As filed with the Securities and Exchange Commission on March 17, 2000
Registration Nos: 811-09095
333-66819
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Pre-Effective Amendment No / /
Post-Effective Amendment No. 4 / X /
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 4 / X /
LIBERTY FUNDS TRUST IX* (FORMERLY LAMCO TRUST I)
(Exact Name of Registrant as Specified in Charter)
One Financial Center, Boston, Massachusetts 02111
(Address of Principal Executive Offices)
617-426-3750
(Registrant's Telephone Number, including Area Code)
Name and Address of
Agent for Service: Copy to:
- ---------------------------- -----------
Nancy L. Conlin, Esquire Jeremiah J. Bresnahan, Esquire
Colonial Management Associates, Inc. Bingham Dana LLP
One Financial Center 150 Federal Street
Boston, MA 02111 Boston, MA 02110
It is proposed that this filing will become effective (check appropriate box):
/ / Immediately upon filing pursuant to paragraph (b).
/ / On (date) pursuant to paragraph (b).
/ / 60 days after filing pursuant to paragraph (a)(1).
/ / On (date) pursuant to paragraph (a)(1) of Rule 485.
/ / 75 days after filing pursuant to paragraph (a)(2).
/X/ On June 1, 2000 pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
_____________
* This filing relates only to the following series of the Registrant:
Liberty All-Star Small Cap Growth Fund, Liberty All-Star Mid Cap Growth
Fund, Liberty All-Star Large Cap Growth Fund and Liberty All-Star Growth
Opportunities Fund.
<PAGE>
LIBERTY ALL-STAR FUNDS PROSPECTUS, JUNE 1, 2000
o LIBERTY ALL-STAR SMALL CAP GROWTH FUND
o LIBERTY ALL-STAR MID CAP GROWTH FUND
o LIBERTY ALL-STAR LARGE CAP GROWTH FUND
Class A, B and C Shares
Advised by Liberty Asset Management Company
Although these securities have been
registered with the Securities and
Exchange Commission, the Commission
has not approved or disapproved any
shares offered in this prospectus or
determined whether in this prospectus is
accurate or complete. Any representation
to the contrary is a criminal offense.
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
<PAGE>
TABLE OF CONTENTS
THE FUNDS......................................................................
Investment Goals..........................................................
Primary Investment Strategies.............................................
Primary Investment Risks..................................................
Performance History.......................................................
Your Expenses.............................................................
YOUR ACCOUNT...................................................................
How to Buy Shares.........................................................
Sales Charges.............................................................
How to Exchange Shares....................................................
How to Sell Shares........................................................
Distribution and Service Fees.............................................
Other Information About Your Account......................................
MANAGING THE FUNDS.............................................................
Investment Advisor........................................................
Portfolio Managers........................................................
Portfolio Manager Performance Information.................................
OTHER INVESTMENT
STRATEGIES AND RISKS...........................................................
FINANCIAL HIGHLIGHTS...........................................................
<PAGE>
THE FUNDS
INVESTMENT GOALS
LIBERTY ALL-STAR SMALL CAP GROWTH FUND (Small Cap Fund) seeks long-term capital
appreciation by investing primarily in equity securities issued by small
companies.
LIBERTY ALL-STAR MID CAP GROWTH FUND (Mid Cap Fund) seeks long-term capital
appreciation by investing primarily in equity securities issued by medium-sized
companies.
LIBERTY ALL-STAR LARGE CAP GROWTH FUND (Large Cap Fund) seeks long-term capital
appreciation by investing primarily in equity securities issued by large
companies.
[In left margin column]
The advisor continuously monitors the performance and investment styles of each
Fund's Portfolio Manager. From time to time the advisor may recommend changes
of the Portfolio Manager based on factors such as changes in the Portfolio
Manager's investment style, a deterioration in the Portfolio Manager's
performance relative to that of other investment management firms practicing a
similar style, or adverse changes in ownership or personnel.
PRIMARY INVESTMENT STRATEGIES
Under normal market conditions, each Fund invests primarily in equity and
equity related securities, which include common stocks, bonds convertible into
stocks, warrants and other rights to purchase stocks, that demonstrate the
potential for continuing, above-average growth.
The Funds' advisor, Liberty Asset Management Company (LAMCO), allocates each
Fund's portfolio assets to one or more independent investment management
organizations (Portfolio Managers). There is one Portfolio Manager for each
Fund as of the date of this Prospectus. Each Fund's Portfolio Manager and
investment strategy are described below.
The Portfolio Manager for the SMALL CAP FUND is Westwood Management
Corporation. The Small Cap Fund primarily invests in a portfolio of equity
securities issued by small companies. These smaller companies have a market
capitalization (defined as shares outstanding times current market price) of
between $100 million and $1.5 billion at the time of the Fund's initial
investment. The Fund may invest in relatively new or unseasoned companies,
which are in their early stages of development, or small companies in new and
emerging industries. In selecting securities for the Fund, the Portfolio
Manager considers companies that offer:
<PAGE>
o an earnings growth rate exceeding the Fund's benchmark, the Russell
2000 Growth Index
o an increasing return on equity
o a low debt/equity ratio
o continuous earnings per share and sales growth
o a recent positive earnings surprise
The Portfolio Manager closely monitors the issuers and will sell a stock if the
stock achieves 90% of its price objective and has limited further potential for
price increase, the forecasted price/earnings ratio exceeds the future
forecasted growth rate and/or the issuer suffers an earnings disappointment.
The Portfolio Manager for the MID CAP FUND is TCW Funds Management, Inc. The
Mid Cap Fund invests primarily in equity securities issued by medium-sized
companies which are characterized as "growth" companies according to criteria
established by the Portfolio Manager. In managing the Fund, the Portfolio
Manager will focus on emerging companies that exhibit this characteristic. The
Fund may purchase and sell convertible securities.
The Portfolio Manager uses a "bottom-up" approach to identify securities for
investment. First, the Portfolio Manager uses quantitative and qualitative
criteria to screen companies. The Portfolio Manager then subjects companies
that make it through this screening process to fundamental analysis, which
generally looks for at least some of the following factors:
o a demonstrated record of consistent earnings growth or the potential to
grow earnings
o an ability to earn an attractive return on equity
o a price/earnings ratio which is less than the Portfolio Manager's
internally estimated three-year earnings growth rate
o a large and growing market share
o a strong balance sheet
o significant ownership interest by management and a strong management
team
The Portfolio Manager for the LARGE CAP FUND is TCW Funds Management, Inc. The
Large Cap Fund invests primarily in equity securities issued by large
companies. In managing the Fund, the Portfolio Manager will seek to achieve
superior long-term returns by owning shares in companies that are believed to
have strong and enduring business models and inherent advantages over their
competitors. The Fund may purchase and sell convertible securities and foreign
securities.
<PAGE>
* * * * * * * * * *
Additional strategies that are not primary investment strategies and the risks
associated with them are described below under "Other Investment Strategies and
Risks."
PRIMARY INVESTMENT RISKS
The primary risks of investing in each Fund are described below. There are many
circumstances (including additional risks that are not described here) which
could prevent a Fund from achieving its goals. It is possible to lose money by
investing in a Fund. The performance of each Fund depends on the performance of
the stock markets in the United States and in foreign countries and on the
performance of the individual stocks in which it invests. The value of each
Fund will vary from day to day, reflecting changes in the values of the
securities held by such Fund. Each of the Funds is subject (in varying degrees)
to the following primary risks:
Market risk is the risk that the price of a security held by a Fund will fall
due to changing market, economic or political conditions.
Growth securities, because they tend to reflect future expectations about their
issuers, may be particularly sensitive to market movements. The prices of
growth securities may fall if expectations about their issuers are not met.
Smaller companies are more likely than medium-sized and larger companies to
have limited product lines, operating histories, markets or financial
resources. They may depend heavily on a small management team. Stocks of
smaller companies may trade less frequently, may trade in smaller volumes and
may fluctuate more sharply in price than stocks of medium-sized and larger
companies. In addition, they may not be widely followed by the investment
community, which can lower the demand for their stock.
The securities issued by mid-capitalization companies may have more risk than
those of larger companies. These securities may be more susceptible to market
downturns, and their prices could be more volatile.
Foreign securities are subject to special risks. Foreign stock markets can be
extremely volatile. Fluctuations in currency exchange rates may impact the
value of foreign securities without a change in the intrinsic value of those
securities. The liquidity of foreign securities may be more limited than
domestic securities, which means that a Fund may, at times, be unable to sell
foreign securities at desirable prices. Brokerage commissions, custodial fees
and other fees are generally higher for foreign investments. In addition,
foreign governments may impose withholding taxes which would reduce the amount
of income available to distribute to shareholders. Other risks include the
following: possible delays in the settlement of transactions; less publicly
available information about companies; the impact of political, social or
diplomatic events; and possible seizure, expropriation or nationalization of
the company or its assets.
As non-diversified mutual funds, the Mid Cap Fund and the Large Cap Fund are
allowed to invest a greater percentage of their assets in the securities of a
<PAGE>
single issuer. This may concentrate issuer risk and, therefore, the Funds may
have an increased risk of loss compared to a similar diversified mutual fund.
PERFORMANCE HISTORY
Because each Fund is a new fund and has not completed one full year of
investment performance, information related to the Fund's performance has not
been included in this prospectus. However, information on other funds managed
by the Portfolio Managers is contained in the section "Managing the Funds -
Portfolio Manager Performance Information" in this prospectus.
<PAGE>
THE FUNDS LIBERTY ALL-STAR SMALL CAP GROWTH FUND
YOUR EXPENSES
Fees and expenses are among the factors you should consider before you invest
in a mutual fund. The tables below describe the fees and expenses you may pay
when you buy, hold and sell shares of the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES1/ (PAID DIRECTLY FROM YOUR INVESTMENT)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------
Maximum sales charge (load) on purchases (%)
(as a percentage of the offering price) 5.75 0.00 0.00
- ------------------------------------------------------------------------------------------
Maximum deferred sales charge (load) on
redemptions (%)(as a percentage of the lesser
of purchase price or redemption price) 1.00 2/ 5.00 1.00
- ------------------------------------------------------------------------------------------
Redemption fee (%) (as a percentage of amount 3/ 3/ 3/
redeemed, if applicable)
- ------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (DEDUCTED DIRECTLY FROM FUND ASSETS)
- ------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------
Management and administration fee (%) _.__ _.__ _.__
- ------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees (%) 0.25 1.00 1.00
- ------------------------------------------------------------------------------------------
Other expenses (%) _.__ _.__ _.__
- ------------------------------------------------------------------------------------------
Total annual fund operating expenses4/(%) _.__ _.__ _.__
- ------------------------------------------------------------------------------------------
</TABLE>
- ------------------------
1/ A $10 annual fee is deducted from accounts of less than $1,000 and paid
to the transfer agent.
2/ This charge applies only to certain Class A shares bought without an
initial sales charge that are sold within 18 months of purchase.
3/ There is a $7.50 charge for wiring sale proceeds to your bank.
4/ The Fund's advisor and administrator have voluntarily agreed to waive
advisory and administration fees and reimburse the Fund for certain expenses so
that the total annual fund operating expenses (exclusive of distribution and
service fees, brokerage commissions, interest, taxes and extraordinary
expenses, if any) will not exceed _.__%. As a result, the actual management and
administration fees for each share class would be ___% and total annual fund
operating expenses for Class A, B and C shares would be ___%, ___% and ___%,
respectively. This arrangement may be terminated by the advisor or
administrator at any time.
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
- -------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS
- -------------------------------------------------------------------------------
Class A $_.__ $_.__
- -------------------------------------------------------------------------------
Class B: did not sell your shares $_.__ $_.__
sold all your shares at
the end of the period $_.__ $_.__
- -------------------------------------------------------------------------------
Class C: did not sell your shares $_.__ $_.__
sold all your shares at
the end of the period $_.__ $_.__
- -------------------------------------------------------------------------------
[In left margin column]
UNDERSTANDING EXPENSES
SALES CHARGES are paid directly by shareholders to Liberty Funds
Distributor, Inc., the Fund's distributor.
ANNUAL FUND OPERATING EXPENSES are deducted from the Fund. They include
management and administration fees, 12b-1 fees, brokerage costs, and
administrative costs including pricing and custody services.
EXAMPLE EXPENSES help you compare the cost of investing in the Fund to
the cost of investing in other mutual funds. The table does not take into
account any expense reduction arrangements discussed in the footnotes to the
Annual Fund Operating Expenses table. It uses the following hypothetical
conditions:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same
o Assumes reinvestment of all dividends and distributions
<PAGE>
THE FUNDS LIBERTY ALL-STAR MID CAP GROWTH FUND
YOUR EXPENSES
Fees and expenses are among the factors you should consider before you invest
in a mutual fund. The tables below describe the fees and expenses you may pay
when you buy, hold and sell shares of the Fund.
SHAREHOLDER FEES5/ (PAID DIRECTLY FROM YOUR INVESTMENT)
- -------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
- -------------------------------------------------------------------------------
Maximum sales charge (load) on purchases (%)
(as a percentage of the offering price) 5.75 0.00 0.00
- -------------------------------------------------------------------------------
Maximum deferred sales charge (load) on
redemptions (%)(as a percentage of the lesser
of purchase price or redemption price) 1.00 6/ 5.00 1.00
- -------------------------------------------------------------------------------
Redemption fee (%) (as a percentage of amount 7/ 7/ 7/
redeemed, if applicable)
- -------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (DEDUCTED DIRECTLY FROM FUND ASSETS)
- -------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
- -------------------------------------------------------------------------------
Management and administration fee (%) _.__ _.__ _.__
- -------------------------------------------------------------------------------
Distribution and service (12b-1) fees (%) 0.25 1.00 1.00
- -------------------------------------------------------------------------------
Other expenses (%) _.__ _.__ _.__
- -------------------------------------------------------------------------------
Total annual fund operating expenses8/(%) _.__ _.__ _.__
- -------------------------------------------------------------------------------
- -------------------------
5/ A $10 annual fee is deducted from accounts of less than $1,000 and paid
to the transfer agent.
6/ This charge applies only to certain Class A shares bought without an
initial sales charge that are sold within 18 months of purchase.
7/ There is a $7.50 charge for wiring sale proceeds to your bank.
8/ The Fund's advisor and administrator have voluntarily agreed to waive
advisory and administration fees and reimburse the Fund for certain expenses so
that the total annual fund operating expenses (exclusive of distribution and
service fees, brokerage commissions, interest, taxes and extraordinary
expenses, if any) will not exceed _.__%. As a result, the actual management and
administration fees for each share class would be ___% and total annual fund
operating expenses for Class A, B and C shares would be ___%, ___% and ___%,
respectively. This arrangement may be terminated by the advisor or
administrator at any time.
<PAGE>
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
- -------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS
- -------------------------------------------------------------------------------
Class A $_.__ $_.__
- -------------------------------------------------------------------------------
Class B: did not sell your shares $_.__ $_.__
sold all your shares at
the end of the period $_.__ $_.__
- -------------------------------------------------------------------------------
Class C: did not sell your shares $_.__ $_.__
sold all your shares at
the end of the period $_.__ $_.__
- -------------------------------------------------------------------------------
[In left margin column]
UNDERSTANDING EXPENSES
SALES CHARGES are paid directly by
shareholders to Liberty Funds Distributor, Inc.,
the Fund's distributor.
ANNUAL FUND OPERATING EXPENSES are
deducted from the Fund. They include
management and administration fees, 12b-1 fees,
brokerage costs, and administrative costs
including pricing and custody services.
EXAMPLE EXPENSES help you compare
the cost of investing in the Fund to the cost of
investing in other mutual funds. The table does
not take into account any expense reduction
arrangements discussed in the footnotes to the
Annual Fund Operating Expenses table. It uses
the following hypothetical conditions:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the
same
o Assumes reinvestment of all dividends
and distributions
<PAGE>
THE FUNDS LIBERTY ALL-STAR LARGE CAP GROWTH FUND
YOUR EXPENSES
Fees and expenses are among the factors you should consider before you invest
in a mutual fund. The tables below describe the fees and expenses you may pay
when you buy, hold and sell shares of the Fund.
SHAREHOLDER FEES9/ (PAID DIRECTLY FROM YOUR INVESTMENT)
- -------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
- -------------------------------------------------------------------------------
Maximum sales charge (load) on purchases (%)
(as a percentage of the offering price) 5.75 0.00 0.00
- -------------------------------------------------------------------------------
Maximum deferred sales charge (load) on
redemptions (%) (as a percentage of the lesser
of purchase price or redemption price) 1.00 10/ 5.00 1.00
- -------------------------------------------------------------------------------
Redemption fee (%) (as a percentage of amount 11/ 11/ 11/
redeemed, if applicable)
- -------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (DEDUCTED DIRECTLY FROM FUND ASSETS)
- -------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
- -------------------------------------------------------------------------------
Management and administration fee (%) _.__ _.__ _.__
- -------------------------------------------------------------------------------
Distribution and service (12b-1) fees (%) 0.25 1.00 1.00
- -------------------------------------------------------------------------------
Other expenses (%) _.__ _.__ _.__
- -------------------------------------------------------------------------------
Total annual fund operating expenses 12/(%) _.__ _.__ _.__
- -------------------------------------------------------------------------------
- ------------------------
9/ A $10 annual fee is deducted from accounts of less than $1,000 and paid
to the transfer agent.
10/ This charge applies only to certain Class A shares bought without an
initial sales charge that are sold within 18 months of purchase.
11/ There is a $7.50 charge for wiring sale proceeds to your bank.
12/ The Fund's advisor and administrator have voluntarily agreed to waive
advisory and administration fees and reimburse the Fund for certain expenses so
that the total annual fund operating expenses (exclusive of distribution and
service fees, brokerage commissions, interest, taxes and extraordinary
expenses, if any) will not exceed _.__%. As a result, the actual management and
administration fees for each share class would be ___% and total annual fund
operating expenses for Class A, B and C shares would be ___%, ___% and ___%,
respectively. This arrangement may be terminated by the advisor or
administrator at any time.
<PAGE>
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
- -------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS
- -------------------------------------------------------------------------------
Class A $_.__ $_.__
- -------------------------------------------------------------------------------
Class B: did not sell your shares $_.__ $_.__
sold all your shares at
the end of the period $_.__ $_.__
- -------------------------------------------------------------------------------
Class C: did not sell your shares $_.__ $_.__
sold all your shares at
the end of the period $_.__ $_.__
- -------------------------------------------------------------------------------
[In left margin column]
UNDERSTANDING EXPENSES
SALES CHARGES are paid directly by shareholders to Liberty Funds
Distributor, Inc., the Fund's distributor.
ANNUAL FUND OPERATING EXPENSES are deducted from the Fund. They include
management and administration fees, 12b-1 fees, brokerage costs, and
administrative costs including pricing and custody services.
EXAMPLE EXPENSES help you compare the cost of investing in the Fund to the
cost of investing in other mutual funds. The table does not take into account
any expense reduction arrangements discussed in the footnotes to the Annual
Fund Operating Expenses table. It uses the following hypothetical conditions:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same
o Assumes reinvestment of all dividends and distributions
<PAGE>
YOUR ACCOUNT
HOW TO BUY SHARES
Your financial advisor can help you establish an appropriate investment
portfolio, buy shares and monitor your investments. When a Fund receives your
purchase request in "good form," your shares will be bought at the next
calculated public offering price. "Good form" means that you placed your order
with your brokerage firm or your payment has been received and your application
is complete, including all necessary signatures.
[In left margin column]
INVESTMENT MINIMUMS13/
Initial Investment ....................$1,000
Subsequent Investments ................$50
Automatic Investment Plan .............$50
Retirement Plans ......................$25
OUTLINED BELOW ARE THE VARIOUS OPTIONS FOR BUYING SHARES:
METHOD INSTRUCTIONS
Through your Your financial advisor can help you establish your
financial advisor account and buy Fund shares on your behalf.
By check For new accounts, send a completed application and check
(new account) made payable to the Fund to the transfer agent, Liberty
Funds Services, Inc., P.O. Box 1722,
Boston, MA 02105-1722.
By check For existing accounts, fill out and return the
(existing account) additional investment stub included in your quarterly
statement, or send a letter of instruction including
your Fund name and account number with a check made
payable to the Fund to Liberty Funds Services, Inc.,
P.O. Box 1722, Boston, MA 02105-1722.
By exchange You or your financial advisor may acquire shares by
exchanging shares you own in one fund for shares of the
same class of the Fund at no additional cost. For
federal income tax purposes, an exchange is ordinarily a
taxable event that may result in a taxable gain or loss.
There may be an additional charge if exchanging from a
money market fund. To exchange by telephone,
call 1-800-422-3737.
- ------------------------
13/ Each Fund reserves the right to change the investment minimums. Each
Fund also reserves the right to refuse a purchase order for any reason,
including if it believes that doing so would be in the best interest of the
Fund and its shareholders.
<PAGE>
By wire You may purchase shares by wiring money from your
bank account to your fund account. To wire funds to your
fund account, call 1-800-422-3737 to obtain a control
number and the wiring instructions.
By electronic You may purchase shares by electronically transferring
funds money from your bank account to your fund account by
transfer calling 1-800-422-3737. Electronic funds transfers may
take up to two business days to settle and be considered
in "good form." You must set up this feature prior to
your telephone request. Be sure to complete the
appropriate section of the application.
Automatic You can make monthly or quarterly investments
investment plan automatically from your bank account to your fund
account. You can select a preauthorized amount to be
sent via electronic funds transfer. Be sure to complete
the appropriate section of the application for this
feature.
By dividend You may automatically invest dividends distributed by
diversification one fund into the same class of shares of the Fund at no
additional sales charge. You will normally have to pay
federal income taxes, and any state or local taxes, on
the distributions you receive from a Fund, whether you
take the distributions in cash or reinvest them in
additional shares. To invest your dividends in another
fund, call 1-800-345-6611.
[In left margin column]
CHOOSING A SHARE CLASS
The Funds offer three classes of shares in this
prospectus CLASS A, B and C. Each share class
has its own sales charge and expense structure.
Determining which share class is best for you
depends on the dollar amount you are investing
and the number of years for which you are
willing to invest. Purchases of $250,000 or more
but less than $1 million can be made only in
Class A or Class C shares. Purchases of $1
million or more are automatically invested in
Class A shares. If your financial advisor firm
participates in the Class B discount program,
purchases of over $1 million can be made only in
Class A or Class C shares. Otherwise, purchases
in excess of $250,000 must be for Class A or
Class C shares only. Based on your personal
situation, your investment advisor can help you
decide which class of shares makes the most
sense for you.
<PAGE>
The Funds also offers an additional class of
shares, Class Z shares, exclusively to certain
institutional and other investors. Class Z shares
are made available through a separate
prospectus provided to eligible institutional and
other investors.
SALES CHARGES
You may be subject to an initial sales charge when you purchase, or a
contingent deferred sales charge (CDSC) when you sell, shares of a Fund. These
sales charges are described below. In certain circumstances, these sales
charges are waived, as described below and in the Statement of Additional
Information.
CLASS A SHARES Your purchases of Class A shares generally are at the public
offering price. This price includes a sales charge that is based on the amount
of your initial investment when you open your account. A portion of the sales
charge is the commission paid to the financial advisor firm on the sale of
Class A shares. The sales charge you pay on additional investments is based on
the total amount of your purchase and the current value of your account. The
amount of the sales charge differs depending on the amount you invest as shown
in the table below.
<TABLE>
<CAPTION>
CLASS A SALES CHARGES
<S> <C> <C> <C>
% OF OFFERING
AS A % OF PRICE
THE PUBLIC AS A % RETAINED BY
OFFERING OF YOUR FINANCIAL ADVISOR
AMOUNT OF PURCHASE PRICE INVESTMENT FIRM
Less than $50,000 __.____ __.____ __.____
- ------------------------------------------------------------------------------------------------
$50,000 to less than $100,000 __.____ __.____ __.____
- ------------------------------------------------------------------------------------------------
$100,000 to less than $250,000 __.____ __.____ __.____
- ------------------------------------------------------------------------------------------------
$250,000 to less than $500,000 __.____ __.____ __.____
- ------------------------------------------------------------------------------------------------
$500,000 to less than $1,000,000 __.____ __.____ __.____
- ------------------------------------------------------------------------------------------------
$1,000,000 or more14/
</TABLE>
- ------------------------
14/ Class A share purchases that bring your account value above $1 million
are subject to a 1% CDSC if redeemed within 18 months of their purchase date.
The 18month period begins on the first day of the month following each
purchase. Subsequent Class A share purchases that bring your account value
above $1 million are subject to a 1% CDSC if redeemed within 18 months of their
purchase date. The 18-month period beings on the first day of the month
following each purchase.
<PAGE>
For Class A share purchases of $1 million or more, financial advisors receive a
commission from the distributor as follows:
PURCHASES OVER $1 MILLION
AMOUNT PURCHASED COMMISSION %
First $3 million 1.00
- -------------------------------------------------------------------------------
Next $2 million 0.50
- -------------------------------------------------------------------------------
Over $5 million 0.25 15/
- -------------------------------------------------------------------------------
[In left margin column]
UNDERSTANDING CONTINGENT
DEFERRED SALES CHARGES (CDSC)
Certain investments in Class A, B and C shares
are subject to a CDSC, a sales charge applied at
the time you sell your shares. You will pay the
CDSC only on shares you sell within a certain
amount of time after purchase. The CDSC
generally declines each year until there is no
charge for selling shares. The CDSC is applied
to the net asset value at the time of purchase or
sale, whichever is lower. For purposes of
calculating the CDSC, the start of the holding
period is the monthend of the month in which
the purchase is made. Shares you purchase with
reinvested dividends or capital gains are not
subject to a CDSC. When you place an order to
sell shares, the Fund will automatically sell first
those shares not subject to a CDSC and then
those you have held the longest. This policy
helps reduce and possibly eliminate the potential
impact of the CDSC.
REDUCED SALES CHARGES FOR LARGER INVESTMENTS There are two ways for you to pay
a lower sales charge when purchasing Class A shares. The first is through
Rights of Accumulation. If the combined value of the Fund accounts maintained
by you, your spouse or your minor children reaches a discount level (according
to the chart on the previous page), your next purchase will receive the lower
sales charge. The second is by signing a Statement of Intent within 90 days of
your purchase. By doing so, you would be able to pay the lower sales charge on
all purchases by agreeing to invest a total of at least $50,000 within 13
months. If your Statement of Intent purchases are not completed within 13
months, you will be charged the applicable sales charge on the amount you had
- ------------------------
15/ Paid over 12 months but only to the extent the shares remain
outstanding.
<PAGE>
invested to that date. In addition, certain investors may purchase shares at a
reduced sales charge or net asset value (NAV), which is the value of a fund
share excluding any sales charges. See the Statement of Additional Information
for a description of these situations.
CLASS B SHARES Your purchases of Class B shares are at the Fund's NAV. Class B
shares have no frontend sales charge, but they do carry a CDSC that is imposed
only on shares sold prior to the completion of the periods shown in the charts
below. The CDSC generally declines each year and eventually disappears over
time. The distributor pays the financial advisor firm an upfront commission on
sales of Class B shares as depicted in the charts below.
CLASS B SALES CHARGES
PURCHASES OF LESS THAN $250,000:
% DEDUCTED WHEN
HOLDING PERIOD AFTER PURCHASE SHARES ARE SOLD
Through first year 5.00
- -------------------------------------------------------------------------------
Through second year 4.00
- -------------------------------------------------------------------------------
Through third year 3.00
- -------------------------------------------------------------------------------
Through fourth year 3.00
- -------------------------------------------------------------------------------
Through fifth year 2.00
- -------------------------------------------------------------------------------
Through sixth year 1.00
- -------------------------------------------------------------------------------
Longer than six years 0.00
Commission to financial advisors is 5.00%.
Automatic conversion to Class A shares is eight years after purchase.
There are two ways for you to pay a lower CDSC and reduce the holding period
when making purchases of Class B shares. The first is through a financial
advisor firm which participates in the Class B share discount program for
larger purchases as described in the charts below. Some financial advisor firms
are not able to participate because their record keeping or transaction
processing systems are not designed to accommodate these reductions. Consult
your financial advisor to see whether it participates in the discount program
for larger purchases. The second is through Rights of Accumulation. If the
combined value of the Fund accounts maintained by you, your spouse or your
minor children is at or above a discount level, your next purchase will receive
the lower CDSC and the applicable reduced holding period.
<PAGE>
PURCHASES OF $250,000 TO LESS THAN $500,000:
% DEDUCTED WHEN
HOLDING PERIOD AFTER PURCHASE SHARES ARE SOLD
Through first year 3.00
- -------------------------------------------------------------------------------
Through second year 2.00
- -------------------------------------------------------------------------------
Through third year 1.00
- -------------------------------------------------------------------------------
Longer than four years 0.00
Commission to financial advisors is 2.50%.
Automatic conversion to Class A shares is four years after purchase.
