders, at a maximum rate of 20% if attributable to the disposition of assets the holding period for which was more than eighteen months or 28% if attributable to the disposition of assets the holding period for which was more than twelve months but less than or equal to eighteen months. If a shareholder holds shares of All-Star for six months or less, any loss on the sale of the shares will be treated as a long-term capital loss to the extent of any amount reportable by the shareholder as long-term capital gain with respect to such shares. Any loss realized upon a disposition of shares may also be disallowed under rules relating to wash sales. At the time of an investor's purchase of All-Star shares, All-Star's net asset value may reflect undistributed net investment income or capital gains or net unrealized appreciation of securities held by All-Star. As of May __, 1998, All-Star had net unrealized appreciation of its investments of $_______ million. A subsequent distribution to the investor of such amounts, although it may in effect constitute a return of his or her investment, would be taxable to the shareholder as ordinary income or capital gain as described above. For federal income tax purposes, All-Star is permitted to carry forward its net realized capital losses, if any, and may realize net capital gains up to the amount of such losses without being required to pay taxes on or distribute such gains. As of December 31, 1997, All-Star had no capital loss carryovers. Under the Interest and Dividend Tax Compliance Act of 1983, certain non-corporate All-Star shareholders may be subject to 31% withholding on reportable dividends and capital gains distributions ("back-up withholding"). Generally, shareholders subject to back-up withholding will be those for whom a taxpayer identification number and certain required certificates are not on file with All-Star or who, to All-Star's knowledge, have furnished an incorrect number. In addition, All-Star is required to withhold from distributions to any shareholder who does not certify to All-Star that such shareholder is not subject to back-up withholding due to notification by the Internal Revenue Service that such taxholder has under-reported interest or dividend income. Distributions from net investment income paid to shareholders who are non-resident aliens or entities may be subject to 30% United States withholding tax (but not, in such event, subject to backup withholding) under the existing provisions of the Code applicable to foreign individuals and entities unless a reduced rate of withholding or a withholding exemption is provided under an applicable treaty. Non-U.S. shareholders are urged to consult their own tax advisors concerning the applicability of the United States withholding tax. Information concerning the federal income tax status of All-Star dividends and distributions is mailed to shareholders annually. Distributions and the transactions referred to in the preceding paragraphs may be subject to state and local income taxes, and the treatment thereof may differ from the federal income tax consequences discussed herein. Shareholders are advised to consult with their tax advisors concerning the application of state and local taxes. See "The Offer-Federal Income Tax Consequences" for a discussion of the federal income tax consequences of the receipt and exercise of Rights. GENERAL All-Star was incorporated as a Maryland corporation on December 16, 1985 and commenced investment operations on March 14, 1986. LAMCO is an indirect wholly-owned subsidiary of Liberty Financial Companies, Inc., itself an indirect majority-owned subsidiary of Liberty Mutual Insurance Company. Under the Fund Management Agreement between All-Star and LAMCO, All-Star may use the name "Liberty All-Star" only so long as the Fund Management Agreement remains in effect. If the Fund Management Agreement is no longer in effect, All-Star is obligated (to the extent it lawfully can) to cease using such name or any other name indicating that it is advised by or otherwise connected with LAMCO. In addition, LAMCO may grant the non-exclusive right to use the name "Liberty All-Star" to any other entity, including any other investment company of which LAMCO or any of its affiliates is the investment adviser or distributor. STATEMENT OF ADDITIONAL INFORMATION Additional information about the Fund is contained in the Statement of Additional Information, a copy of which is available at no charge by calling the Information Agent at the telephone number indicated on the cover of the Prospectus. Set forth below is the Table of Contents of the Statement of Additional Information. Table of Contents Page Investment Objective and Policies Investment Restrictions Investment Advisory and Other Services Directors and Officers of All-Star Portfolio Security Transactions Principal Shareholders Financial Statements APPENDIX A INFORMATION ABOUT THE PORTFOLIO MANAGERS WILLIAM BLAIR & COMPANY, L.L.C. 222 West Adams Street Chicago, IL 60606 William Blair & Company, L.L.C. ("Blair") was appointed as All-Star Portfolio Manager effective March 1, 1997. Blair is a registered investment adviser and a securities broker-dealer. It is the successor to a general partnership over 140 former general partners of which are members or principal no one of whom owns more than 25% interest. As of December 31, 1997, Blair had approximately $9 billion in assets under management. John Jostrand, Principal of Blair, has managed the portion of All-Star's portfolio allocated to Blair since its appointment as an All-Star Portfolio Manager. Mr. Jostrand has been associated with Blair since 1993. MISSISSIPPI VALLEY ADVISORS INC. One Mercantile Center Seventh & Washington Streets St. Louis, Missouri 63101 Mississippi Valley Advisors Inc. ("MVA") was appointed an All-Star Portfolio Manager effective January 2, 1996. MVA is a wholly-owned subsidiary of Mercantile Bank, N.A., which in turn is a wholly-owned subsidiary of Mercantile Bancorporation Inc., a New York Stock Exchange listed bank holding company. As of December 31, 1997, MVA had approximately $9.4 billion in assets under management. Robert J. Anthony, Senior Associate of MVA, has managed the portion of All-Star's portfolio assigned to MVA since its appointment as an All-Star Portfolio Manager. Mr. Anthony has been associated with MVA since 1987. OPPENHEIMER CAPITAL Oppenheimer Tower World Financial Center New York, NY 10281 Oppenheimer Capital ("Opp Cap") has been a Portfolio Manager of All-Star since June 1, 1994. Opp Cap is a Delaware general partnership formed on July 1, 1987 as the successor to a corporation formed in 1975. Opp Cap is owned and controlled by PIMCO Advisors L.P. ("PIMCO"), an investment adviser with approximately $199 billion in assets under management. One of PIMCO's general partners is PIMCO Partners, G.P., a general partnership of which the managing general partner is a limited liability company whose members are the Managing Directors of Pacific Investment Management Company, and the other general partner of which is a subsidiary of Pacific Mutual Life Insurance Company. Approximately 42% of the limited partnership interests in PIMCO are owned by PIMCO Advisors Holdings, L.P., units of which are publicly traded. Mr.John Lindenthal, Managing Director of Opp Cap., has managed the portion of All-Star's portfolio allocated to Opp Cap since its appointment as an All-Star Portfolio Manager. Mr. Lindenthal has been associated with Opp Cap for over 18 years. [Back Cover] No person has been authorized to give any information or to make any representation not contained in this Prospectus and, if given or made, such information or representation must not be relied upon as having been authorized. This Prospectus does not constitute an offering of any securities other than the registered securities to which it relates or an offer to any person in any State or jurisdiction of the United States or any country where such offer would be unlawful. [Logo] LIBERTY All-Star GROWTH FUND, INC. TABLE OF CONTENTS Expenses........................ Prospectus Summary.............. Financial Highlights............ Share Price Data................ Investment Performance.......... The Offer....................... Use of Proceeds................. History of the Fund............. The Multi-Manager Concept....... A Multi-Managed Investment Investment Objective Company and Policies.................. Management of All-Star.......... 1,334,476 Shares of Common Stock Description of Shares........... Issuable upon Exercise of Distributions; Automatic Rights to Subscribe Dividend Reinvestment and for such Shares Cash Purchase Plan............ Tax Status General.............. PROSPECTUS Statement of Additional May , 1998 Information................... Appendix A--Information about the Portfolio Managers.......... LIBERTY ALL-STAR GROWTH FUND, INC. STATEMENT OF ADDITIONAL INFORMATION May __, 1998 This Statement of Additional Information is not a prospectus, and should be read in conjunction with the Prospectus of Liberty All-Star Growth Fund, Inc. ("All-Star") dated May __, 1998. A copy of the Prospectus may be obtained by calling or writing Liberty Asset Management Company at 600 Atlantic Avenue, Boston, Massachusetts 02110 (1-800-542-3863). TABLE OF CONTENTS PAGE - ----------------- ---- Investment Objectives and Policies........... Investment Restrictions...................... Investment Advisory and Other Services....... Directors and Officers of All-Star............ Portfolio Security Transactions.............. Principal Shareholders....................... Financial Statements......................... INVESTMENT OBJECTIVES AND POLICIES A description of the investment objective of Liberty Al-Star Growth Fund, Inc. ("All-Star" or the "Fund") and the types of securities in which it may invest is contained in the Prospectus under "Investment Objectives and Policies." Foreign Securities - ------------------ All-Star may invest up to 25 percent of its net assets in securities of foreign issuers, provided that the Fund will not purchase the securities of a foreign issuer, if, as a result of the purchase, more than 50% of its equity investment would consist of securities of foreign issuers. All-Star's investment in foreign securities involves considerations not typically associated with investing in securities of domestic companies. Investing in securities of foreign issuers and the attendant holding of foreign currencies, for example, could cause the Fund to be affected favorably or unfavorably by changes in currency rates and exchange control regulations. In addition, less information may be available about foreign companies that about domestic companies and foreign companies may not be subject to reporting or accounting standards and requirements comparable to those applicable to domestic companies. Foreign securities and their markets may not be as liquid as domestic securities and their markets. Securities of some foreign companies may involve greater market risk than securities of domestic companies and foreign brokerage commissions and custody fees are generally higher than those in the United States. Investment in foreign securities may also be subject to local economic or political risks, including instability of some foreign governments, the possibility of currency blockage or the imposition of withholding taxes on dividend or interest payments and the potential for expropriation of the assets of the companies issuing the securities. Short sales against the box - --------------------------- All-Star may, to an extent not greater than 5% of its net assets, effect short sales of securities "against the box" (i.e., short sales of securities where the Fund holds or has the right to obtain at no additional cost securities identical to those sold short.) INVESTMENT RESTRICTIONS The following investment restrictions have been adopted for All-Star as fundamental policies and may be changed only by a majority vote (as defined under "Investment Objective and Policies" in the Prospectus) of All-Star's outstanding shares. Non-fundamental policies may be changed by the Board of Directors without shareholder approval. All-Star may not: (1) With respect to 75 percent of its total assets, invest in securities of any one issuer if immediately after and as a result of such investment more than five percent of the total assets of the Fund, taken at market value, would be invested in the securities of such issuer. This restriction does not apply to investments in U.S. Government Securities. (2) Purchase more than 10 percent of the outstanding voting securities, or any class of securities, of any one issuer. (3) Invested 25 percent or more of its total assets, taken at market value at the time of each investment, in the securities of issuers in any particular industry. This restriction does not apply to investments in U.S. Government Securities. (4) Purchase securities of other investment companies, except in connection with a merger, consolidation, acquisition or reorganization, if more than 10 percent of the market value of the Fund's total assets would be invested in securities of other investment companies, more than five percent of the market value of the Fund's total assets would be invested in the securities of any one investment company or the Fund would own more than three percent of any other investment company's securities. (5) Purchase or sell commodities or real estate; provided that All-Star may invest in securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein. (6) Purchase any securities on margin or make short sales of securities, except that All-Star may obtain such short-term credit as may be necessary for the clearance of purchases and sales of portfolio securities. (7) Make loans of money, except by the purchase of debt obligations in which the Trust may invest consistent with its investment objective and policies. Although there is no present intention of doing so in the foreseeable future, All-Star reserves the authority to make loans of its portfolio securities in an aggregate amount not exceeding 20 percent of its total assets. Any such loans will only be made upon approval of, and subject to any conditions imposed by, All-Star's Board of Directors. (8) Borrow money, except that All-Star may borrow from banks and other financial institutions on an unsecured basis to finance the repurchase of its shares. All-Star also may borrow money on a secured basis from banks as a temporary measure for extraordinary or emergency purposes. Such temporary borrowings may not exceed five percent of the value of the Fund's total assets at the time the loan is made. All-Star may pledge up to 10 percent of the lesser of the cost or value of its total assets to secure temporary borrowings. All-Star will not borrow for investment purposes. Immediately after any borrowing, All-Star will maintain asset coverage of not less than 300 percent with respect to all borrowings. While the Fund's borrowings exceed five percent of its total assets, All-Star will make no further purchases of securities, although this limitation will not apply to share repurchase transactions. (9) Issue senior securities, as defined in the Investment Company Act of 1940 (the "Act"), or mortgage, pledge, hypothecate or in any manner transfer, as security for indebtedness, any securities owned or held by All-Star except as may be necessary in connection with borrowings mentioned in (8) above, and then such mortgaging, pledging or hypothecating may not exceed 10 percent of the Fund's total assets, taken at the lesser of cost or market value. (10) Underwrite securities of other issuers except insofar as All-Star may be deemed an underwriter under the Securities Act of 1933, as amended, in selling portfolio securities. (11) Invest more than 10 percent of All-Star's total assets in securities that at the time of purchase have legal or contractual restrictions on resale (including unregistered securities that are eligible for resale pursuant to Rule 144A under the Securities Act of 1933). Except for the 300% limitation referred to in Investment Restriction No. 8 above, if a percentage restriction on investment or utilization of assets as set forth above is adhered to at the time an investment is made, a later change in percentage resulting from a change in the market values of All-Star's assets will not be considered a violation of the restriction. INVESTMENT ADVISORY AND OTHER SERVICES As stated under "Management of All-Star" in the Prospectus, Liberty Asset Management Company ("LAMCO") performs the investment management services and is responsible for the administrative services described therein. LAMCO, through Liberty Financial Companies, Inc. ("Liberty Financial"), is an indirect majority owned subsidiary of Liberty Mutual Insurance Company, Boston, Massachusetts. As indicated under "Directors and Officers of All-Star" below, one of All-Star's Directors and all of its officers are officers of LAMCO, Colonial Management Associates, Inc., Liberty Financial or other affiliates of liberty Financial. Reference is made to Appendix A of the Prospectus for the names of the controlling persons of All-Star's current Portfolio Managers and the names of the individuals at each Portfolio Manager primarily responsible for the management of the portion of All-Star's portfolio assigned to it. None of such Portfolio Managers has any affiliation with LAMCO or (except as Portfolio Manager) with All-Star. As described under "Management of All-Star" in the Prospectus, All-Star pays LAMCO a fund management fee for its investment management services (from which LAMCO pays the Portfolio Managers' fee), and an administrative fee for its administrative services. As shown under "Management of All-Star", effective August 1, 1998 these fees will increase on net assets in excess of $125 million. For the years ended December 31, 1996 and 1997 the total fund management and administrative fees paid to LAMCO were $__________ and $__________, respectively, of which an aggregate of $______________ and $____________, respectively, was paid to the Portfolio Managers. For the year ended December 31, 1995 the Fund Manager received an administrative fee of $_________, and a fund management fee of $_________________ representing its fee for its investment management of the approximately 20% of the net assets of All-Star under its supervision from January 1, 1995 through December 5, 1995 and 100% of such assets under its supervision for the balance of 1995. The Fund Manager paid $________ of such investment management fees to the Fund's then Portfolio Managers. All-Star's original investment manager, Growth Stock Outlook, Inc., received investment management fees of $_________ for its investment management of approximately 80% of All-Star's net assets from January 1 through December 5, 1995. See "History of the Fund" in the Prospectus. All-Star's current Fund Management Agreement and Portfolio Management Agreements will continue in effect until July 31, 1998, whereupon the new agreements at the increased fees will take effect. The new agreements will continue in effect until July 31, 1999 and will continue in effect thereafter so long as such continuance is specifically approved annually by (a) the Board of Directors or (b) the majority vote of All-Star's outstanding shares (as defined under "Investment Objective and Policies" in the Prospectus), provided that, in either event, the continuance is also approved by a majority of the Directors who are not "interested persons" (as defined in the 1940 Act) of All-Star, LAMCO or the Portfolio Managers by a vote cast in person at a meeting called for the purpose of voting on such approval. The Fund Management Agreement may be terminated on 60 days written notice by either party, and the Portfolio Management Agreements may be terminated on 30 days' notice by any party, and any such agreements will terminate automatically if assigned. Custodian and Pricing and Bookkeeping Agent The Chase Manhattan Bank (the "Bank"), 4 Chase MetroTech Center, Brooklyn, NY 11245, is the custodian of the portfolio securities and cash of All-Star. As such, the Bank holds All-Star's portfolio securities and cash in separate accounts on All-Star's behalf and receives and delivers portfolio securities and cash in connection with portfolio transactions initiated by All-Star's Portfolio Managers, collects income due on its portfolio securities and disburses funds in connection with the payment of distributions and expenses. Colonial Management Associates, Inc. ("Colonial"), an affiliate of LAMCO, performs pricing and bookkeeping services for All-Star (see "Management of All-Star" in the Prospectus). For the years ended December 31, 1996 and 1997, All-Star paid pricing and bookkeeping fees to Colonial Management Associates, Inc. of $___________ and $_____________, respectively. Independent Auditors KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110, are the independent auditors of All-Star. KPMG Peat Marwick LLP audits and reports on All-Star's annual financial statements, reviews certain of its regulatory reports and its Federal income tax returns, and performs such other accounting, tax and advisory services as All-Star may engage it to do. DIRECTORS AND OFFICERS OF ALL-STAR The following is a list of All-Star's Directors and officers, together with information about their present positions with All-Star and their principal occupations during the past five years. The Director who is an "interested person" of All-Star, as defined by the 1940 Act, is indicated with an asterisk. Position with Principal Occupation During Name and Address All-Star Past Five Years - ---------------- --------- ------------------------------ Robert J. Birnbaum Director Retired (since January, 313 Bedford Road 1994); Special Counsel, Ridgewood, NJ Dechert, Price & Rhoads 07450 (September, 1988 to December, 1993); President and Chief Operating Officer, New York Stock Exchange, Inc. (May, 1985 to June, 1988). James E. Grinnell Director Private investor (since 22 Harbor Avenue November, 1988); President Marblehead, MA and Chief Executive Officer, 01945 Distribution Management Systems, Inc. (1983 to May 1986); Senior Vice President-Operations, The Rockport Company, importer and distributor of shoes (May, 1986 to November, 1988). Harold W. Cogger* Director Executive Vice President and Liberty Financial and Director, Liberty Financial Companies, Inc. Chairman Companies, Inc. (since 600 Atlantic March, 1995); Director Avenue (since October, 1981) and Boston, MA 02210 Chairman of the Board (since March, 1996), The Colonial Group, Inc.; Executive Vice President (October, 1989 to July, 1993), Colonial Management Associates, Inc.; President (since March 1996), Stein Roe & Farnham Incorporated. Richard W. Lowry Director Private investor (since 10701 Charleston August, 1987); Chairman and Drive Chief Executive Officer, Vero Beach, FL U.S. Plywood Corporation, 32963 manufacturer and distributor of wood products (August, 1985 to August, 1987). John J. Neuhauser Director Dean, Boston College School 140 Commonwealth of Management (since Ave September 1977). Director Chestnut Hill, of Hyde Athletic Industries, MA 02167 Inc. (athletic footwear), a public company. Richard R. President President of LAMCO (since Christensen and Chief January, 1995); President of Liberty Asset Executive Liberty Investment Services, Management Officer Inc. (April, 1987 to March, Company 1995). 600 Atlantic Avenue Boston, MA 02210 William R. Vice Senior Vice President and Parmentier President Chief Investment Officer of Liberty Asset - Chief LAMCO (since May, 1995); Management Investment Consultant (October, 1994 to Company Officer May, 1995); President, GQ 600 Atlantic Asset Management, Inc. Avenue (July, 1993 to October, Boston, MA 02210 1994); Assistant Treasurer, Grumman Corporation (December, 1974 to July, 1993). Christopher S. Vice Vice President-Investments Carabell President of LAMCO (since March, Liberty Asset 1996); Associate Director, Management U.S. Equity Research of Company Rogers Casey & Associates, 600 Atlantic investment consultants Avenue (January, 1995 to February, Boston, MA 02210 1996); Director of Investments, Boy Scouts of America (June, 1990 to January, 1995). Timothy J. Jacoby Treasurer Senior Vice President, Fund Colonial Administration, Colonial Management Management Associates, Inc. Associates, (since September, 1996); Inc. Senior Vice President, One Financial Fidelity Accounting and Center Custody Services (September, Boston, MA 02111 1993 to September, 1996); Assistant Treasurer, Fidelity Group of Funds (August, 1990 to September, 1993). J. Kevin Controller Vice President, Fund Connaughton Administration Treasury Colonial Group of Colonial Management Management Associates, Inc. (since Associates, February, 1998); Senior Tax Inc. Manager, Coopers & Lybrand One Financial (April, 1996 to February, Center 1998); Vice President of Boston, MA 02111 Financial Administration (April, 1995 to April, 1996), Director of Compliance (March, 1994 to April, 1995), First Data Investor Services Group; Vice President of Tax (January, 1994 to March, 1994), Assistant Vice President of Tax (March, 1992 to January, 1994), The Boston Company. John L. Davenport Secretary Vice President and Associate Liberty Financial General Counsel of Liberty Companies, Financial Companies, Inc. Inc. and predecessor (since 600 Atlantic January, 1984). Avenue Boston, MA 02210 - ------ * Interested Director Messrs. Birnbaum, Grinnell, Neuhauser and Lowry comprise the Audit Committee of the Board of Directors. All-Star's Board of Directors is divided into three classes, each of which has a term of three years expiring with the annual meeting of shareholders in the third year of the term. All-Star holds annual meetings of shareholders to vote on, among other things, the election or re-election of the Directors whose terms are expiring with that meeting. The term or office of Mr. Birnbaum will expire upon the final adjournment of the 1999 annual meeting; the term of office of Messrs. Neuhauser and Grinnell will expire upon final adjournment of the annual meeting for the year 2000; and the term of office of Messrs. Cogger and Lowry will expire upon final adjournment of the annual meeting for the year 2001. Messrs. Birnbaum, Grinnell, Neuhauser and Lowry are also Directors of Colonial Trusts I through VII, the umbrella trusts for an aggregate of 39 open-end funds managed by Colonial, an affiliate of LAMCO, five closed-end funds managed by Colonial, and LFC Utilities Trust, an open-end investment company managed by Stein Roe & Farnham Incorporated, another affiliate of LAMCO. Messrs. Birnbaum, Cogger, Grinnell, Neuhauser and Lowry are also directors of Liberty All-Star Equity Fund, another closed-end multi-managed fund managed by LAMCO. LAMCO or its affiliates pay the compensation of all the officers of All-Star, including the Director who is affiliated with LAMCO. All-Star currently pays the independent Directors an annual retainer of $5,000, plus $1,200 per meeting attended, with a minimum of $11,000 per annum if less than five meetings are held and all meetings are attended, plus out-of-pocket expenses relating to attendance at meetings. For 1997, All-Star paid the independent Directors an aggregate of $33,000 in fees and $1,952 in expenses. PORTFOLIO SECURITY TRANSACTIONS Each of All-Star's Portfolio Managers has discretion to select brokers and dealers to execute portfolio transactions initiated by the Portfolio Manager for the portion of All-Star's portfolio assets allocated to it, and to select the markets in which such transactions are to be executed. The Portfolio Management Agreements with All-Star provide, in substance, that, except as provided in the following paragraph, in executing portfolio transactions and selecting brokers or dealers, the primary responsibility of the Portfolio Manager is to seek to obtain best net price and execution for All-Star. It is expected that securities will ordinarily be purchased in the primary markets, and that, in assessing the best net price and execution available to All-Star, the Portfolio Manager will consider all factors it deems relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer and the reasonableness of the commission, if any, for the specific transaction and on a continuing basis. Recognizing these factors, All-Star may pay a brokerage commission in excess of that which another broker or dealer may have charged for effecting the same transaction. The Portfolio Management Agreements also provide that LAMCO has the right to request that transactions giving rise to brokerage commissions, in amounts to be agreed upon from time to time between LAMCO and the Portfolio Manager, be executed by brokers and dealers (to be agreed upon from time to time between LAMCO and the Portfolio Manager) which provide, directly or through third parties, research products and services to LAMCO or to All-Star. The commissions paid on such transactions may exceed the amount of commissions another broker would have charged for effecting that transaction. Research products and services made available to LAMCO through brokers and dealers executing transactions for All-Star involving brokerage commissions include performance, portfolio characteristics, investment style and other qualitative and quantitative data relating to investment managers in general and the Portfolio Managers in particular; data relating to the historic performance of categories of securities associated with particular investment styles; mutual fund portfolio, performance and fee and expense data; data relating to portfolio manager changes by pension plan fiduciaries; quotation equipment; and related computer hardware and software, all of which are used by LAMCO in connection with its selection and monitoring of portfolio managers (including the Portfolio Managers) for All-Star and other multi-managed clients of LAMCO, the assembly of a mix of investment styles appropriate to the investment objectives of All-Star or such other clients, and the determination of overall portfolio strategies. LAMCO from time to time reaches understandings with each of the Portfolio Managers as to the amount of the All-Star portfolio transactions initiated by such Portfolio Manager that are to be directed to brokers and dealers which provide or make available research products and services to LAMCO and the commissions to be charged to All-Star in connection therewith. These amounts may differ among the Portfolio Managers based on the nature of the markets for the types of securities managed by them and other factors. These research products and services are used by LAMCO in connection with its management of All-Star, Liberty All-Star Equity Fund, Liberty All-Star Equity Fund, Variable Series, and other multi-managed clients of LAMCO, regardless of the source of the brokerage commissions. In instances where LAMCO receives from broker-dealers products or services which are used both for research purposes and for administrative or other non-research purposes, LAMCO makes a good faith effort to determine the relative proportions of such products or services which may be considered as investment research, based primarily on anticipated usage, and pays for the costs attributable to the non-research usage in cash. The Portfolio Managers are authorized to cause All-Star to pay a commission to a broker or dealer who provides research products and services to the Portfolio Manager for executing a portfolio transaction which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction. The Portfolio Managers must determine in good faith, however, that such commission was reasonable in relation to the value of the research products and services provided to them, viewed in terms of that particular transaction or in terms of all the client accounts (including All-Star) over which the Portfolio Manager exercises investment discretion. It is possible that certain of the services received by a Portfolio Manager attributable to a particular transaction will primarily benefit one or more other accounts for which investment discretion is exercised by the Portfolio Manager. During 1995, 1996 and 1997, All-Star paid total brokerage commissions of $__________ and $__________, and $_______ respectively. Approximately $________ $__________ and $___________, respectively, of those commissions on transactions aggregating $___________, $________________ and $____________, respectively, were paid to brokerage firms which provided or made available to All-Star's Portfolio Managers or to LAMCO research products and services as described above. Although All-Star does not permit a Portfolio Manager to act or have an affiliate act as broker for Fund portfolio transactions initiated by it, the Portfolio Managers are permitted to place Fund portfolio transactions initiated by them with another Portfolio Manager or its broker-dealer affiliate for execution on an agency basis, provided the commission does not exceed the usual and customary broker's commission being paid to other brokers for comparable transactions and is otherwise in compliance with Rule 17e-1 under the Investment Company Act of 1940. During 1996 aggregate commissions of $600, representing less than one percent of the total commissions paid by All-Star, were paid to Oppenheimer & Co., Inc., then a broker-dealer affiliate of Oppenheimer Capital, a Portfolio Manager of the Fund, in connection with the execution of portfolio transactions for the Fund initiated by another Portfolio Manager. During 1997 no Fund portfolio transactions were placed with any Portfolio Manager or its broker-dealer affiliate. PRINCIPAL SHAREHOLDERS To the knowledge at All-Star, no shareholder on May , 1998 owned beneficially 5% or more of the outstanding shares of All-Star. As of May , 1998, all officers and Directors of All-Star as a group owned less than 1% of All-Star's outstanding shares. FINANCIAL STATEMENTS LIBERTY ALL*STAR GROWTH FUND ................................................................................ Schedule of Investments December 31, 1997
COMMON STOCKS (98.9%) SHARES MARKET VALUE - ---------------------------------------------------------------------------------------------------- AEROSPACE (2.0%) Boeing Co. 39,000 $ 1,908,563 Lockheed Martin Corp. 15,000 1,477,500 ----------- 3,386,063 ----------- AUTO, TIRES & ACCESSORIES (1.1%) Discount Auto Parts, Inc. (a) 18,000 344,250 LucasVarity PLC ADR (a) 45,000 1,569,375 ----------- 1,913,625 =========== BANKS (6.3%) Associated Banc-Corp 13,961 769,600 Bank United Corp., Class A 15,600 763,425 CCB Financial Corp. 6,300 677,250 Charter One Financial, Inc. 10,750 678,594 Citicorp 20,000 2,528,750 Crestar Financial Corp. 14,000 798,000 State Street Corp. 31,500 1,832,906 TCF Financial Corp. 24,000 814,500 Wells Fargo & Co. 5,000 1,697,188 10,560,213 BUSINESS SERVICES (12.5%) Acxiom Corp. (a) 58,200 $1,120,350 American Management Systems (a) 36,100 699,438 Automatic Data Processing, Inc. (a) 46,400 2,847,800 Cintas Corp. 16,700 651,300 Cognizant Corp. (a) 27,100 1,207,644 Cognos, Inc. (a) 47,600 1,094,800 Concord EFS, Inc. (a) 27,700 689,038 Cotelligent Group, Inc. (a) 30,000 573,750 First Data Corp. 55,070 1,610,797 Gartner Group, Inc., Class A (a) 39,600 1,475,100 Intelliquest Information Group (a) 34,500 439,875 National Data Corp. 32,900 1,188,512 Network Associates, Inc. (a) 21,837 1,150,536 Rental Service Corp. (a) 18,000 445,500 Reuters Holdings PLCADR 17,200 1,139,500 Robert Half International, Inc. 18,450 738,000
See Notes to Schedule of Investments. LIBERTY ALL*STAR GROWTH FUND ............................................................................... Schedule of Investments
COMMON STOCKS (CONT.) SHARES MARKET VALUE - ---------------------------------------------------------------------------------------------------- BUSINESS SERVICES (CONT.) Shared Medical Systems, Inc. 23,500 $ 1,551,000 SPSS, Inc. (a) 28,500 548,625 Sungard Data Systems, Inc. (a) 45,200 1,401,200 SystemSoft Corp. (a) 49,903 324,369 ----------- 20,897,134 ----------- CHEMICALS (5.1%) Cytec Industries, Inc. (a) 15,000 704,063 Hanna (M.A.) Co. 44,693 1,128,498 Hercules, Inc. 25,000 1,254,688 International Specialty Products, Inc. (a) 30,000 448,125 Minerals Technologies, Inc. 54,790 2,489,521 Monsanto Co. 30,000 1,260,000 OM Group, Inc. 14,400 529,200 RPM, Inc. 42,500 653,438 ----------- 8,467,533 ----------- COMPUTER & BUSINESS EQUIPMENT (4.9%) Black Box Corp. (a) 18,800 665,050 CFM Technologies (a) 27,546 423,520 Computer Associates International, Inc. 15,000 793,125 DT Industries, Inc. 14,000 479,500 Intel Corp. 37,000 2,599,250 Komag, Inc. (a) 34,332 510,689 Microsoft Corp. (a) 12,000 1,551,000 Zebra Technologies Corp., Class A (a) 37,803 1,124,639 ----------- 8,146,773 ----------- CONSUMER PRODUCTS (1.6%) Blyth Industries, Inc. (a) 26,200 784,363 Cole National Corp., Class A (a) 21,600 646,650 Furniture Brands International, Inc. (a) 23,000 480,125 Samsonite Corp. (a) 24,400 771,650 ----------- 2,682,788 ----------- COSMETICS & TOILETRIES (0.4%) Revlon, Inc. (a) 17,200 607,375 -----------
See Notes to Schedule of Investments. LIBERTY ALL*STAR GROWTH FUND ................................................................................ Schedule of Investments
COMMON STOCKS (CONT.) SHARES MARKET VALUE - ---------------------------------------------------------------------------------------------- DIVERSIFIED (1.3%) Ball Corp. 7,000 $ 247,188 General Electric Co. 20,000 1,467,500 Lydall, Inc. (a) 23,000 451,375 ----------- 2,166,063 ----------- DRUGS & HEALTH CARE (11.5%) Allergan, Inc. 26,700 897,787 Amgen, Inc. 9,300 503,362 Apria Healthcare Group, Inc. (a) 45,800 621,162 Bard (C.R.), Inc. 20,000 626,250 Beverly Enterprises, Inc. (a) 47,000 611,000 Biomet, Inc. 45,000 1,147,500 Boston Scientific Corp. (a) 13,000 596,375 Cardinal Health, Inc. 14,300 1,074,287 Covance, Inc. (a) 56,500 1,122,937 DENTSPLY International, Inc. 30,000 915,000 Elan Corp. ADR(a) 21,100 1,080,056 Hanger Orthopedic Group, Inc. (a) 28,000 360,500 HEALTHSOUTH Corp. (a) 63,800 1,770,450 Integrated Health Services, Inc. 24,500 764,093 Medtronic, Inc. 27,500 1,440,312 Millipore Corp. 16,500 559,968 Pfizer, Inc. 24,800 1,849,150 Pharmerica, Inc. (a) 43,189 448,085 R.P. Scherer Corp. (a) 13,600 829,600 Sun Healthcare Group, Inc. (a) 57,600 1,116,000 Omnicare,Inc. 27,500 852,500 ----------- 19,186,374 ----------- ELECTRONICS & ELECTRICAL EQUIPMENT (5.1%) Adaptec, Inc. (a) 30,000 1,113,750 Analog Devices, Inc. (a) 15,333 424,532 Arrow Electronics, Inc. (a) 60,000 1,946,250 Hubbell, Inc., Class B 19,000 941,687 Linear Technology Corp. 16,400 943,000 Molex, Inc. 62,218 1,788,767 SBS Technologies (a) 22,000 596,750 Xilinix, Inc. (a) 21,800 764,362 ----------- 8,519,098 -----------
See Notes to Schedule of Investments. LIBERTY ALL*STAR GROWTH FUND ............................................................................... Schedule of Investments
COMMON STOCKS (CONT.) SHARES MARKET VALUE - ------------------------------------------------------------------------------------------------ FINANCIAL SERVICES (13.1%) Aames Financial Corp. 29,000 $ 377,000 Cendant Corp. (a) 41,700 1,433,438 CMACInvestment Corp. 15,000 905,625 Countrywide Credit Industries, Inc. 55,000 2,358,125 Credit Acceptance Corp. (a) 49,700 385,175 Federal Home Loan Mortgage Corp. 93,000 3,900,188 Finova Group, Inc. 17,400 864,562 Household International, Inc. 15,900 2,028,244 Interim Services, Inc. (a) 28,600 732,875 MBNA Corp. 65,200 1,780,775 Money Store, Inc. (The) 30,000 630,000 Morgan Stanley, Dean Witter, Discover & Co. 41,250 2,438,906 Paychex, Inc. 15,000 759,375 Southern Pacific Funding Corp. (a) 37,500 492,187 Travelers Group, Inc. 50,000 2,693,750 ----------- 21,780,225 ----------- FOOD, BEVERAGE &RESTAURANTS (3.4%) Brinker International, Inc. (a) 35,000 560,000 Canandaigua Brands, Inc. Class A (a) 18,716 1,036,399 Diageo PLC ADR 30,000 1,136,250 Dole Food Co. 30,000 1,372,500 Hormel Foods Corp. 26,000 851,500 Performance Food Group Co. (a) 32,378 768,978 ----------- 5,725,627 ----------- HOTEL & LEISURE (0.6%) Carnival Corp., Class A 19,400 1,074,275 ----------- INDUSTRIAL EQUIPMENT (3.3%) Albany International 29,500 678,500 Barnett, Inc. (a) 19,000 418,000 Caterpillar, Inc. 36,000 1,748,250 Illinois Tool Works, Inc. 25,100 1,509,138 Kulicke & Soffa Industries, Inc. (a) 32,000 596,000 MSC Industrial Direct Co., Inc. (a) 14,000 588,000 ----------- 5,537,888 -----------
See Notes to Schedule of Investments. LIBERTY ALL*STAR GROWTH FUND ................................................................................ Schedule of Investments
COMMON STOCKS (CONT.) SHARES MARKET VALUE - -------------------------------------------------------------------------------------------------- INSURANCE (8.5%) ACE Limited 25,000 $ 2,404,688 AFLAC, Inc. 35,000 1,789,375 American International Group, Inc. 15,000 1,631,250 EXEL Ltd. 40,000 2,535,000 HCC Insurance Holdings, Inc. 35,500 754,375 PMI Group, Inc. 10,000 723,125 Progressive Corp. 20,000 2,397,500 Transamerica Corp. 18,000 1,917,000 ----------- 14,152,313 ----------- METALS & MINING (0.4%) Freeport-McMoRan Copper & Gold, Inc., Class A 40,000 630,000 ----------- OIL & GAS (2.6%) Global Industries Ltd. (a) 36,500 620,500 Ocean Energy, Inc. (a) 11,500 567,094 Swift Energy Co. (a) 29,446 620,204 Tidewater, Inc. 9,000 496,125 Triton Energy Corp. (a) 27,000 788,063 Union Texas Petroleum Holdings, Inc. 30,000 624,375 United Meridian Corp. (a) 19,900 559,688 ----------- 4,276,049 ----------- PAPER & PLASTIC (1.6%) Aptar Group, Inc. 9,567 530,969 Caraustar Industries, Inc. 13,000 445,250 Champion International Corp. 25,000 1,131,250 Consolidated Papers, Inc. 9,000 480,375 ----------- 2,587,844 PUBLISHING (0.8%) R.R. Donnelley & Sons Co. 35,000 1,303,750 ----------- RETAIL TRADE (5.8%) CVS Corp. 20,200 1,294,063 Fastenal Co. (a) 13,100 501,075 Home Depot, Inc. 27,900 1,642,613 Lowe's Companies, Inc. 17,900 853,606 Marks Brothers Jewelers,Inc. (a) 31,000 511,500 May Department Stores Co. 25,000 1,317,188
See Notes to Schedule of Investments. LIBERTY ALL*STAR GROWTH FUND ............................................................................... Schedule of Investments
COMMON STOCKS (CONT.) SHARES MARKET VALUE - ----------------------------------------------------------------------------------------------------- RETAIL TRADE (CONT.) Staples, Inc. (a) 51,000 $ 1,421,625 Viking Office Products, Inc. (a) 101,700 2,218,331 ----------- 9,760,001 TELECOMMUNICATIONS (4.5%) Airtouch Communications, Inc. (a) 33,000 1,371,563 Arch Communications Group, Inc. (a) 48,482 248,470 IXCCommunications, Inc. (a) 33,000 1,035,375 Mobile Telecommunication Technologies Corp. (a) 49,946 1,098,812 Nokia Corp. ADR 25,000 1,750,000 Sprint Corp. 35,000 2,045,313 ----------- 7,549,533 TRANSPORTATION (2.5%) AMR Corp. (a) 16,000 2,058,000 Hub Group, Inc., Class A(a) 18,500 550,375 U.S. Freightways Corp. 45,300 1,472,250 ----------- 4,080,625 ----------- TOTAL COMMON STOCKS (Cost $122,777,125) 164,991,169 -----------
See Notes to Schedule of Investments. LIBERTY ALL*STAR GROWTH FUND ................................................................................ Schedule of Investments
REPURCHASE AGREEMENT (1.7%) PAR VALUE MARKET VALUE - ---------------------------------------------------------------------------------------------------- ABN AMRO Chicago Corp., dated 12/31/97, 6.60%, to be repurchased at $2,779,019 on 01/2/98, collaterized by U.S. Treasury Notes with various maturities to 2016, with a current market value of $2,842,078. $ 2,778,000 $ 2,778,000 ------------ TOTAL INVESTMENTS (100.6%) (Cost $125,555,125)(b) 167,769,169 OTHER ASSETS AND LIABILITIES, NET (-0.6%) (1,032,050) ------------ NET ASSETS (100.0%) $166,737,119 ============ NET ASSET VALUE PER SHARE (12,937,680 SHARES OUTSTANDING) $ 12.89 ============
NOTES TO SCHEDULE OF INVESTMENTS: (a) Non-income producing security. (b) The cost of investments for federal income tax purposes is $125,751,189. Gross unrealized appreciation and depreciation of investments at December 31, 1997, is as follows: Gross unrealized appreciation $ 47,930,605 Gross unrealized depreciation (5,912,625) ------------ Net unrealized appreciation $ 42,017,980 ============ Acronym Name ------- --------------------------- ADR American Depository Receipt See Notes to Financial Statements. LIBERTY ALL*STAR GROWTH FUND ............................................................................... Statement of Assets and Liabilities December 31, 1997 ASSETS: Investments at market value (identified cost $125,555,125) $167,769,169 Cash 710 Receivable for investments sold 1,037,457 Dividends and interest receivable 103,010 ------------ TOTAL ASSETS 168,910,346 ------------ LIABILITIES: Payable for investments purchased 78,865 Distributions payable to shareholders 1,590,287 Management fees payable 290,160 Administrative and bookkeeping fees payable 110,716 Accrued other expenses 103,199 ------------ TOTAL LIABILITIES 2,173,227 ------------ NET ASSETS $166,737,119 ============ NET ASSETS REPRESENTED BY: Paid-in capital (authorized 20,000,000 shares at $0.10 Par; 12,937,680 shares outstanding) $122,876,305 Accumulated net realized gains on investments less distributions 1,646,770 Net unrealized appreciation on investments 42,214,044 ------------ TOTAL NET ASSETS APPLICABLE TO OUTSTANDING SHARES OF BENEFICIAL INTEREST ($12.89 PER SHARE) $166,737,119 ============ See Notes to Financial Statements. LIBERTY ALL*STAR GROWTH FUND ................................................................................ Statement of Operations Year ended December 31, 1997
INVESTMENT INCOME: Dividends $ 1,265,415 Interest 293,433 ------------ TOTAL INVESTMENT INCOME (NET OF FOREIGN TAXES WITHHELD AT SOURCE WHICH AMOUNTED TO $13,348) 1,558,848 EXPENSES: Management fees $ 1,093,343 Administrative fee 361,802 Bookkeeping fee 53,795 Custodian and transer agent fees 91,567 Proxy and shareholder communication expense 38,756 Printing expense 73,572 Legal and audit fees 53,547 Directors' fees and expense 34,955 Miscellaneous expense 30,208 ------------ TOTAL EXPENSE 1,831,545 ------------ NET INVESTMENT LOSS (272,697) REALIZED AND UNREALIZED GAINS ON INVESTMENTS: Net realized gains on investment transactions: Proceeds from sales 86,998,115 Cost of investments sold 70,458,759 ------------ Net realized gains on investment transactions 16,539,356 Net unrealized appreciation on investments: Beginning of year 22,346,578 End of year 42,214,044 ------------ Change in unrealized appreciation -- net 19,867,466 ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 36,134,125 ============
See Notes to Financial Statements. LIBERTY ALL*STAR GROWTH FUND ............................................................................... Statements of Changes in Net Assets
YEAR ENDED DECEMBER 31, ------------------------------ 1997 1996 - --------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $ (272,697) 77,663 Net realized gain on investment transactions 16,539,356 7,600,155 Change in unrealized appreciation-net 19,867,466 13,538,818 ------------- ------------- Net increase in net assets resulting from operations 36,134,125 21,216,636 ------------- ------------- DISTRIBUTIONS DECLARED FROM: Net investment income (35,334) (42,330) Net realized gains on investments (15,385,610) (11,523,548) ------------- ------------- Total distributions (15,420,944) (11,565,878) ------------- ------------- CAPITAL TRANSACTIONS: Increase in net assets from capital share transactions 9,386,884 7,411,472 ------------- ------------- Total increase in net assets 30,100,065 17,062,230 NET ASSETS: Beginning of year 136,637,054 119,574,824 ------------- ------------- End of year (including undistributed net investment income of $0 and $35,334, respectively) $ 166,737,119 $ 136,637,054 ============= =============
See Notes to Financial Statements. LIBERTY ALL*STAR GROWTH FUND ................................................................................ Financial Highlights
YEAR ENDED DECEMBER 31, ------------------------------------------------------------ 1997 1996 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value at beginning of year $11.27 $10.55 $9.95 $10.54 $10.28 ------- ------ ------ ------ ------- Income from Investment Operations: Net investment income (loss) (0.02) 0.01 0.31 0.23 0.18 Net realized and unrealized gain (loss) on investments 2.88 1.86 1.05 (0.24) 0.56 ------- ------ ------ ------ ------- Total from Investment Operations 2.86 1.87 1.36 (0.01) 0.74 ------- ------ ------ ------ ------- Less Distributions: Dividends from net investment income -- (0.01) (0.31) (0.23) (0.18) Distributions from realized capital gains (1.24) (1.01) (0.45) (0.35) (0.30) ------- ------ ------ ------ ------- Total Distributions (1.24) (1.02) (0.76) (0.58) (0.48) Impact of shares issued in dividend reinvestment (a) -- (0.13) -- -- -- ------- ------ ------ ------ ------- Total Distributions and Reinvestments (1.24) (1.15) (0.76) (0.58) (0.48) ------- ------ ------ ------ ------- Net asset value at end of year $12.89 $11.27 $10.55 $9.95 $10.54 ======= ====== ====== ====== ======= Per share market value at end of year $11.938 $9.250 $9.375 $8.500 $10.250 ======= ====== ====== ====== ======= TOTAL INVESTMENT RETURN FOR SHAREHOLDERS: (b) Based on net asset value 27.3% 18.3% 13.8% (1.1%) 7.2% Based on market price 43.6% 9.3% 19.3% (11.6%) 7.2% RATIOS AND SUPPLEMENTAL DATA: Net assets at end of year (millions) $167 $137 $120 $113 $125 Ratio of expenses to average net assets 1.20% 1.35% 1.42% 1.51% 1.35% Ratio of net investment income to average net assets (0.18%) 0.06% 2.87% 2.12% 1.71% Portfolio turnover rate 57% 51% 82% 50% 47% Average commission rate (c) $0.0502 $0.0555 -- -- --