PURCHASES OF $500,000 To LESS THAN $1 MILLION:
% DEDUCTED WHEN
HOLDING PERIOD AFTER PURCHASE SHARES ARE SOLD
Through first year 3.00
- -------------------------------------------------------------------------------
Through second year 2.00
- -------------------------------------------------------------------------------
Through third year 1.00
- -------------------------------------------------------------------------------
Longer than four years 0.00
Commission to financial advisors is 1.75%.
Automatic conversion to Class A shares is three years after purchase.
If you exchange into a fund participating in the Class B share discount program
or transfer your fund account from a financial advisor which does not
participate in the program to one who does, the exchanged or transferred shares
will retain the preexisting CDSC but any additional purchases of Class B shares
which cause the exchanged or transferred account to exceed the applicable
discount level, will receive the lower CDSC and the reduced holding period for
amounts in excess of the discount level. Your financial advisor will receive
the lower commission for purchases in excess of an applicable discount level.
CLASS C SHARES Similar to Class B shares, your purchases of Class C shares are
at the Fund's NAV. Although Class C shares have no frontend sales charge, they
carry a CDSC of 1.00% that is applied to shares sold within the first year
after they are purchased. After holding shares for one year, you may sell them
at any time without paying a CDSC. The distributor pays the financial advisor
firm an upfront commission of 1.00% on sales of Class C shares.
<PAGE>
CLASS C SALES CHARGES
YEARS AFTER PURCHASE % DEDUCTED WHEN SHARES ARE SOLD
Through first year 1.00
- -------------------------------------------------------------------------------
Longer than one year 0.00
HOW TO EXCHANGE SHARES
You may exchange your shares for shares of the same share class of another fund
distributed by Liberty Funds Distributor, Inc. at net asset value. If your
shares are subject to a CDSC, you will not be charged a CDSC upon the exchange.
However, when you sell the shares acquired through the exchange, the shares
sold may be subject to a CDSC, depending upon when you originally purchased the
shares you exchanged. For purposes of computing the CDSC, the length of time
you have owned your shares will be computed from the date of your original
purchase and the applicable CDSC will be the CDSC of the original fund. Unless
your account is part of a tax-deferred retirement plan, an exchange is a taxable
event. Therefore, you may realize a gain or a loss for tax purposes. A Fund may
terminate your exchange privilege if the advisor determines that your exchange
activity is likely to adversely impact its ability to manage the Fund. To
exchange by telephone, call 1-800-422-3737.
HOW TO SELL SHARES
Your financial advisor can help you determine if and when you should sell your
shares. You may sell shares of a Fund on any regular business day that the New
York Stock Exchange (NYSE) is open.
When a Fund receives your sales request in "good form," shares will be sold at
the next calculated price. In "good form" means that money used to purchase
your shares is fully collected. When selling shares by letter of instruction,
"good form" also means (i) your letter has complete instructions, the proper
signatures and signature guarantees, (ii) you have included any certificates
for shares to be sold, and (iii) any other required documents are attached. For
additional documents required for sales by corporations, agents, fiduciaries
and surviving joint owners, please call 1-800-345-6611. Retirement plan accounts
have special requirements; please call 1-800-799-7526 for more information.
The Funds will generally send proceeds from the sale to you within seven days
(usually on the next business day after your request is received in "good
form"). However, if you purchased your shares by check, a Fund may delay
sending the proceeds from the sale of your shares until the check clears which
may take up to 15 days after your purchase. No interest will be paid on
uncashed redemption checks.
<PAGE>
OUTLINED BELOW ARE THE VARIOUS OPTIONS FOR SELLING SHARES:
- -------------------------------------------------------------------------------
METHOD INSTRUCTIONS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Through your You may call your financial advisor to place your sell
financial advisor order. To receive the current trading day's price, your
financial advisor firm must receive your request prior to
the close of the NYSE, usually 4:00 p.m. Eastern time.
- -------------------------------------------------------------------------------
By exchange You or your financial advisor may sell shares
by exchanging from a Fund into the same share class of
another fund at no additional cost. To exchange by
telephone, call 1-800-422-3737.
- -------------------------------------------------------------------------------
By telephone You or your financial advisor may sell shares by telephone
and request that a check be sent to your address of record
by calling 1-800-422-3737, unless you have notified the
Fund of an address change within the previous 30 days. The
dollar limit for telephone sales is $100,000 in a 30-day
period. You do not need to set up this feature in advance
of your call. Certain restrictions apply to retirement
accounts. For details, call 1-800-345-6611.
- -------------------------------------------------------------------------------
By mail You may send a signed letter of instruction or stock power
form along with any certificates to be sold to the address
below. In your letter of instruction, note the Fund's
name, share class, account number, and the dollar value or
number of shares you wish to sell. All account owners must
sign the letter, and signatures must be guaranteed by
either a bank, a member firm of a national stock exchange
or another eligible guarantor institution. Additional
documentation is required for sales by corporations,
agents, fiduciaries, surviving joint owners and individual
retirement account owners. For details, call
1-800-345-6611. Mail your letter of instruction to Liberty
Funds Services, Inc., P.O. Box 1722, Boston, MA 02105-1722.
- -------------------------------------------------------------------------------
By wire You may sell shares and request that the proceeds be wired
to your bank. You must set up this feature prior to your
telephone request. Be sure to complete the appropriate
section of the account application for this feature.
- -------------------------------------------------------------------------------
By electronic You may sell shares and request that the proceeds be
funds transfer electronically transferred to your bank. Proceeds may take
up to two business days to be received by your bank. You
must set up this feature prior to your request. Be sure to
complete the appropriate section of the account
application for this feature.
- -------------------------------------------------------------------------------
<PAGE>
DISTRIBUTION AND SERVICE FEES
Each Fund has adopted a plan under Rule 12b-1 that permits it to pay marketing
and other fees to support the sale and distribution of Class A, B and C shares
and the services provided to you by your financial advisor. The annual
distribution fee and service fee may equal up to 0.00% and 0.25%, respectively,
for Class A shares and 0.75% and 0.25%, respectively, for each of Class B and
Class C shares and are paid out of the assets of these classes. Over time,
these fees will increase the cost of your shares and may cost you more than
paying other types of sales charges.16/
OTHER INFORMATION ABOUT YOUR ACCOUNT
HOW A FUND'S SHARE PRICE IS DETERMINED The price of each class of a Fund's
shares is based on its net asset value (NAV). The NAV is determined at the
close of regular trading on the NYSE, usually 4:00 p.m. Eastern time, on each
business day that the NYSE is open (typically Monday through Friday). The NYSE
is closed on most national holidays and Good Friday.
When you request a transaction, it will be processed at the NAV (plus any
applicable sales charges) next determined after your request is received in
"good form" by the distributor. In most cases, in order to receive that day's
price, the distributor must receive your order before that day's transactions
are processed. If you request a transaction through your financial advisor's
firm, the firm must receive your order by the close of trading on the NYSE to
receive that day's price.
Each Fund determines its NAV for each share class by dividing each class's
total net assets by the number of that class's shares outstanding. In
determining the NAV, each Fund must determine the price of each security in its
portfolio at the close of each trading day. Because each Fund may hold
securities that are traded on foreign exchanges, the value of each Fund's
securities may change on days when shareholders will not be able to buy or sell
Fund shares. This will affect the Funds' NAV on the day it is next determined.
Securities for which market quotations are available are valued each day at the
current market value. However, where market quotations are unavailable, or when
the advisor believes that subsequent events have made them unreliable, the
Funds may use other data to determine the fair value of the securities.
You can find the daily prices of some share classes for each Fund in most major
daily newspapers under the caption "Liberty." You can find daily prices for all
share classes by visiting the Funds' web site at www.libertyfunds.com.
ACCOUNT FEES If your account value falls below $1,000 (other than as a result
of depreciation in share value) you may be subject to an annual account fee of
$10. This fee is deducted from the account in June each year. Approximately 60
- ------------------------
16/ Class B shares automatically convert to Class A shares after a certain
number of years, depending on the program you purchased your shares under,
eliminating the distribution fee upon conversion.
<PAGE>
days prior to the fee date, the Funds' transfer agent will send you written
notification of the upcoming fee. If you add money to your account and bring
the value above $1,000 prior to the fee date, the fee will not be deducted.
SHARE CERTIFICATES Share certificates are not available for Class B and C
shares. Certificates will be issued for Class A shares only if requested. If
you decide to hold share certificates, you will not be able to sell your shares
until you have endorsed your certificates and returned them to the distributor.
DIVIDENDS, DISTRIBUTIONS, AND TAXES Each Fund has the potential to make the
following distributions:
[In left margin column]
UNDERSTANDING FUND DISTRIBUTIONS
Each Fund earns income from the securities it holds. Each Fund also may realize
capital gains and losses on sales of its securities. Each Fund distributes
substantially all of its net investment income and capital gains to
shareholders. As a shareholder, you are entitled to a portion of the Fund's
income and capital gains based on the number of shares you own at the time
these distributions are declared.
TYPES OF DISTRIBUTIONS
Dividend Represents interest and dividends earned from securities held
by the Fund.
Capital gains Represents net long-term capital gains on sales of
securities held for more than 12 months and net short-term
capital gains, which are gains on sales of securities held
for a 12-month period or less.
Each Fund distributes dividends quarterly and any capital gains (including
short-term capital gains) at least annually. You can choose one of the options
listed in the table below for these distributions when you open your account.17/
To change your distribution option call 1-800-345-6611.
- ------------------------
17/ If you do not indicate on your application your preference for
handling distributions, each Fund will automatically reinvest all distributions
in additional shares of the Fund.
<PAGE>
DISTRIBUTION OPTIONS
Reinvest all distributions in additional shares of your current fund
- -------------------------------------------------------------------------------
Reinvest all distributions in shares of another fund
- -------------------------------------------------------------------------------
Receive dividends in cash (see options below) and reinvest capital gains 18/
- -------------------------------------------------------------------------------
Receive all distributions in cash (with one of the following options): 18/
o send the check to your address of record
o send the check to a third party address
o transfer the money to your bank via electronic funds transfer
TAX CONSEQUENCES As long as a Fund qualifies for treatment as a regulated
investment company (which each Fund intends to do in its first and each
subsequent taxable year), it pays no federal income tax on the earnings it
distributes to shareholders. You will normally have to pay federal income taxes
on the distributions you receive from a Fund, whether you take the
distributions in cash or reinvest them in additional shares. Depending on the
state where you live, distributions may also be subject to state and local
income taxes.
In general, any distributions of dividends, interest and short-term capital
gains are taxable as ordinary income. Distributions designated by a Fund as
capital gain dividends are generally taxable as long-term capital gains,
regardless of how long you have held your shares in that Fund. Some dividends
paid by a Fund in January may be taxable as if they had been paid the previous
December. You will be provided with information each year regarding the amount
of ordinary income and capital gains distributed to you for the previous year
and any portion of your distribution which is exempt from state and local
taxes.
A Fund's distributions will reduce that Fund's net asset value per share.
Therefore, if you buy shares in a Fund shortly before the record date of a
distribution by that Fund, you may pay the full price for the shares and then
effectively receive a portion of the purchase price back as a taxable
distribution.
When you redeem, sell or exchange shares of a Fund, it is generally considered
a taxable event for you. Depending on the purchase price and the sale price of
the shares you redeem, sell or exchange, you may have a gain or loss on the
transaction. You are responsible for any tax liabilities generated by your
transaction.
Your investment in a Fund may have additional personal tax implications. Please
consult your tax advisor on federal, state, local or other applicable tax laws.
- ------------------------
18/ Distributions of $10 or less will automatically be reinvested in
additional Fund shares. If you elect to receive distributions by check and the
check is returned as undeliverable, or if you do not cash a distribution check
within six months of the check date, the distribution will be reinvested in
additional shares of the Fund.
<PAGE>
MANAGING THE FUNDS
INVESTMENT ADVISOR
Liberty Asset Management Company (LAMCO), located at Federal Reserve Plaza, 600
Atlantic Avenue, Boston, Massachusetts 02110, is the investment advisor for
each Fund. In its duties as investment advisor, LAMCO runs each Fund's
day-to-day business, including placing all orders for the purchase and sale of
portfolio securities. LAMCO has been an investment advisor since 1985. As of
February 29, 2000, LAMCO managed over $__ billion in assets.
Each Fund pays the advisor a fee at the annual rate of _____% of the average
daily net assets of the Fund.
LAMCO is a manager of other investment managers which the advisor recommends to
the Board of Trustees for appointment pursuant to a portfolio management
agreement among the Trust, LAMCO and the Portfolio Manager. That management
agreement permits each Portfolio Manager to have full investment discretion and
authority over investment of all or a portion of a Fund's assets.
No one individual at LAMCO is responsible for LAMCO's investment management of
the Funds. The following Portfolio Managers manage all or a portion of the
Funds' assets:
o Small Cap Fund: Westwood Management Corporation
o Mid Cap Fund: TCW Funds Management, Inc.
o Large Cap Fund: TCW Funds Management, Inc.
Out of its management fees, the advisor pays Westwood Management Corporation a
fee at the annual rate of ____% of the average daily net assets of the portion
of the Small Cap Fund's assets assigned to Westwood. The agreements with TCW
Funds Management, Inc. provide for a fee at an annual rate of ____% of the
average daily net assets of the portion of the Mid Cap Fund's assets assigned
to TCW and a fee at an annual rate of ____% of the average daily net assets of
the portion of the Large Cap Fund's assets assigned to TCW.
A more complete description of each Portfolio Manager is included in the SAI.
[The Trust and LAMCO have received an exemptive order from the Securities and
Exchange Commission that permits each Fund to change or add Portfolio Managers
without a vote of the shareholders. Information regarding any new Portfolio
Manager is sent to the Fund's shareholders within 90 days following the
effective date of the change.]
PORTFOLIO MANAGERS
No one individual at LAMCO is responsible for LAMCO's investment management of
the Funds. The following individuals are responsible for the management of the
assets of the Funds assigned to the particular Portfolio Manager.
LYNDA J. CALKIN, Senior Vice President of Westwood Management Corporation since
1993, manages the assets of the Small Cap Fund.
<PAGE>
DOUGLAS S. FOREMAN, Group Managing Director and Chief Investment Officer - U.S.
Equities of TCW Funds Management, Inc. since 1994, and CHRISTOPHER J. AINLEY,
Managing Director of TCW Funds Management, Inc. since 1994, manage the assets
of the Mid Cap Fund.
GLEN A. BICKERSTAFF, Managing Director - U.S. Equities of TCW Funds Management,
Inc. since 1998, manages the assets of the Large Cap Fund. Prior to joining TCW
in 1998, Mr. Bickerstaff was a Vice President and Senior Portfolio Manager at
Transamerica Investment Services. TCW is a wholly-owned subsidiary of The TCW
Group, Inc.
<PAGE>
PORTFOLIO MANAGER PERFORMANCE INFORMATION
SMALL CAP EQUITY FUND. The table below sets forth the average annual returns of
the Gabelli Westwood SmallCap Equity Fund (Gabelli Westwood SmallCap Fund), a
diversified, open-end management company managed by Westwood Management
Corporation (Westwood). The Gabelli Westwood SmallCap Fund is the only mutual
fund managed by Westwood with investment goals, policies and restrictions
substantially similar to the Small Cap Fund and has been managed in
substantially the same way that the Small Cap Fund is to be managed by
Westwood. Lynda J. Calkin of Westwood has been primarily responsible for the
day-to-day portfolio management of the Gabelli Westwood SmallCap Fund since its
inception on July 31, 1997. The data is provided to illustrate the past
performance of Westwood in managing a substantially similar fund as measured
against the Russell 2000 Growth Index and the Lipper Small Cap Average and does
not represent the performance of the Small Cap Fund. Investors should not
consider this performance data as an indication of future performance of the
Small Cap Fund or of Westwood. The returns are not intended to predict or
suggest the returns that might be experienced by the Small Cap Fund or an
individual investing in the Small Cap Fund.
The annual returns presented below are unaudited. The use of a methodology
different from that used to calculate the performance data set forth below
could result in different performance data.
All returns presented were calculated on a total return basis and include all
dividends and interest, accrued income and realized and unrealized gains and
losses, and deductions for brokerage commissions and execution costs. Returns
for each period are adjusted to assume that all charges, expenses and fees of
the Class A shares of the Small Cap Fund which are presently in effect were
deducted during such periods. All returns are for the periods ended on December
31, 1999.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------
SINCE
1 YEAR INCEPTION
- --------------------------------------------------------------
GABELLI WESTWOOD SMALLCAP EQUITY
FUND (1) ...................... ______% ______%
- --------------------------------------------------------------
RUSSELL 2000 GROWTH INDEX (2) . ______% ______%
- --------------------------------------------------------------
LIPPER SMALL CAP AVERAGE (3) .. ______% ______%
- --------------------------------------------------------------
- ------------------------
(1) Commencement of investment operations is July 31, 1997.
(2) The Russell 2000 Growth Index is an unmanaged index that measures the
performance of those companies in the Russell 2000 with higher price-to-book
ratios and higher forecasted growth values. The Russell 2000 contains the 2000
smallest companies in the Russell 3000, which, in turn, contains the 3000
largest companies in the U.S. based on total market capitalization. The
performance of the Index does not include fees or expenses.
(3) The Lipper Small Cap Average, which is calculated by Lipper Inc., is
comprised of __________. The performance of the Lipper Small Cap Average does
not include fees or expenses.
<PAGE>
MID CAP EQUITY FUND. The table below sets forth the average annual returns of
the TCW Galileo Aggressive Growth Equities Fund (Aggressive Growth Fund), a
non-diversified, open-end management company managed by TCW Funds Management,
Inc. (TCW). The Aggressive Growth Fund is the only mutual fund managed by TCW
with investment goals, policies and restrictions substantially similar to the
Mid Cap Fund and has been managed in substantially the same way that the Mid
Cap Fund is to be managed by TCW. Douglas S. Foreman and Christopher J. Ainley
have been responsible for the day-to-day portfolio management of the Aggressive
Growth Fund since its inception in June of 1996. The data is provided to
illustrate the past performance of TCW in managing a substantially similar fund
as measured against the Russell Midcap Growth Index and the Morningstar Mid-Cap
Growth Category and does not represent the performance of the Mid Cap Fund.
Investors should not consider this performance data as an indication of future
performance of the Mid Cap Fund or of TCW. The returns are not intended to
predict or suggest the returns that might be experienced by the Mid Cap Fund or
an individual investing in the Mid Cap Fund.
The annual returns presented below are unaudited. The use of a methodology
different from that used to calculate the performance data set forth below
could result in different performance data.
All returns presented were calculated on a total return basis and include all
dividends and interest, accrued income and realized and unrealized gains and
losses, and deductions for brokerage commissions and execution costs. Returns
for each period are adjusted to assume that all charges, expenses and fees of
the Class A shares of the Mid Cap Fund which are presently in effect were
deducted during such periods. All returns are for the periods ended on December
31, 1999.
ANNUAL TOTAL RETURNS
- ----------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS INCEPTION
- ----------------------------------------------------------------------------
TCW GALILEO AGGRESSIVE GROWTH
EQUITIES FUND (4) ............. ______% ______% ______%
- ----------------------------------------------------------------------------
RUSSELL MIDCAP GROWTH INDEX(5) ______% ______% ______%
- ----------------------------------------------------------------------------
MORNINGSTAR MID-CAP GROWTH
CATEGORY(6) ................... ______% ______% _____%
- ----------------------------------------------------------------------------
- ------------------------
(4) Commencement of investment operations is June 3, 1996.
(5) The Russell Midcap Growth Index is an unmanaged index that measures the
performance of those Russell Midcap companies with higher price-to-book ratios
and higher forecasted growth values. The stocks are also members of the Russell
1000 Growth Index. The performance of the Index does not include fees or
expenses.
(6) The Morningstar Mid-Cap Growth Category is comprised of ________________.
The performance of the Morningstar Mid-Cap Growth Category does not include
fees or expenses.
<PAGE>
LARGE CAP EQUITY FUND. The table below sets forth the average annual returns of
the TCW Galileo Select Equities Fund (Select Equities Fund), a non-diversified,
open-end management company managed by TCW Funds Management, Inc. (TCW). The
average annual returns are for periods since May __, 1998, the date on which
Gary Bickerstaff of TCW became the portfolio manager of the Select Equities
Fund. Since May __, 1998, the Select Equities Fund has been managed in
substantially the same way as the Large Cap Fund is to be managed by Mr.
Bickerstaff. The Select Equities Fund is the only mutual fund managed by TCW
with investment goals, policies and restrictions substantially similar to the
Large Cap Fund and has been, since May __, 1998, managed by Mr. Bickerstaff in
substantially the same way that the Large Cap Fund is to be managed by Mr.
Bickerstaff.
The annual returns presented below are unaudited. The use of a methodology
different from that used to calculate the performance data set forth below
could result in different performance data.
All returns presented were calculated on a total return basis and include all
dividends and interest, accrued income and realized and unrealized gains and
losses, and deductions for brokerage commissions and execution costs.
Returns for each period are adjusted to assume that all charges, expenses and
fees of the Class A shares of the Large Cap Fund which are presently in effect
were deducted during such periods. All returns are for the periods ended on
December 31, 1999.
ANNUAL TOTAL RETURNS
- ----------------------------------------------------------------------------
SINCE
1 YEAR MAY __, 1998
- ----------------------------------------------------------------------------
TCW GALILEO SELECT EQUITIES
FUND........................... ______% ______%
- ----------------------------------------------------------------------------
STANDARD & POOR'S 500 ______% ______%
COMPOSITE INDEX (7) ...........
- ----------------------------------------------------------------------------
RUSSELL 1000 GROWTH INDEX(8) .. ______% ______%
- ----------------------------------------------------------------------------
MORNINGSTAR LARGE GROWTH
CATEGORY (9) .................. ______% ______%
- ----------------------------------------------------------------------------
- ------------------------
(7) The Standard & Poor's 500 Composite Index is an unmanaged index of common
stocks that is considered to be generally representative of the United States
stock market. The performance of the Index does not include fees or expenses.
(8) The Russell 1000 Growth Index is an unmanaged index that measures the
performance of those companies in the Russell 1000 (which contains the 1000
largest companies in the U.S. based on total market capitalization) with higher
price-to-book ratios and higher forecasted growth values. The performance of
the Index does not include fees or expenses.
(9) The Morningstar Large Growth Category is comprised of ________________.
The performance of the Morningstar Large Growth Category does not include fees
or expenses.
Prior to joining TCW, Mr. Bickerstaff was the portfolio manager of the
Transamerica Premier Equity Fund from its inception, October 1, 1995, through
May 18, 1998. As the portfolio manager of the Transamerica Premier Equity Fund,
Mr. Bickerstaff had full discretionary authority over the selection of
investments for, and was responsible for, the day-to-day management of that
fund. Average annual returns for the one year period ended December 31, 1997
and for the entire period during which Mr. Bickerstaff managed that fund
<PAGE>
compared with the performance of the Standard and Poor's 500 Composite Index,
the Russell 1000 Growth Index and the Morningstar Large Growth Category were:
<TABLE>
<CAPTION>
<S> <C> <C>
ANNUAL TOTAL RETURNS
- ----------------------------------------------------------------------------------------
SINCE
INCEPTION
1 YEAR (OCTOBER 1, 1995)
ENDED DECEMBER 31, 1997 THROUGH DECEMBER 31, 1997
- ------------------------------------------------------------------------------------------
TRANSAMERICA PREMIER EQUITY
FUND (10) ..................... ______% ______%
- ------------------------------------------------------------------------------------------
S&P 500 INDEX(11) ............. ______% ______%
- ------------------------------------------------------------------------------------------
RUSSELL 1000 GROWTH INDEX(12) . ______% ______%
- ------------------------------------------------------------------------------------------
MORNINGSTAR LARGE GROWTH
CATEGORY(13) .................. ______% ______%
- ------------------------------------------------------------------------------------------
</TABLE>
- -----------
(10) Average annual total returns reflect changes in share prices and
reinvestment of dividends and distributions and is net of all actual fees and
expenses incurred by the Transamerica Premier Equity Fund. [Discuss expense
ratio of Transamerica for periods indicated.] Using the expense ratio of the
Class A shares of the Large Cap Fund, the Transamerica Premier Equity Fund
performance outlined above would be [higher/lower].
(11) The Standard & Poor's 500 Composite Index is an unmanaged index of
common stocks that is considered to be generally representative of the United
States stock market. The performance of the Index does not include fees or
expenses.
(12) The Russell 1000 Growth Index is an unmanaged index that measures the
performance of those companies in the Russell 1000 (which contains the 1000
largest companies in the U.S. based on total market capitalization) with higher
price-to-book ratios and higher forecasted growth values. The performance of
the Index does not include fees or expenses.
(13) The Morningstar Large Growth Category is comprised of ________________.
The performance of the Morningstar Large Growth Category does not include fees
or expenses.
The data in the tables above is provided to illustrate the past performance of
TCW and Mr. Bickerstaff in managing substantially similar funds as measured
against the Standard and Poor's 500 Composite Index, the Russell 1000 Growth
Index and the Morningstar Large Growth Category and does not represent the
performance of the Large Cap Fund. Investors should not consider this
performance data as an indication of future performance of the Large Cap Fund
or of TCW or Mr. Bickerstaff. The returns are not intended to predict or
suggest the returns that might be experienced by the Large Cap Fund or an
individual investing in the Large Cap Fund.
OTHER INVESTMENT STRATEGIES AND RISKS
Each Fund's primary investment strategies and their associated risks are
described above. This section describes other investments a Fund may make and
the risks associated with them. In seeking to achieve its goal, each Fund may
invest in various types of securities and engage in various investment
techniques which are not the principal focus of the Fund and therefore are not
described in this prospectus. These types of securities and investment
practices are identified and discussed in the Funds' Statement of Additional
Information, which you may obtain free of charge (see back cover). Approval by
a Fund's shareholders is not required to modify or change the Fund's investment
goal or investment strategies.
<PAGE>
[In left margin column]
UNDERSTANDING EACH FUND'S OTHER
INVESTMENTS AND RISKS
Each Fund's primary investments and risks are
described under "The Funds Primary
Investment Strategies" and "The Funds -
Primary Investment Risks." In seeking to meet
its investment goal, each Fund may also invest
in other securities and use certain investment
techniques. These securities and investment
techniques offer opportunities and carry various
risks.
Each Fund may elect not to buy any of these
securities or use any of these techniques unless it
believes that doing so will help the Fund achieve
its investment goal. A Fund may not always
achieve its investment goal.
Additional information about each Fund's
securities and investment techniques, as well as
each Fund's fundamental and non-fundamental
investment policies, is contained in the
Statement of Additional Information.
DERIVATIVE STRATEGIES
Each Fund may enter into a number of hedging strategies, including those that
employ futures and options, to gain or reduce exposure to particular securities
or markets. These strategies, commonly referred to as derivatives, involve the
use of financial instruments whose value depend on, or are derived from, the
value of an underlying security, index or currency. Each Fund may use these
strategies to adjust the Fund's sensitivity to changes in interest rates or for
other hedging purposes (i.e., attempting to offset a potential loss in one
position by establishing an interest in an opposite position). Derivative
strategies involve the risk that they may exaggerate a loss, potentially losing
more money than the actual cost of the derivative, or limit a potential gain.
Also, with some derivative strategies there is the risk that the other party to
the transaction may fail to honor its contract terms, causing a loss to the
Fund.
CONVERTIBLE SECURITIES
A convertible security is a fixed-income security, such as a bond or preferred
stock, which may be converted at a stated price within a specified period of
time into a specified number of shares of common stock of the same or a
different issuer. Each of the Mid Cap Fund and the Large Cap Fund may invest in
convertible securities rated below investment grade. Lower rated debt
securities involve greater risk of loss due to credit deterioration and are
<PAGE>
less liquid, especially during periods of economic uncertainty or change, from
higher quality debt securities. Lower rated debt securities have the added risk
that the issuer of the security may default and not make the payment of
interest or principal.
TEMPORARY DEFENSIVE STRATEGIES
At times, the advisor and a Portfolio Manager may determine that adverse market
conditions make it desirable to temporarily suspend a Fund's normal investment
activities. During such times, a Fund may, but is not required to, invest in
cash or high-quality, short-term debt securities, without limit. Taking a
temporary defensive position may prevent a Fund from achieving its investment
goal.
FINANCIAL HIGHLIGHTS
The Funds are newly created and have not yet issued financial statements.
<PAGE>
NOTES
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<PAGE>
NOTES
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<PAGE>
FOR MORE INFORMATION
You may wish to read the Statement of Additional Information for more
information on the Funds and the securities in which they invest. The Statement
of Additional Information is incorporated into this prospectus by reference,
which means that it is considered to be part of this prospectus.
You can get free copies of reports to be issued by the Funds and the Statement
of Additional Information, request other information and discuss your questions
about the Funds by writing or calling the Funds' distributor at:
Liberty Funds Distributor, Inc.
One Financial Center Boston, MA 02111-2621
1-800-426-3750
www.libertyfunds.com
Text-only versions of all Fund documents can be viewed online or downloaded from
the Securities and Exchange Commission at www.sec.gov.
You can review and copy information about the Funds by visiting the following
location, and you can obtain copies, upon payment of a duplicating fee, by
electronic request at the e-mail address [email protected] or by writing the:
Public Reference Room
Securities and Exchange Commission
Washington, DC 20549-0102
Information on the operation of the Public Reference Room may be obtained by
calling 1-202-942-8090.
INVESTMENT COMPANY ACT FILE NUMBER:
Liberty Funds Trust IX (formerly LAMCO Trust I): 811-09095
o Liberty All-Star Small Cap Growth Fund
o Liberty All-Star Mid Cap Growth Fund
o Liberty All-Star Large Cap Growth Fund
<PAGE>
LIBERTY ALL-STAR FUNDS PROSPECTUS, JUNE 1, 2000
o LIBERTY ALL-STAR SMALL CAP GROWTH FUND
o LIBERTY ALL-STAR MID CAP GROWTH FUND
o LIBERTY ALL-STAR LARGE CAP GROWTH FUND
Class Z Shares
Advised by Liberty Asset Management Company
The following eligible institutional
investors may purchase Class Z shares:
(i) any retirement plan with aggregate
assets of at least $5 million at the time of
purchase of Class Z shares and which
purchases shares directly from Liberty
Funds Distributor, Inc., the Funds'
distributor, or through a third party
broker-dealer, (ii) any insurance company,
trust company or bank purchasing shares
for its own account; and (iii) any
endowment, investment company or
foundation. In addition, Class Z shares
may be purchased directly or by exchange
by any clients of investment advisory
affiliates of the distributor provided that
the clients meet certain criteria
established by the distributor and its
affiliates.
Although these securities have been
registered with the Securities and
Exchange Commission, the Commission
has not approved or disapproved any
shares offered in this prospectus or
determined whether in this prospectus is
accurate or complete. Any representation
to the contrary is a criminal offense.
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
<PAGE>
TABLE OF CONTENTS
THE FUNDS......................................................................
Investment Goals.......................................................
Primary Investment Strategies..........................................
Primary Investment Risks...............................................
Performance History....................................................
Your Expenses..........................................................
YOUR ACCOUNT...................................................................
How to Buy Shares......................................................
Sales Charges..........................................................
How to Exchange Shares.................................................
How to Sell Shares.....................................................
Distribution and Service Fees..........................................
Other Information About Your Account...................................
MANAGING THE FUNDS.............................................................
Investment Advisor.....................................................
Portfolio Managers.....................................................
Portfolio Manager Performance Information..............................
OTHER INVESTMENT
STRATEGIES AND RISKS...........................................................
FINANCIAL HIGHLIGHTS...........................................................
<PAGE>
THE FUNDS
INVESTMENT GOALS
LIBERTY ALL-STAR SMALL CAP GROWTH FUND (Small Cap Fund) seeks long-term capital
appreciation by investing primarily in equity securities issued by small
companies.
LIBERTY ALL-STAR MID CAP GROWTH FUND (Mid Cap Fund) seeks long-term capital
appreciation by investing primarily in equity securities issued by medium-sized
companies.
LIBERTY ALL-STAR LARGE CAP GROWTH FUND (Large Cap Fund) seeks long-term capital
appreciation by investing primarily in equity securities issued by large
companies.
[In left margin column]
The advisor continuously monitors the
performance and investment styles of each
Fund's Portfolio Manager. From time to time the
advisor may recommend changes of the Portfolio
Manager based on factors such as changes in the
Portfolio Manager's investment style, a
deterioration in the Portfolio Manager's
performance relative to that of other investment
management firms practicing a similar style, or
adverse changes in ownership or personnel.
PRIMARY INVESTMENT STRATEGIES
Under normal market conditions, each Fund invests primarily in equity and
equity related securities, which include common stocks, bonds convertible into
stocks, warrants and other rights to purchase stocks, that demonstrate the
potential for continuing, above-average growth.
The Funds' advisor, Liberty Asset Management Company (LAMCO), allocates each
Fund's portfolio assets to one or more independent investment management
organizations (Portfolio Managers). There is one Portfolio Manager for each
Fund as of the date of this Prospectus. Each Fund's Portfolio Manager and
investment strategy are described below.
The Portfolio Manager for the SMALL CAP FUND is Westwood Management
Corporation. The Small Cap Fund primarily invests in a portfolio of equity
securities issued by small companies. These smaller companies have a market
capitalization (defined as shares outstanding times current market price) of
between $100 million and $1.5 billion at the time of the Fund's initial
investment. The Fund may invest in relatively new or unseasoned companies,
which are in their early stages of development, or small companies in new and
emerging industries. In selecting securities for the Fund, the Portfolio
Manager considers companies that offer:
<PAGE>
o an earnings growth rate exceeding the Fund's benchmark, the Russell
2000 Growth Index
o an increasing return on equity
o a low debt/equity ratio
o continuous earnings per share and sales growth
o a recent positive earnings surprise
The Portfolio Manager closely monitors the issuers and will sell a stock if the
stock achieves 90% of its price objective and has limited further potential for
price increase, the forecasted price/earnings ratio exceeds the future
forecasted growth rate and/or the issuer suffers an earnings disappointment.
The Portfolio Manager for the MID CAP FUND is TCW Funds Management, Inc. The
Mid Cap Fund invests primarily in equity securities issued by medium-sized
companies which are characterized as "growth" companies according to criteria
established by the Portfolio Manager. In managing the Fund, the Portfolio
Manager will focus on emerging companies that exhibit this characteristic. The
Fund may purchase and sell convertible securities.
The Portfolio Manager uses a "bottom-up" approach to identify securities for
investment. First, the Portfolio Manager uses quantitative and qualitative
criteria to screen companies. The Portfolio Manager then subjects companies
that make it through this screening process to fundamental analysis, which
generally looks for at least some of the following factors:
o a demonstrated record of consistent earnings growth or the potential
to grow earnings
o an ability to earn an attractive return on equity
o a price/earnings ratio which is less than the Portfolio Manager's
internally estimated three-year earnings growth rate
o a large and growing market share
o a strong balance sheet
o significant ownership interest by management and a strong management
team
The Portfolio Manager for the LARGE CAP FUND is TCW Funds Management, Inc. The
Large Cap Fund invests primarily in equity securities issued by large
companies. In managing the Fund, the Portfolio Manager will seek to achieve
superior long-term returns by owning shares in companies that are believed to
have strong and enduring business models and inherent advantages over their
competitors. The Fund may purchase and sell convertible securities and foreign
securities.
<PAGE>
* * * * * * * * * *
Additional strategies that are not primary investment strategies and the risks
associated with them are described below under "Other Investment Strategies and
Risks."
PRIMARY INVESTMENT RISKS
The primary risks of investing in each Fund are described below. There are many
circumstances (including additional risks that are not described here) which
could prevent a Fund from achieving its goals. It is possible to lose money by
investing in a Fund. The performance of each Fund depends on the performance of
the stock markets in the United States and in foreign countries and on the
performance of the individual stocks in which it invests. The value of each
Fund will vary from day to day, reflecting changes in the values of the
securities held by such Fund. Each of the Funds is subject (in varying degrees)
to the following primary risks:
Market risk is the risk that the price of a security held by a Fund will fall
due to changing market, economic or political conditions.
Growth securities, because they tend to reflect future expectations about their
issuers, may be particularly sensitive to market movements. The prices of
growth securities may fall if expectations about their issuers are not met.
Smaller companies are more likely than medium-sized and larger companies to
have limited product lines, operating histories, markets or financial
resources. They may depend heavily on a small management team. Stocks of
smaller companies may trade less frequently, may trade in smaller volumes and
may fluctuate more sharply in price than stocks of medium-sized and larger
companies. In addition, they may not be widely followed by the investment
community, which can lower the demand for their stock.
The securities issued by mid-capitalization companies may have more risk than
those of larger companies. These securities may be more susceptible to market
downturns, and their prices could be more volatile.
Foreign securities are subject to special risks. Foreign stock markets can be
extremely volatile. Fluctuations in currency exchange rates may impact the
value of foreign securities without a change in the intrinsic value of those
securities. The liquidity of foreign securities may be more limited than
domestic securities, which means that a Fund may, at times, be unable to sell
foreign securities at desirable prices. Brokerage commissions, custodial fees
and other fees are generally higher for foreign investments. In addition,
foreign governments may impose withholding taxes which would reduce the amount
of income available to distribute to shareholders. Other risks include the
following: possible delays in the settlement of transactions; less publicly
available information about companies; the impact of political, social or
diplomatic events; and possible seizure, expropriation or nationalization of
the company or its assets.
As non-diversified mutual funds, the Mid Cap Fund and the Large Cap Fund are
allowed to invest a greater percentage of their assets in the securities of a
<PAGE>
single issuer. This may concentrate issuer risk and, therefore, the Funds may
have an increased risk of loss compared to a similar diversified mutual fund.
PERFORMANCE HISTORY
Because each Fund is a new fund and has not completed one full year of
investment performance, information related to the Fund's performance has not
been included in this prospectus. However, information on other funds managed
by the Portfolio Managers is contained in the section "Managing the Funds -
Portfolio Manager Performance Information" in this prospectus.
<PAGE>
THE FUNDS LIBERTY ALL-STAR SMALL CAP GROWTH FUND
YOUR EXPENSES
Fees and expenses are among the factors you should consider before you invest
in a mutual fund. The tables below describe the fees and expenses you may pay
when you buy, hold and sell shares of the Fund.
SHAREHOLDER FEES1/ (PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum sales charge (load) on purchases (%) (as a
percentage of the offering price) 0.00
Maximum deferred sales charge (load) on redemptions (%)
(as a percentage of the lesser of purchase price or
redemption price) 0.00
Redemption fee (%) (as a percentage of amount redeemed, 2/
if applicable)
ANNUAL FUND OPERATING EXPENSES (DEDUCTED DIRECTLY FROM FUND ASSETS)
Management and administration fee (%) _.__
Distribution and service (12b-1) fees (%) 0.00
Other expenses (%) _.__
Total annual fund operating expenses 3/(%) _.__
- ------------------------
1/ A $10 annual fee is deducted from accounts of less than $1,000 and paid
to the transfer agent.
2/ There is a $7.50 charge for wiring sale proceeds to your bank.
3/ The Fund's advisor and administrator have voluntarily agreed to waive
advisory and administration fees and reimburse the Fund for certain expenses so
that the total annual fund operating expenses (exclusive of distribution and
service fees, brokerage commissions, interest, taxes and extraordinary
expenses, if any) will not exceed _.__%. As a result, the actual management and
administration fees for Class Z shares would be ___% and total annual fund
operating expenses for Class Z shares would be ___%, ___% and ___%,
respectively. This arrangement may be terminated by the advisor or
administrator at any time.
<PAGE>
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
1 YEAR 3 YEARS
$-.-- $-.--
[In left margin column]
UNDERSTANDING EXPENSES
SALES CHARGES are paid directly by
shareholders to the Fund's distributor.
ANNUAL FUND OPERATING EXPENSES are
deducted from the Fund. They include
management and administration fees, brokerage
costs, and administrative costs including pricing
and custody services.
EXAMPLE EXPENSES help you compare
the cost of investing in the Fund to the cost of
investing in other mutual funds. The table does
not take into account any expense reduction
arrangements discussed in the footnotes to the
Annual Fund Operating Expenses table. It uses
the following hypothetical conditions:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the
same
o Assumes reinvestment of all dividends
and distributions
<PAGE>
THE FUNDS LIBERTY ALL-STAR MID CAP GROWTH FUND
YOUR EXPENSES
Fees and expenses are among the factors you should consider before you invest
in a mutual fund. The tables below describe the fees and expenses you may pay
when you buy, hold and sell shares of the Fund.
SHAREHOLDER FEES4/ (PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum sales charge (load) on purchases (%) (as a
percentage of the offering price) 0.00
Maximum deferred sales charge (load) on
redemptions (%) (as a percentage of the lesser of
purchase price or redemption price) 0.00
Redemption fee (%) (as a percentage of amount 5/
redeemed, if applicable)
ANNUAL FUND OPERATING EXPENSES (DEDUCTED DIRECTLY FROM FUND ASSETS)
Management and administration fee (%) _.__
Distribution and service (12b-1) fees (%) _.__
Other expenses (%) _.__
Total annual fund operating expenses6/(%) _.__
- ------------------------
4/ A $10 annual fee is deducted from accounts of less than $1,000 and paid
to the transfer agent.
5/ There is a $7.50 charge for wiring sale proceeds to your bank.
6/ The Fund's advisor and administrator have voluntarily agreed to waive
advisory and administration fees and reimburse the Fund for certain expenses so
that the total annual fund operating expenses (exclusive of distribution and
service fees, brokerage commissions, interest, taxes and extraordinary
expenses, if any) will not exceed _.__%. As a result, the actual management and
administration fees for Class Z shares would be ___% and total annual fund
operating expenses for Class Z shares would be ___%. This arrangement may be
terminated by the advisor or administrator at any time.
<PAGE>
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
1 YEAR 3 YEARS
$-.-- $-.--
[In left margin column]
UNDERSTANDING EXPENSES
SALES CHARGES are paid directly by
shareholders to the Fund's distributor.
ANNUAL FUND OPERATING EXPENSES are
deducted from the Fund. They include
management and administration fees, brokerage
costs, and administrative costs including pricing
and custody services.
EXAMPLE EXPENSES help you compare
the cost of investing in the Fund to the cost of
investing in other mutual funds. The table does
not take into account any expense reduction
arrangements discussed in the footnotes to the
Annual Fund Operating Expenses table. It uses
the following hypothetical conditions:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the
same
o Assumes reinvestment of all dividends
and distributions
<PAGE>
THE FUNDS LIBERTY ALL-STAR LARGE CAP GROWTH FUND
YOUR EXPENSES
Fees and expenses are among the factors you should consider before you invest
in a mutual fund. The tables below describe the fees and expenses you may pay
when you buy, hold and sell shares of the Fund.
SHAREHOLDER FEES7/ (PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum sales charge (load) on purchases (%) (as a
percentage of the offering price) 0.00
Maximum deferred sales charge (load) on
redemptions (%)(as a percentage of the lesser of
purchase price or redemption price) 0.00
Redemption fee (%) (as a percentage of amount 8/
redeemed, if applicable)
ANNUAL FUND OPERATING EXPENSES (DEDUCTED DIRECTLY FROM FUND ASSETS)
Management and administration fee (%) _.__
Distribution and service (12b-1) fees (%) _.__
Other expenses (%) _.__
Total annual fund operating expenses 9/ (%) _.__
- ------------------------
7/ A $10 annual fee is deducted from accounts of less than $1,000 and paid
to the transfer agent.
8/ There is a $7.50 charge for wiring sale proceeds to your bank.
9/ The Fund's advisor and administrator have voluntarily agreed to waive
advisory and administration fees and reimburse the Fund for certain expenses so
that the total annual fund operating expenses (exclusive of distribution and
service fees, brokerage commissions, interest, taxes and extraordinary
expenses, if any) will not exceed _.__%. As a result, the actual management and
administration fees for Class Z shares would be ___% and total annual fund
operating expenses for Class Z shares would be ___%. This arrangement may be
terminated by the advisor or administrator at any time.
<PAGE>
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
1 YEAR 3 YEARS
$-.-- $-.--
[In left margin column]
UNDERSTANDING EXPENSES
SALES CHARGES are paid directly by
shareholders to the Fund's distributor.
ANNUAL FUND OPERATING EXPENSES are
deducted from the Fund. They include
management and administration fees, brokerage
costs, and administrative costs including pricing
and custody services.
EXAMPLE EXPENSES help you compare
the cost of investing in the Fund to the cost of
investing in other mutual funds. The table does
not take into account any expense reduction
arrangements discussed in the footnotes to the
Annual Fund Operating Expenses table. It uses
the following hypothetical conditions:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same
o Assumes reinvestment of all dividends and distributions
<PAGE>
YOUR ACCOUNT
HOW TO BUY SHARES
Your financial advisor can help you establish an appropriate investment
portfolio, buy shares and monitor your investments. When a Fund receives your
purchase request in "good form," your shares will be bought at the next
calculated public offering price. "Good form" means that you placed your order
with your brokerage firm or your payment has been received and your application
is complete, including all necessary signatures.
[In left margin column]
WHO IS ELIGIBLE TO BUY CLASS Z
SHARES?
The following eligible institutional investors may
purchase Class Z shares: (i) any retirement plan
with aggregate assets of at least $5 million at the
time of purchase of Class Z shares and which
purchases shares directly from the distributor or
through a third party broker-dealer; (ii) any
insurance company, trust company or bank
purchasing shares for its own account; and (iii)
any endowment, investment company or
foundation. In addition, Class Z shares may be
purchased directly or by exchange by any clients
of investment advisory affiliates of the
distributor provided that the clients meet certain
criteria established by the distributor and its
affiliates.10/
OUTLINED BELOW ARE THE VARIOUS OPTIONS FOR BUYING SHARES:
METHOD INSTRUCTIONS
Through your Your financial advisor can help you establish your
financial advisor account and buy Fund shares on your behalf.
By check For new accounts, send a completed application and check
(new account) made payable to the Fund to the transfer agent, Liberty
Funds Services, Inc., P.O. Box 1722, Boston, MA
02105-1722.
By check For existing accounts, fill out and return the
(existing account) additional investment stub included in your quarterly
statement, or send a letter of instruction including
- -----------------------
10/ Each Fund reserves the right to change the criteria for eligible
investors. Each Fund also reserves the right to refuse a purchase order for any
reason, including if it believes that doing so would be in the best interest of
the Fund and its shareholders.
<PAGE>
your Fund name and account number with a check made
payable to the Fund to Liberty Funds Services, Inc.,
P.O. Box 1722, Boston, MA 02105-1722.
By exchange You or your financial advisor may acquire shares by
exchanging shares you own in one fund for shares of the
same class or Class A of the Fund at no additional cost.
For federal income tax purposes, an exchange is
ordinarily a taxable event that may result in a taxable
gain or loss. There may be an additional charge if
exchanging from a money market fund. To exchange by
telephone, call 1-800-422-3737.
By wire You may purchase shares by wiring money from your bank
account to your fund account. To wire funds to your fund
account, call 1-800-422-3737 to obtain a control number
and the wiring instructions.
By electronic You may purchase shares by electronically transferring
funds money from your bank account to your fund account by
transfer calling 1-800-422-3737. Electronic funds transfers may
take up to two business days to settle and be considered
in "good form." You must set up this feature prior to
your telephone request. Be sure to complete the
appropriate section of the application.
Automatic You can make monthly or quarterly investments
investment plan automatically from your bank account to your fund
account. You can select a pre-authorized amount to be
sent via electronic funds transfer. Be sure to complete
the appropriate section of the application for this
feature.
By dividend You may automatically invest dividends distributed by
diversification one fund into the same class of shares of the Fund at no
additional sales charge. You will normally have to pay
federal income taxes, and any state or local taxes, on
the distributions you receive from a Fund, whether you
take the distributions in cash or reinvest them in
additional shares. To invest your dividends in another
fund, call 1-800-345-6611.
[In left margin column]
CHOOSING A SHARE CLASS
The Funds offers one class of shares in
this prospectus -- CLASS Z.
The Funds also offer three additional
classes of shares -- Class A, B and C
shares are available through a separate
prospectus. Each share class has its own
sales charge and expense structure.
Determining which share class is best for
<PAGE>
you depends on the dollar amount you are
investing and the number of years for
which you are willing to invest. Based on
your personal situation, your investment
advisor can help you decide which class of
shares makes the most sense for you. In
general, anyone who is eligible to
purchase Class Z shares, which do not
incur Rule 12b-1 fees or sales charges,
should do so in preference over other
classes.
SALES CHARGES
Your purchases of Class Z shares generally are at net asset value, which is the
value of a Fund share excluding any sales charge. Class Z shares are not
subject to an initial sales charge when purchased, or a contingent deferred
sales charge when sold.
HOW TO EXCHANGE SHARES
You may exchange your shares for shares of the same share class of another fund
or Class A shares of another fund distributed by Liberty Funds Distributor,
Inc. at net asset value. Unless your account is part of a tax-deferred
retirement plan, an exchange is a taxable event. Therefore, you may realize a
gain or a loss for tax purposes. A Fund may terminate your exchange privilege
if the advisor determines that your exchange activity is likely to adversely
impact its ability to manage the Fund. To exchange by telephone, call
1-800-422-3737.
HOW TO SELL SHARES
Your financial advisor can help you determine if and when you should sell your
shares. You may sell shares of a Fund on any regular business day that the New
York Stock Exchange (NYSE) is open.
When a Fund receives your sales request in "good form," shares will be sold
at the next calculated price. In "good form" means that money used to purchase
your shares is fully collected. When selling shares by letter of instruction,
"good form" also means (i) your letter has complete instructions, the proper
signatures and signature guarantees, and (ii) any other required documents are
attached. For additional documents required for sales by corporations, agents,
fiduciaries and surviving joint owners, please call 1-800-345-6611. Retirement
plan accounts have special requirements; please call 1-800-799-7526 for more
information.
The Funds will generally send proceeds from the sale to you within seven days
(usually on the next business day after your request is received in "good
form"). However, if you purchased your shares by check, a Fund may delay
sending the proceeds from the sale of your shares until the check clears which
may take up to 15 days after your purchase. No interest will be paid on
uncashed redemption checks.
<PAGE>
OUTLINED BELOW ARE THE VARIOUS OPTIONS FOR SELLING SHARES:
- -------------------------------------------------------------------------------
METHOD INSTRUCTIONS
Through your You may call your financial advisor to place your sell
financial advisor order. To receive the current trading day's price, your
financial advisor firm must receive your request prior
to the close of the NYSE, usually 4:00 p.m. Eastern
time.
- -------------------------------------------------------------------------------
By exchange You or your financial advisor may sell shares by
exchanging from a Fund into Class Z or Class A shares of
another fund at no additional cost. To exchange by
telephone, call 1-800-422-3737.
- -------------------------------------------------------------------------------
By telephone You or your financial advisor may sell shares by
telephone and request that a check be sent to your
address of record by calling 1-800-422-3737, unless you
have notified the Fund of an address change within the
previous 30 days. The dollar limit for telephone sales
is $100,000 in a 30-day period. You do not need to set
up this feature in advance of your call. Certain
restrictions apply to retirement accounts. For details,
call 1-800-345-6611.
- -------------------------------------------------------------------------------
By mail You may send a signed letter of instruction to the
address below. In your letter of instruction, note the
Fund's name, share class, account number, and the dollar
value or number of shares you wish to sell. All account
owners must sign the letter, and signatures must be
guaranteed by either a bank, a member firm of a national
stock exchange or another eligible guarantor
institution. Additional documentation is required for
sales by corporations, agents, fiduciaries, surviving
joint owners and individual retirement account owners.
For details, call 1-800-345-6611. Mail your letter of
instruction to Liberty Funds Services, Inc., P.O. Box
1722, Boston, MA 02105-1722.
- -------------------------------------------------------------------------------
By wire You may sell shares and request that the proceeds be
wired to your bank. You must set up this feature prior
to your telephone request. Be sure to complete the
appropriate section of the account application for this
feature.
- -------------------------------------------------------------------------------
By electronic You may sell shares and request that the proceeds be
funds transfer electronically transferred to your bank. Proceeds may
take up to two business days to be received by your
bank. You must set up this feature prior to your
request. Be sure to complete the appropriate section of
the account application for this feature.
- -------------------------------------------------------------------------------
<PAGE>
OTHER INFORMATION ABOUT YOUR ACCOUNT
HOW A FUND'S SHARE PRICE IS DETERMINED The price of each Fund's Class Z shares
is based on its net asset value (NAV). The NAV is determined at the close of
regular trading on the NYSE, usually 4:00 p.m. Eastern time, on each business
day that the NYSE is open (typically Monday through Friday). The NYSE is closed
on most national holidays and Good Friday.
When you request a transaction, it will be processed at the NAV next determined
after your request is received in "good form" by the distributor. In most
cases, in order to receive that day's price, the distributor must receive your
order before that day's transactions are processed. If you request a
transaction through your financial advisor's firm, the firm must receive your
order by the close of trading on the NYSE to receive that day's price.
Each Fund determines its NAV for its Class Z shares by dividing the total net
assets attributable to Class Z shares by the number of Class Z shares
outstanding. In determining the NAV, each Fund must determine the price of each
security in its portfolio at the close of each trading day. Because each Fund
may hold securities that are traded on foreign exchanges, the value of each
Fund's securities may change on days when shareholders will not be able to buy
or sell Fund shares. This will affect the Funds' NAV on the day it is next
determined. Securities for which market quotations are available are valued
each day at the current market value. However, where market quotations are
unavailable, or when the advisor believes that subsequent events have made them
unreliable, the Funds may use other data to determine the fair value of the
securities.
You can find the daily prices of some share classes for each Fund in most major
daily newspapers under the caption "Liberty." You can find daily prices for all
share classes by visiting the Funds' web site at www.libertyfunds.com.
ACCOUNT FEES If your account value falls below $1,000 (other than as a result
of depreciation in share value) you may be subject to an annual account fee of
$10. This fee is deducted from the account in June each year. Approximately 60
days prior to the fee date, the Funds' transfer agent will send you written
notification of the upcoming fee. If you add money to your account and bring
the value above $1,000 prior to the fee date, the fee will not be deducted.
SHARE CERTIFICATES Share certificates are not available for Class Z shares.
DIVIDENDS, DISTRIBUTIONS, AND TAXES Each Fund has the potential to make the
following distributions:
[In left margin column]
UNDERSTANDING FUND
DISTRIBUTIONS
Each Fund earns income from the
securities it holds. Each Fund also may
realize capital gains and losses on sales of
its securities. Each Fund distributes
<PAGE>
substantially all of its net investment
income and capital gains to shareholders.
As a shareholder, you are entitled to a
portion of the Fund's income and capital
gains based on the number of shares you
own at the time these distributions are
declared.
TYPES OF DISTRIBUTIONS
Dividend Represents interest and dividends earned from securities held
by the Fund.
Capital gains Represents net long-term capital gains on sales of securities
held for more than 12 months and net short-term capital gains,
which are gains on sales of securities held for a 12-month
period or less.
Each Fund distributes dividends quarterly and any capital gains (including
short-term capital gains) at least annually. You can choose one of the options
listed in the table below for these distributions when you open your
account.11/ To change your distribution option call 1-800-345-6611.
DISTRIBUTION OPTIONS
Reinvest all distributions in additional shares of your current fund
- -------------------------------------------------------------------------------
Reinvest all distributions in shares of another fund
- -------------------------------------------------------------------------------
Receive dividends in cash (see options below) and reinvest capital gains 12/
- -------------------------------------------------------------------------------
Receive all distributions in cash (with one of the following options)12/:
o send the check to your address of record
o send the check to a third party address
o transfer the money to your bank via electronic funds transfer
TAX CONSEQUENCES As long as a Fund qualifies for treatment as a regulated
investment company (which each Fund intends to do in its first and each
subsequent taxable year), it pays no federal income tax on the earnings it
distributes to shareholders. You will normally have to pay federal income taxes
- ---------------------
11/ If you do not indicate on your application your preference for
handling distributions, each Fund will automatically reinvest all distributions
in additional shares of the Fund.
12/ Distributions of $10 or less will automatically be reinvested in
additional Fund shares. If you elect to receive distributions by check and the
check is returned as undeliverable, or if you do not cash a distribution check
within six months of the check date, the distribution will be reinvested in
additional shares of the Fund.
<PAGE>
on the distributions you receive from a Fund, whether you take the
distributions in cash or reinvest them in additional shares. Depending on the
state where you live, distributions may also be subject to state and local
income taxes.
In general, any distributions of dividends, interest and short-term capital
gains are taxable as ordinary income. Distributions designated by a Fund as
capital gain dividends are generally taxable as long-term capital gains,
regardless of how long you have held your shares in that Fund. Some dividends
paid by a Fund in January may be taxable as if they had been paid the previous
December. You will be provided with information each year regarding the amount
of ordinary income and capital gains distributed to you for the previous year
and any portion of your distribution which is exempt from state and local
taxes.
A Fund's distributions will reduce that Fund's net asset value per share.
Therefore, if you buy shares in a Fund shortly before the record date of a
distribution by that Fund, you may pay the full price for the shares and then
effectively receive a portion of the purchase price back as a taxable
distribution.
When you redeem, sell or exchange shares of a Fund, it is generally considered
a taxable event for you. Depending on the purchase price and the sale price of
the shares you redeem, sell or exchange, you may have a gain or loss on the
transaction. You are responsible for any tax liabilities generated by your
transaction.
Your investment in a Fund may have additional personal tax implications. Please
consult your tax advisor on federal, state, local or other applicable tax laws.