(a) Effect of dividend reinvestment shares at a price below net asset value in accordance with the 1996 Automatic Dividend Reinvestment and Cash Purchase Plan. (b) Calculated assuming all distributions reinvested. (c) For fiscal years beginning on or after September 1, 1995, a fund is required to disclose its average commission rate per share for trades on which commissions are charged. See Notes to Financial Statements. LIBERTY ALL*STAR GROWTH FUND ............................................................................... Notes to Financial Statements December 31, 1997 NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES Liberty All-Star Growth Fund, Inc. (the Fund), is registered under the Investment Company Act of 1940, as amended, as a closed-end, diversified management investment company and commenced operations on March 14, 1986. The Fund's investment objective is to seek long-term capital appreciation. The Fund is managed by Liberty Asset Management Company (the "Manager"). The Manager is a subsidiary of Liberty Financial Companies, Inc., a publicly traded company of which Liberty Mutual Insurance Company is the majority shareholder. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results, if different, are expected to be immaterial to the net assets of the Fund. VALUATION OF INVESTMENTS -- Portfolio securities listed on an exchange and over-the-counter securities quoted on the NASDAQ system are valued on the basis of the last sale on the date as of which the valuation is made, or, lacking any sales, at the mean of the closing bid and asked quotations on that date. Over-the-counter securities not quoted on the NASDAQ system are valued at the most recent bid prices on that date. Securities for which reliable quotations are not readily available are valued at fair value, as determined in good faith and pursuant to procedures established by the Board of Directors. Short-term instruments maturing in more than 60 days for which market quotations are readily available are valued at current market value. Short-term instruments with remaining maturities of 60 days or less are valued at amortized cost, unless the Board of Directors determine that this does not represent fair value. PROVISION FOR FEDERAL INCOME TAX -- The Fund qualifies as a "regulated investment company." As a result, a federal income tax provision is not required for amounts distributed to shareholders. OTHER -- Security transactions are accounted for on the trade date. Interest income and expenses are recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. NOTE 2. FEES PAID TO AFFILIATES Under the Fund's Management and Portfolio Management Agreements, the Fund pays the Manager a management fee for its investment management services at an annual rate of 0.75% of the Fund's average weekly net assets. The Manager pays each Portfolio Manager a portfolio management fee at an annual rate of 0.40% of the average weekly net assets of the portion of the investment portfolio managed by it. The Fund also pays the Manager a fee for its administrative services at an annual rate of 0.25% of the Fund's average weekly net assets. The annual fund management and administrative fees are reduced to 0.5625% and 0.1875%, respectively, on average weekly net assets in excess of $125 million up to $250 million and to 0.375% and 0.125%, respectively, on average weekly net assets in excess of $250 million. The aggregate annual fees payable by the Manager to the Portfolio Managers are reduced to 0.30% of the Fund's average weekly net assets in excess of $125 million up to $250 million and to 0.20% on average weekly net assets in excess of $250 million. Colonial Management Associates, Inc. (an affiliate of the Manager) provides bookkeeping and pricing services for $30,000 per year plus 0.0233% of the Fund's average weekly net assets over $50 million. NOTE 3. CAPITAL TRANSACTIONS During the year ended December 31, 1997 and December 31, 1996, distributions in the amount of $9,386,884 and $7,411,472, respectively, were paid in newly issued shares valued at market value or net asset value, but not less than 95% of market value, resulting in the issuance of 818,429 and 780,155 shares, respectively. LIBERTY ALL*STAR GROWTH FUND ................................................................................ Notes to Financial Statements NOTE 4. SECURITIES TRANSACTIONS Realized gains and losses are recorded on the identified cost basis for both financial reporting and federal income tax purposes. The cost of investments purchased and the proceeds from investments sold, excluding short-term debt obligations for the year ended December 31, 1997, were $84,561,657 and $86,998,115, respectively. The Fund may enter into repurchase agreements and require the seller of the instrument to maintain on deposit with the Fund's custodian bank or in the Federal Reserve Book-Entry System securities in the amount at all times equal to or in excess of the value of the repurchase agreement, plus accrued interest. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. NOTE 5. DISTRIBUTIONS TO SHAREHOLDERS The Fund currently has a policy of paying distributions on its common shares totaling approximately 10% of its net asset value per year, payable in four quarterly distributions of 2.5% of the Fund's net asset value at the close of the New York Stock Exchange on the Friday prior to each quarterly declaration date. Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. LIBERTY ALL*STAR GROWTH FUND ............................................................................... Independent Auditors' Report [LOGO] KPMG Peat Marwick LLP The Board of Directors and Shareholders Liberty All-Star Growth Fund, Inc.: We have audited the accompanying statement of assets and liabilities of Liberty All-Star Growth Fund, Inc. (the Fund), including the schedule of investments, as of December 31, 1997, and the related statement of operations for the year then ended, the statement s of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Investment securities held in custody are confirmed to us by the custodian. As to securities purchased and sold, but not received or delivered, we request confirmations from brokers and, where replies are not received, we carry out other appropriate procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Liberty All-Star Growth Fund, Inc. as of December 31, 1997, the results of its operations for the year then ended, changes in its net assets for each of the years in the two-year period then ended, and financial highlights for each of the years in the five-year period then ended, in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP Boston, Massachusetts February 13, 1998 PART C OTHER INFORMATION Item 24. Financial Statements and Exhibits (1) Financial Statements Included in Part A ------------------ Financial highlights for ten years ended December 31, 1997 (audited) Financial highlights for three months ended March 31, 1998* Included in Part B ------------------ Audited ------- Schedule of Investments, December 31, 1997 Statement of Assets and Liabilities, December 31, 1997 Statement of Operations for the year ended December 31, 1997 Statements of Changes in Net Assets for the years ended December 31,1997 and December 31, 1996 Financial Highlights for five years ended December 31, 1997 Notes to Financial Statements Independent Auditors' Report Unaudited* --------- Schedule of Investments, March 31, 1998 Statement of Assets and Liabilities, March 31, 1998 Statement of Operations for the three months ended March 31, 1998 Statements of Changes in Net Assets for the three month periods ended March 31, 1998 and March 31, 1997 Financial Highlights for three months ended March 31, 1998 Notes to Financial Statements (2) Exhibits -------- (a) Articles of Incorporation dated December 16, 1985 (a)(1) Articles of Amendment dated April 27, 1989 (a)(2) Articles of Amendment dated May 31, 1991 (a)(3) Articles of Amendment dated November 6, 1995 (b) Restated By-laws, as amended through April 18, 1996 (c) Not applicable (d)(1) Specimen certificate for shares of common stock (d)(2) Form of subscription certificate (e) Automatic Dividend Reinvestment and Cash Purchase Plan Brochure, as amended effective June 30, 1996 (f) Inapplicable (g)(1) Fund Management Agreement dated November 6, 1995 between Registrant and Liberty Asset Management Company* (g)(2) Form of Portfolio Management Agreement among Registrant, Liberty Asset Management Company and Portfolio Managers (h) Inapplicable (i) Inapplicable (j)(1) Form of Custody Agreement with The Chase Manhattan Bank, NA1 (j)(2) Supplement to Custody Agreement (k)(1) Registrar, Transfer Agency and Service Agreement with State Street Bank and Trust Company (2) Pricing and Bookkeeping Agreement dated January 1, 1996 between Registrant and Colonial Management Associates, Inc. (3) Form of Subscription Rights Agency Agreement between Registrant and State Street Bank & Trust Company* (l) Opinion of counsel* (m) Inapplicable (n) Consent of independent auditors* Item 25. Marketing Arrangements Not applicable. Item 26. Other Expenses of Issuance and Distribution The following table sets forth the estimated expenses expected to be incurred in connection with the offering described in this Registration Statement: Registration fee..................... $ New York Stock Exchange Listing fee Printing of Prospectus............... Mailing.............................. Subscription Agent fees.............. Accounting fees and expense.......... Legal fees and expenses.............. Miscellaneous........................ Total Item 27. Persons Controlled by or Under Common Control of Registrant Not applicable Item 28. Number of Holders of Securities Title of Class No. of Record Holders -------------- --------------------- (as of April 28, 1998) Shares of Common Stock, par value $.10 per share 3,823 Item 29. Indemnification Reference is made to Article X of Registrant's Articles of Incorporation (Item 24, Exhibit (a)(1)) and to Article V of Registrant's Restated By-laws (Item 24, Exhibit (b)) for provisions relating to indemnification and exculpation. The Registrant, Liberty Asset Management Company and their respective trustees, directors and officers are insured by a directors and officers/errors and omissions liability policy. Item 30. Business and Other Connections of Investment Adviser Liberty Asset Management Company, Registrant's Fund Manager, was organized in August 1985 and is primarily engaged in the corporate administration of and the provision of its multi-management services (see "The Multi-Manager Concept" in the Prospectus) for Registrant and Liberty All-Star Equity Fund, another multi-managed closed-end investment company. It also provides its multi-management services to Liberty All-Star Equity Fund, Variable Series, a multi-managed open-end investment company which serves as an investment vehicle for variable annuity contracts issued by affiliated insurance companies. Kenneth R. Leibler, Chairman of the Board, Lindsay Cook, Senior Vice President and a Director, C. Allen Merritt, Jr., Vice President, Treasurer and a Director, John A. Benning, Vice President and Secretary, and Michael E. Santilli, Controller, of Liberty Asset Management Company, are each officers (and in the case of Mr. Leibler, a Director) of and devote substantially all their time to the business of Liberty Asset Management Company's parent, Liberty Financial Companies, Inc. The remaining officers and directors of Liberty Asset Management Company devote all or substantially all of their time to its affairs. The business and other connections of the officers and directors of the Portfolio Managers of Registrant are listed in Schedules A and D of their respective ADV Forms as currently on file with the Commission, which information is hereby incorporated herein by reference. The file numbers of such ADV Forms are as follows: Oppenheimer Capital 801-10708 William Blair & Co LLC 801-00688 Mississippi Valley Advisors Inc. 801-28897 Item 31. Location of Accounts and Records The records of Registrant specified in items (1) through (3) and (5) through (8) of Rule 31a-1(b) under the Investment Company Act of 1940 are maintained by Registrant's pricing and bookkeeping agent, Colonial Management Associates, Inc., One Financial Center, Boston, MA 02111. The records of Registrant specified in items (4) and (11) of Rule 31a-1(b) are maintained by Registrant's Fund Manager, Liberty Asset Management Company, Federal Reserve Plaza, Boston, MA 02210. The records of Registrant specified in items (9) and (10) of Rule 31a-1(b) with respect to portfolio transactions initiated by a Portfolio Manager of Registrant are maintained by that Portfolio Manager (see Appendix A to Part I). Item 32. Management Services Inapplicable Item 33 Undertakings (1) Registrant undertakes to suspend the offering of the shares covered hereby until it amends its prospectus contained herein if (1) subsequent to the effective date of this Registration Statement, its net asset value per share declines more than 10 percent from its net asset value per share as of the effective date of this Registration Statement, or (2) its net asset value increases to an amount greater than its net proceeds as stated in the prospectus contained herein. (2) Not applicable (3) Not applicable (4) The Registrant hereby undertakes: (a) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement; (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in the Registration Statement;" (b) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (5) The Registrant hereby undertakes that: a. for the purpose of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant under Rule 497(h) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective; and b. for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof. (6) The Registrant hereby undertakes to send by first class mail or other means designed to ensure equally prompt delivery, within two business days of receipt of a written or oral request, any Statement of Additional Information. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this Registration Statement on Form N-2 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boston and the Commonwealth of Massachusetts on April 29, 1998. LIBERTY ALL-STAR GROWTH FUND, INC. By:\s\ Richard R. Christensen ------------------------------------ Richard R. Christensen, President Pursuant to the requirements of the Securities Act 1993, this Registration Statement on Form N-2 has been signed below by the following persons in the capacities and on the dates indicated. By so signing, each of the undersigned in his capacity as a Director, or Officer, or both, as the case may be, of the Registrant, does also hereby appoint John A. Benning, Richard R. Christensen, John L. Davenport, and Jeremiah J. Bresnahan, Jr. and each of them, severally, or if more than one acts, a majority of them, his true and lawful attorney and agent to execute in his name, place and stead (in such capacity) any and all amendments to this Registration Statement and any post-effective amendments thereto and all instruments necessary or desirable in connection therewith, to attest to the seal of the Registrant thereon and to file the same with the Securities and Exchange Commission. Each of said attorneys and agents shall have power to act with or without the others and have full power and authority to do and perform in the name and on behalf of each of the undersigned, in any and all capacities, every act whatsoever necessary or advisable to be done in the premises as fully and to all intents and purposes as each of the undersigned might or could in person, hereby ratifying and approving the act of said attorneys and agents and each of them. (Signature) (Title and Capacity) (Date) - ---------- ------------------ ---- /s/ Richard R. Christensen President (Chief Executive - -------------------------- Officer) April 29, 1998 Richard R. Christensen /s/ Timothy J. Jacoby Treasurer (Principal Financial April 29, 1998 - ------------------------- Officer) Timothy J. Jacoby /s/ J. Kevin Connaughton Controller (Principal Accounting April 29, 1998 - -------------------------- Officer) J. Kevin Connaughton /s/ Robert J. Birnbaum Director April 29, 1998 - -------------------------- Robert J. Birnbaum /s/ Harold W. Cogger Director April 29, 1998 - ------------------------- Harold W. Cogger /s/ James E. Grinnell Director April 29, 1998 - ------------------------ James E. Grinnell /s/ Richard W. Lowry Director April 29, 1998 - ------------------------ Richard W. Lowry /s/ John J. Neuhauser Director April 29, 1998 - ------------------------ John J. Neuhauser EX-3.(I) 2 ARTICLES OF INCORPORATION ARTICLES OF INCORPORATION OF GROWTH STOCK OUTLOOK TRUST, INC. - ----------------------------------------------------------- ARTICLE I THE UNDERSIGNED, John W. Scheflen, whose post office address is 1800 Mercantile Bank & Trust Building, 2 Hopkins Plaza, Baltimore, Maryland 21201, being at least eighteen years of age does hereby act as an incorporator and form a corporation under and by virtue of the Maryland General Corporation Law. ARTICLE II NAME ---- The name of the Corporation is GROWTH STOCK OUTLOOK TRUST, INC. ARTICLE III PURPOSES AND POWERS ------------------- The Corporation is formed for the following purposes: (1) To conduct and carry on the business of an investment company. (2) To hold, invest and reinvest its assets in securities and other investments or to hold part or all of its assets in cash. (3) To issue and sell shares of its capital stock in such amounts and on such terms and conditions and for such purposes and for such amount or kind of consideration as may now or hereafter be permitted by law. (4) To do any and all additional acts and to exercise any and all additional powers or rights as may be necessary, incidental, appropriate or desirable for the accomplishment of all or any of the foregoing purposes. The Corporation shall be authorized to exercise and enjoy all of the powers, rights and privileges granted to, or conferred upon, corporations by the Maryland General Corporation Law now or hereafter in force, and the enumeration of the foregoing shall not be deemed to exclude any powers, rights or privileges so granted or conferred. ARTICLE IV PRINCIPAL OFFICE AND RESIDENT AGENT ----------------------------------- The post office address of the principal office of the Corporation in the State of Maryland is 4405 East-West Highway, Bethesda, Maryland 20814. The name of the resident agent of the Corporation in the State of Maryland is Charles Allmon, a citizen and resident of the State of Maryland. The post office address of the resident agent is 4405 East-West Highway, Bethesda, Maryland 20814. ARTICLE V 0 CAPITAL STOCK (1) The total number of shares of capital stock that the Corporation shall have authority to issue is twenty million (20,000,000) shares, of the par value of ten cents ($.10) per share and of the aggregate par value of two million dollars ($2,000,000), all of which twenty million (20,000,000) shares are designated Common Stock. (2) The Corporation may issue fractional shares. Any fractional share shall carry proportionately the rights of a whole share including, without limitation, the right to vote and the right to receive dividends. A fractional shares shall not, however, have the right to receive a certificate evidencing it. (3) All persons who shall acquire stock in the Corporation shall acquire the same subject to the provisions of these Articles of Incorporation and the By-Laws of the Corporation. (4) No holder of stock of the Corporation by virtue of being such a holder shall have any right to purchase or subscribe for any shares of the Corporation's capital stock or any other security that the Corporation may issue or sell (whether out of the number of shares authorized by these Articles of Incorporation or out of any shares of the Corporation's capital stock that the Corporation may acquire) other than a right that the Board of Directors in its discretion may determine to grant. (5) The Board of Directors shall have authority by resolution to classify and reclassify any authorized but unissued shares of capital stock from time to time by setting or changing in any one or more respects the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions or redemption of the capital stock. (6) Notwithstanding any provision of law requiring any action to be taken or authorized by the affirmative vote of the holders of a designated proportion of the votes of all classes or of any class of stock of the Corporation, such action shall be effective and valid if taken or authorized by the affirmative vote of a majority of the total number of votes entitled to be cast thereon, except as otherwise provided in these Articles of Incorporation. ARTICLE VI BOARD OF DIRECTORS (1) The number of directors constituting the Board of Directors shall be no less than three (3) nor more than nine (9). This number may be changed pursuant to the By-Laws of the Corporation, but shall at no time be less than the minimum number required under the Maryland General Corporation Law. The names of the directors who shall act until the first annual meeting of shareholders or until their successors are duly chosen and qualified are: Charles Allmon; Thomas McIntyre; and Ingrid Hendershot. (2) In furtherance, and not in limitation, of the powers conferred by the laws of the State of Maryland, the Board of Directors is expressly authorized: (i) To make, alter or repeal the By-Laws of the Corporation, except where such power is reserved by the By-Laws to the stockholders, and except as otherwise required by the Investment Company Act of 1940. (ii) From time to time to determine whether and to what extent and at what times and places and under what conditions and regulations the books and accounts of the Corporation, or any of them other than the stock ledger, shall be open to the inspection of the stockholders. No stockholder shall have any right to inspect any account or book or document of the Corporation, except as conferred by law or authorized by resolution of the Board of Directors or of the stockholders. (iii) Without the assent or vote of the stockholders, to authorize the issuance from time to time of shares of the stock of any class of the Corporation, whether now or hereafter authorized, and securities convertible into shares of stock of the Corporation of any class or classes, whether now or hereafter authorized, for such consideration as the Board of Directors may deem advisable. (iv) Without the assent or vote of the stockholders, to authorize and issue obligations of the Corporation, secured and unsecured, as the Board of Directors may determine, and to authorize and cause to be executed mortgages and liens upon the real or personal property of the Corporation. (v) Notwithstanding anything in these Articles of Incorporation to the contrary, to establish in its absolute discretion the basis or method for determining the value of the assets belonging to any class, the value of the liabilities belonging to any class and the net asset value of each share of any class of the Corporation's stock. (vi) To determine in accordance with generally accepted accounting principles and practices what constitutes net profits, earnings, surplus or net assets in excess of capital, and to determine what accounting periods shall be used by the Corporation for any purpose; to set apart out of any funds of the Corporation reserves for such purposes as it shall determine and to abolish the same; to declare and pay any dividends and distributions in cash, securities or other property from surplus or any funds legally available therefor, at such intervals as it shall determine; to declare dividends or distributions by means of a formula or other method of determination, at meetings held less frequently than the frequency of the effectiveness of such declarations; to establish payment dates for dividends or any other distributions on any basis, including dates occurring less frequently than the effectiveness of declarations thereof; and to provide for the payment of declared dividends on a date earlier or later than the specified payment date in the case of stockholders of the Corporation redeeming their entire ownership of shares of any class of the Corporation. (vii) In addition to the powers and authorities granted herein and by statute expressly conferred upon it, the Board of Directors is authorized to exercise all powers and do all acts that may be exercised or done by the Corporation pursuant to the provisions of the laws of the State of Maryland, these Articles of Incorporation and the By-Laws of the Corporation. (3) Any determination made in good faith, and in accordance with accepted accounting practices, if applicable, by or pursuant to the direction of the Board of Directors, with respect to the amount of assets, obligations or liabilities of the Corporation, as to the amount of net income of the Corporation from dividends and interest for any period or amounts at any time legally available for the payment of dividends, as to the amount of any reserves or charges set up and the propriety thereof, as to the time of or purpose for creating reserves or as to the use, alteration or cancellation of any reserves or charges (whether or not any obligation or liability for which the reserves or charges have been created has been paid or discharged or is then or thereafter required to be paid or discharged), as to the value of any security owned by the Corporation, the determination of the net asset value of shares of any class of the Corporation's capital stock, or as to any other matters relating to the issuance, sale, redemption or other acquisition or disposition of securities or shares of capital stock of the Corporation, and any reasonable determination made in good faith by the Board of Directors whether any transaction constitutes a purchase of securities on "margin," a sale of securities "short," or an underwriting of the sale of, or a participation in any underwriting or selling group in connection with the public distribution of, any securities, shall be final and conclusive, and shall be binding upon the Corporation and all holders of its capital stock, past, present and future, and shares of the capital stock of the Corporation are issued and sold on the condition and understanding, evidenced by the purchase of shares of capital stock or acceptance of share certificates, that any and all such determinations shall be binding as aforesaid. No provision of these Articles of Incorporation of the Corporation shall be effective to (i) require a waiver of compliance with any provision of the Securities Act of 1933, as amended, or the Investment Company Act of 1940, or of any valid rule, regulation or order of the Securities and Exchange Commission under those Acts or (ii) protect or purport to protect any director or officer of the Corporation against any liability to the Corporation or its security holders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. ARTICLE VII CHANGE OF STRUCTURE Notwithstanding any other provision of these Articles of Incorporation, the conversion of the Corporation from a "closed-end company" to an "open-end company," as those terms are defined in Sections 5(a)(2) and 5(a)(1), respectively, of the Investment Company Act of 1940 as in effect on December 1, 1985, shall require the affirmative vote or consent of the holders of sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of each class of stock of the Corporation normally entitled to vote in elections of directors voting for the purposes of this Article as separate classes. Such affirmative vote or consent shall be in addition to the vote or consent of the holders of the stock of the Corporation otherwise required by law or by the terms of any class or series of preferred stock, whether now or hereafter authorized, or any agreement between the Corporation and any national securities exchange. ARTICLE VIII CERTAIN TRANSACTIONS (1) Notwithstanding any other provision of these Articles of Incorporation, and subject to the exceptions provided in Paragraph (4) of this Article, the types of transactions described in Paragraph (3) of this Article shall require the affirmative vote or consent of the holders of sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of each class of stock of the Corporation normally entitled to vote in elections of directors voting for the purposes of this Article as separate classes, when a Principal Shareholder (as defined in Paragraph (2) of this Article) is a party to the transaction. Such affirmative vote or consent shall be in addition to the vote or consent of the holders of the stock of the Corporation otherwise required by law or by the terms of any class or series of preferred stock, whether now or hereafter authorized, or any agreement between the Corporation and any national securities exchange. (2) The term "Principal Shareholder" shall mean any corporation, person or other entity which is the beneficial owner, directly or indirectly, of more than five percent (5%) of the outstanding shares of any class of stock of the Corporation and shall include any affiliate or associate, as such terms are defined in clause (i) below, of a Principal Shareholder. For the purposes of this Article, in addition to the shares of stock which a corporation, person or other entity beneficially owns directly, (a) any corporation, person or other entity shall be deemed to be the beneficial owner of any shares of stock of the Corporation (i) which it has the right to acquire pursuant to any agreement or upon exercise of conversion rights or warrants, or otherwise (but excluding stock options granted by the Corporation) or (ii) which are beneficially owned, directly or indirectly (including shares deemed owned through application of clause (i) above), by any other corporation, person or entity with which it or its "affiliate" or "associate" (as defined below) has any agreement , arrangement or understanding for the purpose of acquiring, holding, voting or disposing of stock of the Corporation, or which is its "affiliate", or "associate" as those terms are defined in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934 as in effect on December 1, 1985, and (b) the outstanding shares of any class of stock of the Corporation shall include shares deemed owned through application of clauses (i) and (ii) above but shall not include any other shares which may be issuable pursuant to any agreement, or upon exercise of conversion rights or warrants, or otherwise. (3) This Article shall apply to the following transactions: (i) The merger or consolidation of the Corporation or any subsidiary of the Corporation with or into any Principal Shareholder. (ii) The issuance of any securities of the Corporation to any Principal Shareholder for cash. (iii)The sale, lease or exchange of all or any substantial part of the assets of the Corporation to any Principal Shareholder (except assets having an aggregate fair market value of less than $1,000,000, aggregating for the purpose of such computation all assets sold, leased or exchanged in any series of similar transactions within a twelve-month period). (iv) The sale, lease or exchange to the Corporation or any subsidiary thereof, in exchange for securities of the Corporation, of any assets of any Principal Shareholder (except assets having an aggregate fair market value of less than $1,000,000, aggregating for the purposes of such computation all assets sold, leased or exchanged in any series of similar transactions within a twelve-month period). (4) The provisions of this Article shall not be applicable to (i) any of the transactions described in Paragraph (3) of this Article if the Board of Directors of the Corporation shall by resolution have approved a memorandum of understanding with such Principal Shareholder with respect to and substantially consistent with such transaction, or (ii) any such transaction with any corporation of which a majority of the outstanding shares of all classes of stock normally entitled to vote in elections of directors is owned of record or beneficially by the Corporation and its subsidiaries. (5) The Board of Directors shall have the power and duty to determine for the purposes of this Article on the basis of information known to the Corporation, whether (i) a corporation, person or entity beneficially owns more than five percent (5%) of the outstanding shares of any class of stock of the Corporation, (ii) a corporation, person, or entity beneficially owns more than five percent (5%) of the outstanding shares of any class of stock of the Corporation, (ii) a corporation, person or entity is an "affiliate" or "associate" (as defined above) of another, (iii) the assets being acquired or leased to or by the Corporation, or any subsidiary thereof, constitute a substantial part of the assets of the Corporation and have an aggregate fair market value of less than $1,000,000, and (iv) the memorandum of understanding referred to in Paragraph (4) hereof is substantially consistent with the transaction covered thereby. Any such determination shall be conclusive and binding for all purposes of this Article. ARTICLE IX AMENDMENTS (1) The Corporation reserves the right from time to time to make any amendment to its Articles of Incorporation, now or hereafter authorized by law, including any amendment that alters the contract rights, as expressly set forth in its Articles of Incorporation, of any outstanding stock. (2) Notwithstanding Paragraph (1) of this Article or any other provision of these Articles of Incorporation, no amendment to these Articles of Incorporation of the Corporation shall amend, alter, change or repeal any of the provisions of Articles VII, VIII, and IX unless the amendment effecting such amendment, alteration, change or repeal shall receive the affirmative vote or consent of sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of each class of stock of the Corporation normally entitled to vote in elections of directors, voting for the purposes of this Article as separate classes. Such affirmative vote or consent shall be in addition to the vote or consent of the holders of the stock of the Corporation otherwise required by law or by the terms of any class or series of preferred stock, whether now or hereafter authorized, or any agreement between the Corporation and any national securities exchange. IN WITNESS WHEREOF, I have adopted and signed these Articles of Incorporation and do hereby acknowledge that the adoption and signed are my act. Dated the 16th day of December, 1985. \s\ John W. Scheflen -------------------------------------- John W. Scheflen Incorporator CONSENT TO USE OF NAME GROWTH STOCK OUTLOOK, INC., a corporation organized under the laws of the State of Maryland, hereby consents to the organization of Growth Stock Outlook Trust, Inc. in the State of Maryland. IN WITNESS WHEREOF, said GROWTH STOCK OUTLOOK, INC. has caused this consent to be executed by its President and attested under its corporate seal by its Secretary, this 13th day of December 1985. GROWTH STOCK OUTLOOK, INC. By: Charles Allmon President Attest: Secretary (SEAL) EX-99.2K 3 ARTICLES OF AMENDMENT GROWTH STOCK OUTLOOK TRUST, INC. ARTICLES OF AMENDMENT GROWTH STOCK OUTLOOK TRUST, INC., a Maryland corporation (the "Corporation"), its principal office in the State of Maryland being 4405 East-West Highway, Bethesda, Maryland 20814, hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: The charter of the Corporation is hereby amended by adding a new Article X to the Articles of Incorporation which shall be as follows: ARTICLE X To the fullest extent permitted by the Maryland General Corporation Law, as amended from time to time, no director or officer of the Corporation shall be personally liable to the Corporation or its stockholders for money damages, except to the extent such exemption from liability or limitation thereof is not permitted to the Investment Company Act of 1940, as amended from time to time. No amendment to these Articles of Incorporation or repeal of any of its provisions shall limit or eliminate the benefits provided to directors and officers under this provision with respect to any act or omission which occurred prior to such amendment or repeal. SECOND: The foregoing amendment has been advised by the Board of Directors of the Corporation and approved by the stockholders of the Corporation. IN WITNESS WHEREOF, Growth Stock Outlook Trust, Inc. has caused these presents to be signed in its name and on its behalf by its President and Chairman and its corporate seal to be hereunder affixed and attested by its Secretary on April 27, 1989. GROWTH STOCK OUTLOOK TRUST, INC. By:_______________________________ Charles Allmon Chairman and President Attest: Janet R. Hudson Secretary THE UNDERSIGNED, President of Growth Stock Outlook Trust, Inc., who executed on behalf of the Corporation the foregoing Articles of Amendment, of which this certificate is made a part, hereby acknowledges, in the name and on behalf of the Corporation, the foregoing Articles of Amendment to be the corporate act of the Corporation and further certifies that, to the best of his knowledge, information and belief, the matters and facts set forth therein with respect to the approval thereof are true in all material respects, under penalties of perjury. ____________________________________ Charles Allmon President EX-99.2K 4 ARTICLES OF AMENDMENT GROWTH STOCK OUTLOOK TRUST, INC. ARTICLES OF AMENDMENT Growth Stock Outlook Trust, Inc., a Maryland corporation having its principal office in Montgomery County, Maryland (hereinafter called "Corporation"), hereby certifies: FIRST: The charter of the Corporation is amended by striking out Article II of the Articles of Incorporation and inserting in lieu thereof the following: "Name: The name of the Corporation (hereinafter called the Corporation) is The Charles Allmon Trust, Inc." SECOND: The amendment of the charter of the Corporation as hereinabove set forth has been duly advised by the Board of Directors and approved by the stockholders of the Corporation. IN WITNESS WHEREOF, Growth Stock Outlook Trust, Inc. has caused this instrument to be signed in its name and on its behalf by its President, Charles Allmon, and attested by its Secretary, Janet R. Hudson, on the 31st day of May, 1991. The undersigned acknowledges these Articles of Amendment to be the corporate act of the Corporation and states that to the best of his or her knowledge, information and belief the matters and facts set forth herein with respect to the authorization and approval hereof are true in all material respects and that this statement is made under the penalties of perjury. GROWTH STOCK OUTLOOK TRUST, INC. By: \s\ Charles Allmon ------------------------------ Charles Allmon, President ATTEST By: \s\ Janet R. Hudson --------------------- Janet R. Hudson Secretary EX-99.2K 5 ARTICLES OF AMENDMENT THE CHARLES ALLMON TRUST, INC. ARTICLES OF AMENDMENT THE CHARLES ALLMON TRUST, INC., a Maryland corporation having its principal office in Montgomery County, Maryland (hereinafter called the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland, that: FIRST: The charter of the Corporation is hereby amended by striking out Article II of the Articles of Incorporation, as amended, and inserting in lieu thereof the following: "Name: The name of the Corporation (hereinafter called the "Corporation") is "Liberty ALL-STAR Growth Fund, Inc." SECOND: The amendment of the charter of the Corporation as hereinabove set forth has been duly advised by the Board of Directors and approved by the stockholders of the Corporation. IN WITNESS WHEREOF, The Charles Allmon Trust, Inc. has caused this instrument to be signed in its name and on its behalf by its President, William R. Parmentier, and attested by its Secretary, John L. Davenport, on the 6th day of November, 1995. THE CHARLES ALLMON TRUST, INC. By:_____________________________ William R. Parmentier President ATTEST: By:_______________________________ John L. Davenport, Secretary THE UNDERSIGNED, President of The Charles Allmon Trust, Inc., who executed on behalf of said corporation the foregoing Articles of Amendment, of which this certificate is made a part, hereby acknowledges, in the name and on behalf of said corporation, the foregoing Articles of Amendment to be the corporate act of said corporation and further certifies that, to the best of his knowledge, information and belief, the matters and facts set forth therein with respect to the approval thereof are true in all materials respects, under the penalties of perjury. \s\ William R. Parmentier ------------------------------ William R. Parmentier EX-99.2B 6 BY-LAWS Restated BY-LAWS OF LIBERTY ALL-STAR GROWTH FUND, INC. A Maryland Corporation As amended through April 18, 1996 ARTICLE I STOCKHOLDERS SECTION 1. Annual Meetings. The annual meeting of the stockholders of Liberty All-Star Growth Fund, Inc. (formerly "The Charles Allmon Trust, Inc.") (the "Corporation") shall be held on a date fixed from time to time by the Board of Directors within the thirty-one (31) day period ending four (4) months after the end of the Corporation's fiscal year. An annual meeting may be held at any place in or out of the State of Maryland as may be determined by the Board of Directors as shall be designated in the notice of the meeting and at the time specified by the Board of Directors. Any business of the Corporation may be transacted at an annual meeting without being specifically designated in the notice unless otherwise provided by statute, the Corporation's Charter or these By-Laws. SECTION 2. Special Meetings. Special meetings of the stockholders of any purpose or purposes, unless otherwise prescribed by statute or by the Corporation's Charter, may be held at any place within the United States, and may be called at any time by the Board of Directors, by the Chairman of the Board or by the President, and shall be called by the Chairman of the Board or President or Secretary at the request in writing of a majority of the Board of Directors or at the request in writing of stockholders entitled to cast at least twenty-five (25) percent of the votes entitled to be cast at the meeting upon payment by such stockholders to the Corporation of the reasonably estimated cost of preparing and mailing a notice of a meeting (which estimated cost shall be provided to such stockholders by the Secretary of the Corporation). Notwithstanding the foregoing, unless requested by stockholders entitled to cast a majority of the votes entitled to be cast at the meeting, a special meeting of the stockholders need not be called at the request of stockholders to consider any matter that is substantially the same as a matter voted on at any special meeting of the stockholders held during the preceding twelve (12) months. A written request shall state the purpose or purposes of the proposed meeting. SECTION 3. Notice of Meetings. Written or printed notice of the purpose or purposes and of the time and place of every meeting of the stockholders shall be given by the Secretary of the Corporation to each stockholder of record entitled to vote at the meeting, by placing the notice in the mail at least ten (10) days, but not more than ninety (90) days, prior to the date designated for the meeting addressed to each stockholder at the address appearing on the books of the Corporation or supplied by the stockholder to the Corporation for the purpose of notice. The notice of any meeting of stockholders may be accompanied by a form of proxy approved by the Board of Directors in favor of the actions or persons as the Board of Directors may select. Notice of any meeting of stockholders shall be deemed waived by any stockholder who attends the meeting in person or by proxy, who before or after the meeting submits a signed waiver of notice that is filed with the records of the meeting. SECTION 4. Quorum. Except as otherwise provided by statute or by the Corporation's Charter, the presence in person or by proxy of stockholders of the Corporation entitled to cast at least a majority of the votes entitled to be cast shall constitute a quorum at each meeting of the stockholders and all questions shall be decided by majority vote of the shares so represented in person or by proxy at the meeting and entitled to vote. In the absence of a quorum, the stockholders present in person or by proxy at the meeting, by majority vote and without notice other than by announcement at the meeting, may adjourn the meeting from time to time as provided in Section 5 of this Article I until a quorum shall attend. The stockholders present at any duly organized meeting may continue to do business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. The absence from any meeting in person or by proxy of holders of the number of shares of stock of the Corporation in excess of a majority that may be required by the laws of the State of Maryland, the Investment Company Act of 1940, or other applicable statute, the Corporation's Articles of Incorporation or these By-Laws, for action upon any given matter shall not prevent action at the meeting on any other matter or matters that may properly come before the meeting, so long as there are present, in person or by proxy, holders of the number of shares of stock of the Corporation required for action upon the other matter or matters. SECTION 5. Adjournment. Any meeting of the stockholders may be adjourned from time to time, without notice other than by announcement at the meeting at which the adjournment is taken. At any adjourned meeting at which a quorum shall be present any action may be taken that could have been taken at the meeting originally called. A meeting of the stockholders may not be adjourned to a date more than one-hundred-twenty (120) days after the original record date. SECTION 6. Organization. At every meeting of the stockholders, the Chairman of the Board, or in his absence or inability to act, the President, or in his absence or inability to act, a Vice President, or in the absence or inability to act of the Chairman of the Board, the President and all the Vice Presidents, a chairman chosen by the stockholders, shall act as chairman of the meeting. The Secretary, or in the absence or inability to act, a person appointed by the chairman of the meeting, shall act as secretary of the meeting and keep the minutes of the meeting. SECTION 7. Order of Business. The order of business at all meetings of the stockholders shall be as determined by the chairman of the meeting. SECTION 8. Voting. Except as otherwise provided by statute or the Corporation's Charter, each holder of record of shares of stock of the Corporation having voting power shall be entitled at each meeting of the stockholders to one (1) vote for every share of stock standing in his name on the records of the Corporation as of the record date determined pursuant to Section 9 of this Article I. Each stockholder entitled to vote at any meeting of stockholders may authorize another person or persons to act from him by a proxy signed by the stockholder or his attorney-in-fact. The placing of a shareholder's name on a proxy pursuant to telephonic or electronically transmitted instructions obtained pursuant to procedures reasonably designed to verify that such instructions have been authorized by such shareholder shall constitute execution or signature of such proxy by or on behalf of such shareholder. No proxy shall be valid after the expiration of eleven (11) months from the date thereof, unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the stockholder executing it, except in those cases in which the proxy states that it is irrevocable and in which an irrevocable proxy is permitted by law. SECTION 9. Fixing of Record Date for Determining Stockholders Entitled to Vote at Meeting. The Board of Directors may set a record date for the purpose of determining stockholders entitled to vote at any meeting of the stockholders. The record date for a particular meeting shall be not more than ninety (90) for fewer than ten (10) days before the date of the meeting. All persons who were holders of record of shares as of the record date of a meeting, and no others, shall be entitled to vote at such meeting and any adjournment thereof. SECTION 10. Inspectors. The Board of Directors may, in advance of any meeting of stockholders, appoint one (1) or more inspectors to act at the meeting or at any adjournment of the meeting. If the inspectors shall not be so appointed or if any of them shall fail to appear or act, the chairman of the meeting may appoint inspectors. Each inspector, before entering upon the discharge of his duties, shall, if required by the chairman of the meeting, take and sign an oath to execute faithfully the duties of inspector at the meeting with strict impartiality and according to the best of his ability. The inspectors shall determine the number of shares outstanding and the voting power of each share, the number of shares represented at the meeting, the existence of a quorum and the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do those acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the chairman of the meeting or any stockholder entitled to vote at the meeting, the inspectors shall make a report in writing of any challenge, request or matter determined by them and shall execute a certificate of any fact found by them. No director or candidate for the office of director shall act as inspector of an election of directors. Inspectors need not be stockholders of the Corporation. SECTION 11. Consent of Stockholders in Lieu of Meeting. Except as otherwise provided by statute or the Corporation's Charter, any action required to be taken at any annual or special meeting of stockholders, or any action that may be taken at any annual or special meeting of the stockholders, may be taken without a meeting, without prior notice and without a vote, if the following are filed with the records of stockholders' meetings: (a) an unanimous written consent that sets for the action and is signed by each stockholder entitled to vote on the matter and (b) a written waiver of any right to dissent signed by each stockholder entitled to notice of the meeting but not entitled to vote at the meeting. ARTICLE II BOARD OF DIRECTORS SECTION 1. General Powers. Except as otherwise provided in the Corporation's Charter, the business and affairs of the Corporation shall be managed under the direction of the Board of Directors. All powers of the Corporation may be exercised by or under authority of the Board of Directors except as conferred on or reserved to the stockholders by law, by the Corporation's Charter or by these By-Laws. SECTION 2. Number, Election and Term of Directors. The number of directors shall be fixed from time to time by resolution of the Board of Directors adopted by a majority of the directors then in office; provided, however, that the number of directors shall in no event be fewer than three (3) nor more then nine (9). The Board of Directors shall be divided into three classes. Within the limits above specified, the number of directors in each class shall be determined by resolution of the Board of Directors or by the stockholders at the annual meeting thereof. The term of office of the first class shall expire on the date of the first annual meeting of stockholders. The term of office of the second class shall expire one year thereafter. The term of office of the third class shall expire two years thereafter. Upon expiration of the term of office in each class as set forth above, the number of directors in such class, as determined by the Board of Directors, shall be elected for a term of three years to succeed the directors whose terms of office expire. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 5 of this Article, and each director elected shall hold office until his successor shall have been elected and shall have qualified, or until his death, or until he shall have resigned or have been removed as provided in these By-Laws, or as otherwise provided by statute or the Corporation's Charter. Any vacancy created by an increase in directors may be filled in accordance with Section 5 of this Article II. No reduction in the number of directors shall have the effect of removing any director from office prior to the expiration of his term unless the director is specifically removed pursuant to Section 4 of this Article II at the time of the decrease. A director need not be a stockholder of the Corporation, a citizen of the United States or a resident of the State of Maryland. SECTION 3. Resignation. A director of the Corporation may resign at any time by giving written notice of his resignation to the Board of Directors or the Chairman of the Board or to the President or the Secretary of the Corporation. Any resignation shall take effect at the time specified in it or, should the time when it is to become effective not be specified in it, immediately upon its receipt. Acceptance of a resignation shall not be necessary to make it effective unless the resignation states otherwise. SECTION 4. Removal of Directors. Any director of the Corporation may be removed by the stockholders with or without cause by a vote of a majority of the votes entitled to be cast for the election of directors. SECTION 5. Vacancies. Subject to the provisions of the Investment Company Act of 1940, any vacancies in the Board of Directors, whether arising from death, resignation, removal or any other cause except an increase in the number of directors, shall be filled by a vote of the majority of the Board of Directors then in office even though that majority is less than a quorum, provided that no vacancy or vacancies shall be filled by action of the remaining directors if, after the filling of the vacancy or vacancies, fewer than two-thirds of the directors then holding office shall have been elected by the stockholders of the Corporation. A majority of the entire Board may fill a vacancy that results from an increase in the number of directors. In the event that at any time a vacancy exists in any office of a director that may not be filled by the remaining directors, a special meeting of the stockholders shall be held as promptly as possible and in any event within sixty (60) days, for the purpose of filling the vacancy or vacancies. Any director appointed by the Board of Directors to fill a vacancy shall hold office only until the next annual meeting of stockholders of the Corporation and until a successor has been elected and qualifies or until his earlier resignation or removal. Any director elected by the stockholders to fill a vacancy shall hold office for the balance of the term of the director whose death, resignation or removal occasioned the vacancy and until a successor has been elected and qualified or until his earlier resignation or removal. SECTION 6. Place of Meetings. Meetings of the Board may be held at any place that the Board of Directors may from time to time determine or that is specified in the notice of the meeting. SECTION 7. Regular Meetings. Regular meetings of the Board of Directors may be held without notice at the time and place determined by the Board of Directors. SECTION 8. Special Meetings. Special meetings of the Board of Directors may be called by two (2) or more directors of the Corporation or by the Chairman of the Board or the President. SECTION 9. Annual Meeting. The annual meeting of the newly elected and other directors shall be held as soon as practicable after the meeting of stockholders at which the newly elected directors were elected. No notice of such annual meeting shall be necessary if held immediately after the adjournment, and at the site, of the meeting of stockholders. If not so held, notice shall be given as hereinafter provided for special meetings of the Board of Directors. SECTION 10. Notice of Special Meetings. Notice of each special meeting of the Board of Directors shall be given by the Secretary as hereinafter provided. Each notice shall state the time and place of the meeting and shall be delivered to each director, either personally or by telephone or other standard form of telecommunication, at least twenty-four (24) hours before the time at which the meeting is to be held, or by first-class mail, postage prepaid, addressed to the director at his residence or usual place of business, and mailed at least three (3) days before the day on which the meeting is to be held. SECTION 11. Waiver of Notice of Meetings. Notice of any special meeting need not be given to any director who shall, either before or after the meeting, sign a written waiver of notice that is filed with the records of the meeting or who shall attend the meeting. SECTION 12. Quorum and Voting. One-third (1/3), but not fewer than two (2) of the members of the entire Board of Directors shall be present in person at any meeting of the Board so as to constitute a quorum for the transaction of business at the meeting, and except as otherwise expressly required by statute, the Corporation's Charter, these By-Laws, the Investment Company Act of 1940, or any other applicable statute, the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board. In the absence of a quorum at any meeting of the Board, a majority of the directors present may adjourn the meeting to another time and place until a quorum shall be present. Notice of the time and place of any adjourned meeting shall be given to the directors who were not present at the time of the adjournment and, unless the time and place were announced at the meeting at which the adjournment was taken, to the other directors. At any adjourned meeting at which a quorum is present, any business may be transacted that might have been transacted at the meeting as originally called. SECTION 13. Organization. The Board of Directors may designate a Chairman of the Board, who shall preside at each meeting of the Board. In the absence or inability of the Chairman of the Board to act, the President, or, in his absence or inability to act, another director chosen by a majority of the directors present, shall act as chairman of the meeting and preside at the meeting. The Secretary (or, in his absence or inability to act, any person appointed by the chairman) shall act as secretary of the meeting and keep the minutes of the meeting. SECTION 14. Committees. The Board of Directors may designate one (1) or more committees of the Board of Directors, each consisting of two (2) or more directors. To the extent provided in the resolution, and permitted by law, the committee or committees shall have and may exercise the powers of the Board of Directors in the management of the business affairs of the Corporation. Any committee or committees shall have the name or names determined from time to time by resolution adopted by the Board of Directors. Each committee shall keep regular minutes of its meetings and provide those minutes to the Board of Directors when required. The members of a committee present at any meeting, whether or not they constitute a quorum, may appoint a director to act in the place of an absent member. SECTION 15. Written Consent of Directors in Lieu of a Meeting. Subject to the provisions of the Investment Company Act of 1940, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee of the Board may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of the proceedings of the Board or committee. SECTION 16. Telephone Conference. Members of the Board of Directors of any committee of the Board may participate in any Board or committee meeting by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time. Participation by such means shall constitute presence in person at the meeting. SECTION 17. Compensation. Each director shall be entitled to receive compensation, if any, as may from time to time be fixed by the Board of Directors, including a fee for each meeting of the Board or any committee thereof, regular or special, he attends. Directors may also be reimbursed by the Corporation for all reasonable expenses incurred in traveling to and from the place of a Board or committee meeting. ARTICLE III OFFICERS, AGENTS AND EMPLOYEES SECTION 1. Number and Qualifications. The officers of the Corporation shall be a Chairman of the Board, a President, a Treasurer, a Controller and a Secretary, each of whom shall be elected by the Board of Directors. The Board of Directors may also appoint any other officers, agents and employees it deems necessary or proper. Any two (2) or more officers may be held by the same person, except the office of President, but no officer shall execute, acknowledge or verify in more than one (1) capacity any instrument required by law to be executed, acknowledged or verified in more than one capacity. The Chairman of the Board, the President, the Treasurer, the Controller and the Secretary shall be elected by the Board of Directors each year at its first meeting held after the annual meeting of stockholders, each to hold office until the meeting of the Board following the next annual meeting of the stockholders and until his or her successor shall have been duly elected and shall have qualified, or until his or her death, or until he or she shall have resigned or have been removed, as provided in these By-Laws. The Board of Directors may from time to time elect such additional officers (including one or more Vice Presidents, one or more Assistant Vice Presidents, one or more Assistant Treasurers, one or more Assistant Controllers and one or more Assistant Secretaries) and may appoint, or delegate to the President the power to appoint, such agents as may be necessary or desirable for the business of the Corporation. Such other officers and agents shall have such duties and shall hold their offices for such terms as may be prescribed by the Board or by the appointing authority. Any officer other than the Chairman of the Board may be but none need be, a Director, and any officer may be, but none need be a stockholder of the Corporation. SECTION 2. Resignations. Any officer of the Corporation may resign at any time by giving written notice of his or her resignation to the Board of Directors, the Chairman of the Board, the President or the Secretary. Any resignation shall take effect at the time specified therein or, if the time when it shall become effective is not specified therein, immediately upon its receipt. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation. SECTION 3. Removal of Officer, Agent or Employee. Any officer, agent or employee of the Corporation may be removed by the Board of Directors with or without cause at any time, and the Board may delegate the power of removal as to agents and employees not elected or appointed by the Board of Directors. SECTION 4. Vacancies. A vacancy in any office, whether arising from death, resignation, removal or any other cause, may be filled for the unexpired portion of the term of the office that shall be vacant, in the manner prescribed in these By-Laws for the regular election or appointment to that office. SECTION 5. Compensation. The compensation, if any, of the officers of the Corporation shall be fixed by the Board of Directors, but this power may be delegated to any officer with respect to other officers under his control. SECTION 6. Bonds or Other Security. If required by the Board, any officer, agent or employee of the Corporation shall give a bond or other security for the faithful performance of his or her duties, in an amount and with any surety or sureties as the Board may require. SECTION 7. Chairman of the Board. The Chairman of the Board shall be a Director of the Corporation and, unless the Board shall specify otherwise, shall preside at meetings of the Board and of the Stockholders of the Corporation. SECTION 8. President. The President shall be the Chief Executive Officer of the Corporation and shall have, subject to the control of the Board of Directors, general charge of the business and affairs of the Corporation, and may employ and discharge employees and agents of the Corporation, except those elected or appointed by the Board, and he or she may delegate these powers. SECTION 9. Vice President. Each Vice President shall have the powers and perform the duties that the President or the Board of Directors may from time to time prescribe. In the absence or disability of the President, the Vice President or, if there be more than one Vice President, any Vice President designated by the Directors, shall perform all the duties and may exercise any of the powers of the President, subject to the control of the Board of Directors. SECTION 10. Treasurer. The Treasurer shall be the principal financial and accounting officer of the Corporation. He or she shall deliver all funds of the Corporation which may come into his or her hands to any custodian appointed by or pursuant to authority granted by the Board of Directors. He or she shall render a statement of condition of the finances of the Corporation to the Directors as often as they shall require the same, and he or she shall in general perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him or her by the Board of Directors. SECTION 11. Assistant Treasurers. In the absence or disability of the Treasurer, the Assistant Treasurer, or, if there be more than one, any Assistant Treasurer designated by the Board of Directors, shall perform all the duties, and may exercise all the powers, of the Treasurer. The Assistant Treasurers, if any, shall perform such other duties as from time to time may be assigned to them by the Treasurer or the Board of Directors. SECTION 12. Controller. The Controller shall be the chief accounting officer of the Corporation and shall have control of all its books of account. He or she shall see that correct and complete books and records of account are kept as required by law, showing fully, in such form as he or she shall prescribe, all transactions of the Corporation, and he or she shall require, keep and preserve all vouchers relating thereto for such period as may be necessary. The Controller shall render periodically such financial statements and such other reports relating to the Corporation's business as may be required by the President or the Board. He or she shall generally perform all duties appertaining to the office of controller of a corporation. SECTION 13. Assistant Controllers. In the absence or disability of the Controller, the Assistant Controller, or, if there be more than one, any Assistant Controller designated by the Board of Directors, shall perform all of the duties, and may exercise all of the powers, of the Controller. The Assistant Controllers, if any, shall perform such other duties as from time to time may be assigned to them by the Controller or the Board of Directors. SECTION 14. Secretary. The Secretary shall keep the minutes of all meetings of the Directors and of all meetings of the Stockholders of the Corporation in proper books provided for that purpose; he or she shall have custody of the seal of the Corporation; he or she shall have charge of the share transfer books, lists and records unless the same are in the charge of the Corporation's transfer agent. He or she shall attend to the giving and serving of all notices by the Corporation in accordance with the provisions of these By-Laws and as required by law; and subject to these By-Laws, he or she shall in general perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the Directors. SECTION 15. Assistant Secretaries. In the absence or disability of the Secretary, the Assistant Secretary, or, if there be more than one, any Assistant Secretary designated by the Board of Directors, shall perform all of the duties, and may exercise all of the powers, of the Secretary. The Assistant Secretaries, if any, shall perform such other duties as from time to time may be assigned to them by the Secretary or the Board of Directors. SECTION 16. Delegation of Duties. In case of the absence or disability of any officer of the Corporation, or for any other reason that the Board of Directors may deem sufficient, the Board may confer for the time being the powers or duties, or any of them, of such officer upon any other officer or upon any Director. ARTICLE IV STOCK SECTION 1. Stock Certificates. Unless otherwise provided by the Board of Directors and permitted by law, each holder of stock of the Corporation shall be entitled upon specific written request to such person as may be designated by the Corporation to have a certificate or certificates, in a form approved by the Board, representing the number of shares of stock of the Corporation owned by him; provided, however, that certificates for fractional shares will not be delivered in any case. The certificates representing shares of stock shall be signed by or in the name of the Corporation by the Chairman of the Board, the President or a Vice President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer and sealed with the seal of the Corporation. Any or all of the signatures or the seal on the certificate may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before the certificate is issued, it may be issued by the Corporation with the same effect as if the officer, transfer agent or registrar was still in office at the date of issue. SECTION 2. Stock Ledger. There shall be maintained a stock ledger containing the name and address of each stockholder and the number of shares of stock of each class the shareholder holds. The stock ledger may be in written form or any other form which can be converted within a reasonable time into written form for visual inspection. The original or a duplicate of the stock ledger shall be kept at the principal office of the Corporation or at any other office or agency specified by the Board of Directors. SECTION 3. Transfers of Shares. Transfers of shares of stock of the Corporation shall be made on the stock records of the Corporation only by the registered holder of the shares, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary or with a transfer agent or transfer clerk, and on surrender of the certificate or certificates, if issued, for the shares properly endorsed or accompanied by a duly executed stock transfer power and the payment of all taxes thereon. Except as otherwise provided by law, the Corporation shall be entitled to recognize the exclusive right of a person in whose name any share or shares stand on the record of stockholders as the owner of the share or shares for all purposes, including, without limitation, the rights to receive dividends or other distributions and to vote as the owner, and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in any such share or shares on the part of any other person. SECTION 4. Regulations. The Board of Directors may authorize the issuance of uncertificated securities if permitted by law. If stock certificates are issued, the Board of Directors may make any additional rules and regulations, not inconsistent with these By-Laws, as it may deem expedient concerning the issue, transfer and registration of certificates for shares of stock of the Corporation. The Board may appoint, or authorize any officer or officers to appoint, one or more transfer agents or one or more transfer clerks and one or more registrars and may require all certificates for shares of stock to bear the signature or signatures of any of them. SECTION 5. Lost, Destroyed or Mutilated Certificates. The holder of any certificate representing shares of stock of the Corporation shall immediately notify the Corporation of its loss, destruction or mutilation and the Corporation may issue a new certificate of stock in the place of any certificate issued by it that has been alleged to have been lost or destroyed or that shall have been mutilated. The Board may, in its discretion, require the owner (or his legal representative) of a lost, destroyed or mutilated certificate: to give the Corporation a bond in a sum, limited or unlimited, and in a form and with any surety or sureties, as the Board in its absolute discretion shall determine, to indemnify the Corporation against any claim that may be made against it on account of the alleged loss or destruction of any such certificate, or issuance of a new certificate. Anything herein to the contrary notwithstanding, the Board of Directors, in its absolute discretion, may refuse to issue any such new certificate, except pursuant to legal proceedings under the laws of the State of Maryland. SECTION 6. Fixing of Record Date for Dividends, Distributions, etc. The Board may fix, in advance, a date not more than ninety (90) days preceding the date fixed for the payment of any dividend or the making of any distribution or the allotment of rights to subscribe for securities of the Corporation, or for the delivery of evidences of rights or evidences of interests arising out of any change, conversion or exchange of common stock or other securities, as the record date for the determination of the stockholders entitled to receive any such dividend, distribution, allotment, rights or interest, and in such case only the stockholders of record at the time so fixed shall be entitled to receive such dividend, distribution, allotment, rights or interests. SECTION 7. Information to Stockholders and Others. Any stockholder of the Corporation or his agent may inspect and copy during the Corporation's usual business hours the Corporation's By-Laws, minutes of the proceedings of its stockholders, annual statements of its affairs and voting trust agreements on file at its principal office. ARTICLE V INDEMNIFICATION SECTION 1. Indemnification of Directors and Officers. The Corporation shall indemnify its directors to the fullest extent that indemnification of directors is permitted by the Maryland General Corporation Law. The Corporation shall indemnify its officers to the same extent as its directors and to such further extent as is consistent with law. The Corporation shall indemnify its directors and officers who while serving as directors or officers also serve at the request of the Corporation as a director, officer, partner, trustee, employee, agent or fiduciary of another corporation, partnership, joint venture, trust, other enterprise or employee benefit plan to the fullest extent consistent with law. The indemnification and other rights provided by this Article shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. This Article shall not protect any such a person against any liability to the Corporation or any stockholder thereof to which such person would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office ("disabling conduct"). SECTION 2. Advances. Any current or former director or officer of the Corporation claiming indemnification within the scope of this Article V shall be entitled to advances from the Corporation for payment of the reasonable expenses incurred by him in connection with proceedings to which he is a party in the manner and to the fullest extent permissible under the Maryland General Corporation Law. The person seeking indemnification shall provide to the Corporation a written affirmation of his good faith belief that the standard of conduct necessary for indemnification by the Corporation has been met and a written undertaking to repay any such advance, if it should ultimately be determined that the standard of conduct has not been met. In addition, at lease one of the following additional conditions shall be met: (a) the person seeking indemnification shall provide a security in form and amount acceptable to the Corporation for his undertaking; (b) the Corporation is insured against losses arising by reason of the advance; or (c) a majority of a quorum of directors of the Corporation who are neither "interested persons" as defined in Section 2(a)(19) of the Investment Company Act of 1940 nor parties to the proceeding ("disinterested non-party directors"), or independent legal counsel, in a written opinion, shall have determined, based in a review of facts readily available to the Corporation at the time the advance is proposed to be made, that there is reason to believe that the person seeking indemnification will ultimately be found to be entitled to indemnification. SECTION 3. Procedure. At the request of any person claiming indemnification under this Article, the Board of Directors shall determine, or cause to be determined, in a manner consistent with the Maryland General Corporation Law, whether the standards required by this Article have been met. Indemnification shall be made only following: (a) a final decision on the merits by a court or other body before whom the proceeding was brought that the person to be indemnified was not liable by reason of disabling conduct or (b) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the person to be indemnified was not liable by reason of disabling conduct, by (i) the vote of a majority of a quorum of disinterested non-party directors or (ii) an independent legal counsel in a written opinion. SECTION 4. Indemnification of Employees and Agents. Employees and agents who are not officers or directors of the Corporation may be indemnified, and reasonable expenses may be advanced to such employees or agents, as may be provided by action of the Board of Directors or by contract subject to any limitations imposed by the Investment Company Act of 1940. SECTION 5. Other Rights. The Board of Directors may make further provision consistent with law for indemnification and advance of expenses to directors, officers, employees and agents by resolution, agreement or otherwise. The indemnification provided by this Article shall not be deemed exclusive of any other right, with respect to indemnification or otherwise, to which those seeking indemnification may be entitled under any insurance or other agreement or resolution of stockholders or disinterested directors or otherwise. SECTION 6. Amendments. References in this Article are to the Maryland General Corporation Law and to the Investment Company Act of 1940 as from time to time amended. No amendment of these By-Laws shall affect any right of any person under this Article based on any event, omission or proceeding prior to the amendment. ARTICLE VI SEAL The seal of the Corporation shall be circular in form and shall bear the name of the Corporation, the year of its incorporation, the words "Corporate Seal" and "Maryland" and any emblem or device approved by the Board of Directors. The seal may be used by causing it or a facsimile to be impressed or affixed or in any other manner reproduced, or by placing the word ("seal") adjacent to the signature of the authorized officer of the Corporation. ARTICLE VII FISCAL YEAR SECTION 1. Fiscal Year. The Corporation's fiscal year shall be fixed by the Board of Directors. SECTION 2. Accountant. (a) The Corporation shall employ an independent public accountant or a firm of independent