MANAGING THE FUNDS
INVESTMENT ADVISOR
Liberty Asset Management Company (LAMCO), located at Federal Reserve Plaza, 600
Atlantic Avenue, Boston, Massachusetts 02110, is the investment advisor for
each Fund. In its duties as investment advisor, LAMCO runs each Fund's
day-to-day business, including placing all orders for the purchase and sale of
portfolio securities. LAMCO has been an investment advisor since 1985. As of
February 29, 2000, LAMCO managed over $__ billion in assets.
Each Fund pays the advisor a fee at the annual rate of ____% of the average
daily net assets of the Fund.
LAMCO is a manager of other investment managers which the advisor recommends to
the Board of Trustees for appointment pursuant to a portfolio management
agreement among the Trust, LAMCO and the Portfolio Manager. That management
agreement permits each Portfolio Manager to have full investment discretion and
authority over investment of all or a portion of a Fund's assets.
No one individual at LAMCO is responsible for LAMCO's investment management of
the Funds. The following Portfolio Managers manage all or a portion of the
Funds' assets:
<PAGE>
o Small Cap Fund: Westwood Management Corporation
o Mid Cap Fund: TCW Funds Management, Inc.
o Large Cap Fund: TCW Funds Management, Inc.
Out of its management fees, the advisor pays Westwood Management Corporation a
fee at the annual rate of ____% of the average daily net assets of the portion
of the Small Cap Fund's assets assigned to Westwood. The agreements with TCW
Funds Management, Inc. provide for a fee at an annual rate of ____% of the
average daily net assets of the portion of the Mid Cap Fund's assets assigned
to TCW and a fee at an annual rate of ____% of the average daily net assets of
the portion of the Large Cap Fund's assets assigned to TCW.
A more complete description of each Portfolio Manager is included in the SAI.
[The Trust and LAMCO have received an exemptive order from the Securities and
Exchange Commission that permits each Fund to change or add Portfolio Managers
without a vote of the shareholders. Information regarding any new Portfolio
Manager is sent to the Fund's shareholders within 90 days following the
effective date of the change.]
PORTFOLIO MANAGERS
No one individual at LAMCO is responsible for LAMCO's investment management of
the Funds. The following individuals are responsible for the management of the
assets of the Funds assigned to the particular Portfolio Manager.
LYNDA J. CALKIN, Senior Vice President of Westwood Management Corporation since
1993, manages the assets of the Small Cap Fund.
DOUGLAS S. FOREMAN, Group Managing Director and Chief Investment Officer - U.S.
Equities of TCW Funds Management, Inc. since 1994, and CHRISTOPHER J. AINLEY,
Managing Director of TCW Funds Management, Inc. since 1994, manage the assets
of the Mid Cap Fund.
GLEN A. BICKERSTAFF, Managing Director - U.S. Equities of TCW Funds Management,
Inc. since 1998, manages the assets of the Large Cap Fund. Prior to joining TCW
in 1998, Mr. Bickerstaff was a Vice President and Senior Portfolio Manager at
Transamerica Investment Services. TCW is a wholly-owned subsidiary of The TCW
Group, Inc.
<PAGE>
PORTFOLIO MANAGER PERFORMANCE INFORMATION
SMALL CAP EQUITY FUND. The table below sets forth the average annual returns of
the Gabelli Westwood SmallCap Equity Fund (Gabelli Westwood SmallCap Fund), a
diversified, open-end management company managed by Westwood Management
Corporation (Westwood). The Gabelli Westwood SmallCap Fund is the only mutual
fund managed by Westwood with investment goals, policies and restrictions
substantially similar to the Small Cap Fund and has been managed in
substantially the same way that the Small Cap Fund is to be managed by
Westwood. Lynda J. Calkin of Westwood has been primarily responsible for the
day-to-day portfolio management of the Gabelli Westwood SmallCap Fund since its
inception on July 31, 1997. The data is provided to illustrate the past
performance of Westwood in managing a substantially similar fund as measured
against the Russell 2000 Growth Index and the Lipper Small Cap Average and does
not represent the performance of the Small Cap Fund. Investors should not
consider this performance data as an indication of future performance of the
Small Cap Fund or of Westwood. The returns are not intended to predict or
suggest the returns that might be experienced by the Small Cap Fund or an
individual investing in the Small Cap Fund.
The annual returns presented below are unaudited. The use of a methodology
different from that used to calculate the performance data set forth below
could result in different performance data.
All returns presented were calculated on a total return basis and include all
dividends and interest, accrued income and realized and unrealized gains and
losses, and deductions for brokerage commissions and execution costs. Returns
for each period are adjusted to assume that all expenses and fees of the Class
Z shares of THE Small Cap Fund which are presently in effect were deducted
during such periods. All returns are for the periods ended on December 31,
1999.
ANNUAL TOTAL RETURNS
- ------------------------------------------------------------------
SINCE
1 YEAR INCEPTION
- ------------------------------------------------------------------
GABELLI WESTWOOD SMALLCAP EQUITY
FUND (1) ........................ ______% ______%
- ------------------------------------------------------------------
RUSSELL 2000 GROWTH INDEX (2).... ______% ______%
- ------------------------------------------------------------------
LIPPER SMALL CAP AVERAGE (3) .... ______% ______%
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- -----------
(1) Commencement of investment operations is July 31, 1997.
(2) The Russell 2000 Growth Index is an unmanaged index that measures the
performance of those companies in the Russell 2000 with higher price-to-book
ratios and higher forecasted growth values. The Russell 2000 contains the 2000
smallest companies in the Russell 3000, which, in turn, contains the 3000
largest companies in the U.S. based on total market capitalization. The
performance of the Index does not include fees or expenses.
(3) The Lipper Small Cap Average, which is calculated by Lipper Inc., is
comprised of __________. The performance of the Lipper Small Cap Average does
not include fees or expenses.
<PAGE>
MID CAP EQUITY FUND. The table below sets forth the average annual returns of
the TCW Galileo Aggressive Growth Equities Fund (Aggressive Growth Fund), a
non-diversified, open-end management company managed by TCW Funds Management,
Inc. (TCW). The Aggressive Growth Fund is the only mutual fund managed by TCW
with investment goals, policies and restrictions substantially similar to the
Mid Cap Fund and has been managed in substantially the same way that the Mid
Cap Fund is to be managed by TCW. Douglas S. Foreman and Christopher J. Ainley
have been responsible for the day-to-day portfolio management of the Aggressive
Growth Fund since its inception in June of 1996. The data is provided to
illustrate the past performance of TCW in managing a substantially similar fund
as measured against the Russell Midcap Growth Index and the Morningstar Mid-Cap
Growth Category and does not represent the performance of the Mid Cap Fund.
Investors should not consider this performance data as an indication of future
performance of the Mid Cap Fund or of TCW. The returns are not intended to
predict or suggest the returns that might be experienced by the Mid Cap Fund or
an individual investing in the Mid Cap Fund.
The annual returns presented below are unaudited. The use of a methodology
different from that used to calculate the performance data set forth below
could result in different performance data.
All returns presented were calculated on a total return basis and include all
dividends and interest, accrued income and realized and unrealized gains and
losses, and deductions for brokerage commissions and execution costs. Returns
for each period are adjusted to assume that all expenses and fees of the Class
Z shares of the Mid Cap Fund which are presently in effect were deducted during
such periods. All returns are for the periods ended on December 31, 1999.
ANNUAL TOTAL RETURNS
- ----------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS INCEPTION
- ----------------------------------------------------------------------------
TCW GALILEO AGGRESSIVE GROWTH
EQUITIES FUND (4) ............... ______% ______% ______%
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RUSSELL MIDCAP GROWTH INDEX(5)... ______% ______% ______%
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MORNINGSTAR MID-CAP GROWTH
CATEGORY(6) ..................... ______% ______% ______%
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- -----------
(4) Commencement of investment operations is June 3, 1996.
(5) The Russell Midcap Growth Index is an unmanaged index that measures
the performance of those Russell Midcap companies with higher price-to-book
ratios and higher forecasted growth values. The stocks are also members of the
Russell 1000 Growth Index. The performance of the Index does not include fees
or expenses.
(6) The Morningstar Mid-Cap Growth Category is comprised of
________________. The performance of the Morningstar Mid-Cap Growth Category
does not include fees or expenses.
<PAGE>
LARGE CAP EQUITY FUND. The table below sets forth the average annual returns of
the TCW Galileo Select Equities Fund (Select Equities Fund), a non-diversified,
open-end management company managed by TCW Funds Management, Inc. (TCW). The
average annual returns are for periods since May __, 1998, the date on which
Gary Bickerstaff of TCW became the portfolio manager of the Select Equities
Fund. Since May __, 1998, the Select Equities Fund has been managed in
substantially the same way as the Large Cap Fund is to be managed by Mr.
Bickerstaff. The Select Equities Fund is the only mutual fund managed by TCW
with investment goals, policies and restrictions substantially similar to the
Large Cap Fund and has been, since May __, 1998, managed by Mr. Bickerstaff in
substantially the same way that the Large Cap Fund is to be managed by Mr.
Bickerstaff.
The annual returns presented below are unaudited. The use of a methodology
different from that used to calculate the performance data set forth below
could result in different performance data.
All returns presented were calculated on a total return basis and include all
dividends and interest, accrued income and realized and unrealized gains and
losses, and deductions for brokerage commissions and execution costs.
Returns for each period are adjusted to assume that all expenses and fees of
the Class Z shares of the Large Cap Fund which are presently in effect were
deducted during such periods. All returns are for the periods ended on December
31, 1999.
ANNUAL TOTAL RETURNS
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SINCE
1 YEAR MAY __, 1998
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TCW GALILEO SELECT EQUITIES
FUND................................. ______% ______%
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STANDARD & POOR'S 500 ______% ______%
COMPOSITE INDEX (7) .................
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RUSSELL 1000 GROWTH INDEX(8) ........ ______% ______%
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MORNINGSTAR LARGE GROWTH
CATEGORY (9) ........................ ______% ______%
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- -----------
(7) The Standard & Poor's 500 Composite Index is an unmanaged index of
common stocks that is considered to be generally representative of the United
States stock market. The performance of the Index does not include fees or
expenses.
(8) The Russell 1000 Growth Index is an unmanaged index that measures the
performance of those companies in the Russell 1000 (which contains the 1000
largest companies in the U.S. based on total market capitalization) with higher
price-to-book ratios and higher forecasted growth values. The performance of
the Index does not include fees or expenses.
(9) The Morningstar Large Growth Category is comprised of
_______________. The performance of the Morningstar Large Growth Category does
not include fees or expenses.
Prior to joining TCW, Mr. Bickerstaff was the portfolio manager of the
Transamerica Premier Equity Fund from its inception, October 1, 1995, through
May 18, 1998. As the portfolio manager of the Transamerica Premier Equity Fund,
Mr. Bickerstaff had full discretionary authority over the selection of
investments for, and was responsible for, the day-to-day management of that
fund. Average annual returns for the one year period ended December 31, 1997
<PAGE>
and for the entire period during which Mr. Bickerstaff managed that fund
compared with the performance of the Standard and Poor's 500 Composite Index,
the Russell 1000 Growth Index and the Morningstar Large Growth Category were:
<TABLE>
<CAPTION>
<S> <C> <C>
ANNUAL TOTAL RETURNS
- ---------------------------------------------------------------------------------------
SINCE
INCEPTION
1 YEAR (OCTOBER 1, 1995)
ENDED DECEMBER 31, 1997 THROUGH DECEMBER 31,1997
- ---------------------------------------------------------------------------------------
TRANSAMERICA PREMIER EQUITY
FUND (10) ..................... ______% ______%
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S&P 500 INDEX(11) ............. ______% ______%
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RUSSELL 1000 GROWTH INDEX(12).. ______% ______%
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MORNINGSTAR LARGE GROWTH
CATEGORY(13) .................. ______% ______%
- ---------------------------------------------------------------------------------------
</TABLE>
- -----------
(10) Average annual total returns reflect changes in share prices and
reinvestment of dividends and distributions and is net of all actual fees and
expenses incurred by the Transamerica Premier Equity Fund. [Discuss expense
ratio of Transamerica for periods indicated.] Using the expense ratio of the
Class Z shares of the Large Cap Fund, the Transamerica Premier Equity Fund
performance outlined above would be [higher/lower].
(11) The Standard & Poor's 500 Composite Index is an unmanaged index of
common stocks that is considered to be generally representative of the United
States stock market. The performance of the Index does not include fees or
expenses.
(12) The Russell 1000 Growth Index is an unmanaged index that measures the
performance of those companies in the Russell 1000 (which contains the 1000
largest companies in the U.S. based on total market capitalization) with higher
price-to-book ratios and higher forecasted growth values. The performance of
the Index does not include fees or expenses.
(13) The Morningstar Large Growth Category is comprised of
________________. The performance of the Morningstar Large Growth Category does
not include fees or expenses.
The data in the tables above is provided to illustrate the past performance of
TCW and Mr. Bickerstaff in managing substantially similar funds as measured
against the Standard and Poor's 500 Composite Index, the Russell 1000 Growth
Index and the Morningstar Large Growth Category and does not represent the
performance of the Large Cap Fund. Investors should not consider this
performance data as an indication of future performance of the Large Cap Fund
or of TCW or Mr. Bickerstaff. The returns are not intended to predict or
suggest the returns that might be experienced by the Large Cap Fund or an
individual investing in the Large Cap Fund.
OTHER INVESTMENT STRATEGIES AND RISKS
Each Fund's primary investment strategies and their associated risks are
described above. This section describes other investments a Fund may make and
the risks associated with them. In seeking to achieve its goal, each Fund may
invest in various types of securities and engage in various investment
techniques which are not the principal focus of the Fund and therefore are not
described in this prospectus. These types of securities and investment
practices are identified and discussed in the Funds' Statement of Additional
Information, which you may obtain free of charge (see back cover). Approval by
a Fund's shareholders is not required to modify or change any of the Fund's
investment goal or investment strategies.
<PAGE>
[In left margin column]
UNDERSTANDING EACH FUND'S OTHER
INVESTMENTS AND RISKS
Each Fund's primary investments and risks are
described under "The Funds Primary
Investment Strategies" and "The Funds -
Primary Investment Risks." In seeking to meet
its investment goal, each Fund may also invest
in other securities and use certain investment
techniques. These securities and investment
techniques offer opportunities and carry various
risks.
Each Fund may elect not to buy any of these
securities or use any of these techniques unless it
believes that doing so will help the Fund achieve
its investment goal. A Fund may not always
achieve its investment goal.
Additional information about each Fund's
securities and investment techniques, as well as
each Fund's fundamental and non-fundamental
investment policies, is contained in the
Statement of Additional Information.
DERIVATIVE STRATEGIES
Each Fund may enter into a number of hedging strategies, including those that
employ futures and options, to gain or reduce exposure to particular securities
or markets. These strategies, commonly referred to as derivatives, involve the
use of financial instruments whose value depend on, or are derived from, the
value of an underlying security, index or currency. Each Fund may use these
strategies to adjust the Fund's sensitivity to changes in interest rates or for
other hedging purposes (i.e., attempting to offset a potential loss in one
position by establishing an interest in an opposite position). Derivative
strategies involve the risk that they may exaggerate a loss, potentially losing
more money than the actual cost of the derivative, or limit a potential gain.
Also, with some derivative strategies there is the risk that the other party to
the transaction may fail to honor its contract terms, causing a loss to the
Fund.
CONVERTIBLE SECURITIES
A convertible security is a fixed-income security, such as a bond or preferred
stock, which may be converted at a stated price within a specified period of
time into a specified number of shares of common stock of the same or a
different issuer. Each of the Mid Cap Fund and the Large Cap Fund may invest in
convertible securities rated below investment grade. Lower rated debt
securities involve greater risk of loss due to credit deterioration and are
<PAGE>
less liquid, especially during periods of economic uncertainty or change, from
higher quality debt securities. Lower rated debt securities have the added risk
that the issuer of the security may default and not make the payment of
interest or principal.
TEMPORARY DEFENSIVE STRATEGIES
At times, the advisor may determine that adverse market conditions make it
desirable to temporarily suspend a Fund's normal investment activities. During
such times, a Fund may, but is not required to, invest in cash or high-quality,
short-term debt securities, without limit. Taking a temporary defensive position
may prevent a Fund from achieving its investment goal.
FINANCIAL HIGHLIGHTS
The Funds are newly created and have not yet issued financial statements.
<PAGE>
NOTES
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<PAGE>
FOR MORE INFORMATION
You may wish to read the Statement of Additional Information for more
information on the Funds and the securities in which they invest. The Statement
of Additional Information is incorporated into this prospectus by reference,
which means that it is considered to be part of this prospectus.
You can get free copies of reports to be issued by the Funds and the Statement
of Additional Information, request other information and discuss your questions
about the Funds by writing or calling the Funds' distributor at:
Liberty Funds Distributor, Inc.
One Financial Center Boston, MA 02111-2621
1-800-426-3750
www.libertyfunds.com
Text-only versions of all Fund documents can be viewed online or downloaded
from the Securities and Exchange Commission at www.sec.gov.
You can review and copy information about the Funds by visiting the following
location, and you can obtain copies, upon payment of a duplicating fee, by
electronic request at the e-mail address [email protected] or by writing the:
Public Reference Room
Securities and Exchange Commission
Washington, DC 20549-0102
Information on the operation of the Public Reference Room may be obtained by
calling 1-202-942-8090.
INVESTMENT COMPANY ACT FILE NUMBER:
Liberty Funds Trust IX (formerly LAMCO Trust I): 811-09095
o Liberty All-Star Small Cap Growth Fund
o Liberty All-Star Mid Cap Growth Fund
o Liberty All-Star Large Cap Growth Fund
<PAGE>
LIBERTY ALL-STAR FUNDS PROSPECTUS, JUNE 1, 2000
o LIBERTY ALL-STAR GROWTH OPPORTUNITIES FUND
Class A, B and C Shares
Advised by Liberty Asset Management Company
Although these securities have been
registered with the Securities and
Exchange Commission, the Commission
has not approved or disapproved any
shares offered in this prospectus or
determined whether in this prospectus is
accurate or complete. Any representation
to the contrary is a criminal offense.
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
<PAGE>
TABLE OF CONTENTS
THE FUND.......................................................................
Investment Goal...........................................................
Primary Investment Strategies.............................................
Underlying Liberty Funds..................................................
Primary Investment Risks..................................................
Performance History.......................................................
Your Expenses.............................................................
YOUR ACCOUNT...................................................................
How to Buy Shares.........................................................
Sales Charges.............................................................
How to Exchange Shares....................................................
How to Sell Shares........................................................
Distribution and Service Fees.............................................
Other Information About Your Account......................................
MANAGING THE FUND..............................................................
Investment Advisor........................................................
Portfolio Managers........................................................
Portfolio Manager Performance Information.................................
OTHER INVESTMENT
STRATEGIES AND RISKS...........................................................
FINANCIAL HIGHLIGHTS...........................................................
<PAGE>
THE FUND
INVESTMENT GOAL
Liberty All-Star Growth Opportunities Fund seeks long-term capital appreciation.
PRIMARY INVESTMENT STRATEGIES
The Fund does not invest directly in a portfolio of securities; rather, in
seeking to achieve its investment goal, it invests in shares of
underlying Liberty funds. Liberty Asset Management Company (LAMCO) is the
investment advisor to the Fund and to each of the underlying Liberty funds. The
underlying Liberty funds invest primarily in equity and equity related
securities, which include common stocks, bonds convertible into stocks,
warrants and other rights to purchase stocks, that demonstrate the potential
for continuing, above-average growth.
The pie chart below illustrates the expected asset allocation for the Fund
under normal market conditions:
[Pie chart illustrating the following allocations:
50% large capitalization equity securities
30% mid capitalization equity securities
20% small capitalization equity securities]
Allocation Ranges
Large Capitalization Equity Securities......40% to 60%
Mid Capitalization Equity Securities........20% to 50%
Small Capitalization Equity Securities......15% to 40%
[In left margin column]
In managing the Fund, LAMCO (advisor),
an investment advisory affiliate of Liberty Funds
Distributor, Inc., the Fund's distributor, uses an
asset allocation strategy that focuses on three
broad asset classes of equity securities - large
capitalization equity securities, mid
capitalization equity securities, and small
capitalization equity securities. The advisor
studies the long term performance of each asset
class and the relationships among the asset
classes. The advisor then determines the
optimal combination of funds that would
maximize potential returns with an acceptable
amount of risk. After determining what
percentage of the Fund's assets should be
invested in each asset class, the advisor then
invests the Fund's assets, in such proportions, in
<PAGE>
the underlying Liberty fund corresponding to
each asset class.
In general, the advisor intends to manage the Fund according to its allocation
strategy and within the allocation ranges shown above. However, the advisor
reserves the right in its discretion, without prior notice to shareholders, to
modify the allocation strategy for the Fund from time to time. If because of
appreciation or depreciation of the net asset value of the shares of underlying
Liberty funds within the three asset classes, the Fund's allocation falls
outside the applicable range shown above, the advisor will consider, in its
discretion, whether to reallocate the Fund's investments in the underlying
Liberty funds to bring its allocation back within such range.
[In left margin column]
LAMCO, as the advisor of each of the underlying
Liberty funds, continuously monitors the
performance and investment styles of each
underlying Liberty fund's Portfolio Manager.
From time to time the advisor may recommend
changes of the Portfolio Manager based on
factors such as changes in the Portfolio
Manager's investment style, a deterioration in
the Portfolio Manager's performance relative to
that of other investment management firms
practicing a similar style, or adverse changes in
ownership or personnel.
UNDERLYING LIBERTY FUNDS
LAMCO allocates each underlying Liberty fund's portfolio assets to one or more
independent investment management organizations (Portfolio Managers). There is
one Portfolio Manager for each underlying Liberty fund as of the date of this
prospectus.
Set forth below are the underlying Liberty funds in which the Fund may invest
and the Portfolio Manager for each underlying Liberty fund. The advisor may, in
its discretion, add additional underlying funds as investment options for the
Fund.
- -------------------------------------------------------------------------------
UNDERLYING LIBERTY FUND PORTFOLIO MANAGER
- -------------------------------------------------------------------------------
Liberty All-Star Small Cap Growth Fund Westwood Management Corporation
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Liberty All-Star Mid Cap Growth Fund TCW Funds Management, Inc.
- -------------------------------------------------------------------------------
Liberty All-Star Large Cap Growth Fund TCW Funds Management, Inc.
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Liberty All-Star Small Cap Growth Fund (Small Cap Fund) seeks long-term capital
appreciation by investing primarily in equity securities issued by small
companies. These smaller companies have a market capitalization (defined as
<PAGE>
shares outstanding times current market price) of between $100 million and $1.5
billion at the time of the Fund's initial investment. The Small Cap Fund may
invest in relatively new or unseasoned companies, which are in their early
stages of development, or small companies in new and emerging industries. In
selecting securities for the Small Cap Fund, the Portfolio Manager considers
companies that offer:
o an earnings growth rate exceeding the Small Cap Fund's benchmark, the
Russell 2000 Growth Index
o an increasing return on equity
o a low debt/equity ratio
o continuous earnings per share and sales growth
o a recent positive earnings surprise
The Portfolio Manager for the Small Cap Fund closely monitors the issuers and
will sell a stock if the stock achieves 90% of its price objective and has
limited further potential for price increase, the forecasted price/earnings
ratio exceeds the future forecasted growth rate and/or the issuer suffers an
earnings disappointment.
Liberty All-Star Mid Cap Growth Fund (Mid Cap Fund) seeks long-term capital
appreciation by investing primarily in equity securities issued by medium-sized
companies which are characterized as "growth" companies according to criteria
established by the Mid Cap Fund's Portfolio Manager. In managing the Mid Cap
Fund, the Portfolio Manager will focus on emerging companies that exhibit this
characteristic. The Fund may purchase and sell convertible securities.
The Portfolio Manager for the Mid Cap Fund uses a "bottom-up" approach to
identify securities for investment. First, the Portfolio Manager uses
quantitative and qualitative criteria to screen companies. The Portfolio
Manager then subjects companies that make it through this screening process to
fundamental analysis, which generally looks for at least some of the following
factors:
o a demonstrated record of consistent earnings growth or the potential to
grow earnings
o an ability to earn an attractive return on equity
o a price/earnings ratio which is less than the Portfolio Manager's
internally estimated three-year earnings growth rate
o a large and growing market share
o a strong balance sheet
o significant ownership interest by management and a strong management
team
Liberty All-Star Large Cap Growth Fund (Large Cap Fund) seeks long-term capital
appreciation by investing primarily in equity securities issued by large
companies. In managing the Large Cap Fund, the Portfolio Manager will seek to
achieve superior long-term returns by owning shares in companies that are
believed to have strong and enduring business models and inherent advantages
over their competitors. The Large Cap Fund may purchase and sell convertible
securities and foreign securities.
A more complete description of each Portfolio Manager is included in the Fund's
Statement of Additional Information. [The Trust and LAMCO have received an
exemptive order from the Securities and Exchange Commission that permits each
<PAGE>
underlying Liberty fund to change or add Portfolio Managers without a vote of
its shareholders. Information regarding any new Portfolio Manager is sent to
the Fund's shareholders within 90 days following the effective date of the
change.]
PRIMARY INVESTMENT RISKS
There are many circumstances (including additional risks that are not described
here) which could prevent the Fund from achieving its goal. It is possible to
lose money by investing in the Fund. The performance of the Fund depends on the
performance of the underlying Liberty funds in which its invests. The
performance of the underlying funds, in turn, depends on the performance of the
stock markets in the United States and in foreign countries and on the
performance of the individual stocks in which they invest. The value of the
Fund will vary from day to day, reflecting changes in the values of the
underlying Liberty funds. The risks of investing in the Fund generally are the
same risks that are associated with the underlying Liberty funds in which the
Fund invests. Each of the underlying Liberty funds is subject (in varying
degrees) to the following primary risks:
Market risk is the risk that the price of a security held by the underlying
Liberty fund will fall due to changing market, economic or political
conditions.
Growth securities, because they tend to reflect future expectations about their
issuers, may be particularly sensitive to market movements. The prices of
growth securities may fall if expectations about their issuers are not met.
Smaller companies are more likely than medium-sized and larger companies to
have limited product lines, operating histories, markets or financial
resources. They may depend heavily on a small management team. Stocks of
smaller companies may trade less frequently, may trade in smaller volumes and
may fluctuate more sharply in price than stocks of medium-sized and larger
companies. In addition, they may not be widely followed by the investment
community, which can lower the demand for their stock.
The securities issued by mid-capitalization companies may have more risk than
those of larger companies. These securities may be more susceptible to market
downturns, and their prices could be more volatile.
Foreign securities are subject to special risks. Foreign stock markets can be
extremely volatile. Fluctuations in currency exchange rates may impact the
value of foreign securities without a change in the intrinsic value of those
securities. The liquidity of foreign securities may be more limited than
domestic securities, which means that the underlying Liberty fund may, at
times, be unable to sell foreign securities at desirable prices. Brokerage
commissions, custodial fees and other fees are generally higher for foreign
investments. In addition, foreign governments may impose withholding taxes
which would reduce the amount of income available to distribute to
shareholders. Other risks include the following: possible delays in the
settlement of transactions; less publicly available information about
companies; the impact of political, social or diplomatic events; and possible
seizure, expropriation or nationalization of the company or its assets.
As non-diversified mutual funds, the Liberty All-Star Mid Cap Growth Fund and
the Liberty All-Star Large Cap Growth Fund are allowed to invest a greater
<PAGE>
percentage of their assets in the securities of a single issuer. This may
concentrate issuer risk and, therefore, these underlying Liberty funds may have
an increased risk of loss compared to a similar diversified mutual fund.
PERFORMANCE HISTORY
Because the Fund is a new fund and has not completed one full year of
investment performance, information related to the Fund's performance has not
been included in this prospectus. However, information on other funds managed
by the Portfolio Managers is contained in the section "Managing the Fund -
Portfolio Manager Performance Information" in this prospectus.
YOUR EXPENSES
Fees and expenses are among the factors you should consider before you invest
in a mutual fund. The tables below describe the fees and expenses you may pay
when you buy, hold and sell shares of the Fund.
SHAREHOLDER FEES 1/ (PAID DIRECTLY FROM YOUR INVESTMENT)
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CLASS A CLASS B CLASS C
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Maximum sales charge (load) on purchases (%)
(as apercentage of the offering price) 5.75 0.00 0.00
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Maximum deferred sales charge (load) on
redemptions (%) (as a percentage of the lesser
of purchase price or redemption price) 1.00 2/ 5.00 1.00
- -------------------------------------------------------------------------------
Redemption fee (%) (as a percentage of amount 3/ 3/ 3/
redeemed, if applicable)
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ANNUAL FUND OPERATING EXPENSES (DEDUCTED DIRECTLY FROM FUND ASSETS)
- -------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
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Management and administration fee 4/(%) _.__ _.__ _.__
- -------------------------------------------------------------------------------
- ------------------------
1/ A $10 annual fee is deducted from accounts of less than $1,000 and paid
to the transfer agent.
2/ This charge applies only to certain Class A shares bought without an
initial sales charge that are sold within 18 months of purchase.
3/ There is a $7.50 charge for wiring sale proceeds to your bank.
<PAGE>
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Distribution and service (12b-1) fees (%) 0.25 1.00 1.00
- -------------------------------------------------------------------------------
Other expenses (%) _.__ _.__ _.__
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Total annual fund operating expenses 5/(%) _.__ _.__ _.__
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EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
- -------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS
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Class A $_.__ $_.__
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Class B: did not sell your shares $_.__ $_.__
sold all your shares at
the end of the period $_.__ $_.__
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Class C: did not sell your shares $_.__ $_.__
sold all your shares at
the end of the period $_.__ $_.__
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[In left margin column]
UNDERSTANDING EXPENSES
SALES CHARGES are paid directly by
shareholders to Liberty Funds Distributor, Inc.,
the Fund's distributor.
ANNUAL FUND OPERATING EXPENSES are
deducted from the Fund. They include
management and administration fees, 12b-1 fees,
- -------------------------------------------------------------------------------
4/ The Fund bears its own pro rata share of the fees and expenses incurred
by the underlying Liberty funds. The investment return will be net of the
Fund's pro rata share of the expenses of the underlying Liberty funds in which
it invests. Based on the expense ratio of each underlying Liberty fund,
adjusted to reflect current fees and fee waivers in effect, as of its most
recent fiscal year end, the ranges for the average weighted expense ratio per
annum borne by the Fund (excluding distribution and service fees), including
its pro rata share of expenses of the underlying Liberty funds, is expected to
be ____% to ____%.
5/ The Fund's advisor and administrator have voluntarily agreed to waive
advisory and administration fees and reimburse the Fund for certain expenses so
that the total annual fund operating expenses (exclusive of distribution and
service fees, brokerage commissions, interest, taxes and extraordinary
expenses, if any) will not exceed _.__%. As a result, the actual management and
administration fees for each share class would be ___% and total annual fund
operating expenses for Class A, B and C shares would be ___%, ___% and ___%,
respectively. This arrangement may be terminated by the advisor or
administrator at any time.
<PAGE>
brokerage costs, and administrative costs
including pricing and custody services.
EXAMPLE EXPENSES help you compare
the cost of investing in the Fund to the cost of
investing in other mutual funds. The table does
not take into account any expense reduction
arrangements discussed in the footnotes to the
Annual Fund Operating Expenses table. It uses
the following hypothetical conditions:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same
o Assumes reinvestment of all dividends and distributions
YOUR ACCOUNT
HOW TO BUY SHARES
Your financial advisor can help you establish an appropriate investment
portfolio, buy shares and monitor your investments. When the Fund receives your
purchase request in "good form," your shares will be bought at the next
calculated public offering price. "Good form" means that you placed your order
with your brokerage firm or your payment has been received and your application
is complete, including all necessary signatures.
[In left margin column]
INVESTMENT MINIMUMS 6/
Initial Investment ....................$1,000
Subsequent Investments ................$50
Automatic Investment Plan .............$50
Retirement Plans ......................$25
- ------------------------
6/ The Fund reserves the right to change the investment minimums. The Fund
also reserves the right to refuse a purchase order for any reason, including if
it believes that doing so would be in the best interest of the Fund and its
shareholders.
<PAGE>
OUTLINED BELOW ARE THE VARIOUS OPTIONS FOR BUYING SHARES:
METHOD INSTRUCTIONS
Through your Your financial advisor can help you establish your
financial advisor account and buy Fund shares on your behalf.
By check For new accounts, send a completed application and check
(new account) made payable to the Fund to the transfer agent, Liberty
Funds Services, Inc., P.O. Box 1722, Boston, MA
02105-1722.
By check For existing accounts, fill out and return the
(existing account) additional investment stub included in your quarterly
statement, or send a letter of instruction including
your Fund name and account number with a check made
payable to the Fund to Liberty Funds Services, Inc.,
P.O. Box 1722, Boston, MA 02105-1722.
By exchange You or your financial advisor may acquire shares by
exchanging shares you own in one fund for shares of the
same class of the Fund at no additional cost. For
federal income tax purposes, an exchange is ordinarily a
taxable event that may result in a taxable gain or loss.
There may be an additional charge if exchanging from a
money market fund. To exchange by telephone, call
1-800-422-3737.
By wire You may purchase shares by wiring money from your bank
account to your fund account. To wire funds to your fund
account, call 1-800-422-3737 to obtain a control number
and the wiring instructions.
By electronic You may purchase shares by electronically transferring
funds money from your bank account to your fund account by
transfer calling 1-800-422-3737. Electronic funds transfers may
take up to two business days to settle and be considered
in "good form." You must set up this feature prior to
your telephone request. Be sure to complete the
appropriate section of the application.
Automatic You can make monthly or quarterly investments
investment plan automatically from your bank account to your fund
account. You can select a preauthorized amount to be
sent via electronic funds transfer. Be sure to complete
the appropriate section of the application for this
feature.
By dividend You may automatically invest dividends distributed by
diversification one fund into the same class of shares of the Fund at no
additional sales charge. You will normally have to pay
federal income taxes, and any state or local taxes, on
the distributions you receive from a fund, whether you
take the distributions in cash or reinvest them in
<PAGE>
additional shares. To invest your dividends in another
fund, call 1-800-345-6611.
[In left margin column]
CHOOSING A SHARE CLASS
The Fund offers three classes of shares in this
prospectus CLASS A, B and C. Each share class
has its own sales charge and expense structure.
Determining which share class is best for you
depends on the dollar amount you are investing
and the number of years for which you are
willing to invest. Purchases of $250,000 or more
but less than $1 million can be made only in
Class A or Class C shares. Purchases of $1
million or more are automatically invested in
Class A shares. If your financial advisor firm
participates in the Class B discount program,
purchases of over $1 million can be made only in
Class A or Class C shares. Otherwise, purchases
in excess of $250,000 must be for Class A or
Class C shares only. Based on your personal
situation, your investment advisor can help you
decide which class of shares makes the most
sense for you.
The Fund also offers an additional class of
shares, Class Z shares, exclusively to certain
institutional and other investors. Class Z shares
are made available through a separate
prospectus provided to eligible institutional and
other investors.
SALES CHARGES
You may be subject to an initial sales charge when you purchase, or a
contingent deferred sales charge (CDSC) when you sell, shares of the Fund.
These sales charges are described below. In certain circumstances, these sales
charges are waived, as described below and in the Statement of Additional
Information.
CLASS A SHARES Your purchases of Class A shares generally are at the public
offering price. This price includes a sales charge that is based on the amount
of your initial investment when you open your account. A portion of the sales
charge is the commission paid to the financial advisor firm on the sale of
Class A shares. The sales charge you pay on additional investments is based on
the total amount of your purchase and the current value of your account. The
amount of the sales charge differs depending on the amount you invest as shown
in the table below.
<PAGE>
CLASS A SALES CHARGES
% OF OFFERING
AS A % OF PRICE
THE PUBLIC AS A % RETAINED BY
OFFERING OF YOUR FINANCIAL
AMOUNT OF PURCHASE PRICE INVESTMENT ADVISOR FIRM
Less than $50,000 __.____ __.____ __.____
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$50,000 to less than $100,000 __.____ __.____ __.____
- -------------------------------------------------------------------------------
$100,000 to less than $250,000 __.____ __.____ __.____
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$250,000 to less than $500,000 __.____ __.____ __.____
- -------------------------------------------------------------------------------
$500,000 to less than $1,000,000 __.____ __.____ __.____
- -------------------------------------------------------------------------------
$1,000,000 or more 7/
For Class A share purchases of $1 million or more, financial advisors receive a
commission from the distributor as follows:
PURCHASES OVER $1 MILLION
AMOUNT PURCHASED COMMISSION %
First $3 million 1.00
- -------------------------------------------------------------------------------
Next $2 million 0.50
- -------------------------------------------------------------------------------
Over $5 million 0.25 8/
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[In left margin column]
UNDERSTANDING CONTINGENT
DEFERRED SALES CHARGES (CDSC)
Certain investments in Class A, B and C shares
are subject to a CDSC, a sales charge applied at
the time you sell your shares. You will pay the
CDSC only on shares you sell within a certain
amount of time after purchase. The CDSC
generally declines each year until there is no
charge for selling shares. The CDSC is applied
to the net asset value at the time of purchase or
- --------------------------
7/ Class A share purchases that bring your account value above $1 million
are subject to a 1% CDSC if redeemed within 18 months of their purchase date.
The 18month period begins on the first day of the month following each
purchase. Subsequent Class A share purchases that bring your account value
above $1 million are subject to a 1% CDSC if redeemed within 18 months of their
purchase date. The 18-month period beings on the first day of the month
following each purchase.
8/ Paid over 12 months but only to the extent the shares remain
outstanding.
<PAGE>
sale, whichever is lower. For purposes of
calculating the CDSC, the start of the holding
period is the monthend of the month in which
the purchase is made. Shares you purchase with
reinvested dividends or capital gains are not
subject to a CDSC. When you place an order to
sell shares, the Fund will automatically sell first
those shares not subject to a CDSC and then
those you have held the longest. This policy
helps reduce and possibly eliminate the potential
impact of the CDSC.
REDUCED SALES CHARGES FOR LARGER INVESTMENTS There are two ways for you to pay
a lower sales charge when purchasing Class A shares. The first is through
Rights of Accumulation. If the combined value of the Fund accounts maintained
by you, your spouse or your minor children reaches a discount level (according
to the chart on the previous page), your next purchase will receive the lower
sales charge. The second is by signing a Statement of Intent within 90 days of
your purchase. By doing so, you would be able to pay the lower sales charge on
all purchases by agreeing to invest a total of at least $50,000 within 13
months. If your Statement of Intent purchases are not completed within 13
months, you will be charged the applicable sales charge on the amount you had
invested to that date. In addition, certain investors may purchase shares at a
reduced sales charge or net asset value (NAV), which is the value of a fund
share excluding any sales charges. See the Statement of Additional Information
for a description of these situations.
CLASS B SHARES Your purchases of Class B shares are at the Fund's NAV. Class B
shares have no frontend sales charge, but they do carry a CDSC that is imposed
only on shares sold prior to the completion of the periods shown in the charts
below. The CDSC generally declines each year and eventually disappears over
time. The distributor pays the financial advisor firm an upfront commission on
sales of Class B shares as depicted in the charts below.
CLASS B SALES CHARGES
PURCHASES OF LESS THAN $250,000:
% DEDUCTED WHEN
HOLDING PERIOD AFTER PURCHASE SHARES ARE SOLD
Through first year 5.00
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Through second year 4.00
- -------------------------------------------------------------------------------
Through third year 3.00
- -------------------------------------------------------------------------------
Through fourth year 3.00
- -------------------------------------------------------------------------------
Through fifth year 2.00
- -------------------------------------------------------------------------------
Through sixth year 1.00
- -------------------------------------------------------------------------------
Longer than six years 0.00
<PAGE>
Commission to financial advisors is 5.00%.
Automatic conversion to Class A shares is eight years after purchase.
There are two ways for you to pay a lower CDSC and reduce the holding period
when making purchases of Class B shares. The first is through a financial
advisor firm which participates in the Class B share discount program for
larger purchases as described in the charts below. Some financial advisor firms
are not able to participate because their record keeping or transaction
processing systems are not designed to accommodate these reductions. Consult
your financial advisor to see whether it participates in the discount program
for larger purchases. The second is through Rights of Accumulation. If the
combined value of the Fund accounts maintained by you, your spouse or your
minor children is at or above a discount level, your next purchase will receive
the lower CDSC and the applicable reduced holding period.
PURCHASES OF $250,000 tO LESS THAN $500,000:
% DEDUCTED WHEN
HOLDING PERIOD AFTER PURCHASE SHARES ARE SOLD
Through first year 3.00
- -------------------------------------------------------------------------------
Through second year 2.00
- -------------------------------------------------------------------------------
Through third year 1.00
- -------------------------------------------------------------------------------
Longer than four years 0.00
Commission to financial advisors is 2.50%.
Automatic conversion to Class A shares is four years after purchase.
PURCHASES OF $500,000 To LESS THAN $1 MILLION:
% DEDUCTED WHEN
HOLDING PERIOD AFTER PURCHASE SHARES ARE SOLD
Through first year 3.00
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Through second year 2.00
- -------------------------------------------------------------------------------
Through third year 1.00
- -------------------------------------------------------------------------------
Longer than four years 0.00
Commission to financial advisors is 1.75%.
Automatic conversion to Class A shares is three years after purchase.
If you exchange into a fund participating in the Class B share discount program
or transfer your fund account from a financial advisor which does not
participate in the program to one who does, the exchanged or transferred shares
<PAGE>
will retain the preexisting CDSC but any additional purchases of Class B shares
which cause the exchanged or transferred account to exceed the applicable
discount level, will receive the lower CDSC and the reduced holding period for
amounts in excess of the discount level. Your financial advisor will receive
the lower commission for purchases in excess of an applicable discount level.
CLASS C SHARES Similar to Class B shares, your purchases of Class C shares are
at the Fund's NAV. Although Class C shares have no frontend sales charge, they
carry a CDSC of 1.00% that is applied to shares sold within the first year
after they are purchased. After holding shares for one year, you may sell them
at any time without paying a CDSC. The distributor pays the financial advisor
firm an upfront commission of 1.00% on sales of Class C shares.
CLASS C SALES CHARGES
YEARS AFTER PURCHASE % DEDUCTED WHEN SHARES ARE SOLD
Through first year 1.00
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Longer than one year 0.00
HOW TO EXCHANGE SHARES
You may exchange your shares for shares of the same share class of another fund
distributed by Liberty Funds Distributor, Inc. at net asset value. If your
shares are subject to a CDSC, you will not be charged a CDSC upon the exchange.
However, when you sell the shares acquired through the exchange, the shares
sold may be subject to a CDSC, depending upon when you originally purchased the
shares you exchanged. For purposes of computing the CDSC, the length of time
you have owned your shares will be computed from the date of your original
purchase and the applicable CDSC will be the CDSC of the original fund. Unless
your account is part of a tax-deferred retirement plan, an exchange is a taxable
event. Therefore, you may realize a gain or a loss for tax purposes. The Fund
may terminate your exchange privilege if the advisor determines that your
exchange activity is likely to adversely impact its ability to manage the Fund.
To exchange by telephone, call 1-800-422-3737.
HOW TO SELL SHARES
Your financial advisor can help you determine if and when you should sell your
shares. You may sell shares of the Fund on any regular business day that the
New York Stock Exchange (NYSE) is open.
When the Fund receives your sales request in "good form," shares will be sold
at the next calculated price. In "good form" means that money used to purchase
your shares is fully collected. When selling shares by letter of instruction,
"good form" also means (i) your letter has complete instructions, the proper
signatures and signature guarantees, (ii) you have included any certificates
for shares to be sold, and (iii) any other required documents are attached. For
additional documents required for sales by corporations, agents, fiduciaries
and surviving joint owners, please call 1-800-345-6611. Retirement plan
accounts have special requirements; please call 1-800-799-7526 for more
information.
<PAGE>
The Fund will generally send proceeds from the sale to you within seven days
(usually on the next business day after your request is received in "good
form"). However, if you purchased your shares by check, the Fund may delay
sending the proceeds from the sale of your shares until the check clears which
may take up to 15 days after your purchase. No interest will be paid on
uncashed redemption checks.
OUTLINED BELOW ARE THE VARIOUS OPTIONS FOR SELLING SHARES:
- -------------------------------------------------------------------------------
METHOD INSTRUCTIONS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Through your You may call your financial advisor to place your sell
financial advisor order. To receive the current trading day's price, your
financial advisor firm must receive your request prior
to the close of the NYSE, usually 4:00 p.m. Eastern
time.
- -------------------------------------------------------------------------------
By exchange You or your financial advisor may sell shares
by exchanging from the Fund into the same share class of
another fund at no additional cost. To exchange by
telephone, call 1-800-422-3737.
- -------------------------------------------------------------------------------
By telephone You or your financial advisor may sell shares by
telephone and request that a check be sent to your
address of record by calling 1-800-422-3737, unless you
have notified the Fund of an address change within the
previous 30 days. The dollar limit for telephone sales
is $100,000 in a 30-day period. You do not need to set up
this feature in advance of your call. Certain
restrictions apply to retirement accounts. For details,
call 1-800-345-6611.
- -------------------------------------------------------------------------------
By mail You may send a signed letter of instruction or stock
power form along with any certificates to be sold to the
address below. In your letter of instruction, note the
Fund's name, share class, account number, and the dollar
value or number of shares you wish to sell. All account
owners must sign the letter, and signatures must be
guaranteed by either a bank, a member firm of a national
stock exchange or another eligible guarantor
institution. Additional documentation is required for
sales by corporations, agents, fiduciaries, surviving
joint owners and individual retirement account owners.
For details, call 1-800-345-6611. Mail your letter of
instruction to Liberty Funds Services, Inc., P.O. Box
1722, Boston, MA 02105-1722.
- -------------------------------------------------------------------------------
By wire You may sell shares and request that the proceeds be
wired to your bank. You must set up this feature prior
to your telephone request. Be sure to complete the
appropriate section of the account application for this
feature.
- -------------------------------------------------------------------------------
<PAGE>
By electronic You may sell shares and request that the proceeds be
funds transfer electronically transferred to your bank. Proceeds may
take up to two business days to be received by your
bank. You must set up this feature prior to your
request. Be sure to complete the appropriate section of
the account application for this feature.
- -------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE FEES
The Fund has adopted a plan under Rule 12b-1 that permits it to pay marketing
and other fees to support the sale and distribution of Class A, B and C shares
and the services provided to you by your financial advisor. The annual
distribution fee and service fee may equal up to 0.00% and 0.25%, respectively,
for Class A shares and 0.75% and 0.25%, respectively, for each of Class B and
Class C shares and are paid out of the assets of these classes. Over time,
these fees will increase the cost of your shares and may cost you more than
paying other types of sales charges.9/
OTHER INFORMATION ABOUT YOUR ACCOUNT
HOW THE FUND'S SHARE PRICE IS DETERMINED The price of each class of the Fund's
shares is based on its net asset value (NAV). The NAV is determined at the
close of regular trading on the NYSE, usually 4:00 p.m. Eastern time, on each
business day that the NYSE is open (typically Monday through Friday). The NYSE
is closed on most national holidays and Good Friday.
When you request a transaction, it will be processed at the NAV (plus any
applicable sales charges) next determined after your request is received in
"good form" by the distributor. In most cases, in order to receive that day's
price, the distributor must receive your order before that day's transactions
are processed. If you request a transaction through your financial advisor's
firm, the firm must receive your order by the close of trading on the NYSE to
receive that day's price.
The Fund determines its NAV for each share class by dividing each class's total
net assets by the number of that class's shares outstanding. In determining the
NAV, the Fund must determine the price of each security in its portfolio at the
close of each trading day. The assets of the Fund consist primarily of shares
of the underlying Liberty funds. Because an underlying Liberty fund may hold
securities that are traded on foreign exchanges, the value of the underlying
Liberty fund's securities may change on days when shareholders will not be able
to buy or sell shares of the underlying Liberty fund. This will affect the
underlying Liberty fund's NAV on the day it is next determined. Securities for
which market quotations are available are valued each day at the current market
- -------------------------
9/ Class B shares automatically convert to Class A shares after a certain
number of years, depending on the program you purchased your shares under,
eliminating the distribution fee upon conversion.
<PAGE>
value. However, where market quotations are unavailable, or when the advisor
believes that subsequent events have made them unreliable, the underlying
Liberty fund may use other data to determine the fair value of the securities.
You can find the daily prices of some share classes for the Fund in most major
daily newspapers under the caption "Liberty." You can find daily prices for all
share classes by visiting the Fund's web site at www.libertyfunds.com.
ACCOUNT FEES If your account value falls below $1,000 (other than as a result
of depreciation in share value) you may be subject to an annual account fee of
$10. This fee is deducted from the account in June each year. Approximately 60
days prior to the fee date, the Fund's transfer agent will send you written
notification of the upcoming fee. If you add money to your account and bring
the value above $1,000 prior to the fee date, the fee will not be deducted.
SHARE CERTIFICATES Share certificates are not available for Class B and C
shares. Certificates will be issued for Class A shares only if requested. If
you decide to hold share certificates, you will not be able to sell your shares
until you have endorsed your certificates and returned them to the distributor.
DIVIDENDS, DISTRIBUTIONS, AND TAXES The Fund has the potential to make the
following distributions:
[In left margin column]
UNDERSTANDING FUND
DISTRIBUTIONS
The Fund earns income from the
securities it holds. The Fund also may
realize capital gains and losses on sales of
its securities. The Fund distributes
substantially all of its net investment
income and capital gains to shareholders.
As a shareholder, you are entitled to a
portion of the Fund's income and capital
gains based on the number of shares you
own at the time these distributions are
declared.
TYPES OF DISTRIBUTIONS
Dividend Represents interest and dividends earned from securities held by
the Fund.
Capital gains Represents net long-term capital gains on sales of
securities held for more than 12 months and net short-term
capital gains, which are gains on sales of securities held for
a 12-month period or less.
The Fund distributes dividends quarterly and any capital gains (including
short-term capital gains) at least annually. You can choose one of the options
<PAGE>
listed in the table below for these distributions when you open your account.10/
To change your distribution option call 1-800-345-6611.
DISTRIBUTION OPTIONS
Reinvest all distributions in additional shares of your current fund
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Reinvest all distributions in shares of another fund
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Receive dividends in cash (see options below) and reinvest capital gains 11/
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Receive all distributions in cash (with one of the following options)11/:
o send the check to your address of record
o send the check to a third party address
o transfer the money to your bank via electronic funds transfer
TAX CONSEQUENCES As long as the Fund qualifies for treatment as a regulated
investment company (which it intends to do in its first and each subsequent
taxable year), it pays no federal income tax on the earnings it distributes to
shareholders. You will normally have to pay federal income taxes on the
distributions you receive from the Fund, whether you take the distributions in
cash or reinvest them in additional shares. Depending on the state where you
live, distributions may also be subject to state and local income taxes.
In general, any distributions of dividends, interest and short-term capital
gains are taxable as ordinary income. Distributions designated as capital gain
dividends are taxable as long-term capital gains, regardless of how long you
have held your Fund shares. Some dividends paid in January may be taxable as if
they had been paid the previous December. You will be provided with information
each year regarding the amount of ordinary income and capital gains distributed
to you for the previous year and any portion of your distribution which is
exempt from state and local taxes.
Fund distributions will reduce the Fund's net asset value per share. Therefore,
if you buy shares shortly before the record date of a distribution, you may pay
the full price for the shares and then effectively receive a portion of the
purchase price back as a taxable distribution.
When you redeem, sell or exchange shares, it is generally considered a taxable
event for you. Depending on the purchase price and the sale price of the shares
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10/ If you do not indicate on your application your preference for
handling distributions, the Fund will automatically reinvest all distributions
in additional shares of the Fund.
11/ Distributions of $10 or less will automatically be reinvested in
additional Fund shares. If you elect to receive distributions by check and the
check is returned as undeliverable, or if you do not cash a distribution check
within six months of the check date, the distribution will be reinvested in
additional shares of the Fund.
<PAGE>
you redeem, sell or exchange, you may have a gain or loss on the transaction.
You are responsible for any tax liabilities generated by your transaction.
Your investment in the Fund may have additional personal tax implications.
Please consult your tax advisor on federal, state, local or other applicable
tax laws.
<PAGE>
MANAGING THE FUND
INVESTMENT ADVISOR
Liberty Asset Management Company (LAMCO), located at Federal Reserve Plaza, 600
Atlantic Avenue, Boston, Massachusetts 02110, is the investment advisor for the
Fund and for each of the underlying Liberty funds. In its duties as investment
advisor, LAMCO runs the funds' day-to-day business, including placing all
orders for the purchase and sale of portfolio securities. LAMCO has been an
investment advisor since 1985. As of February 29, 2000, LAMCO managed over $__
billion in assets.
The Fund pays the advisor a fee at the annual rate of ____% of the average
daily net assets of the Fund.
PORTFOLIO MANAGERS
No one individual at LAMCO is responsible for LAMCO's investment management of
the Fund or the underlying Liberty funds. The following individuals are
responsible for the management of the assets of the underlying Liberty funds in
which the Fund may invest:
LYNDA J. CALKIN, Senior Vice President of Westwood Management Corporation since
1993, manages the assets of the Liberty All-Star Small Cap Growth Fund.
DOUGLAS S. FOREMAN, Group Managing Director and Chief Investment Officer - U.S.
Equities of TCW Funds Management, Inc. since 1994, and CHRISTOPHER J. AINLEY,
Managing Director of TCW Funds Management, Inc. since 1994, manage the assets
of the Liberty All-Star Mid Cap Growth Fund.
GLEN A. BICKERSTAFF, Managing Director - U.S. Equities of TCW Funds Management,
Inc. since 1998, manages the assets of the Liberty All-Star Large Cap Growth
Fund. Prior to joining TCW in 1998, Mr. Bickerstaff was a Vice President and
Senior Portfolio Manager at Transamerica Investment Services. TCW is a
wholly-owned subsidiary of The TCW Group, Inc.
<PAGE>
PORTFOLIO MANAGER PERFORMANCE INFORMATION
SMALL CAP EQUITY FUND. The table below sets forth the average annual returns of
the Gabelli Westwood SmallCap Equity Fund (Gabelli Westwood SmallCap Fund), a
diversified, open-end management company managed by Westwood Management
Corporation (Westwood). The Gabelli Westwood SmallCap Fund is the only mutual
fund managed by Westwood with investment goals, policies and restrictions
substantially similar to the Small Cap Fund and has been managed in
substantially the same way that the Small Cap Fund is to be managed by
Westwood. Lynda J. Calkin of Westwood has been primarily responsible for the
day-to-day portfolio management of the Gabelli Westwood SmallCap Fund since its
inception on July 31, 1997. The data is provided to illustrate the past
performance of Westwood in managing a substantially similar fund as measured
against the Russell 2000 Growth Index and the Lipper Small Cap Average and does
not represent the performance of the Small Cap Fund. Investors should not
consider this performance data as an indication of future performance of the
Small Cap Fund, the Growth Opportunities Fund or of Westwood. The returns are
not intended to predict or suggest the returns that might be experienced by the
Small Cap Fund, the Growth Opportunities Fund or an individual investing in the
Growth Opportunities Fund.
The annual returns presented below are unaudited. The use of a methodology
different from that used to calculate the performance data set forth below
could result in different performance data.
All returns presented were calculated on a total return basis and include all
dividends and interest, accrued income and realized and unrealized gains and
losses, and deductions for brokerage commissions and execution costs. Returns
for each period are adjusted to assume that all charges, expenses and fees of
the Class A shares of the Growth Opportunities Fund which are presently in
effect were deducted during such periods. All returns are for the periods ended
on December 31, 1999.
ANNUAL TOTAL RETURNS
- ----------------------------------------------------------------
SINCE
1 YEAR INCEPTION
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GABELLI WESTWOOD SMALLCAP EQUITY
FUND (1) ...................... ______% ______%
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RUSSELL 2000 GROWTH INDEX (2) . ______% ______%
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LIPPER SMALL CAP AVERAGE (3) .. ______% ______%
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(1) Commencement of investment operations is July 31, 1997.
(2) The Russell 2000 Growth Index is an unmanaged index that measures the
performance of those companies in the Russell 2000 with higher price-to-book
ratios and higher forecasted growth values. The Russell 2000 contains the 2000
smallest companies in the Russell 3000, which, in turn, contains the 3000
largest companies in the U.S. based on total market capitalization. The
performance of the Index does not include fees or expenses.
(3) The Lipper Small Cap Average, which is calculated by Lipper Inc., is
comprised of __________. The performance of the Lipper Small Cap Average does
not include fees or expenses.
<PAGE>
MID CAP EQUITY FUND. The table below sets forth the average annual returns of
the TCW Galileo Aggressive Growth Equities Fund (Aggressive Growth Fund), a
non-diversified, open-end management company managed by TCW Funds Management,
Inc. (TCW). The Aggressive Growth Fund is the only mutual fund managed by TCW
with investment goals, policies and restrictions substantially similar to the
Mid Cap Fund and has been managed in substantially the same way that the Mid
Cap Fund is to be managed by TCW. Douglas S. Foreman and Christopher J. Ainley
have been responsible for the day-to-day portfolio management of the Aggressive
Growth Fund since its inception in June of 1996. The data is provided to
illustrate the past performance of TCW in managing a substantially similar fund
as measured against the Russell Midcap Growth Index and the Morningstar Mid-Cap
Growth Category and does not represent the performance of the Mid Cap Fund.
Investors should not consider this performance data as an indication of future
performance of the Mid Cap Fund, the Growth Opportunities Fund or of TCW. The
returns are not intended to predict or suggest the returns that might be
experienced by the Mid Cap Fund, the Growth Opportunities Fund or an individual
investing in the Growth Opportunities Fund.
The annual returns presented below are unaudited. The use of a methodology
different from that used to calculate the performance data set forth below
could result in different performance data.