public accountants of national reputation as its Accountant to examine the accounts of the Corporation and to sign and certify financial statements filed by the Corporation. The Accountant's certificates and reports shall be addressed both to the Board of Directors and to the stockholders. The employment of the Accountant shall be conditioned upon the right of the Corporation to terminate the employment forthwith without any penalty by vote of a majority of the outstanding voting securities at any stockholders' meeting called for that purpose. (b) A majority of the members of the Board of Directors who are not "interested persons" (as such term is defined in the Investment Company Act of 1940) of the Corporation shall select the Accountant at any meeting held within thirty (30) days before or after the beginning of the fiscal year of the Corporation or before the annual stockholders' meeting in that year. Such selection shall be submitted for ratification or rejection at the next succeeding annual stockholders' meeting. If such meeting shall reject such selection, the Accountant shall be selected by majority vote of the Corporation's outstanding voting securities, either at the meeting at which the rejection occurred or at a subsequent meeting of stockholders called for that purpose. (c) Any vacancy occurring between annual meetings, due to the resignation of the Accountant, may be filled by the vote of a majority of the members of the Board of Directors who are not "interested persons" of the Corporation, as that term is defined in the Investment Company Act of 1940, at a meeting called for the purpose of voting on such action. ARTICLE VIII CUSTODY OF SECURITIES SECTION 1. Employment of a Custodian. The Corporation shall place and at all times maintain in the custody of a Custodian (including any sub-custodian for the Custodian) all funds, securities and similar investments owned by the Corporation. The Custodian (and any sub-custodian) shall be an institution conforming to the requirements of Section 17(f) of the Investment Company Act of 1940 and the rules of the Securities and Exchange Commission thereunder. The Custodian shall be appointed from time to time by the Board of Directors, which shall fix its renumeration. SECTION 2. Termination of Custodian Agreement. Upon termination of the Custodian Agreement or inability of the Custodian to continue to serve, the Board of Directors shall promptly appoint a successor custodian, but in the event that no successor Custodian can be found who has the required qualifications and is willing to serve, the Board of Directors shall call as promptly as possible a special meeting of the stockholders to determine whether the Corporation shall function without a Custodian or shall be liquidated. If so directed by vote of the holders of a majority of the outstanding shares of stock entitled to vote of the Corporation, the Custodian shall deliver and pay over all property of the Corporation held by it as specified in such vote. ARTICLE IX AMENDMENTS These By-Laws may be amended or repealed by the affirmative vote of a majority of the Board of Directors at any regular or special meeting of the Board of Directors, subject to the requirements of the Investment Company Act of 1940. LIBERTY ALL-STAR GROWTH FUND, INC. EX-99.2K 7 CERTIFICATE OF SHARES OF COMMON STOCK COMMON COMMON STOCK STOCK Par Value $.10 Per Share THIS CERTIFICATE IS TRANSFERABLE IN BOSTON, MASSACHUSETTS OR NEW YORK, NEW YORK INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND LIBERTY ALL-STAR GROWTH FUND, INC. - ------------------------------------------------------------- THIS CERTIFIES THAT IS THE OWNER OF - ------------------------------------------------------------- FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF Liberty All-Star Growth Fund, Inc. transferable on the books of the Corporation by the holder hereof in person or by daily authorized Attorney upon surrender of this Certificate properly endorsed. This Certificate and the shares represented hereby are issued and shall be subject to all of the provisions of the Articles of Incorporation of the Corporation, and the Bylaws of the Corporation, and all amendments thereof, copies of which are on file at the principal office of the Corporation and with the Transfer Agent. This Certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar. Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated: COUNTERSIGNED AND REGISTERED: STATE STREET BANK AND TRUST COMPANY TRANSFER AGENT BY AND REGISTRAR. \s\ John Davenport \s\Richard R. Christensen Secretary President AUTHORIZED SIGNATURE EX-99.2K 8 FORM OF SUBSCRIPTION CERTIFICATE Rights Issued__________ Shares of Common Stock available on Primary Subscription _________ VOID IF NOT RECEIVED BY THE SUBSCRIPTION AGENT BEFORE 5:00 P.M. EASTERN TIME ON JULY __, 1998 UNLESS PRECEDED BY A NOTICE OF GUARANTEED DELIVERY LIBERTY ALL-STAR GROWTH FUND, INC. SUBSCRIPTION CERTIFICATE FORM FOR RIGHTS TO SUBSCRIBE FOR SHARES OF COMMON STOCK IN ORDER TO EXERCISE YOUR RIGHTS, YOU MUST EITHER (i) COMPLETE AND SIGN THIS SUBSCRIPTION CERTIFICATE ON THE BACK AND RETURN IT TOGETHER WITH PAYMENT OF THE ESTIMATED SUBSCRIPTION PRICE REFERRED TO BELOW, OR (ii) PRESENT A PROPERLY COMPLETED NOTICE OF GURARANTEED DELIVERY, IN EITHER CASE TO THE SUBSCRIPTION AGENT BEFORE 5:00 P.M. EASTERN TIME ON JULY , 1998. As the record holder of rights (the "Rights") to acquire shares of Common Stock ("Shares") of Liberty All-Star Growth Fund, Inc. (the "Fund"), you are entitled to subscribe for the number of Shares of the Fund shown above, pursuant to the Primary Subscription, upon the terms and conditions and at the Subscription Price for each Share determined in accordance with the formula specified in the Prospectus relating thereto. The Rights issued to you also entitle you to participate in the Over-Subscription Privilege, as described in the Prospectus. Pursuant to the Over-Subscription Privilege, you may purchase any number of additional Shares if such Shares are available and you have fully exercised your rights on Primary Subscription (other than those Rights which cannot be exercised because they represent the right to acquire less than one full Share). NOTE: The Subscription Price of $ referred to on the back is an estimated price only. The final Subscription Price, to be determined on July , 1998, could be higher or lower. Additional payment may be required for any new Shares acquired in the Primary Subscription (and any new Shares acquired through the Over-Subscription Privilege) when the actual Subscription Price is determined. Please reference the Control Number appearing on the form below on your check, money order, or notice of guaranteed delivery. -------------------------------------------------------- The number of shares you are entitled to subscribe for on Primary Subscription is computed as follows: No. of Common Shares owned _______ /10 = ____________ new Shares (fractions ignored) ------------------------------------------------------- THIS SUBSCRIPTION RIGHT IS NON-TRANSFERABLE Full payment of the estimated Subscription Price for Shares subscribed for both on Primary Subscription and pursuant to the Over-Subscription Privilege must accompany this Subscription Certificate and must be made payable in United States dollars by money order or check drawn on a bank located in the United States payable to Liberty All-Star Growth Fund, Inc. Alternatively, a Notice of Guaranteed Delivery must be received by the Subscription Agent before 5:00 p.m. Eastern time on July , 1998. Account No: Control No: Number of Rights: (continued on back) PLEASE PRINT ALL INFORMATION CLEARLY AND LEGIBLY - ------------------------------------------------------------------------------ SECTION 1: DETAILS OF SUBSCRIPTION IF YOU WISH TO SUBSCRIBE FOR YOUR FULL ENTITLEMENT: A. I subscribe for my full entitlement of new Shares __________________ X $_________________= $_____________ (No. of new Shares) (amount enclosed) B. I apply for the Over-Subscription Privilege* _________________ X $_________________ = $______________ (No. of additional Shares) (amount enclosed) * You can exercise your Over-Subscription Privilege only if you have fully exercised your Rights on Primary Subscription, other than those Rights that would entitle you to subscribe for less than one full Share. IF YOU DO NOT WISH TO SUBSCRIBE FOR YOUR FULL ENTITLEMENT: C. I apply for __________X $________ = _____________ (No. of new Shares) (amount enclosed) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECTION 2: TO SUBSCRIBE: I acknowledge that I have received the Prospectus for this Offer, and I hereby irrevocably subscribe for the number of new Shares indicated above on the terms and conditions set out in the Prospectus. I understand and agree that I will be obligated to pay an additional amount to the Fund if the Subscription Price, as determined on the Expiration Date, is in excess of the estimated Subscription Price of $ . I hereby agree that if I fail to pay in full for the Shares for which I have subscribed, the Fund may exercise any of the remedies provided for in the Prospectus. Signature of Subscriber(s)____________________________________________________ __________________________________________________ Your telephone number ( )____________________________________________________ If you wish to have the certificates for your Shares and refund check (if any) delivered to an address other than that listed on this card, you must have your signature guaranteed by a member firm of the New York Stock Exchange or a bank or trust company. Please provide the delivery address below and note if it is a permanent change. Name ____________________________________________________ Address ____________________________________________________ ____________________________________________________ Zip ____________________________________________________ _ Check if permanent change |_| - -------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- YOUR SUBSCRIPTION CERTIFICATE AND PAYMENT (OR NOTICE OR GUARANTEED DELIVERY) SHOULD BE SENT AS FOLLOWS: BY FIRST CLASS MAIL: BY HAND: BY OVERNIGHT State Street Bank State Street Bank COURIER OR EXPRESS and Trust Company and Trust Company MAIL: Corporate Securities State Street Bank Reorganization Transfer and and Trust Company P.O. Box 9061 Reporting Corporate Boston, MA Services Reorganization 02205-8686 One Exchange Place Department 55 Broadway, 3rd 70 Campanelli Drive Floor Braintree, MA New York, New 02184 York 10006 DELIVERY TO AN ADDRESS OTHER THAN ONE OF THE ADDRESSES LISTED ABOVE WILL NOT CONSTITUTE GOOD DELIVERY - ------------------------------------------------------------------------------- EX-99.2E 9 DIVIDEND REINVESTMENT PLAN LIBERTY ALL-STAR GROWTH FUND, INC. Automatic Dividend Reinvestment and Cash Purchase Plan (as amended effective June 30, 1996) Dear Shareholder: We have prepared this brochure in response to your questions concerning our Automatic Dividend Reinvestment and Cash Purchase plan (the "Plan"). Before delving into the "fine print" you will find several pages of Questions and Answers designed to convey the basic operational features of the Plan. The Plan is available to all shareholders of the Liberty All-Star Growth Fund, Inc. (the "Fund"). State Street Bank and Trust Company ("State Street") serves as the administrator for the Plan. Feel free to call State Street for additional information (see "Whom Should I Contact for Additional Information?"). We hope this proves helpful in your understanding of the Plan. Sincerely, Richard R. Christensen President and Chief Executive Officer What is the Automatic Dividend Reinvestment and Cash Purchase Plan? The Automatic Dividend Reinvestment and Cash Purchase Plan offers shareholders in Liberty ALL-STAR Growth Fund, Inc. a prompt and simple way to reinvest their dividends and distributions in additional shares of the Fund. The Plan also gives shareholders the option of making cash investments in Fund shares through the Plan Agent. State Street Bank and Trust Company acts as Plan Agent for shareholders in administering the Plan. The complete Terms and Conditions of the Plan appear later in this brochure. How Do I Enroll in the Plan? No enrollment is necessary. Each registered shareholder is considered a participant in the Plan (unless the shareholder elects otherwise). All dividends and distributions will be automatically reinvested by State Street, as the Plan agent, in whole and/or fractional shares of the Fund, as the case may be. What If My Shares Are Held by a Broker, Bank or Nominee? When brokers, banks or nominees hold shares for others who are beneficial owners, State Street will administer the Plan based on the information provided to State Street by the registered shareholder (the broker, bank or nominee). To the extent that you wish to participate, or not participate, in the Plan, you should contact the institution holding your shares to ensure that your account is properly represented. What Does the Plan Offer? The Plan has two components: reinvestment of dividends and distributions, and an optional cash purchase feature. o Reinvestment of Dividends and Distributions Unless you elect not to participate in the Plan, your dividends and distributions will be promptly invested for you, automatically increasing your holdings in the Fund. If the Fund declares a dividend or distribution payable at the option of the shareholder either in cash or in shares of the Fund, the Fund will issue new shares to you valued at the lower of (i) the market price of the shares on the valuation date for the dividend or distribution, or (ii) the net asset value of the shares on such date, provided that the Fund will not issue new shares at a discount of more than 5% from the then current market price. If the dividend or distribution is declared payable only in cash, then, unless you elect not to participate in the Plan, you will receive shares purchased with the dividend or distribution on the New York Stock Exchange or otherwise on the open market. If the market price exceeds net asset value before the Plan Agent has completed its purchases, the Fund may direct the Plan Agent to cease purchasing shares, with the Fund issuing the remaining shares at net asset value (but not at a discount of more than 5% from the then current market price). All reinvestments are in full and fractional shares, carried to three decimal places. o Voluntary Cash Purchases Plan participants have the option of making additional investments in Fund shares through the Plan Agent. You may invest any amount from $100 to $3,000 on a monthly basis. The Plan Agent will purchase shares for you on the New York Stock Exchange or in the open market on or about the 15th day of each calendar month, and in any event no more than 45 days after such date except where curtailment or suspension of purchases is necessary for compliance with law. If you hold shares in your own name, you should deal directly with the Plan Agent, State Street Bank and Trust Company. We suggest you send your check to the following address to be received on or about the fifth day of the calendar month to allow time for processing: State Street Bank and Trust Company P.O. Box 8200 Boston, MA 02266-8200 A shareholder whose shares are held by an institution must send the voluntary cash payment to the institution (bank, broker or nominee), which (as the registered shareholder) will forward the payment to State Street. You should not send your check prior to the 15th day of the month prior to the month in which you want the check invested. You will not receive interest on uninvested cash payments. You may withdraw a voluntary cash payment by written notice, if the notice is received by State Street Bank not less than 48 hours before the investment date. Is There a Cost to Participate? There is no direct charge to participants for reinvesting dividends and distributions, since the Plan Agent's fees are paid by the Fund. There are no brokerage charges for shares issued directly by the Fund. Whenever shares are purchased on the New York Stock Exchange or otherwise on the open market, each participant will pay a pro rata portion of brokerage commissions. Brokerage charges for purchasing shares through the Plan, whether with reinvested dividends and distributions or voluntary cash purchases, are expected to be less than the usual brokerage charges for individual transactions, because the Plan Agent will purchase shares for all participants in blocks, resulting in lower commissions for each individual participant. Voluntary cash purchases will be subject to a $1.25 service fee for each investment, in addition to a pro rata share of brokerage commissions. Brokerage commissions and service fees, if any, will be reflected in the prices paid for shares. What are the Tax Implications for Participants? You will receive tax information annually for your personal records and to help you prepare your federal income tax return. The automatic reinvestment of dividends and distributions does not relieve you of any income tax which may be payable on dividends or distributions. How do I Terminate my Dividend Reinvestment and Cash Purchase Plan Account? Please use the attached card to terminate your Dividend Reinvestment and Cash Purchase Plan account. Your withdrawal will be effective as specified in Paragraph 13 of the Terms and Conditions. If you withdraw, you will receive, without charge, a stock certificate issued in your name for all full shares; or, if you wish, State Street Bank will sell your shares and send you the proceeds, less a service fee of $2.50 and less brokerage commissions. You must choose one of these two options by checking the appropriate box on the attached card. (State Street will sell your shares only if they are noncertificated and held on State Street's books. Shares in certificate form must be sold through a broker.) State Street Bank will convert any fractional shares you hold at the time of your withdrawal to cash at the current market price and send you a check for the proceeds. How do Participating Shareholders Benefit? o You will build holdings in the Fund easily and automatically, at no brokerage cost or at reduced costs. o You will receive a detailed account statement from State Street Bank and Trust Company, your Plan Agent, showing total dividends and distributions or optional cash investments, date of investment, shares acquired and price per share, and total shares of record held by you and by the Plan Agent. Your proxy will include shares held for you by the Plan Agent pursuant to the Plan. o As long as you participate in the Plan, State Street Bank, as your Plan Agent, will hold the shares it is holding for you in safekeeping, in non-certificated form. This convenience provides added protection against loss, theft, or inadvertent destruction of certificates. Will I be Issued Stock Certificates for Transactions in the Plan? If a stock certificate is desired, it must be requested in writing for each transaction. The attached card may be used for this purpose. Certificates will be issued only for whole shares. Whom Should I Contact for Additional Information? If you hold shares in your own name, please address all notices, correspondence, questions, or other communications regarding the Plan to: State Street Bank and Trust Company P.O. Box 8200, Boston, MA 02266-8200 800-542-3863 If your shares are not held in your name, you should contact your brokerage firm, bank or other nominee for more information. Either Liberty ALL-STAR Growth Fund, Inc. or State Street Bank may amend or terminate the Plan. Participants will receive written notice at least 90 days before the effective date of any amendment. In the case of termination, participants will receive written notice of termination at least 90 days before the record date of any dividend or distribution by the Fund. Terms and Conditions of Automatic Dividend Reinvestment and Cash Purchase Plan (as amended effective June 30, 1996) 1.Each common shareholder of record holding shares of common stock, par value $.10 per share ("Shares"), of Liberty ALL-STAR Growth Fund, Inc. (the "Fund") will automatically be a participant in the Automatic Dividend Reinvestment and Cash Purchase Plan (the "Plan") unless the shareholder specifically elects otherwise. All dividends and other distributions of the Fund will be automatically reinvested by State Street Bank and Trust Company ("State Street") as Plan agent, in whole and/or fractional Shares, as the case may be, for the accounts of Plan participants, as hereinafter provided. 2.Whenever the Fund declares a distribution or an income dividend payable in Shares or cash at the option of the shareholders, each participant in the Plan hereby elects to take such distribution or dividend entirely in Shares, and State Street shall automatically receive such shares, including fractions, for his or her account. The number of additional Shares to be credited to the account of each participant in the Plan shall be determined by dividing the dollar amount of the distribution or income dividend payable on his or her Shares by the lower of (i) the market price per Share on the valuation date, or (ii) the net asset value per Share on the valuation date. Shares issued by the Fund will not be issued at a discount of more than 5% from the then current market value of the Shares. The valuation date will be the payable date for such distribution or such prior date as may be determined by the Board of Directors of the Fund. 3.In the event that the Fund declares a distribution or an income dividend payable only in cash, State Street shall apply the amount of such distribution or dividend payable on the Shares of each participant in the Plan (less his or her pro rata share of brokerage commissions incurred with respect to State Street's open-market purchases in connection with the reinvestment of such dividend or distribution) to the purchase on the open market of Shares for his or her account. Such purchases will be made on or shortly after the payment date for such distribution or dividend, and in no event more than 30 days after such date except where temporary curtailment or suspension of purchases is necessary to comply with applicable provisions of federal securities law. In the event that, prior to State Street's completion of all such purchases necessary in connection with such distribution or dividend, the market price of a Share equals or exceeds its net asset value, then State Street may cease purchasing Shares and the Fund will issue the remaining Shares necessary for the payment of such distribution or dividend at their net asset value per share, but not at a discount of more than 5% from the then current market value of the Shares. In a case where, in accordance with the preceding paragraph, State Street has terminated open-market purchases and the Fund has issued the remaining Shares, the number of Shares received by the participants in respect of such distribution or dividend will be based on the weighted average of prices paid for Shares purchased in the open market and the price at which the Fund issued the remaining Shares. 4.For purposes of the Plan (a) the market price of Shares on a particular date shall be the last sale price on the New York Stock Exchange (the "Exchange") at the close of the trading day on that date or, if there is no sale on the Exchange on that date, then the mean between the closing bid and asked quotations for Shares on the Exchange on such date, and (b) the net asset value per Share on a particular date shall be as determined by or on behalf of the Fund in the manner described in the Fund's Registration Statement on Form N- 2. 5.The open-market purchases provided for above may be made on any securities exchange where the Shares are traded, in the over-the-counter market or in negotiated transactions, and may be on such terms as to price, delivery and otherwise as State Street shall determine. 6.The entire amount of a participant's dividend or other distribution will be reinvested by State Street in Shares as provided above. For any balance that is insufficient to purchase a whole Share, State Street will credit a participant's account with a fractional Share interest computed to three decimal places. The fractional Share interest is included in all subsequent distributions, and a participant has voting rights on full and fractional Shares acquired under the Plan. However, if a participant's Shares are held by a broker, bank or nominee, any amount not sufficient to purchase a whole share may be credited to a participant's account in lieu of the fractional Share interest. 7.State Street will maintain all shareholder accounts in the Plan and furnish written confirmations of all transactions in the accounts, including information needed by shareholders for personal and tax records. Shares in the account of each Plan participant will be held by State Street in noncertificated form in the name of the participant and each shareholder's proxy will include those Shares purchased pursuant to the Plan. 8.In the case of shareholders such as banks, brokers or nominees that hold Shares for others who are beneficial owners, State Street will administer the Plan on the basis of the number of Shares certified from time to time by the shareholder as representing the total amount registered in the shareholder's name and held for the account of beneficial owners who are to participate in the Plan. 9.A participant will be issued a stock certificate for transactions in the Plan only upon written request by the participant for each transaction. Certificates will be issued only for whole Shares. 