All returns presented were calculated on a total return basis and include all
dividends and interest, accrued income and realized and unrealized gains and
losses, and deductions for brokerage commissions and execution costs. Returns
for each period are adjusted to assume that all charges, expenses and fees of
the Class A shares of the Growth Opportunities Fund which are presently in
effect were deducted during such periods. All returns are for the periods ended
on December 31, 1999.
ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS INCEPTION
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TCW GALILEO AGGRESSIVE GROWTH
EQUITIES FUND (4) ............. ______% ______% ______%
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RUSSELL MIDCAP GROWTH INDEX(5).. ______% ______% ______%
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MORNINGSTAR MID-CAP GROWTH
CATEGORY(6) ................... ______% ______% _____%
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(4) Commencement of investment operations is June 3, 1996.
(5) The Russell Midcap Growth Index is an unmanaged index that measures the
performance of those Russell Midcap companies with higher price-to-book ratios
and higher forecasted growth values. The stocks are also members of the Russell
1000 Growth Index. The performance of the Index does not include fees or
expenses.
(6) The Morningstar Mid-Cap Growth Category is comprised of ________________.
The performance of the Morningstar Mid-Cap Growth Category does not include
fees or expenses.
<PAGE>
LARGE CAP EQUITY FUND. The table below sets forth the average annual returns of
the TCW Galileo Select Equities Fund (Select Equities Fund), a non-diversified,
open-end management company managed by TCW Funds Management, Inc. (TCW). The
average annual returns are for periods since May __, 1998, the date on which
Gary Bickerstaff of TCW became the portfolio manager of the Select Equities
Fund. Since May __, 1998, the Select Equities Fund has been managed in
substantially the same way as the Large Cap Fund is to be managed by Mr.
Bickerstaff. The Select Equities Fund is the only mutual fund managed by TCW
with investment goals, policies and restrictions substantially similar to the
Large Cap Fund and has been, since May __, 1998, managed by Mr. Bickerstaff in
substantially the same way that the Large Cap Fund is to be managed by Mr.
Bickerstaff.
The annual returns presented below are unaudited. The use of a methodology
different from that used to calculate the performance data set forth below
could result in different performance data.
All returns presented were calculated on a total return basis and include all
dividends and interest, accrued income and realized and unrealized gains and
losses, and deductions for brokerage commissions and execution costs.
Returns for each period are adjusted to assume that all charges, expenses and
fees of the Class A shares of the Growth Opportunities Fund which are presently
in effect were deducted during such periods. All returns are for the periods
ended on December 31, 1999.
ANNUAL TOTAL RETURNS
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SINCE
1 YEAR MAY __, 1998
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TCW GALILEO SELECT EQUITIES
FUND........................... ______% ______%
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STANDARD & POOR'S 500 ______% ______%
COMPOSITE INDEX (7) ...........
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RUSSELL 1000 GROWTH INDEX(8) .. ______% ______%
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MORNINGSTAR LARGE GROWTH
CATEGORY (9) .................. ______% ______%
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- -----------
(7) The Standard & Poor's 500 Composite Index is an unmanaged index of common
stocks that is considered to be generally representative of the United States
stock market. The performance of the Index does not include fees or expenses.
(8) The Russell 1000 Growth Index is an unmanaged index that measures the
performance of those companies in the Russell 1000 (which contains the 1000
largest companies in the U.S. based on total market capitalization) with higher
price-to-book ratios and higher forecasted growth values. The performance of
the Index does not include fees or expenses.
(9) The Morningstar Large Growth Category is comprised of ________________.
The performance of the Morningstar Large Growth Category does not include fees
or expenses.
Prior to joining TCW, Mr. Bickerstaff was the portfolio manager of the
Transamerica Premier Equity Fund from its inception, October 1, 1995, through
May 18, 1998. As the portfolio manager of the Transamerica Premier Equity Fund,
Mr. Bickerstaff had full discretionary authority over the selection of
investments for, and was responsible for, the day-to-day management of that
fund. Average annual returns for the one year period ended December 31, 1997
<PAGE>
and for the entire period during which Mr. Bickerstaff managed that fund
compared with the performance of the Standard and Poor's 500 Composite Index,
the Russell 1000 Growth Index and the Morningstar Large Growth Category were:
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS
<S> <C> <C>
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SINCE
INCEPTION
1 YEAR (OCTOBER 1, 1995)
ENDED DECEMBER 31, 1997 THROUGH DECEMBER 31, 1997
- ----------------------------------------------------------------------------------------
TRANSAMERICA PREMIER EQUITY
FUND (10) ..................... ______% ______%
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S&P 500 INDEX(11) ............. ______% ______%
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RUSSELL 1000 GROWTH INDEX(12) . ______% ______%
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MORNINGSTAR LARGE GROWTH
CATEGORY(13) .................. ______% ______%
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</TABLE>
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(10) Average annual total returns reflect changes in share prices and
reinvestment of dividends and distributions and is net of all actual fees and
expenses incurred by the Transamerica Premier Equity Fund. [Discuss expense
ratio of Transamerica for periods indicated.] Using the expense ratio of the
Class A shares of the Growth Opportunities Fund, the Transamerica Premier
Equity Fund performance outlined above would be [higher/lower].
(11) The Standard & Poor's 500 Composite Index is an unmanaged index of
common stocks that is considered to be generally representative of the United
States stock market. The performance of the Index does not include fees or
expenses.
(12) The Russell 1000 Growth Index is an unmanaged index that measures the
performance of those companies in the Russell 1000 (which contains the 1000
largest companies in the U.S. based on total market capitalization) with higher
price-to-book ratios and higher forecasted growth values. The performance of
the Index does not include fees or expenses.
(13) The Morningstar Large Growth Category is comprised of ________________.
The performance of the Morningstar Large Growth Category does not include fees
or expenses.
The data in the tables above is provided to illustrate the past performance of
TCW and Mr. Bickerstaff in managing substantially similar funds as measured
against the Standard and Poor's 500 Composite Index, the Russell 1000 Growth
Index and the Morningstar Large Growth Category and does not represent the
performance of the Large Cap Fund. Investors should not consider this
performance data as an indication of future performance of the Large Cap Fund,
the Growth Opportunities Fund or of TCW or Mr. Bickerstaff. The returns are not
intended to predict or suggest the returns that might be experienced by the
Large Cap Fund, the Growth Opportunities Fund or an individual investing in the
Growth Opportunities Fund.
OTHER INVESTMENT STRATEGIES AND RISKS
Each underlying Liberty fund's primary investment strategies and their
associated risks are described above. In addition to investing in the
underlying Liberty funds, the Fund is permitted to invest directly in cash,
government securities and short-term commercial paper. [An affiliate of the
Fund has applied for an exemptive order from the Securities and Exchange
Commission that would permit the Fund to invest directly in additional types of
securities.] This section describes other investments that the Fund and each of
the underlying Liberty funds may make and the risks associated with them. In
seeking to achieve its goal, the Fund or an underlying Liberty fund may invest
in various types of securities and engage in various investment techniques
which are not the principal focus of the Fund or the underlying Liberty fund
<PAGE>
and therefore are not described in this prospectus. These types of securities
and investment practices are identified and discussed in the Fund's Statement
of Additional Information, which you may obtain free of charge (see back
cover).
[In left margin column]
UNDERSTANDING OTHER INVESTMENTS
AND RISKS
Each underlying Liberty fund's primary
investments and risks are described under "The
Fund - Underlying Liberty Funds" and "The
Fund - Primary Investment Risks." In seeking
to meet its investment goal, each underlying
Liberty fund may also invest in other securities
and use certain investment techniques. These
securities and investment techniques offer
opportunities and carry various risks.
Each underlying Liberty fund may elect not to
buy any of these securities or use any of these
techniques unless it believes that doing so will
help the underlying Liberty fund achieve its
investment goal. The underlying Liberty funds
may not always achieve their respective
investment goals.
Additional information about the underlying
Liberty funds' securities and investment
techniques, as well as the underlying Liberty
funds' fundamental and nonfundamental
investment policies, is contained in the
Statement of Additional Information.
DERIVATIVE STRATEGIES
Each underlying Liberty fund may enter into a number of hedging strategies,
including those that employ futures and options, to gain or reduce exposure to
particular securities or markets. These strategies, commonly referred to as
derivatives, involve the use of financial instruments whose value depend on, or
are derived from, the value of an underlying security, index or currency. Each
underlying Liberty fund may use these strategies to adjust its sensitivity to
changes in interest rates or for other hedging purposes (i.e., attempting to
offset a potential loss in one position by establishing an interest in an
opposite position). Derivative strategies involve the risk that they may
exaggerate a loss, potentially losing more money than the actual cost of the
derivative, or limit a potential gain. Also, with some derivative strategies
there is the risk that the other party to the transaction may fail to honor its
contract terms, causing a loss to the underlying Liberty fund.
<PAGE>
CONVERTIBLE SECURITIES
A convertible security is a fixed-income security, such as a bond or preferred
stock, which may be converted at a stated price within a specified period of
time into a specified number of shares of common stock of the same or a
different issuer. Each of the Liberty All-Star Mid Cap Growth Fund and Liberty
All-Star Large Cap Growth Fund may invest in convertible securities rated below
investment grade. Lower rated debt securities involve greater risk of loss due
to credit deterioration and are less liquid, especially during periods of
economic uncertainty or change, from higher quality debt securities. Lower
rated debt securities have the added risk that the issuer of the security may
default and not make the payment of interest or principal.
TEMPORARY DEFENSIVE STRATEGIES
At times, the advisor may determine that adverse market conditions make it
desirable to temporarily suspend the Fund's or an underlying Liberty fund's
normal investment activities. During such times, the Fund or an underlying
Liberty fund may, but is not required to, invest in cash or high-quality,
short-term debt securities, without limit. Taking a temporary defensive position
may prevent the Fund or an underlying Liberty fund from achieving its
investment goal.
FINANCIAL HIGHLIGHTS
The Fund is newly created and has not yet issued financial statements.
<PAGE>
NOTES
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<PAGE>
FOR MORE INFORMATION
You may wish to read the Statement of Additional Information for more
information on the Fund and the securities in which it invests. The Statement
of Additional Information is incorporated into this prospectus by reference,
which means that it is considered to be part of this prospectus.
You can get free copies of reports to be issued by the Fund and the Statement
of Additional Information, request other information and discuss your questions
about the Fund by writing or calling the Fund's distributor at:
Liberty Funds Distributor, Inc.
One Financial Center Boston, MA 02111-2621
1-800-426-3750
www.libertyfunds.com
Text-only versions of all Fund documents can be viewed online or downloaded from
the Securities and Exchange Commission at www.sec.gov.
You can review and copy information about the Fund by visiting the following
location, and you can obtain copies, upon payment of a duplicating fee, by
electronic request at the e-mail address [email protected] or by writing the:
Public Reference Room
Securities and Exchange Commission
Washington, DC 205490102
Information on the operation of the Public Reference Room may be obtained by
calling 1-202-942-8090.
INVESTMENT COMPANY ACT FILE NUMBER:
Liberty Funds Trust IX (formerly LAMCO Trust I): 811-09095
o Liberty All-Star Growth Opportunities Fund
<PAGE>
LIBERTY ALL-STAR FUNDS PROSPECTUS, JUNE 1, 2000
o LIBERTY ALL-STAR GROWTH OPPORTUNITIES FUND
Class Z Shares
Advised by Liberty Asset Management Company
The following eligible institutional
investors may purchase Class Z shares:
(i) any retirement plan with aggregate
assets of at least $5 million at the time of
purchase of Class Z shares and which
purchases shares directly from Liberty
Funds Distributor, Inc., the Fund's
distributor, or through a third party
broker-dealer, (ii) any insurance company,
trust company or bank purchasing shares
for its own account; and (iii) any
endowment, investment company or
foundation. In addition, Class Z shares
may be purchased directly or by exchange
by any clients of investment advisory
affiliates of the distributor provided that
the clients meet certain criteria
established by the distributor and its
affiliates.
Although these securities have been
registered with the Securities and
Exchange Commission, the Commission
has not approved or disapproved any
shares offered in this prospectus or
determined whether in this prospectus is
accurate or complete. Any representation
to the contrary is a criminal offense.
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
<PAGE>
TABLE OF CONTENTS
THE FUND.......................................................................
Investment Goal........................................................
Primary Investment Strategies..........................................
Underlying Liberty Funds...............................................
Primary Investment Risks...............................................
Performance History....................................................
Your Expenses..........................................................
YOUR ACCOUNT...................................................................
How to Buy Shares......................................................
Sales Charges..........................................................
How to Exchange Shares.................................................
How to Sell Shares.....................................................
Distribution and Service Fees..........................................
Other Information About Your Account...................................
MANAGING THE FUND..............................................................
Investment Advisor.....................................................
Portfolio Managers.....................................................
Portfolio Manager Performance Information..............................
OTHER INVESTMENT
STRATEGIES AND RISKS...........................................................
FINANCIAL HIGHLIGHTS...........................................................
<PAGE>
THE FUND
INVESTMENT GOAL
Liberty All-Star Growth Opportunities Fund seeks long-term capital
appreciation.
PRIMARY INVESTMENT STRATEGIES
The Fund does not invest directly in a portfolio of securities; rather, in
seeking to achieve its investment goal, it invests in shares of
underlying Liberty funds. Liberty Asset Management Company (LAMCO) is the
investment advisor to the Fund and to each of the underlying Liberty funds. The
underlying Liberty funds invest primarily in equity and equity related
securities, which include common stocks, bonds convertible into stocks,
warrants and other rights to purchase stocks, that demonstrate the potential
for continuing, above-average growth.
The pie chart below illustrates the expected asset allocation for the Fund
under normal market conditions:
[Pie chart illustrating the following allocations:
50% large capitalization equity securities
30% mid capitalization equity securities
20% small capitalization equity securities]
Allocation Ranges
Large Capitalization Equity Securities........40% to 60%
Mid Capitalization Equity Securities..........20% to 50%
Small Capitalization Equity Securities........15% to 40%
[In left margin column]
In managing the Fund, LAMCO (advisor), an
investment advisory affiliate of Liberty Funds
Distributor, Inc., the Fund's distributor, uses an
asset allocation strategy that focuses on three
broad asset classes of equity securities large
capitalization equity securities, mid
capitalization equity securities, and small
capitalization equity securities. The advisor
studies the long term performance of each asset
class and the relationships among the asset
classes. The advisor then determines the
optimal combination of funds that would
maximize potential returns with an acceptable
amount of risk. After determining what
percentage of the Fund's assets should be
invested in each asset class, the advisor then
invests the Fund's assets, in such proportions, in
<PAGE>
the underlying Liberty fund corresponding to
each asset class.
In general, the advisor intends to manage the Fund according to its allocation
strategy and within the allocation ranges shown above. However, the advisor
reserves the right in its discretion, without prior notice to shareholders, to
modify the allocation strategy for the Fund from time to time. If because of
appreciation or depreciation of the net asset value of the shares of underlying
Liberty funds within the three asset classes, the Fund's allocation falls
outside the applicable range shown above, the advisor will consider, in its
discretion, whether to reallocate the Fund's investments in the underlying
Liberty funds to bring its allocation back within such range.
[In left margin column]
LAMCO, as the advisor of each of the underlying
Liberty funds, continuously monitors the
performance and investment styles of each
underlying Liberty fund's Portfolio Manager.
From time to time the advisor may recommend
changes of the Portfolio Manager based on
factors such as changes in the Portfolio
Manager's investment style, a deterioration in
the Portfolio Manager's performance relative to
that of other investment management firms
practicing a similar style, or adverse changes in
ownership or personnel.
UNDERLYING LIBERTY FUNDS
LAMCO allocates each underlying Liberty fund's portfolio assets to one or more
independent investment management organizations (Portfolio Managers). There is
one Portfolio Manager for each underlying Liberty fund as of the date of this
prospectus.
Set forth below are the underlying Liberty funds in which the Fund may invest
and the Portfolio Manager for each underlying Liberty fund. The advisor may, in
its discretion, add additional underlying funds as investment options for the
Fund.
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UNDERLYING LIBERTY FUND PORTFOLIO MANAGER
- -------------------------------------------------------------------------------
Liberty All-Star Small Cap Growth Fund Westwood Management Corporation
- -------------------------------------------------------------------------------
Liberty All-Star Mid Cap Growth Fund TCW Funds Management, Inc.
- -------------------------------------------------------------------------------
Liberty All-Star Large Cap Growth Fund TCW Funds Management, Inc.
- -------------------------------------------------------------------------------
Liberty All-Star Small Cap Growth Fund (Small Cap Fund) seeks long-term capital
appreciation by investing primarily in equity securities issued by small
companies. These smaller companies have a market capitalization (defined as
<PAGE>
shares outstanding times current market price) of between $100 million and $1.5
billion at the time of the Fund's initial investment. The Small Cap Fund may
invest in relatively new or unseasoned companies, which are in their early
stages of development, or small companies in new and emerging industries. In
selecting securities for the Small Cap Fund, the Portfolio Manager considers
companies that offer:
o an earnings growth rate exceeding the Small Cap Fund's benchmark, the
Russell 2000 Growth Index
o an increasing return on equity
o a low debt/equity ratio
o continuous earnings per share and sales growth
o a recent positive earnings surprise
The Portfolio Manager for the Small Cap Fund closely monitors the issuers and
will sell a stock if the stock achieves 90% of its price objective and has
limited further potential for price increase, the forecasted price/earnings
ratio exceeds the future forecasted growth rate and/or the issuer suffers an
earnings disappointment.
Liberty All-Star Mid Cap Growth Fund (Mid Cap Fund) seeks long-term capital
appreciation by investing primarily in equity securities issued by medium-sized
companies which are characterized as "growth" companies according to criteria
established by the Mid Cap Fund's Portfolio Manager. In managing the Mid Cap
Fund, the Portfolio Manager will focus on emerging companies that exhibit this
characteristic. The Fund may purchase and sell convertible securities.
The Portfolio Manager for the Mid Cap Fund uses a "bottom-up" approach to
identify securities for investment. First, the Portfolio Manager uses
quantitative and qualitative criteria to screen companies. The Portfolio
Manager then subjects companies that make it through this screening process to
fundamental analysis, which generally looks for at least some of the following
factors:
o a demonstrated record of consistent earnings growth or the potential
to grow earnings
o an ability to earn an attractive return on equity
o a price/earnings ratio which is less than the Portfolio Manager's
internally estimated three-year earnings growth rate
o a large and growing market share
o a strong balance sheet
o significant ownership interest by management and a strong management
team
Liberty All-Star Large Cap Growth Fund (Large Cap Fund) seeks long-term capital
appreciation by investing primarily in equity securities issued by large
companies. In managing the Large Cap Fund, the Portfolio Manager will seek to
achieve superior long-term returns by owning shares in companies that are
believed to have strong and enduring business models and inherent advantages
over their competitors. The Large Cap Fund may purchase and sell convertible
securities and foreign securities.
A more complete description of each Portfolio Manager is included in the Fund's
Statement of Additional Information. [The Trust and LAMCO have received an
exemptive order from the Securities and Exchange Commission that permits each
<PAGE>
underlying Liberty fund to change or add Portfolio Managers without a vote of
its shareholders. Information regarding any new Portfolio Manager is sent to
the Fund's shareholders within 90 days following the effective date of the
change.]
PRIMARY INVESTMENT RISKS
There are many circumstances (including additional risks that are not described
here) which could prevent the Fund from achieving its goal. It is possible to
lose money by investing in the Fund. The performance of the Fund depends on the
performance of the underlying Liberty funds in which its invests. The
performance of the underlying funds, in turn, depends on the performance of the
stock markets in the United States and in foreign countries and on the
performance of the individual stocks in which they invest. The value of the
Fund will vary from day to day, reflecting changes in the values of the
underlying Liberty funds. The risks of investing in the Fund generally are the
same risks that are associated with the underlying Liberty funds in which the
Fund invests. Each of the underlying Liberty funds is subject (in varying
degrees) to the following primary risks:
Market risk is the risk that the price of a security held by the underlying
Liberty fund will fall due to changing market, economic or political
conditions.
Growth securities, because they tend to reflect future expectations about their
issuers, may be particularly sensitive to market movements. The prices of
growth securities may fall if expectations about their issuers are not met.
Smaller companies are more likely than medium-sized and larger companies to
have limited product lines, operating histories, markets or financial
resources. They may depend heavily on a small management team. Stocks of
smaller companies may trade less frequently, may trade in smaller volumes and
may fluctuate more sharply in price than stocks of medium-sized and larger
companies. In addition, they may not be widely followed by the investment
community, which can lower the demand for their stock.
The securities issued by mid-capitalization companies may have more risk than
those of larger companies. These securities may be more susceptible to market
downturns, and their prices could be more volatile.
Foreign securities are subject to special risks. Foreign stock markets can be
extremely volatile. Fluctuations in currency exchange rates may impact the
value of foreign securities without a change in the intrinsic value of those
securities. The liquidity of foreign securities may be more limited than
domestic securities, which means that the underlying Liberty fund may, at
times, be unable to sell foreign securities at desirable prices. Brokerage
commissions, custodial fees and other fees are generally higher for foreign
investments. In addition, foreign governments may impose withholding taxes
which would reduce the amount of income available to distribute to
shareholders. Other risks include the following: possible delays in the
settlement of transactions; less publicly available information about
companies; the impact of political, social or diplomatic events; and possible
seizure, expropriation or nationalization of the company or its assets.
As non-diversified mutual funds, the Liberty All-Star Mid Cap Growth Fund and
the Liberty All-Star Large Cap Growth Fund are allowed to invest a greater
<PAGE>
percentage of their assets in the securities of a single issuer. This may
concentrate issuer risk and, therefore, these underlying Liberty funds may have
an increased risk of loss compared to a similar diversified mutual fund.
PERFORMANCE HISTORY
Because the Fund is a new fund and has not completed one full year of
investment performance, information related to the Fund's performance has not
been included in this prospectus. However, information on other funds managed
by the Portfolio Managers is contained in the section "Managing the Fund -
Portfolio Manager Performance Information" in this prospectus.
YOUR EXPENSES
Fees and expenses are among the factors you should consider before you invest
in a mutual fund. The tables below describe the fees and expenses you may pay
when you buy, hold and sell shares of the Fund.
SHAREHOLDER FEES1/ (PAID DIRECTLY FROM YOUR INVESTMENT)
- -----------------------------------------------------------------
Maximum sales charge (load) on purchases (%) (as a
percentage of the offering price) 0.00
- -----------------------------------------------------------------
Maximum deferred sales charge (load) on
redemptions (%) (as a percentage of the lesser of
purchase price or redemption price) 0.00
- -----------------------------------------------------------------
Redemption fee (%) (as a percentage of amount 2/
redeemed, if applicable)
- -----------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (DEDUCTED DIRECTLY FROM FUND ASSETS)
- -----------------------------------------------------------------
Management and administration fee3/ (%) _.__
- -----------------------------------------------------------------
Distribution and service (12b-1) fees (%) 0.00
- -----------------------------------------------------------------
- ------------------------
1/ A $10 annual fee is deducted from accounts of less than $1,000 and paid
to the transfer agent.
2/ There is a $7.50 charge for wiring sale proceeds to your bank.
3/ The Fund bears its own pro rata share of the fees and expenses incurred
by the underlying Liberty funds. The investment return will be net of the
Fund's pro rata share of the expenses of the underlying Liberty funds in which
it invests. Based on the expense ratio of each underlying Liberty fund,
adjusted to reflect current fees and fee waivers in effect, as of its most
recent fiscal year end, the ranges for the average weighted expense ratio per
annum borne by the Fund, including its pro rata share of expenses of the
underlying Liberty funds, is expected to be ____% to ____%.
<PAGE>
- -----------------------------------------------------------------
Other expenses (%) _.__
- -----------------------------------------------------------------
Total annual fund operating expenses4/(%) _.__
- -----------------------------------------------------------------
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
---------------------------------------
1 YEAR 3 YEARS
---------------------------------------
$-.-- $-.--
---------------------------------------
[In left margin column]
UNDERSTANDING EXPENSES
SALES CHARGES are paid directly by
shareholders to the Fund's distributor.
ANNUAL FUND OPERATING EXPENSES are
deducted from the Fund. They include
management and administration fees, brokerage
costs, and administrative costs including pricing
and custody services.
EXAMPLE EXPENSES help you compare
the cost of investing in the Fund to the cost of
investing in other mutual funds. The table does
not take into account any expense reduction
arrangements discussed in the footnotes to the
Annual Fund Operating Expenses table. It uses
the following hypothetical conditions:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same
o Assumes reinvestment of all dividends
and distributions
- ------------------------
4/ The Fund's advisor and administrator have voluntarily agreed to waive
advisory and administration fees and reimburse the Fund for certain expenses so
that the total annual fund operating expenses (exclusive of distribution and
service fees, brokerage commissions, interest, taxes and extraordinary
expenses, if any) will not exceed _.__%. As a result, the actual management
and administration fees for Class Z shares would be __% and total annual fund
operating expenses for Class Z shares would be __%. This arrangement may be
terminated by the advisor or administrator at any time.
<PAGE>
YOUR ACCOUNT
HOW TO BUY SHARES
Your financial advisor can help you establish an appropriate investment
portfolio, buy shares and monitor your investments. When the Fund receives your
purchase request in "good form," your shares will be bought at the next
calculated public offering price. "Good form" means that you placed your order
with your brokerage firm or your payment has been received and your application
is complete, including all necessary signatures.
[In left margin column]
WHO IS ELIGIBLE TO BUY CLASS Z
SHARES?
The following eligible institutional investors may
purchase Class Z shares: (i) any retirement plan
with aggregate assets of at least $5 million at the
time of purchase of Class Z shares and which
purchases shares directly from the distributor or
through a third party broker-dealer; (ii) any
insurance company, trust company or bank
purchasing shares for its own account; and (iii)
any endowment, investment company or
foundation. In addition, Class Z shares may be
purchased directly or by exchange by any clients
of investment advisory affiliates of the
distributor provided that the clients meet certain
criteria established by the distributor and its
affiliates.5/
OUTLINED BELOW ARE THE VARIOUS OPTIONS FOR BUYING SHARES:
METHOD INSTRUCTIONS
Through your Your financial advisor can help you establish your
financial advisor account and buy Fund shares on your behalf.
By check For new accounts, send a completed application and check
(new account) made payable to the Fund to the transfer agent, Liberty
Funds Services, Inc., P.O. Box 1722, Boston,
MA 02105-1722.
By check For existing accounts, fill out and return the
(existing account) additional investment stub included in your quarterly
statement, or send a letter of instruction including
- ------------------------
5/ The Fund reserves the right to change the criteria for eligible
investors. The Fund also reserves the right to refuse a purchase order for any
reason, including if it believes that doing so would be in the best interest of
the Fund and its shareholders.
<PAGE>
your Fund name and account number with a check made
payable to the Fund to Liberty Funds Services, Inc.,
P.O. Box 1722, Boston, MA 02105-1722.
By exchange You or your financial advisor may acquire shares by
exchanging shares you own in one fund for shares of the
same class or Class A of the Fund at no additional cost.
For federal income tax purposes, an exchange is
ordinarily a taxable event that may result in a taxable
gain or loss. There may be an additional charge if
exchanging from a money market fund. To exchange by
telephone, call 1-800-422-3737.
By wire You may purchase shares by wiring money from your bank
account to your fund account. To wire funds to your fund
account, call 1-800-422-3737 to obtain a control number
and the wiring instructions.
By electronic You may purchase shares by electronically transferring
funds money from your bank account to your fund account by
transfer calling 1-800-422-3737. Electronic funds transfers may
take up to two business days to settle and be considered
in "good form." You must set up this feature prior to
your telephone request. Be sure to complete the
appropriate section of the application.
Automatic You can make monthly or quarterly investments
investment plan automatically from your bank account to your fund
account. You can select a preauthorized amount to be
sent via electronic funds transfer. Be sure to complete
the appropriate section of the application for this
feature.
By dividend You may automatically invest dividends distributed by
diversification one fund into the same class of shares of the Fund at no
additional sales charge. You will normally have to pay
federal income taxes, and any state or local taxes, on
the distributions you receive from a fund, whether you
take the distributions in cash or reinvest them in
additional shares. To invest your dividends in another
fund, call 1-800-345-6611.
[In left margin column]
CHOOSING A SHARE CLASS
The Fund offers one class of shares in this
prospectus -- CLASS Z.
The Fund also offers three additional
classes of shares -- Class A, B and C
shares are available through a separate
prospectus. Each share class has its own
sales charge and expense structure.
Determining which share class is best for
<PAGE>
you depends on the dollar amount you are
investing and the number of years for
which you are willing to invest. Based on
your personal situation, your investment
advisor can help you decide which class of
shares makes the most sense for you. In
general, anyone who is eligible to
purchase Class Z shares, which do not
incur Rule 12b-1 fees or sales charges,
should do so in preference over other
classes.
SALES CHARGES
Your purchases of Class Z shares generally are at net asset value, which is the
value of a Fund share excluding any sales charge. Class Z shares are not
subject to an initial sales charge when purchased, or a contingent deferred
sales charge when sold.
HOW TO EXCHANGE SHARES
You may exchange your shares for shares of the same share class of another fund
or Class A shares of another fund distributed by Liberty Funds Distributor,
Inc. at net asset value. Unless your account is part of a tax-deferred
retirement plan, an exchange is a taxable event. Therefore, you may realize a
gain or a loss for tax purposes. The Fund may terminate your exchange privilege
if the advisor determines that your exchange activity is likely to adversely
impact its ability to manage the Fund. To exchange by telephone, call
1-800-422-3737.
HOW TO SELL SHARES
Your financial advisor can help you determine if and when you should sell your
shares. You may sell shares of the Fund on any regular business day that the
New York Stock Exchange (NYSE) is open.
When the Fund receives your sales request in "good form," shares will be sold
at the next calculated price. In "good form" means that money used to purchase
your shares is fully collected. When selling shares by letter of instruction,
"good form" also means (i) your letter has complete instructions, the proper
signatures and signature guarantees and (ii) any other required documents are
attached. For additional documents required for sales by corporations, agents,
fiduciaries and surviving joint owners, please call 1-800-345-6611. Retirement
plan accounts have special requirements; please call 1-800-799-7526 for more
information.
The Fund will generally send proceeds from the sale to you within seven days
(usually on the next business day after your request is received in "good
form"). However, if you purchased your shares by check, the Fund may delay
sending the proceeds from the sale of your shares until the check clears which
may take up to 15 days after your purchase. No interest will be paid on
uncashed redemption checks.
<PAGE>
OUTLINED BELOW ARE THE VARIOUS OPTIONS FOR SELLING SHARES:
- -------------------------------------------------------------------------------
METHOD INSTRUCTIONS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Through your You may call your financial advisor to place your sell
financial advisor order. To receive the current trading day's price, your
financial advisor firm must receive your request prior
to the close of the NYSE, usually 4:00 p.m. Eastern time.
- -------------------------------------------------------------------------------
By exchange You or your financial advisor may sell shares by
exchanging from the Fund into Class Z or Class A shares
of another fund at no additional cost. To exchange by
telephone, call 1-800-422-3737.
- -------------------------------------------------------------------------------
By telephone You or your financial advisor may sell shares by
telephone and request that a check be sent to your
address of record by calling 1-800-422-3737, unless you
have notified the Fund of an address change within the
previous 30 days. The dollar limit for telephone sales
is $100,000 in a 30-day period. You do not need to set
up this feature in advance of your call. Certain
restrictions apply to retirement accounts. For details,
call 1-800-345-6611.
- -------------------------------------------------------------------------------
By mail You may send a signed letter of instruction to the
address below. In your letter of instruction, note the
Fund's name, share class, account number, and the dollar
value or number of shares you wish to sell. All account
owners must sign the letter, and signatures must be
guaranteed by either a bank, a member firm of a national
stock exchange or another eligible guarantor institution.
Additional documentation is required for sales by
corporations, agents, fiduciaries, surviving joint owners
and individual retirement account owners. For details,
call 1-800-345-6611. Mail your letter of instruction to
Liberty Funds Services, Inc., P.O. Box 1722, Boston, MA
02105-1722.
- -------------------------------------------------------------------------------
By wire You may sell shares and request that the proceeds be
wired to your bank. You must set up this feature prior
to your telephone request. Be sure to complete the
appropriate section of the account application for this
feature.
- -------------------------------------------------------------------------------
By electronic You may sell shares and request that the proceeds be
funds transfer electronically transferred to your bank. Proceeds may
take up to two business days to be received by your bank.
You must set up this feature prior to your request. Be
sure to complete the appropriate section of the account
application for this feature.
- -------------------------------------------------------------------------------
<PAGE>
OTHER INFORMATION ABOUT YOUR ACCOUNT
HOW THE FUND'S SHARE PRICE IS DETERMINED The price of the Fund's Class Z shares
is based on its net asset value (NAV). The NAV is determined at the close of
regular trading on the NYSE, usually 4:00 p.m. Eastern time, on each business
day that the NYSE is open (typically Monday through Friday). The NYSE is closed
on most national holidays and Good Friday.
When you request a transaction, it will be processed at the NAV next determined
after your request is received in "good form" by the distributor. In most
cases, in order to receive that day's price, the distributor must receive your
order before that day's transactions are processed. If you request a
transaction through your financial advisor's firm, the firm must receive your
order by the close of trading on the NYSE to receive that day's price.
The Fund determines its NAV for its Class Z shares by dividing the total net
assets attributable to Class Z shares by the number of Class Z shares
outstanding. In determining the NAV, the Fund must determine the price of each
security in its portfolio at the close of each trading day. The assets of the
Fund consist primarily of shares of the underlying Liberty funds. Because an
underlying Liberty fund may hold securities that are traded on foreign
exchanges, the value of the underlying Liberty fund's securities may change on
days when shareholders will not be able to buy or sell shares of the underlying
Liberty fund. This will affect the underlying Liberty fund's NAV on the day it
is next determined. Securities for which market quotations are available are
valued each day at the current market value. However, where market quotations
are unavailable, or when the advisor believes that subsequent events have made
them unreliable, the underlying Liberty fund may use other data to determine
the fair value of the securities.
You can find the daily prices of some share classes for the Fund in most major
daily newspapers under the caption "Liberty." You can find daily prices for all
share classes by visiting the Fund's web site at www.libertyfunds.com.
ACCOUNT FEES If your account value falls below $1,000 (other than as a result
of depreciation in share value) you may be subject to an annual account fee of
$10. This fee is deducted from the account in June each year. Approximately 60
days prior to the fee date, the Fund's transfer agent will send you written
notification of the upcoming fee. If you add money to your account and bring
the value above $1,000 prior to the fee date, the fee will not be deducted.
SHARE CERTIFICATES Share certificates are not available for Class Z shares.
DIVIDENDS, DISTRIBUTIONS, AND TAXES The Fund has the potential to make the
following distributions:
<PAGE>
[In left margin column]
UNDERSTANDING FUND DISTRIBUTIONS
The Fund earns income from the
securities it holds. The Fund also may
realize capital gains and losses on sales of
its securities. The Fund distributes
substantially all of its net investment
income and capital gains to shareholders.
As a shareholder, you are entitled to a
portion of the Fund's income and capital
gains based on the number of shares you
own at the time these distributions are
declared.
TYPES OF DISTRIBUTIONS
Dividend Represents interest and dividends earned from securities held
by the Fund.
Capital gains Represents net long-term capital gains on sales of
securities held for more than 12 months and net short-term
capital gains, which are gains on sales of securities held
for a 12-month period or less.
The Fund distributes dividends quarterly and any capital gains (including
short-term capital gains) at least annually. You can choose one of the options
listed in the table below for these distributions when you open your account.6/
To change your distribution option call 1-800-345-6611.
DISTRIBUTION OPTIONS
Reinvest all distributions in additional shares of your current fund
- -------------------------------------------------------------------------------
Reinvest all distributions in shares of another fund
- -------------------------------------------------------------------------------
Receive dividends in cash (see options below) and reinvest capital gains7/
- -------------------------------------------------------------------------------
Receive all distributions in cash (with one of the following options)7/:
- ------------------------
6/ If you do not indicate on your application your preference for handling
distributions, the Fund will automatically reinvest all distributions in
additional shares of the Fund.
7/ Distributions of $10 or less will automatically be reinvested in
additional Fund shares. If you elect to receive distributions by check and the
check is returned as undeliverable, or if you do not cash a distribution check
within six months of the check date, the distribution will be reinvested in
additional shares of the Fund.
<PAGE>
o send the check to your address of record
o send the check to a third party address
o transfer the money to your bank via electronic funds transfer
TAX CONSEQUENCES As long as the Fund qualifies for treatment as a regulated
investment company (which it intends to do in its first and each subsequent
taxable year), it pays no federal income tax on the earnings it distributes to
shareholders. You will normally have to pay federal income taxes on the
distributions you receive from the Fund, whether you take the distributions in
cash or reinvest them in additional shares. Depending on the state where you
live, distributions may also be subject to state and local income taxes.
In general, any distributions of dividends, interest and short-term capital
gains are taxable as ordinary income. Distributions designated as capital gain
dividends are taxable as long-term capital gains, regardless of how long you
have held your Fund shares. Some dividends paid in January may be taxable as if
they had been paid the previous December. You will be provided with information
each year regarding the amount of ordinary income and capital gains distributed
to you for the previous year and any portion of your distribution which is
exempt from state and local taxes.
Fund distributions will reduce the Fund's net asset value per share. Therefore,
if you buy shares shortly before the record date of a distribution, you may pay
the full price for the shares and then effectively receive a portion of the
purchase price back as a taxable distribution.
When you redeem, sell or exchange shares, it is generally considered a taxable
event for you. Depending on the purchase price and the sale price of the shares
you redeem, sell or exchange, you may have a gain or loss on the transaction.
You are responsible for any tax liabilities generated by your transaction.
Your investment in the Fund may have additional personal tax implications.
Please consult your tax advisor on federal, state, local or other applicable
tax laws.
<PAGE>
MANAGING THE FUND
INVESTMENT ADVISOR
Liberty Asset Management Company (LAMCO), located at Federal Reserve Plaza, 600
Atlantic Avenue, Boston, Massachusetts 02110, is the investment advisor for the
Fund and for each of the underlying Liberty funds. In its duties as investment
advisor, LAMCO runs the funds' day-to-day business, including placing all
orders for the purchase and sale of portfolio securities. LAMCO has been an
investment advisor since 1985. As of February 29, 2000, LAMCO managed over $__
billion in assets.
The Fund pays the advisor a fee at the annual rate of ____% of the average
daily net assets of the Fund.
PORTFOLIO MANAGERS
No one individual at LAMCO is responsible for LAMCO's investment management of
the Fund or the underlying Liberty funds. The following individuals are
responsible for the management of the assets of the underlying Liberty funds in
which the Fund may invest:
LYNDA J. CALKIN, Senior Vice President of Westwood Management Corporation since
1993, manages the assets of the Liberty All-Star Small Cap Growth Fund.
DOUGLAS S. FOREMAN, Group Managing Director and Chief Investment Officer - U.S.
Equities of TCW Funds Management, Inc. since 1994, and CHRISTOPHER J. AINLEY,
Managing Director of TCW Funds Management, Inc. since 1994, manage the assets
of the Liberty All-Star Mid Cap Growth Fund.
GLEN A. BICKERSTAFF, Managing Director - U.S. Equities of TCW Funds Management,
Inc. since 1998, manages the assets of the Liberty All-Star Large Cap Growth
Fund. Prior to joining TCW in 1998, Mr. Bickerstaff was a Vice President and
Senior Portfolio Manager at Transamerica Investment Services. TCW is a
wholly-owned subsidiary of The TCW Group, Inc.
<PAGE>
PORTFOLIO MANAGER PERFORMANCE INFORMATION
SMALL CAP EQUITY FUND. The table below sets forth the average annual returns of
the Gabelli Westwood SmallCap Equity Fund (Gabelli Westwood SmallCap Fund), a
diversified, open-end management company managed by Westwood Management
Corporation (Westwood). The Gabelli Westwood SmallCap Fund is the only mutual
fund managed by Westwood with investment goals, policies and restrictions
substantially similar to the Small Cap Fund and has been managed in
substantially the same way that the Small Cap Fund is to be managed by
Westwood. Lynda J. Calkin of Westwood has been primarily responsible for the
day-to-day portfolio management of the Gabelli Westwood SmallCap Fund since its
inception on July 31, 1997. The data is provided to illustrate the past
performance of Westwood in managing a substantially similar fund as measured
against the Russell 2000 Growth Index and the Lipper Small Cap Average and does
not represent the performance of the Small Cap Fund. Investors should not
consider this performance data as an indication of future performance of the
Small Cap Fund, the Growth Opportunities Fund or of Westwood. The returns are
not intended to predict or suggest the returns that might be experienced by the
Small Cap Fund, the Growth Opportunities Fund or an individual investing in the
Growth Opportunities Fund.
The annual returns presented below are unaudited. The use of a methodology
different from that used to calculate the performance data set forth below
could result in different performance data.
All returns presented were calculated on a total return basis and include all
dividends and interest, accrued income and realized and unrealized gains and
losses, and deductions for brokerage commissions and execution costs. Returns
for each period are adjusted to assume that all expenses and fees of the Class
Z shares of the Growth Opportunities Fund which are presently in effect were
deducted during such periods. All returns are for the periods ended on December
31, 1999.
ANNUAL TOTAL RETURNS
- ----------------------------------------------------------------
SINCE
1 YEAR INCEPTION
- ----------------------------------------------------------------
GABELLI WESTWOOD SMALLCAP EQUITY
FUND (1) ........................ ______% ______%
- ----------------------------------------------------------------
RUSSELL 2000 GROWTH INDEX (2).... ______% ______%
- ----------------------------------------------------------------
LIPPER SMALL CAP AVERAGE (3)..... ______% ______%
- ----------------------------------------------------------------
- -----------
(1) Commencement of investment operations is July 31, 1997.
(2) The Russell 2000 Growth Index is an unmanaged index that measures the
performance of those companies in the Russell 2000 with higher price-to-book
ratios and higher forecasted growth values. The Russell 2000 contains the 2000
smallest companies in the Russell 3000, which, in turn, contains the 3000
largest companies in the U.S. based on total market capitalization. The
performance of the Index does not include fees or expenses.
(3) The Lipper Small Cap Average, which is calculated by Lipper Inc., is
comprised of __________. The performance of the Lipper Small Cap Average does
not include fees or expenses.
<PAGE>
MID CAP EQUITY FUND. The table below sets forth the average annual returns of
the TCW Galileo Aggressive Growth Equities Fund (Aggressive Growth Fund), a
non-diversified, open-end management company managed by TCW Funds Management,
Inc. (TCW). The Aggressive Growth Fund is the only mutual fund managed by TCW
with investment goals, policies and restrictions substantially similar to the
Mid Cap Fund and has been managed in substantially the same way that the Mid
Cap Fund is to be managed by TCW. Douglas S. Foreman and Christopher J. Ainley
have been responsible for the day-to-day portfolio management of the Aggressive
Growth Fund since its inception in June of 1996. The data is provided to
illustrate the past performance of TCW in managing a substantially similar fund
as measured against the Russell Midcap Growth Index and the Morningstar Mid-Cap
Growth Category and does not represent the performance of the Mid Cap Fund.
Investors should not consider this performance data as an indication of future
performance of the Mid Cap Fund, the Growth Opportunities Fund or of TCW. The
returns are not intended to predict or suggest the returns that might be
experienced by the Mid Cap Fund, the Growth Opportunities Fund or an individual
investing in the Growth Opportunities Fund.
The annual returns presented below are unaudited. The use of a methodology
different from that used to calculate the performance data set forth below
could result in different performance data.
All returns presented were calculated on a total return basis and include all
dividends and interest, accrued income and realized and unrealized gains and
losses, and deductions for brokerage commissions and execution costs. Returns
for each period are adjusted to assume that all expenses and fees of the Class
Z shares of the Growth Opportunities Fund which are presently in effect were
deducted during such periods. All returns are for the periods ended on December
31, 1999.
ANNUAL TOTAL RETURNS
- ----------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS INCEPTION
- ----------------------------------------------------------------------------
TCW GALILEO AGGRESSIVE GROWTH
EQUITIES FUND (4) ............. ______% ______% ______%
- ----------------------------------------------------------------------------
RUSSELL MIDCAP GROWTH INDEX(5) ______% ______% ______%
- ----------------------------------------------------------------------------
MORNINGSTAR MID-CAP GROWTH
CATEGORY(6) ................... ______% ______% _____%
- ----------------------------------------------------------------------------
- -----------
(4) Commencement of investment operations is June 3, 1996.
(5) The Russell Midcap Growth Index is an unmanaged index that measures the
performance of those Russell Midcap companies with higher price-to-book ratios
and higher forecasted growth values. The stocks are also members of the Russell
1000 Growth Index. The performance of the Index does not include fees or
expenses.
(6) The Morningstar Mid-Cap Growth Category is comprised of ________________.
The performance of the Morningstar Mid-Cap Growth Category does not include
fees or expenses.
<PAGE>
LARGE CAP EQUITY FUND. The table below sets forth the average annual returns of
the TCW Galileo Select Equities Fund (Select Equities Fund), a non-diversified,
open-end management company managed by TCW Funds Management, Inc. (TCW). The
average annual returns are for periods since May __, 1998, the date on which
Gary Bickerstaff of TCW became the portfolio manager of the Select Equities
Fund. Since May __, 1998, the Select Equities Fund has been managed in
substantially the same way as the Large Cap Fund is to be managed by Mr.
Bickerstaff. The Select Equities Fund is the only mutual fund managed by TCW
with investment goals, policies and restrictions substantially similar to the
Large Cap Fund and has been, since May __, 1998, managed by Mr. Bickerstaff in
substantially the same way that the Large Cap Fund is to be managed by Mr.
Bickerstaff.
The annual returns presented below are unaudited. The use of a methodology
different from that used to calculate the performance data set forth below
could result in different performance data.
All returns presented were calculated on a total return basis and include all
dividends and interest, accrued income and realized and unrealized gains and
losses, and deductions for brokerage commissions and execution costs.
Returns for each period are adjusted to assume that all expenses and fees of
the Class Z shares of the Growth Opportunities Fund which are presently in
effect were deducted during such periods. All returns are for the periods ended
on December 31, 1999.
ANNUAL TOTAL RETURNS
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SINCE
1 YEAR MAY __, 1998
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TCW GALILEO SELECT EQUITIES
FUND........................... ______% ______%
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STANDARD & POOR'S 500 ______% ______%
COMPOSITE INDEX (7) ...........
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RUSSELL 1000 GROWTH INDEX(8) .. ______% ______%
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MORNINGSTAR LARGE GROWTH
CATEGORY (9) .................. ______% ______%
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- -----------
(7) The Standard & Poor's 500 Composite Index is an unmanaged index of common
stocks that is considered to be generally representative of the United States
stock market. The performance of the Index does not include fees or expenses.
(8) The Russell 1000 Growth Index is an unmanaged index that measures the
performance of those companies in the Russell 1000 (which contains the 1000
largest companies in the U.S. based on total market capitalization) with higher
price-to-book ratios and higher forecasted growth values. The performance of
the Index does not include fees or expenses.
(9) The Morningstar Large Growth Category is comprised of ________________.
The performance of the Morningstar Large Growth Category does not include fees
or expenses.
Prior to joining TCW, Mr. Bickerstaff was the portfolio manager of the
Transamerica Premier Equity Fund from its inception, October 1, 1995, through
May 18, 1998. As the portfolio manager of the Transamerica Premier Equity Fund,
Mr. Bickerstaff had full discretionary authority over the selection of
investments for, and was responsible for, the day-to-day management of that
fund. Average annual returns for the one year period ended December 31, 1997
<PAGE>
and for the entire period during which Mr. Bickerstaff managed that fund
compared with the performance of the Standard and Poor's 500 Composite Index,
the Russell 1000 Growth Index and the Morningstar Large Growth Category were:
<TABLE>
<CAPTION>
<S> <C> <C>
ANNUAL TOTAL RETURNS
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SINCE
INCEPTION
1 YEAR (OCTOBER 1, 1995)
ENDED DECEMBER 31, 1997 THROUGH DECEMBER 31, 1997
- ------------------------------------------------------------------------------------------
TRANSAMERICA PREMIER EQUITY
FUND (10) ..................... ______% ______%
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S&P 500 INDEX(11) ............. ______% ______%
- ------------------------------------------------------------------------------------------
RUSSELL 1000 GROWTH INDEX(12) . ______% ______%
- ------------------------------------------------------------------------------------------
MORNINGSTAR LARGE GROWTH
CATEGORY(13) .................. ______% ______%
- ------------------------------------------------------------------------------------------
</TABLE>
- -----------
(10) Average annual total returns reflect changes in share prices and
reinvestment of dividends and distributions and is net of all actual fees and
expenses incurred by the Transamerica Premier Equity Fund. [Discuss expense
ratio of Transamerica for periods indicated.] Using the expense ratio of the
Class Z shares of the Growth Opportunities Fund, the Transamerica Premier
Equity Fund performance outlined above would be [higher/lower].
(11) The Standard & Poor's 500 Composite Index is an unmanaged index of
common stocks that is considered to be generally representative of the United
States stock market. The performance of the Index does not include fees or
expenses.
(12) The Russell 1000 Growth Index is an unmanaged index that measures the
performance of those companies in the Russell 1000 (which contains the 1000
largest companies in the U.S. based on total market capitalization) with higher
price-to-book ratios and higher forecasted growth values. The performance of
the Index does not include fees or expenses.
(13) The Morningstar Large Growth Category is comprised of ________________.
The performance of the Morningstar Large Growth Category does not include fees
or expenses.
The data in the tables above is provided to illustrate the past performance of
TCW and Mr. Bickerstaff in managing substantially similar funds as measured
against the Standard and Poor's 500 Composite Index, the Russell 1000 Growth
Index and the Morningstar Large Growth Category and does not represent the
performance of the Large Cap Fund. Investors should not consider this
performance data as an indication of future performance of the Large Cap Fund,
the Growth Opportunities Fund or of TCW or Mr. Bickerstaff. The returns are not
intended to predict or suggest the returns that might be experienced by the
Large Cap Fund, the Growth Opportunities Fund or an individual investing in the
Growth Opportunities Fund.
OTHER INVESTMENT STRATEGIES AND RISKS
Each underlying Liberty fund's primary investment strategies and their
associated risks are described above. In addition to investing in the
underlying Liberty funds, the Fund is permitted to invest directly in cash,
government securities and short-term commercial paper. [An affiliate of the
Fund has applied for an exemptive order from the Securities and Exchange
Commission that would permit the Fund to invest directly in additional types of
securities.] This section describes other investments that the Fund and each of
the underlying Liberty funds may make and the risks associated with them. In
seeking to achieve its goal, the Fund or an underlying Liberty fund may invest
in various types of securities and engage in various investment techniques
which are not the principal focus of the Fund or the underlying Liberty fund
<PAGE>
and therefore are not described in this prospectus. These types of securities
and investment practices are identified and discussed in the Fund's Statement
of Additional Information, which you may obtain free of charge (see back
cover).
[In left margin column]
UNDERSTANDING OTHER INVESTMENTS AND RISKS
Each underlying Liberty fund's primary
investments and risks are described under "The
Fund - Underlying Liberty Funds" and "The
Fund Primary Investment Risks." In seeking
to meet its investment goal, each underlying
Liberty fund may also invest in other securities
and use certain investment techniques. These
securities and investment techniques offer
opportunities and carry various risks.
Each underlying Liberty fund may elect not to
buy any of these securities or use any of these
techniques unless it believes that doing so will
help the underlying Liberty fund achieve its
investment goal. The underlying Liberty funds
may not always achieve their respective
investment goals.
Additional information about the underlying
Liberty funds' securities and investment
techniques, as well as the underlying Liberty
funds' fundamental and non-fundamental
investment policies, is contained in the
Statement of Additional Information.
DERIVATIVE STRATEGIES
Each underlying Liberty fund may enter into a number of hedging strategies,
including those that employ futures and options, to gain or reduce exposure to
particular securities or markets. These strategies, commonly referred to as
derivatives, involve the use of financial instruments whose value depend on, or
are derived from, the value of an underlying security, index or currency. Each
underlying Liberty fund may use these strategies to adjust its sensitivity to
changes in interest rates or for other hedging purposes (i.e., attempting to
offset a potential loss in one position by establishing an interest in an
opposite position). Derivative strategies involve the risk that they may
exaggerate a loss, potentially losing more money than the actual cost of the
derivative, or limit a potential gain. Also, with some derivative strategies
there is the risk that the other party to the transaction may fail to honor its
contract terms, causing a loss to the underlying Liberty fund.
<PAGE>
CONVERTIBLE SECURITIES
A convertible security is a fixed-income security, such as a bond or preferred
stock, which may be converted at a stated price within a specified period of
time into a specified number of shares of common stock of the same or a
different issuer. Each of the Liberty All-Star Mid Cap Growth Fund and Liberty
All-Star Large Cap Growth Fund may invest in convertible securities rated below
investment grade. Lower rated debt securities involve greater risk of loss due
to credit deterioration and are less liquid, especially during periods of
economic uncertainty or change, from higher quality debt securities. Lower
rated debt securities have the added risk that the issuer of the security may
default and not make the payment of interest or principal.
TEMPORARY DEFENSIVE STRATEGIES
At times, the advisor may determine that adverse market conditions make it
desirable to temporarily suspend the Fund's or an underlying Liberty fund's
normal investment activities. During such times, the Fund or an underlying
Liberty fund may, but is not required to, invest in cash or high-quality,
short-term debt securities, without limit. Taking a temporary defensive position
may prevent the Fund or an underlying Liberty fund from achieving its
investment goal.
FINANCIAL HIGHLIGHTS
The Fund is newly created and has not yet issued financial statements.
<PAGE>
NOTES
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<PAGE>
NOTES
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<PAGE>
FOR MORE INFORMATION
You may wish to read the Statement of Additional Information for more
information on the Fund and the securities in which it invests. The Statement
of Additional Information is incorporated into this prospectus by reference,
which means that it is considered to be part of this prospectus.
You can get free copies of reports to be issued by the Fund and the Statement
of Additional Information, request other information and discuss your questions
about the Fund by writing or calling the Fund's distributor at:
Liberty Funds Distributor, Inc.
One Financial Center Boston, MA 02111-2621
1-800-426-3750
www.libertyfunds.com
Text-only versions of all Fund documents can be viewed online or downloaded from
the Securities and Exchange Commission at www.sec.gov.
You can review and copy information about the Fund by visiting the following
location, and you can obtain copies, upon payment of a duplicating fee, by
electronic request at the e-mail address [email protected] or by writing the:
Public Reference Room
Securities and Exchange Commission
Washington, DC 20549-0102
Information on the operation of the Public Reference Room may be obtained by
calling 1-202-942-8090.
INVESTMENT COMPANY ACT FILE NUMBER:
Liberty Funds Trust IX (formerly LAMCO Trust I): 811-09095
o Liberty All-Star Growth Opportunities Fund
<PAGE>
LIBERTY ALL-STAR GROWTH AND INCOME FUND
LIBERTY ALL-STAR GROWTH OPPORTUNITIES FUND
LIBERTY ALL-STAR SMALL CAP GROWTH FUND
LIBERTY ALL-STAR MID CAP GROWTH FUND
LIBERTY ALL-STAR LARGE CAP GROWTH FUND
(Each a Fund and, collectively, the Funds)
Series of Liberty Funds Trust IX
Statement of Additional Information
March 17, 2000, Revised June 1, 2000
This Statement of Additional Information (SAI) contains information which may
be useful to investors but which is not included in the Prospectuses of the
Funds. This SAI is not a Prospectus and is authorized for distribution only
when accompanied or preceded by the Prospectus dated March 17, 2000 relating to
the Liberty All-Star Growth and Income Fund (Growth and Income Fund), the
Prospectus dated June 1, 2000 relating to the Liberty All-Star Growth
Opportunities Fund (Growth Opportunities Fund), or the Prospectus dated June 1,
2000 relating to the Liberty All-Star Small Cap Growth Fund (Small Cap Fund),
the Liberty All-Star Mid Cap Growth Fund (Mid Cap Fund) and the Liberty
All-Star Large Cap Growth Fund (Large Cap Fund). This SAI should be read
together with the Prospectuses mentioned above and the most recent Annual
Report of the Growth and Income Fund dated December 31, 1999. Investors may
obtain a free copy of a Prospectus and the Annual Report from Liberty Funds
Distributor, Inc. (LFD), One Financial Center, Boston, MA 02111-2621. The
Financial Statements and Report of Independent Accountants appearing in the
Growth and Income Fund's December 31, 1999 Annual Report are incorporated in
this SAI by reference.
This SAI contains specific information about the Funds and additional
information about certain securities and investment techniques described in the
Funds' Prospectuses.