10.Participants in the Plan have the option of making additional cash payments on a monthly basis for investment in Shares. These payments can be made in any amount from $100 to $3,000. State Street will use all funds received to purchase Shares in the open market on or about the 15th day of each calendar month, and in no event no more than 45 days after such date except where temporary curtailment or suspension of purchases is necessary to comply with applicable provisions of Federal securities laws. 11.Registered shareholders should send voluntary cash payments to State Street in a manner than ensures that State Street will receive these payments approximately 10 days before the next investment date. For shareholders whose Share are held by an institution, the shareholder must send the voluntary cash payment to the institution (bank, broker or nominee), which (as the registered shareholder) will forward the payment to State Street. A participant may withdraw a voluntary cash payment by written notice if the notice is received by State Street at least 48 hours before the payment is to be invested. 12.State Street's fee for handling the reinvestment of dividends and distributions will be paid by the Fund. State Street will charge a $1.25 service fee for each voluntary cash investment. There will be no brokerage charge to shareholders for Shares issued directly by the Fund as a result of dividends or distributions payable either in stock or cash. Each participant, however, will pay a pro rata share of brokerage commissions incurred with respect to State Street's open-market purchases in connection with the reinvestment of dividends or distributions as well as from voluntary cash payments. 13.A shareholder may terminate her or his account under the Plan by notifying State Street in writing. Such termination will be effective immediately if notice is received by State Street not less than 10 days prior to any dividend or distribution record date; otherwise such termination will be effective, with respect to any subsequent dividend or distributions, on the first trading day after the dividend paid for such record date has been credited to the shareholder's account. The Plan may be terminated by State Street or the Fund upon notice in writing mailed to the shareholder at least 90 days prior to any record date for the payment of any dividend or distribution by the Fund. Upon any termination State Street will cause a certificate for the number of full Shares held in the shareholder's Plan account and a check in payment for any fractional Share interest to be delivered to her or him. The payment for the fractional share interest will be valued at the closing price of Shares on the date the discontinuance is effective. If a shareholder elects by notice to State Street in writing in advance of a termination of the shareholder's account under the Plan to have State Street sell her or his noncertificated Shares credited to the shareholder's account and remit the proceeds to her or him, State Street is authorized to deduct from the proceeds $2.50 per transaction plus the brokerage commissions incurred in connection with such sale. Terminations in which the shareholder has requested that State Street sell her or his noncertificated Shares will occur on the first trading day of the week immediately following receipt of written notification by State Street. A shareholder may withdraw her or his request to so terminate her or his account by written notice if the notice is received by State Street at least 48 hours before the account is to be terminated. 14.These terms and conditions may be amended or supplemented by State Street or the Fund at any time or times but, except when necessary or appropriate to comply with applicable law or the rules or policies of the Securities and Exchange Commission or any other regulatory authority, only by mailing to the shareholder appropriate written notice at least 90 days prior to the effective date thereof. The amendment or supplement shall be deemed to be accepted by the shareholder unless, prior to the effective date thereof, State Street receives written notice of the termination of the shareholder account under the Plan. Subject to approval of the Fund's Board of Directors, any such amendment may include an appointment of a successor agent under these terms and conditions, with full power and authority to perform all or any of the acts to be performed by State Street under these terms and conditions. LIBERTY ALL-STAR GROWTH FUND, INC. PLEASE TERMINATE MY REINVESTMENT ACCOUNT AND . . . (CHECK ONE) [ ] Issue a certificate for all full shares and sell any fractional shares remaining in my reinvestment account. [ ] Sell all shares currently being held in my reinvestment account and remit a check for the net proceeds. PLEASE CONTINUE TO REINVEST MY DIVIDENDS AND DISTRIBUTIONS AND . . . [ ] Issue a certificate for shares. (Please Print) NAME(S) DATE ACCOUNT NUMBER SIGNATURE(S) LIBERTY ALL-STAR GROWTH FUND, INC. . . STATE STREET BANK AND TRUST COMPANY P.O. BOX 8200 BOSTON, MASSACHUSETTS 02266-8200 PLACE STAMP HERE. EX-99.A4 10 FORM PORTFOLIO MANAGEMENT AGREEMENT FORM PORTFOLIO MANAGEMENT AGREEMENT ______________, 199_ [Name and address of Portfolio Manager] Re: Portfolio Management Agreement ------------------------------ Ladies and Gentlemen: Liberty All-Star Growth Fund, Inc. (the "Fund") is a diversified closed-end investment company registered under the Investment Company Act of 1940 (the "Act"), and is subject to the rules and regulations promulgated thereunder. Liberty Asset Management Company (the "Fund Manager") evaluates and recommends portfolio managers for the assets of the Fund, and is responsible for the day-to-day administration of the Fund. 1. Employment as a Portfolio Manager. The Fund being duly authorized hereby employs _____________________ (the "Portfolio Manager") as a discretionary portfolio manager, on the terms and conditions set forth herein, of that portion of the Fund's assets which the Fund Manager determines to assign to the Portfolio Manager (those assets being referred to as the "Portfolio Manager Account"). The Fund Manager may, from time to time, allocate and reallocate the Fund's assets among the Portfolio Manager and the other portfolio managers of the Fund's assets. 2. Acceptance of Employment; Standard of Performance. The Portfolio Manager accepts its employment as a discretionary portfolio manager and agrees to use its best professional judgment to make timely investment decisions for the Portfolio Manager Account in accordance with the provisions of this Agreement. 3. Portfolio Management Services of Portfolio Manager. In providing portfolio management services to the Portfolio Manager Account, the Portfolio Manager shall be subject to the investment objectives, policies and restrictions of the Fund as set forth in its current Registration Statement under the Act, as the same may be modified from time to time (the "Registration Statement"), and the investment restrictions set forth in the Act and the Rules thereunder (as and to the extent set forth in the Registration Statement or in other documentation furnished to the Portfolio Manager by the Fund or the Fund Manager), to the supervision and control of the Board of Directors of the Fund, and to instructions from the Fund Manager. The Portfolio Manager shall not, without the prior approval of the Fund or the Fund Manager, effect any transactions which would cause the Portfolio Manager Account, treated as a separate fund, to be out of compliance with any of such restrictions or policies. 4. Transaction Procedures. All portfolio transactions for the Portfolio Manager Account will be consummated by payment to or delivery by the custodian of the Fund (the "Custodian"), or such depositories or agents as may be designated by the Custodian in writing, as custodian for the Fund, of all cash and/or securities due to or from the Portfolio Manager Account, and the Portfolio Manager shall not have possession or custody thereof or any responsibility or liability with respect to such custody. The Portfolio Manager shall advise and confirm to the Custodian all investment orders for the Portfolio Manager Account placed by it with brokers and dealers at the time and in the manner set forth in Schedule A hereto (as amended from time to time by the Fund Manager). The Fund shall issue to the Custodian such instructions as may be appropriate in connection with the settlement of any transaction initiated by the Portfolio manager. The Fund shall be responsible for all custodial arrangements and the payment of all custodial charges and fees, and, upon giving proper instructions to the Custodian, the Portfolio Manager shall have no responsibility or liability with respect to custodial arrangements or the acts, omissions or other conduct of the Custodian. 5. Allocation of Brokerage. The Portfolio Manager shall have authority and discretion to select brokers and dealers to execute portfolio transactions initiated by the Portfolio Manager for the Portfolio Manager Account, and to select the markets on or in which the transaction will be executed. A. In doing so, the Portfolio Manager's primary responsibility shall be to seek to obtain best net price and execution for the Fund. However, this responsibility shall not obligate the Portfolio Manager to solicit competitive bids for each transaction or to seek the lowest available commission cost to the Fund, so long as the Portfolio Manager reasonably believes that the broker or dealer selected by it can be expected to obtain a "best execution" market price on the particular transaction and determines in good faith that the commission cost is reasonable in relation to the value of the brokerage and research services (as defined in Section 28(e)(3) of the Securities Exchange Act of 1934) provided by such broker or dealer to the Portfolio Manager viewed in terms of either that particular transaction or of the Portfolio Manager's overall responsibilities with respect to its clients, including the Fund, as to which the Portfolio Manager exercises investment discretion, notwithstanding that the Fund may not be the direct or exclusive beneficiary of any such services or that another broker may be willing to charge the Fund a lower commission on the particular transaction. B. Subject to the requirements of paragraph A above, the Fund Manager shall have the right to request that transactions giving rise to brokerage commissions, in an amount to be agreed upon by the Fund Manager and the Portfolio Manager, shall be executed by brokers and dealers that provide brokerage or research services to the Fund Manager, or as to which an on-going relationship will be of value to the Fund in the management of its assets, which services and relationship may, but need not, be of direct benefit to the Portfolio Manager Account. C. The Portfolio Manager shall not execute any portfolio transactions for the Portfolio Manager Account with a broker or dealer which is an "affiliated person" (as defined in the Act) of the Fund, the Portfolio Manager or any other Portfolio Manager of the Fund without the prior written approval of the Fund. The Fund Manager will provide the Portfolio Manager with a list of brokers and dealers which are "affiliated persons" of the Fund or its Portfolio Managers. 6. Proxies. The Fund will vote or direct the voting of all proxies solicited by or with respect to the issuers of securities in which assets of the Portfolio Manager Account may be invested from time to time. At the request of the Fund, the Portfolio Manager shall provide the Fund with its recommendations as to the voting of such proxies. 7. Fees for Services. The compensation of the Portfolio Manager for its services under this Agreement shall be calculated and paid by the Fund Manager in accordance with the attached Schedule C. Pursuant to the Fund Management Agreement between the Fund and the Fund Manager, the Fund Manager is solely responsible for the payment of fees to the Portfolio Manager from the fund management fees paid to it by the Fund, and the Portfolio Manager agrees to seek payment of its fees solely from the Fund Manager. 8. Other Investment Activities of Portfolio Manager. The Fund acknowledges that the Portfolio Manager or one or more of its affiliates has investment responsibilities, renders investment advice to and performs other investment advisory services for other individuals or entities ("Client Accounts"), and that the Portfolio Manager, its affiliates or any of its or their directors, members, officers, agents or employees may buy, sell or trade in any securities for its or their respective accounts ("Affiliated Accounts"). Subject to the provisions of paragraph 2 hereof, the Fund agrees that the Portfolio Manager or its affiliates may give advice or exercise investment responsibility and take such other action with respect to other Client Accounts and Affiliated Accounts which may differ from the advice given or the timing or nature of action taken with respect to the Portfolio Manager Account, provided that the Portfolio Manager acts in good faith, and provided further, that it is the Portfolio Manager's policy to allocate, within its reasonable discretion, investment opportunities to the Portfolio Manager Account over a period of time on a fair and equitable basis relative to the Client Accounts and the Affiliated Accounts, taking into account the cash position and the investment objectives and policies of the Fund and any specific investment restrictions applicable thereto. The Fund acknowledges that one or more Client Accounts and Affiliated Accounts may at any time hold, acquire, increase, decrease, dispose of or otherwise deal with positions in investments in which the Portfolio Manager Account may have an interest from time to time, whether in transactions which involve the Portfolio Manager Account or otherwise. The Portfolio Manager shall have no obligation to acquire for the Portfolio Manager Account a position in any investment which any Client Account or Affiliated Account may acquire, and the Fund shall have no first refusal, coinvestment or other rights in respect of any such investment, either for the Portfolio Manager Account or otherwise. 9. Limitation of Liability. The Portfolio Manager shall not be liable for any action taken, omitted or suffered to be taken by it in its reasonable judgment, in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Agreement, or in accordance with (or in the absence of) specific directions or instructions from the Fund, provided, however, that such acts or omissions shall not have resulted from the Portfolio Manager's willful misfeasance, bad faith or gross negligence, a violation of the standard of care established by and applicable to the Portfolio Manager in its actions under this Agreement or breach of its duty or of its obligations hereunder (provided, however, that the foregoing shall not be construed to protect the Portfolio Manager from liability in violation of Section 17(i) of the Act). 10. Confidentiality. Subject to the duty of the Portfolio Manager and the Fund to comply with applicable law, including any demand of any regulatory or taxing authority having jurisdiction, the parties hereto shall treat as confidential all information pertaining to the Portfolio Manager Account and the actions of the Portfolio Manager and the Fund in respect thereof. 11. Assignment. This Agreement shall terminate automatically in the event of its assignment, as that term is defined in Section 2(a)(4) of the Act. The Portfolio Manager shall notify the Fund in writing sufficiently in advance of any proposed change of control, as defined in Section 2(a)(9) of the Act, as will enable the Fund to consider whether an assignment as defined in Section 2(a)(4) of the Act will occur, and whether to take the steps necessary to enter into a new contract with the Portfolio Manager. 12. Representations, Warranties and Agreements of the Fund. The Fund represents, warrants and agrees that: A. The Portfolio Manager has been duly appointed to provide investment services to the Portfolio Manager Account as contemplated hereby. B. The Fund has delivered to the Portfolio Manager such instructions governing the investment of the Portfolio Manager Account as are necessary for the Portfolio Manager to carry out its obligations under this Agreement. 13. Representations, Warranties and Agreements of the Portfolio Manager. The Portfolio Manager represents, warrants and agrees that: A. It is registered as an "Investment Adviser" under the Investment Advisers Act of 1940 ("Advisers Act"). B. It will maintain, keep current and preserve on behalf of the Fund, in the manner required or permitted by the Act and the Rules thereunder, the records identified in Schedule B (as Schedule B may be amended from time to time by the Fund Manager). The Portfolio Manager agrees that such records are the property of the Fund, and will be surrendered to the Fund promptly upon request. C. It will adopt a written code of ethics complying with the requirements of Rule l7j-l under the Act and will provide the Fund with a copy of the code of ethics and evidence of its adoption. Within 45 days of the end of each year while this Agreement is in effect, an officer or general partner of the Portfolio Manager shall certify to the Fund that the Portfolio Manager has complied with the requirements of Rule l7j-l during the previous year and that there has been no violation of its code of ethics or, if such a violation has occurred, that appropriate action was taken in response to such violation. Upon the written request of the Fund, the Portfolio Manager shall permit the Fund to examine the reports required to be made by the Portfolio Manager under Rule l7j-l(c)(l). D. Upon request, the Portfolio Manager will promptly supply the Fund with any information concerning the Portfolio Manager and its stockholders, employees and affiliates which the Fund may reasonably require in connection with the preparation of its Registration Statement or amendments thereto, proxy material, reports and other documents required to be filed under the Act, the Securities Act of 1933, or other applicable securities laws. 14. Amendment. This Agreement may be amended at any time, but (except for Schedules A and B which may be amended by the Fund Manager acting alone) only by written agreement among the Portfolio Manager, the Fund Manager and the Fund, which amendment, other than amendments to Schedules A and B, is subject to the approval of the Board of Directors and the Shareholders of the Fund as and to the extent required by the Act. 15. Effective Date; Term. This Agreement shall continue in effect until July 31, 1998 and shall continue in effect thereafter provided such continuance is specifically approved at least annually by (i) the Fund's Board of Directors or (ii) a vote of a "majority" (as defined in the Act) of the Fund's outstanding voting securities, provided that in either event such continuance is also approved by a majority of the Board of Directors who are not "interested persons" (as defined in the Act) of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval [, and provided further that, in accordance with the conditions of the application of the Fund and the Fund Manager for an exemption from Section 15(a) of the Act (Rel. Nos. IC 20772 and 20824, as amended, Rel. Nos. IC. 22498 and 22542), the continuance of the Agreement following the regularly scheduled annual meeting of the shareholders of the Fund next following the date of this Agreement shall be subject to approval at such meeting by such "majority" vote of the Fund's outstanding voting securities.]* The aforesaid requirement that continuance of this Agreement be "specifically approved at least annually" shall be construed in a manner consistent with the Act and the Rules and Regulations thereunder. 16. Termination. This Agreement may be terminated by any party, without penalty, immediately upon written notice to the other parties in the event of a breach of any provision thereof by a party so notified, or otherwise upon not less than thirty (30) days' written notice to the Portfolio Manager in the case of termination by the Fund or the Fund Manager, or ninety (90) days' written notice to the Fund and the Fund Manager in the case of termination by the Portfolio Manager, but any such termination shall not affect the status, obligations or liabilities of any party hereto to the other parties. 17. Applicable Law. To the extent that state law is not preempted by the provisions of any law of the United States heretofore or hereafter enacted, as the same may be amended from time to time, this Agreement shall be administered, construed and enforced according to the laws of the Commonwealth of Massachusetts. 18. Severability. If any term or condition of this Agreement shall be invalid or unenforceable to any extent or in any application, then the remainder of this Agreement, and such term or condition except to such extent or in such application, shall not be affected thereby, and each and every term and condition of this Agreement shall be valid and enforced to the fullest extent and in the broadest application permitted by law. [19. Prior Agreement Superceded. This Agreement supercedes and replaces the Portfolio Management Agreement dated among the Fund, the Fund Manager and the Portfolio Manager.] LIBERTY ALL-STAR GROWTH FUND, INC. By:____________________________________ Title:_________________________________ LIBERTY ASSET MANAGEMENT COMPANY By:____________________________________ Title:_________________________________ ACCEPTED: [Name of Portfolio Manager] By:________________________________ Title:_____________________________ SCHEDULES: A. Operational Procedures For Portfolio Transactions B. Record Keeping Requirements C. Fee Schedule SCHEDULE C PORTFOLIO MANAGER FEE For services provided to the Portfolio Manager Account, the Fund Manager will pay to the Portfolio Manager, on or before the fifth business day of each calendar quarter, a fee for the previous calendar quarter at the rate of: .10% (.40% annually) of the Portfolio Manager's Percentage (as defined below) of the average weekly net assets of the Fund up to and including $125 million; .075% (.30% annually) of the Portfolio Manager's Percentage of the average weekly net assets of the Fund exceeding $125 million and up to and including $250 million; and .05% (.20% annually) of the Portfolio Manager's Percentage of the average weekly net assets of the Fund exceeding $250 million. Each quarterly payment set forth above shall be based on the average weekly net assets during such previous calendar quarter. The fee for the period from the date this Agreement becomes effective to the end of the calendar quarter in which such effective date occurs will be prorated according to the proportion that such period bears to the full quarterly period. Upon any termination of this Agreement before the end of a calendar quarter, the fee for the part of that calendar quarter during which this Agreement was in effect shall be prorated according to the proportion that such period bears to the full quarterly period and will be payable upon the date of termination of this Agreement. For the purpose of determining fees payable to the Portfolio Manager, the value of the Fund's net assets will be computed at the times and in the manner specified in the Registration Statement as from time to time in effect. "Portfolio Manager's Percentage" means the percentage obtained by dividing the average weekly net assets in the Portfolio Manager Account by the Fund's average weekly net assets. EX-99.2J 11 SUPPLEMENT TO CUSTODY AGREEMENT AGREEMENT This AGREEMENT is made as of _________________, 1998 between The Chase Manhattan Bank (the "Bank") and each of the trusts on behalf of each of the funds set forth in Schedule A hereto (each, a "Customer"). WHEREAS, the Bank, the Customers and certain other investment companies have entered into a Global Custody Agreement dated as of August 17, 1997 (the "Custody Agreement") pursuant to which the Bank has agreed to serve as custodian of the Customers' assets and, in connection therewith, to establish and maintain a Custody Account and Deposit Account on behalf of the Customers; and WHEREAS, the Custody Agreement provides that additional Accounts may be established and separately accounted for upon written agreement between the Bank and the Customers. NOW, THEREFORE, the Bank and the Customers hereby agree as follows: 1. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Custody Agreement. 2. The Bank shall establish and maintain a separate Account ("Portfolio Manager Account") for each portfolio management firm ("Portfolio Manager") appointed, including Portfolio Managers appointed subsequent to the date of this Agreement, by the applicable Customer to manage such Customer's Assets, each Portfolio Manager Account to contain the Assets allocated to that Portfolio Manager by the Customer's investment manager, Liberty Asset Management Company (the "Fund Manager"), as specified from time to time in Instructions to the Bank. All Assets received and delivered and all payments made and received for a Customer's Custody Account or Deposit Account resulting from investment decisions made by a Portfolio Manager pursuant to Instructions to the Bank shall be credited to or debited from the applicable Portfolio Manager Account, together with all investment earnings on the Assets in such Account and all other amounts paid on or with respect to, and all Assets received in exchange for, such Assets. Such crediting and debiting shall occur at the same time and in the same manner as with respect to the applicable Custody Account or Deposit Account. All other receipts and expenditures by a Customer shall be allocated among the Portfolio Manager Accounts in accordance with Instructions. 3. A Portfolio Manager Account shall be deemed an "Account" for purposes of the Custody Agreement. 4. All notices, statements, Corporate Actions and proxies delivered by the Bank to the Customers pursuant to the Custody Agreement shall also be delivered simultaneously by the Bank to the appropriate Portfolio Manager. 5. In the event that the Fund Manager establishes additional investment companies, or additional series to existing investment companies, which are multi-managed in a similar manner as the Customers (the "New Customers"), and the New Customers become party to the Custody Agreement, then the New Customers shall also become party to this Agreement and their Portfolio Manager Accounts shall be deemed "Accounts" for purposes of the Custody Agreement by a written instrument signed by the New Customer and the Bank. 6. A copy of the Agreement and Declaration of Trust of each Customer is on file with the Secretary of State of The Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Trustees of each Customer as Trustees and not individually and that the obligations of this instrument are not binding upon any of the Trustees, officers or shareholders of any Customer individually but are binding only upon the assets and property of a Customer. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. Each of the Investment Companies listed on Schedule A By______________________________ Name: Title: THE CHASE MANHATTAN BANK By______________________________ Name: Title: Schedule A List of Investment Companies party to the Agreement Liberty All-Star Growth Fund, Inc. Liberty All-Star Equity Fund Liberty Variable Investment Trust, on behalf of Liberty All-Star Equity Fund, Variable Series EX-99.A4 12 REGISTRAR, TRANSFER AGENCY AND SERVICE AGMT REGISTRAR, TRANSFER AGENCY AND SERVICE AGREEMENT between THE CHARLES ALLMON TRUST, INC. and STATE STREET BANK AND TRUST COMPANY TABLE OF CONTENTS Page 1. Terms of Appointment; Duties of theBank............1 2. Fees and Expenses..................................3 3. Representations and Warranties of the Bank.........4 4. Representations and Warranties of the Fund.........5 5. Data Access and Proprietary Information............6 6. Indemnification....................................8 7. Standard of Care..................................11 8. Covenants of the Fund and the Bank................11 9. Termination of Agreement..........................13 10. Assignment........................................13 11. Amendment.........................................14 12. Massachusetts Law to Apply........................14 13. Force Majeure.....................................14 14. Consequential Damages.............................14 15. Merger of Agreement...............................15 16. Counterparts......................................15 REGISTRAR,TRANSFER AGENCY AND SERVICE AGREEMENT AGREEMENT made as of the day of , 1994, by and between THE CHARLES ALLMON TRUST, INC., a Maryland corporation, having its principal office and place of business at 4405 East-West Highway, Bethesda, Maryland, 20814, (the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company having its principal office and place of business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank"). WHEREAS, the Fund desires to appoint the Bank as its registrar, transfer agent, dividend disbursing agent, custodian of certain retirement plans and agent in connection with certain other activities, and the Bank desires to accept such appointment; NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows: l. Terms of Appointment; Duties of the Bank 1.1 Subject to the terms and conditions set forth in this Agreement, the Fund hereby employs and appoints the Bank to act as, and the Bank agrees to act as registrar, transfer agent for the Fund's authorized and issued shares of its common stock, ("Shares"), dividend disbursing agent, custodian of certain retirement plans and agent in connection with any dividend reinvestment plan in effect as of the date of this Agreement. 1.2 The Bank agrees that it will perform the following services: (a) In accordance with procedures established from time to time by agreement between the Fund and the Bank, the Bank shall: (i) Issue and record the appropriate number of Shares as authorized and hold such Shares in the appropriate Shareholder account; (ii) Effect transfers of Shares by the registered owners thereof upon receipt of appropriate documentation; (iii) Prepare and transmit payments for dividends and distributions declared by the Fund; (iv) Act as agent for Shareholders pursuant to the dividend reinvestment and cash purchase plan as amended from time to time and mutually agreed upon by the Fund and the Bank in substantially the form attached as Exhibit A hereto; and (vi) Issue replacement certificates for those certificates alleged to have been lost, stolen or destroyed upon receipt by the Bank of indemnification satisfactory to the Bank and protecting the Bank and the Fund, and the Bank at its option, may issue replacement certificates in place of mutilated stock certificates upon presentation thereof and without such indemnity; (b) In addition to and neither in lieu nor in contravention of the services set forth in the above paragraph (a), the Bank shall: (i) perform all the customary services of a registrar, transfer agent, dividend disbursing agent, custodian of certain retirement plans and agent of the dividend reinvestment and cash purchase plan as described in Section 1 consistent with those requirements in effect as at the date of this Agreement. The detailed definition, frequency, limitations and associated costs (if any) set out in the attached fee schedule, include but not limited to: maintaining all Shareholder accounts, preparing Shareholder meeting lists, mailing proxies and proxy material to current shareholders and receiving and tabulating proxies, mailing Shareholder reports to current Shareholders, withholding and paying on a timely basis taxes on U.S. resident and non-resident alien accounts where applicable, preparing and filing U.S. Treasury Department Forms 1099 and other appropriate forms required with respect to dividends and distributions by federal or state authorities for all registered Shareholders, preparing and mailing confirmations and statements of account to shareholders for all confirmable transactions in shareholder accounts, and providing shareholder information. (c) The Bank shall provide additional services on behalf of the Fund (i.e., escheatment services) which may be agreed upon in writing between the Fund and the Bank. 2. Fees and Expenses 2.1 For the performance by the Bank pursuant to this Agreement, the Fund agrees to pay the Bank an annual maintenance fee as set out in the initial fee schedule attached hereto. Such fees and out-of-pocket expenses and advances identified under Section 2.2 below may be changed from time to time subject to mutual written agreement between the Fund and the Bank. 2.2 In addition to the fee paid under Section 2.1 above, the Fund agrees to reimburse the Bank for out-of-pocket expenses, including but not limited to confirmation production, postage, forms, telephone, microfilm, microfiche, tabulating proxies, records storage, or advances incurred by the Bank for the items set out in the fee schedule attached hereto. In addition, any other expenses incurred by the Bank at the request or with the consent of the Fund, will be reimbursed by the Fund. 2.3 The Fund agrees to pay all fees and reimbursable expenses within five days following the receipt of the respective billing notice. Postage for mailing of dividends, proxies, Fund reports and other mailings to all Shareholder accounts shall be advanced to the Bank by the Fund at least seven (7) days prior to the mailing date of such materials. 3. Representations and Warranties of the Bank The Bank represents and warrants to the Fund that: 3.1 It is a trust company duly organized and existing and in good standing under the laws of the Commonwealth of Massachusetts. 3.2 It is duly qualified to carry on its business in the Commonwealth of Massachusetts. 3.3 It is empowered under applicable laws and by its Charter and By-Laws to enter into and perform this Agreement. 3.4 All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement. 3.5 It has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement. 4. Representations and Warranties of the Fund The Fund represents and warrants to the Bank that: 4.1 It is a corporation duly organized and existing and in good standing under the laws of Maryland. 4.2 It is empowered under applicable laws and by its Articles of Incorporation and By-Laws to enter into and perform this Agreement. 4.3 All corporate proceedings required by said Articles of Incorporation and By-Laws have been taken to authorize it to enter into and perform this Agreement. 4.4 It is a closed-end, diversified investment company registered under the Investment Company Act of 1940, as amended. 4.5 To the extent required by federal securities laws a registration statement under the Securities Act of 1933, as amended, is currently effective, and appropriate state securities law filings have been made with respect to all Shares of the Fund being offered for sale; information to the contrary will result in immediate notification to the Bank. 4.6 It shall make all required filings under federal and state securities laws. 5. Data Access and Proprietary Information 5.1 The Fund acknowledges that the data bases, computer programs, screen formats, report formats, interactive design techniques, and documentation manuals furnished to the Fund by the Bank as part of the Fund's ability to access certain Fund-related data ("Customer Data") maintained by the Bank on data bases under the control and ownership of the Bank or other third party ("Data Access Services") constitute copyrighted, trade secret, or other proprietary information (collectively, "Proprietary Information") of substantial value to the Bank or other third party. In no event shall Proprietary Information be deemed Customer Data. The Fund agrees to treat all Proprietary Information as proprietary to the Bank and further agrees that it shall not divulge any Proprietary Information to any person or organization except as may be provided hereunder. Without limiting the foregoing, the Fund agrees for itself and its employees and agents: (a) to access Customer Data solely from locations as may be designated in writing by the Bank and solely in accordance with the Bank's applicable user documentation; (b) to refrain from copying or duplicating in any way the Proprietary Information; (c) to refrain from obtaining unauthorized access to any portion of the Proprietary Information, and if such access is inadvertently obtained, to inform the Bank in a timely manner of such fact and dispose of such information in accordance with the Bank's instructions; (d) to refrain from causing or allowing third-party data acquired hereunder from being retransmitted to any other computer facility or other location, except with the prior written consent of the Bank; (e) that the Fund shall have access only to those authorized transactions agreed upon by the parties; and (f) to honor all reasonable written requests made by the Bank to protect at the Bank's expense the rights of the Bank in Proprietary Information at common law, under federal copyright law and under other federal or state law. Each party shall take reasonable efforts to advise its employees of their obligations pursuant to this Section 5. The obligations of this Section shall survive any earlier termination of this Agreement. 5.2 If the Fund notifies the Bank that any of the Data Access Services do not operate in material compliance with the most recently issued user documentation for such services, the Bank shall endeavor in a timely manner to correct such failure. Organizations from which the Bank may obtain certain data included in the Data Access Services are solely responsible for the contents of such data and the Fund agrees to make no claim against the Bank arising out of the contents of such third-party data, including, but not limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 5.3 If the transactions available to the Fund include the ability to originate electronic instructions to the Bank in order to (i) effect the transfer or movement of cash or Shares or (ii) transmit Shareholder information or other information, (such transactions constituting a "COEFI"), then in such event the Bank shall be entitled to rely on the validity and authenticity of such instruction without undertaking any further inquiry as long as such instruction is undertaken in conformity with security procedures established by the Bank from time to time. 6. Indemnification 6.1 The Bank shall not be responsible for, and the Fund shall indemnify and hold the Bank harmless from and against, any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to: (a) All actions of the Bank or its agent or subcontractors required to be taken pursuant to this Agreement, provided that such actions are taken in good faith and without negligence or willful misconduct. (b) The Fund's lack of good faith, negligence or willful misconduct which arise out of the breach of any representation or warranty of the Fund hereunder. (c) The reliance on or use by the Bank or its agents or subcontractors of information, records, documents or services which (i) are received by the Bank or its agents or subcontractors, and (ii) have been prepared, maintained or performed by the Fund or any other person or firm on behalf of the Fund including but not limited to any previous transfer agent or registrar. (d) The reliance on, or the carrying out by the Bank or its agents or subcontractors of, any instructions or requests of the Fund. (e) The offer or sale of Shares in violation of any requirement under the federal securities laws or regulations or the securities laws or regulations of any state that such Shares be registered in such state or in violation of any stop order or other determination or ruling by any federal agency or any state with respect to the offer or sale of such Shares in such state. 6.2 The Bank shall indemnify and hold the Fund harmless from and against any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to any action or failure or omission to act by the Bank as a result of the Bank's lack of good faith, negligence or willful misconduct. 6.3 At any time, the Bank may apply to any officer of the Fund for instructions, and may consult with legal counsel with respect to any matter arising in connection with the services to be performed by the Bank under this Agreement, and the Bank and its agents or subcontractors shall not be liable and shall be indemnified by the Fund for any action taken or omitted by it in reliance upon such instructions or upon the opinion of such counsel. The Bank, its agents and subcontractors shall be protected and indemnified in acting upon any paper or document furnished by or on behalf of the Fund, reasonably believed to be genuine and to have been signed by the proper person or persons, or upon any instruction, information, data, records or documents provided the Bank or its agents or subcontractors by machine readable input, telex, CRT data entry or other similar means authorized by the Fund, and shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Fund. The Bank, its agents and subcontractors shall also be protected and indemnified in recognizing stock certificates which are reasonably believed to bear the proper manual or facsimile signatures of the officers of the Fund, and the proper countersignature of any former transfer agent or former registrar, or of a co-transfer agent or co-registrar. 6.4 In order that the indemnification provisions contained in this Section 6 shall apply, upon the assertion of a claim for which either party may be required to indemnify the other, the party seeking indemnification shall promptly notify the other party of such assertion, and shall keep the other party advised with respect to all developments concerning such claim. The party who may be required to indemnify shall have the option to participate with the party seeking indemnification in the defense of such claim. The party seeking indemnification shall in no case confess any claim or make any compromise in any case in which the other party may be required to indemnify it except with the other party's prior written consent. 7. Standard of Care The Bank shall at all times act in good faith and agrees to use its best efforts within reasonable limits to insure the accuracy of all services performed under this Agreement, but assumes no responsibility and shall not be liable for loss or damage due to errors unless said errors are caused by its negligence, bad faith, or willful misconduct or that of its employees. 8. Covenants of the Fund and the Bank 8.1 The Fund shall promptly furnish to the Bank the following: (a) A certified copy of the resolution of the Board of Directors of the Fund authorizing the appointment of the Bank and the execution and delivery of this Agreement. (b) A copy of the Articles of Incorporation and By-Laws of the Fund and all amendments thereto. 8.2 The Bank hereby agrees to establish and maintain facilities and procedures reasonably acceptable to the Fund for safekeeping of stock certificates, check forms and facsimile signature imprinting devices, if any; and for the preparation or use, and for keeping account of, such certificates, forms and devices. 8.3 The Bank shall keep records relating to the services to be performed hereunder, in the form and manner as it may deem advisable. To the extent required by Section 31 of the Investment Company Act of 1940, as amended, and the Rules thereunder, the Bank agrees that all such records prepared or maintained by the Bank relating to the services to be performed by the Bank hereunder are the property of the Fund and will be preserved, maintained and made available in accordance with such Section and Rules, and will be surrendered promptly to the Fund on and in accordance with its request. 8.4 The Bank and the Fund agree that all books, records, information and data pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law. 8.5 In case of any requests or demands for the inspection of the Shareholder records of the Fund, the Bank will endeavor to notify the Fund and to secure instructions from an authorized officer of the Fund as to such inspection. The Bank reserves the right, however, to exhibit the Shareholder records to any person whenever it is advised by its counsel that it may be held liable for the failure to exhibit the Shareholder records to such person. 9. Termination of Agreement 9.1 This Agreement may be terminated by either party upon one hundred twenty (120) days written notice to the other. 9.2 Should the Fund exercise its right to terminate, all out-of-pocket expenses associated with the movement of records and material will be borne by the Fund. Additionally, the Bank reserves the right to charge for any other reasonable expenses associated with such termination and/or a charge equivalent to the average of three (3) months' fees. 10. Assignment 10.1 Except as provided in Section 10.3 below, neither this Agreement nor any rights or obligations hereunder may be assigned by either party without the written consent of the other party. 10.2 This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns. 10.3 The Bank may, without further consent on the part of the Fund, subcontract for the performance hereof with (i) Boston Financial Data Services, Inc., a Massachusetts corporation ("BFDS") which is duly registered as a transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of 1934, as amended ("Section 17A(c)(1)"); (ii) a BFDS subsidiary duly registered as a transfer agent pursuant to Section 17A(c)(1); or (iii) a BFDS affiliate; provided, however, that the Bank shall be as fully responsible to the Fund for the acts and omissions of any subcontractor as it is for its own acts and omissions. 11. Amendment This Agreement may be amended or modified by a written agreement executed by both parties and authorized or approved by a resolution of the Board of Directors of the Fund. 12. Massachusetts Law to Apply This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the Commonwealth of Massachusetts. 13. Force Majeure In the event either party is unable to perform its obligations under the terms of this Agreement because of acts of God, strikes, equipment or transmission failure or damage reasonably beyond its control, or other causes reasonably beyond its control, such party shall not be liable for damages to the other for any damages resulting from such failure to perform or otherwise from such causes. 14. Consequential Damages Neither party to this Agreement shall be liable to the other party for consequential damages under any provision of this Agreement or for any consequential damages arising out of any act or failure to act hereunder. 15. Merger of Agreement This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written. 16. Counterparts This Agreement may be executed by the parties hereto on any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written. THE CHARLES ALLMON TRUST, INC. BY: ATTEST: STATE STREET BANK AND TRUST COMPANY BY:__________________________________ Executive Vice President ATTEST: EX-99.2K 13 PRICING AND BOOKKEEPING AGREEMENT PRICING AND BOOKKEEPING AGREEMENT AGREEMENT dated as of January 1, 1996, between Liberty All-Star Growth Fund, Inc. (Fund) and Colonial Management Associates, Inc.(Colonial), a Massachusetts corporation. The Fund and Colonial agree as follows: 1.Appointment. The Fund appoints Colonial as agent to perform the services described below, such appointment to take effect January 1, 1996. 2.Services. Colonial shall (i) determine and timely communicate to persons designated by the Fund the Fund's net asset value per share in accordance with the applicable provisions of the Fund's Registration Statement on Form N-2; and (ii) maintain and preserve in a secure manner the accounting records of the Fund, including all such accounting records as the Fund is obligated to maintain and preserve under the Investment Company Act of 1940 and the rules thereunder, applicable federal and state tax laws and any other applicable laws, rules or regulations. In addition to the accounting records of the Fund as a whole, Colonial will maintain and preserve in a secure manner separate portfolio accounts ("Portfolio Manager Accounts") for the assets of the Fund allocated by Liberty Asset Management Company to each of the Fund's Portfolio Managers. All records shall be the property of the Fund. Colonial will provide disaster planning to minimize possible service interruption. 3.Audit, Use and Inspection. Colonial shall make available on its premises during regular business hours all records of a Fund for reasonable audit, use and inspection by the Fund, its agents and any regulatory agency having authority over the Fund. 4.Compensation. The Fund will pay Colonial a monthly fee of $1,750 plus $250 for each Portfolio Manager Account, plus a percentage fee for each month at the following annual rates: 0.0233% of the average weekly net assets of the Fund for such month in excess of $50 million up to $500 million; 0.0167% of the average weekly net assets of the Fund for such month in excess of $500 million up to $1 billion; 0.015% of the average weekly net assets of the Fund for such month in excess of $1 billion up to $3 billion; and 0.001% of the average weekly net assets of the Fund for such month in excess of $3 billion. 5.Compliance. Colonial shall comply with applicable provisions in the Fund's Registration Statement on Form N-2 relating to pricing and bookkeeping. 6.Limitation of Liability. In the absence of willful misfeasance, bad faith or gross negligence on the part of Colonial, or reckless disregard of its obligations and duties hereunder, Colonial shall not be subject to any liability to the Fund, to any shareholder of the Fund or to any other person, firm or organization, for any act or omission in the course of, or connected with, rendering services hereunder. 7.Amendments. The Fund shall submit to Colonial a reasonable time in advance of filing with the Securities and Exchange Commission copies of any changes in its Registration Statements. If a change in documents or procedures materially increases the cost to Colonial of performing its obligations, Colonial shall be entitled to receive reasonable additional compensation. 8. Duration and Termination, etc. This Agreement may be changed only by writing executed by each party. This Agreement: (a) shall continue in effect from year to year so long as approved annually by vote of a majority of the Directors who are not affiliated with Colonial; (b) may be terminated at any time without penalty by sixty days' written notice to either party; and (c) may be terminated at any time for cause by either party if such cause remains unremedied for a reasonable period not to exceed ninety days after receipt of written specification of such cause. Paragraph 6 of this Agreement shall survive termination. If the Fund designates a successor to any of Colonial's obligations, Colonial shall, at the expense and direction of the Fund, transfer to the successor all Fund records maintained by Colonial. 9. Miscellaneous. This Agreement shall be governed by the laws of The Commonwealth of Massachusetts. IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first above. LIBERTY ALL-STAR GROWTH FUND, INC. By: Peter L. Lydecker, Controller COLONIAL MANAGEMENT ASSOCIATES, INC. By: Arthur O. Stern, Executive Vice President -----END PRIVACY-ENHANCED MESSAGE-----