<PAGE>
TABLE OF CONTENTS
PAGE
Definitions
Organization and History
Investment Objectives and Policies
Fundamental Investment Policies
Other Investment Policies
Investment Management and Other Services
Portfolio Turnover
Other Charges and Expenses
Investment Performance
Custodian
Independent Accountants
Description of Certain Investments
Taxes
Management of the Funds
Determination of Net Asset Value
How to Buy Shares
Special Purchase Programs/Investor Services
Programs for Reducing or Eliminating Sales Charges
How to Sell Shares
Distributions
How to Exchange Shares
Suspension of Redemptions
Shareholder Liability
Shareholder Meetings
Performance Measures
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
DEFINITIONS
"Trust" Liberty Funds Trust IX
"Growth and Income Fund" Liberty All-Star Growth and Income Fund
"Growth Opportunities Fund" Liberty All-Star Growth Opportunities Fund
"Small Cap Fund" Liberty All-Star Small Cap Growth Fund
"Mid Cap Fund" Liberty All-Star Mid Cap Growth Fund
"Large Cap Fund" Liberty All-Star Large Cap Growth Fund
"Advisor" Liberty Asset Management Company, the Funds'
investment advisor
"Administrator" Colonial Management Associates, Inc., the Funds'
administrator
"LFD" Liberty Funds Distributor, Inc., the Funds'
distributor
"LFS" Liberty Funds Services, Inc., the Funds' shareholder
services and transfer agent
"Underlying Liberty Funds" The open-end mutual funds in which the
Growth Opportunities Fund may invest,
currently, the Small Cap Fund, Mid Cap Fund and
Large Cap Fund
</TABLE>
ORGANIZATION AND HISTORY
The Trust is a Massachusetts business trust organized in 1998. The Growth and
Income Fund, a diversified series of the Trust, commenced operations on March
1, 1999, and the Small Cap Fund, a diversified series of the Trust, and each of
the Mid Cap Fund, the Large Cap Fund and the Growth Opportunities Fund,
non-diversified series of the Trust, commenced operations on ___________, 2000.
Each Fund represents the entire interest in a separate series of the Trust. The
Growth and Income Fund's registration statement was initially became effective
by the Securities and Exchange Commission (SEC) on January 15, 1999. The
registration statement relating to each of the Growth Opportunities Fund, the
Small Cap Fund, the Mid Cap Fund and the Large Cap Fund became effective on
___________, 2000.
The Trust is not required to hold annual shareholder meetings, but special
meetings may be called for certain purposes. Shareholders receive one vote for
each Fund share. Shares of the Funds and any other series of the Trust that may
be in existence from time to time generally vote together except when required
by law to vote separately by fund or by class. Shareholders owning in the
aggregate ten percent of Trust shares may call meetings to consider removal of
Trustees. Under certain circumstances, the Trust will provide information to
assist shareholders in calling such a meeting. See "Shareholder Meetings."
The Trust changed its name from "LAMCO Trust I" to its current name on April 1,
1999.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Funds' Prospectuses describe the investment objectives and investment
policies of each Fund. The Growth Opportunities Fund does not invest directly
in a portfolio of securities; rather, in seeking to achieve its investment
objective, it invests primarily in shares of the Underlying Liberty Funds.
The Advisor allocates the Growth Opportunities Fund's assets among the
Underlying Liberty Funds.
This SAI contains additional information about the principal strategies and
risks that are described or referred to in the Prospectuses of the Funds as
well as information about the non-principal strategies, risks and fundamental
investment policies of the Funds.
Except as indicated under "Fundamental Investment Policies," no Fund's
investment policies are fundamental and the Trustees may change the policies
without shareholder approval.
FUNDAMENTAL INVESTMENT POLICIES
The Investment Company Act of 1940 (Act) provides that a "vote of a majority of
the outstanding voting securities" means the affirmative vote of the lesser of
(1) more than 50% of the outstanding shares of a Fund, or (2) 67% or more of
the shares present at a meeting if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy. The following fundamental
investment policies can not be changed without such a vote.
Each Fund may:
1. Borrow from banks, other affiliated funds and other persons to the extent
permitted by applicable law, provided that a Fund's borrowings shall not
exceed 33 1/3% of the value of its total assets (including the amount
borrowed) less liabilities (other than borrowings) or such other
percentage permitted by law;
2. Own real estate only if acquired as the result of owning securities and
not more than 5% of total assets;
3. Purchase and sell futures contracts and related options as long as the
total initial margin and premiums do not exceed 5% of total assets;
4. Not issue senior securities except as provided in paragraph 1 above and to
the extent permitted by the Act;
5. Underwrite securities issued by others only when disposing of portfolio
securities;
<PAGE>
6. Make loans only (a) through lending of securities, (b) through the
purchase of debt instruments or similar evidences of indebtedness
typically sold privately to financial institutions or traded in public
securities markets, (c) through an interfund lending program with other
affiliated funds provided that no such loan may be made if, as a result,
the aggregate of such interfund loans would exceed 33 1/3% of the value of
its total assets (taken at market value at the time of such loans), and
(d) through repurchase agreements;
7. Not concentrate 25% or more of its total assets in any industry (other
than securities issued or guaranteed as to principal and interest by the
Government of the United States or any agency or instrumentality thereof).
Notwithstanding the investment policies and restrictions of the Funds, the
Growth and Income Fund may invest all or a portion of its investable
assets in investment companies with substantially the same investment
objective, policies and restrictions as that Fund, and each of the Growth
Opportunities Fund, Small Cap Fund, Mid Cap Fund and Large Cap Fund may
invest all or any portion of its assets in one or more investment
companies, to the extent not prohibited by the Act, the rules and
regulations thereunder, and exemptive orders granted under the Act; and
8. With respect to the Growth and Income Fund and the Small Cap Fund only,
each such Fund may not purchase securities of any one issuer, if (a)
more than 5% of the Fund's total assets taken at market value would
at the time be invested in the securities of such issuer, except
that such restriction does not apply to securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities
or corporations sponsored thereby, and except that up to 25% of the Fund's
total assets may be invested without regard to this limitation; or (b)
such purchase would at the time result in more than 10% of the outstanding
voting securities of such issuer being held by the Fund, except that up to
25% of the Fund's total assets may be invested without regard to this
limitation.
OTHER INVESTMENT POLICIES
As non-fundamental investment policies which may be changed without a
shareholder vote, no Fund may:
1. Have a short sales position, unless the Fund owns, or owns rights
(exercisable without payment) to acquire, an equal amount of securities;
2. Invest more than 15% of its net assets in illiquid assets; and
3. Purchase additional securities for the Fund's portfolio if borrowing does
NOT exceed 5% of the Fund's total assets.
<PAGE>
As a non-fundamental restriction, each of the Small Cap Fund, the Mid Cap Fund
and the Large Cap Fund may not purchase securities issued by any registered
investment company in reliance on the provisions of Sections 12(d)(1)(F) or
12(d)(1)(G) of the Act and the rules and regulations thereunder except to the
extent not prohibited by the Act, rules and regulations thereunder and
exemptive orders granted thereunder.
Total assets and net assets are determined at current value for purposes of
compliance with investment restrictions and policies. Except for the
restrictions on borrowings and investments in illiquid assets, all percentage
limitations will apply at the time of investment and are not violated unless an
excess or deficiency occurs as a result of such investment. For the purpose of
restriction 7 above, an issuer is the entity whose revenues support the
security.
INVESTMENT MANAGEMENT AND OTHER SERVICES
GENERAL
The Growth and Income Fund's investment program is based upon the Advisor's
multi-manager concept. The Advisor allocates the Fund's portfolio assets on an
equal basis among a number of independent investment management organizations
(Portfolio Managers) -- currently five in number -- each of which employs a
different investment style, and periodically rebalances the Fund's portfolio
among the Portfolio Managers so as to maintain an approximately equal
allocation of the portfolio among them throughout all market cycles.
The Advisor also allocates the assets of each of the Small Cap Fund, the Mid
Cap Fund and the Large Cap Fund among one or more Portfolio Managers. Currently
each of the Small Cap Fund, the Mid Cap Fund and the Large Cap Fund has one
Portfolio Manager.
Each Portfolio Manager provides these services to the Growth and Income Fund,
the Small Cap Fund, the Mid Cap Fund or the Large Cap Fund, as applicable,
under a Portfolio Management Agreement (Portfolio Management Agreements) among
the Trust, on behalf of the appropriate Fund, the Advisor and such Portfolio
Manager. Under a Fund Management Agreement with each of the Growth and Income,
Small Cap, Mid Cap and Large Cap Funds, the Advisor monitors the investment
performance and styles of, and from time to time recommends changes in, the
Portfolio Managers for those Funds, and, in the case of the Growth and Income
Fund, allocates and reallocates the Fund's portfolio assets among them. Under a
Fund Management Agreement with the Growth Opportunities Fund, the Advisor
allocates and reallocates the Fund's assets among Underlying Liberty Funds.
For these services, each Fund pays the Advisor a monthly fee based on the
average of the daily closing value of the total net assets of the Fund at the
annual rate of _____% (subject to reductions that the Advisor may agree to
periodically). From the fee received from the Growth and Income Fund, the
<PAGE>
Advisor pays each Portfolio Manager of the Growth and Income Fund other than
OpCap Advisors a monthly fee at the annual rate of 0.30% on the average of the
daily closing value of the net assets of the Fund assigned to that Portfolio
Manager. OpCap Advisors' agreement provides for a fee of 0.40% on the average
of the daily closing value of the net assets assigned to it up to $100 million
and 0.30% on such average daily closing value in excess of $100 million. OpCap
Advisors has voluntarily agreed, however, to waive any fee in excess of 0.30%
until the earlier of March 1, 2002 or the date the total of the Fund's net
assets reaches $100 million. From the fee received from each of the Small Cap,
Mid Cap and Large Cap Funds, the Advisor pays to each Portfolio Manager of
those Funds a monthly fee at the annual rate of _____% on the average of the
daily closing value of the net assets of the applicable Fund assigned to that
Portfolio Manager. Under the Fund Management Agreements, any liability of the
Advisor to the Trust, a Fund and/or its shareholders is limited to situations
involving the Advisor's own willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties.
In addition to the fees and expenses paid by the Growth Opportunities Fund
directly, the Fund pays its pro rata share of the fees and expenses of the
Underlying Liberty Funds in which it invests.
Each Fund Management Agreement may be terminated with respect to a Fund at any
time on 60 days' written notice by the Advisor or by the Trustees of the Trust
or by a vote of a majority of the outstanding voting securities of the Fund.
Each Fund Management Agreement will automatically terminate upon any assignment
thereof and shall continue in effect following its second anniversary and from
year to year thereafter only so long as such continuance is approved at least
annually (i) by the Trustees of the Trust or by a vote of a majority of the
outstanding voting securities of the applicable Fund and (ii) by vote of a
majority of the Trustees who are not interested persons (as such term is
defined in the Act) of the Advisor or the Trust, cast in person at a meeting
called for the purpose of voting on such approval.
The Advisor or an affiliate thereof pays all salaries of officers of the Trust.
The Funds pay all expenses not assumed by the Advisor including, but not
limited to, auditing, legal, custodial, investor servicing and shareholder
reporting expenses. The Funds pay the cost of printing and mailing any
Prospectuses sent to shareholders. LFD pays the cost of printing and
distributing all other Prospectuses.
As of the date of this Statement of Additional Information, the following
entities serve as the Growth and Income Fund's Portfolio Managers:
J.P. Morgan Investment Management, Inc. J.P. Morgan Investment Management
Inc., 522 Fifth Avenue, New York, New York 10036, is a wholly-owned
subsidiary of J.P. Morgan & Co. Incorporated, a New York Stock Exchange
listed bank holding company the principal banking subsidiary of which is
Morgan Guaranty Trust Company of New York. J.P. Morgan's principal
executive officer is Keith M. Schappert, and its directors are Mr.
Schappert and William L. Cobb, Jr., C. Nicolas Potter, Michael R. Granito,
<PAGE>
John R. Thomas, Thomas M. Luddy, Michael E. Patterson, Jean Louis Pierre
Brunel, Robert A. Anselmi, Milan Steven Soltis and K. Warren Anderson.
OpCap Advisors. OpCap Advisors, Oppenheimer Tower, World Financial Center,
New York, New York 10281, is a majority-owned subsidiary of Oppenheimer
Capital, which in turn is a wholly-owned subsidiary of PIMCO Advisors L.P.
OpCap Advisors' principal executive officer is Bernard H. Garil.
Boston Partners Asset Management, L.P. ("Boston Partners"), One Financial
Center, Boston, Massachusetts 02111, was founded in April, 1985 by three
former principal officers of The Boston Company Asset Management, Inc.
Boston Partners is a limited partnership of which Boston Partners, Inc.,
One Financial Center, Boston, Massachusetts, is the sole general partner.
Westwood Management Corp. Westwood Management Corp., 300 Crescent Court,
Suite 1300, Dallas, Texas 75201, is a wholly owned subsidiary of Southwest
Securities Group, Inc., a New York Stock Exchange listed securities firm.
Its principal executive officer is Susan M. Byrne. Its directors are Ms.
Byrne, Raymond E. Wooldridge, Don A. Buchhotz, David M. Glatstein and
Patricia R. Fraze.
TCW Investment Management Company. TCW Investment Management Company
("TCW"), located at 865 South Figueroa Street, Los Angeles, CA 90017, is a
wholly-owned subsidiary of The TCW Group, Inc. ("TCW Group"). Established
in 1971, TCW Group's direct and indirect subsidiaries, including TCW,
provide a variety of trust, investment management and investment advisory
services. Ownership of the TCW Group lies approximately 95% with its
employees and 5% with its directors. Robert A. Day, who is Chairman of the
Board of Directors of TCW Group, may be deemed to be a control person of
TCW by virtue of the aggregate ownership by Mr. Day and his family of more
than 25% of the outstanding voting stock of the TCW Group. As of September
30, 1999 TCW had over $55 billion in assets under management.
As of the date of this Statement of Additional Information, Westwood Management
Corp. serves as the Portfolio Manager of the Small Cap Fund, and TCW Investment
Management Company serves as the Portfolio Manager of each of the Mid Cap Fund
and the Large Cap Fund.
Under the Fund Management and Portfolio Management Agreements, neither the
Advisor nor the Portfolio Managers are liable for actions taken by them in good
faith and without gross negligence or willful misfeasance. Although the
Portfolio Managers' activities are subject to general oversight by the Advisor
and the Trustees and officers of the Trust, neither the Advisor nor such
Trustees and officers evaluate, or have liability for, the investment merits of
the Portfolio Managers' selections of individual securities.
<PAGE>
EXPENSE LIMITATIONS
The Advisor and Administrator have agreed to waive or reimburse all expenses,
including management and administration fees, but excluding 12b-1 distribution
and service fees, interest, taxes, brokerage, and other expenses which are
capitalized in accordance with generally accepted accounting principles, and
extraordinary expenses, incurred by the Funds in excess of 1.25% of average net
asset value per annum. Such arrangement may be terminated by the Advisor and
the Administrator at any time.
PORTFOLIO TURNOVER
None of the Funds can accurately predict portfolio turnover, but the Advisor
anticipates that it will not exceed 100% annually for any Fund. If a Fund (or
an Underlying Liberty Fund, in the case of the Growth Opportunities Fund)
writes a substantial number of call or put options (on securities or indexes)
or engages in the use of futures contracts or options on futures contracts (all
referred to as "Collateralized Transactions"), and the market prices of the
securities underlying the Collateralized Transactions move inversely to the
Collateralized Transaction, there may be a very substantial turnover of the
portfolio. Each Fund (other than the Growth Opportunities Fund) pays brokerage
commissions in connection with options and futures transactions and effecting
closing purchase or sale transactions, as well as for the purchases and sales
of other portfolio securities other than fixed income securities. High
portfolio turnover may result in correspondingly greater brokerage commissions
and other transaction costs, which would be borne directly by a Fund, and may
result in the realization of distributable capital gains, which are taxable to
non-exempt shareholders. Changes in a Fund's Portfolio Managers or, in the case
of the Growth Opportunities Fund, rebalancing of its portfolio among the
Underlying Liberty Funds, and rebalancings of a Fund's portfolio among the
Portfolio Managers may result in higher portfolio turnover than would otherwise
be the case. The Growth Opportunities Fund does not invest directly in a
portfolio of securities. However, the Fund will be responsible for its pro rata
share of the costs and expenses generated by the purchase and sale of
securities by the Underlying Liberty Funds.
OTHER CHARGES AND EXPENSES
Under each Fund's administration agreement, the Fund pays the Administrator a
monthly fee at the annual rate of 0.20% of the average daily net assets
(subject to reductions that the Administrator may agree to periodically) and a
monthly pricing and bookkeeping fee of $3,000 plus the following percentages
per annum of the Fund's average daily net assets over $50 million:
0.035% on the next $950 million
0.025% on the next $1 billion
0.015% on the next $1 billion
0.001% on the excess over $3 billion
Under each Fund's transfer agency and shareholder servicing agreement, the Fund
pays LFS a monthly fee at the annual rate of 0.236% of average daily net
<PAGE>
assets, plus certain out-of-pocket expenses (subject to reductions that LFS may
agree to periodically).
RECENT FEES PAID BY THE GROWTH AND INCOME FUND TO THE ADVISOR, LFD AND LFS
(dollars in thousands)
PERIOD MARCH 1, 1999
(COMMENCEMENT OF INVESTMENT OPERATIONS)
THROUGH DECEMBER 31, 1999
Management fee $
Administration fee
Bookkeeping fee
Shareholder service and transfer agent fee
12b-1 fees:
Service fee (Classes A, B and C)
Distribution fee (Class B)
Distribution fee (Class C)
Fees or expenses waived or borne by
the Advisor/Administrator
BROKERAGE COMMISSIONS (dollars in thousands)
PERIOD MARCH 1, 1999
(COMMENCEMENT OF INVESTMENT OPERATIONS)
THROUGH DECEMBER 31, 1999
Total commissions $
Directed transactions
Commissions on directed transactions
Each of the Growth Opportunities, Small Cap, Mid Cap and Large Cap Funds is
newly-organized and has not paid fees or commissions as of the date of this
Statement of Additional Information.
TRUSTEES AND TRUSTEES' FEES
For the period ended December 31, 1999, the Trustees received the following
compensation in their capacities as Trustees of the Trust and of the Liberty
Funds Complex(a):
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Trustee Aggregate Compensation Total Compensation From
From The Trust For The Liberty Funds Complex Paid
Period Ended December 31, To The Directors/Trustees For
1999(b) The Calendar Year Ended
December 31, 1999(c)
Robert J. Birnbaum $2,549 $112,000
<PAGE>
John V. Carberry 0(e) 0(e)
James E. Grinnell 2,549 125,000
Richard W. Lowry 2,549 112,000
William E. Mayer 2,549 126,000
John J. Neuhauser 2,549 126,252
</TABLE>
(a) The Trust does not currently provide pension or retirement plan benefits
to the Trustees.
(b) The Trust, Liberty All-Star Equity Fund and Liberty All-Star Growth Fund,
Inc., each of which has the same Board of Trustees, pay aggregate
Trustees' fees of $25,000 per annum, assuming a minimum of four meetings
are held and attended, one third of which is allocated among the three
funds on a per fund basis and the remaining two thirds of which is
allocated based on net assets.
(c) At December 31, 1999, the Liberty Funds Complex consisted of 51 open-end
and 10 closed-end management investment company portfolios advised by the
Administrator or its affiliates, The Crabbe Huson Group (Crabbe Huson),
Newport Fund Management Inc. (Newport) and Stein Roe & Farnham
Incorporated (Stein Roe), 9 funds of Liberty Variable Investment Trust
advised by Liberty Advisory Services Corp., an affiliate of the Advisor,
and the closed-end Liberty All-Star Equity and Liberty All-Star Growth
Fund, Inc. advised by the Advisor.
(d) Mr. Carberry does not receive compensation because he is an affiliated
Trustee and an employee of Liberty Financial Companies, Inc. (Liberty
Financial).
The Funds, the Advisor and LFD have adopted codes of ethics under Rule 17j-1 of
the Act which permit personnel subject to the codes to invest in securities,
including securities that may be purchased or held by the Funds.
OWNERSHIP OF THE FUNDS
As of record on February 29, 2000, ______________, located at __________, owned
____% of the Growth and Income Fund and, therefore, may be deemed to "control"
the Fund.
As of record on February 29, 2000, the following shareholders of record owned
5% or more of one or more of each class of the Growth and Income Fund's
outstanding shares:
Class A Shares
Class B Shares
<PAGE>
Class C Shares
Class Z Shares
As of record on February 29, 2000, the officers and Trustees of the Trust as a
group owned less than 1% of the then outstanding shares of the Growth and
Income Fund.
As of record on February 29, 2000 there were ____ Class A, ____ Class B, ____
Class C and ____ Class Z record holders of the Growth and Income Fund.
SALES CHARGES FOR THE GROWTH Class A Shares
AND INCOME FUND (DOLLARS IN THOUSANDS) March 1, 1999 (commencement of
investment operations)
through December 31, 1999
Aggregate initial sales charges on Fund $
share sales
Initial sales charges retained by LFD
Class B Shares
March 1, 1999 (commencement of
investment operations)
through December 31, 1999
Aggregate contingent deferred sales charges $
(CDSC) on Fund redemptions retained by LFD
Class C Shares
March 1, 1999 (commencement of
investment operations)
through December 31, 1999
Aggregate CDSC on Fund redemptions $
retained by LFD
Each of the Growth Opportunities, Small Cap, Mid Cap and Large Cap Funds is
newly-organized and does not have shareholders as of the date of this Statement
of Additional Information.
12B-1 PLAN, CDSC AND CONVERSION OF SHARES
Each Fund offers four classes of shares - Class A, Class B, Class C and Class
Z. The Funds may in the future offer other classes of shares. The Trustees have
approved 12b-1 Plans (Plans) pursuant to Rule 12b-1 under the Act. Under each
Plan, the applicable Fund pays LFD monthly a service fee at an annual rate of
<PAGE>
0.25% of the Fund's net assets attributed to Class A, Class B and Class C
shares issued and outstanding thereafter. Each Fund also pays LFD monthly a
distribution fee at an annual rate of 0.75% of average daily net assets
attributed to Class B and Class C shares of that Fund. LFD may use the entire
amount of such fees to defray the cost of commissions and service fees paid to
financial service firms (FSFs) and for certain other purposes. Since the
distribution and service fees are payable regardless of the amount of LFD's
expenses, LFD may realize a profit from the fees. The Plans authorize any other
payments by a Fund to LFD and its affiliates (including the Advisor and the
Administrator) to the extent that such payments might be construed to be
indirect financing of the distribution of Fund shares.
The Trustees believe the Plans could be a significant factor in the growth and
retention of Fund assets resulting in a more advantageous expense ratio and
increased investment flexibility which could benefit each class of Fund
shareholders. The Plans will continue in effect from year to year so long as
continuance is specifically approved at least annually by a vote of the
Trustees, including the Trustees who are not interested persons of the Trust
and have no direct or indirect financial interest in the operation of the Plans
or in any agreements related to the Plans (Independent Trustees), cast in
person at a meeting called for the purpose of voting on the Plans. The Plans
may not be amended to increase the fee materially without approval by vote of a
majority of the outstanding voting securities of the relevant class of shares,
and all material amendments of the Plans must be approved by the Trustees in
the manner provided in the foregoing sentence. The Plans may be terminated at
any time by vote of a majority of the Independent Trustees or by vote of a
majority of the outstanding voting securities of the relevant class of shares.
The continuance of the Plans will only be effective if the selection and
nomination of the Trustees of the Trust who are not interested persons of the
Trust is effected by such disinterested Trustees.
Class A shares are offered at net asset value plus varying sales charges which
may include a CDSC. Class B shares are offered at net asset value and are
subject to a CDSC if redeemed within six years after purchase. Class C shares
are offered at net asset value and are subject to a 1.00% CDSC on redemptions
within one year after purchase. Class Z shares are offered at net asset value
and are not subject to a CDSC. The CDSCs are described in the Prospectuses.
No CDSC will be imposed on shares derived from reinvestment of distributions or
amounts representing capital appreciation. In determining the applicability and
rate of any CDSC, it will be assumed that a redemption is made first of shares
representing capital appreciation, next of shares representing reinvestment of
distributions and finally of other shares held by the shareholder for the
longest period of time.
A certain number of years, depending on the program you purchased your shares
under, after the end of the month in which a Class B share is purchased, such
share and of any shares issued on the reinvestment of distributions on such
share will be automatically converted into a number of Class A shares having an
equal value. Class A shares are not subject to the 0.75% distribution fee.
<PAGE>
SALES-RELATED EXPENSES (dollars in thousands) of LFD relating to the Growth and
Income Fund were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Period Ended December 31, 1999
Class A Class B Class C Class Z
Fees to FSFs $ $ $ ---
Cost of sales material relating to the Fund
(including printing and mailing expenses) ---
Allocated travel, entertaining and other
promotional
Expenses (including advertising) ---
</TABLE>
Each of the Growth Opportunities, Small Cap, Mid Cap and Large Cap Funds is
newly-organized and has not paid sales-related expenses as of the date of this
Statement of Additional Information.
INVESTMENT PERFORMANCE
The Growth and Income Fund's Class A, Class B, Class C and Class Z share
average annual total returns at December 31, 1999 were (e):
Class A Shares
Period March 1, 1999
(commencement of investment operations)
through December 31, 1999
With sales charge of 5.75% ____%
Without sales charge ____%
Class B Shares
Period March 1, 1999
(commencement of investment operations)
through December 31, 1999
With applicable CDSC ____% (5.00% CDSC)
Without CDSC ____%
Class C Shares
Period March 1, 1999
(commencement of investment operations)
through December 31, 1999
<PAGE>
With applicable CDSC ____% (1.00% CDSC)
Without CDSC ____%
(e) Performance results reflect any voluntary waiver or reimbursement by the
Advisor and/or its affiliates of class expenses. Absent this waiver or
reimbursement arrangement, performance results would have been lower. See
the prospectus for details.
Performance information for the Growth Opportunities, Small Cap, Mid Cap and
Large Cap Funds is not provided because these Funds are newly-organized.
See "Performance Measures" for how calculations are made.
CUSTODIAN
The Chase Manhattan Bank, located at 270 Park Avenue, New York, New York
10017-2070, is the Funds' custodian. The custodian is responsible for
safeguarding the Funds' cash and securities, receiving and delivering
securities and collecting the Funds' interest and dividends.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, located at 160 Federal Street, Boston,
Massachusetts 02110-2624, are the Funds' independent accountants providing
audit and tax return preparation services and assistance and consultation in
connection with the review of various SEC filings. Prior to September 30, 1999,
KPMG LLP, located at 99 High Street, Boston, Massachusetts 02110, was the
Growth and Income Fund's independent accountants. The Financial Statements
incorporated by reference in this SAI have been so incorporated, and the
financial highlights included in the Prospectuses have been so included, in
reliance upon the report of PricewaterhouseCoopers LLP given on the authority
of said firm as experts in accounting and auditing.
DESCRIPTION OF CERTAIN INVESTMENTS
The following is a description of certain types of investments which may be
made by the Funds. Each Fund is permitted to make the following investments,
except as otherwise noted below.
CASH RESERVES AND REPURCHASE AGREEMENTS
A Fund may invest in U.S. Government securities (including direct U.S.
Government obligations and U.S. Government Agency securities described below),
certificates of deposit, bankers' acceptances, time deposits, high quality
commercial paper and repurchase agreements. The money market instruments that
may be used by a Fund may include:
UNITED STATES GOVERNMENT OBLIGATIONS. These consist of various types of
marketable securities issued by the U.S. Treasury, i.e., bills, notes and
<PAGE>
bonds. Such securities are direct obligations of the U.S. Government and differ
mainly in the length of their maturity. Treasury bills, the most frequently
issued marketable government security, have a maturity of up to one year and
are issued on a discount basis.
UNITED STATES GOVERNMENT AGENCY SECURITIES. These consist of debt securities
issued by agencies and instrumentalities of the U.S. Government, including the
various types of instruments currently outstanding or which may be offered in
the future. Agencies include, among others, the Federal Housing Administration,
Government National Mortgage Association, Farmer's Home Administration,
Export-Import Bank of the United States, Maritime Administration, and General
Services Administration. Instrumentalities include, for example, each of the
Federal Home Loan Banks, the National Bank for Cooperatives, the Federal Home
Loan Mortgage Corporation, the Farm Credit Banks, the Federal National Mortgage
Association, and the United States Postal Service. These securities are either:
(i) backed by the full faith and credit of the U.S. Government (e.g., U.S.
Treasury Bills); (ii) guaranteed by the U.S. Treasury (e.g., Government
National Mortgage Association mortgage-backed securities); (iii) supported by
the issuing agency's or instrumentality's right to borrow from the U.S.
Treasury (e.g., Federal National Mortgage Association Discount Notes); or (iv)
supported only by the issuing agency's or instrumentality's own credit (e.g.,
securities issued by the Farmer's Home Administration).
BANK AND SAVINGS AND LOAN OBLIGATIONS. These include certificates of deposit
and bankers' acceptances. Certificates of deposit generally are short-term,
interest-bearing negotiable certificates issued by commercial banks or savings
and loan associations against funds deposited in the issuing institution.
Bankers' acceptances are time drafts drawn on a commercial bank by a borrower,
usually in connection with an international commercial transaction (e.g., to
finance the import, export, transfer, or storage of goods). With a bankers'
acceptance, the borrower is liable for payment as is the bank, which
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Most bankers' acceptances have maturities of six months or less and are
traded in secondary markets prior to maturity. Time deposits are generally
short-term, interest-bearing negotiable obligations issued by commercial banks
against funds deposited in the issuing institutions. A Fund will not invest in
any security issued by a commercial bank or a savings and loan association
unless the bank or savings and loan association is organized and operating in
the United States, has total assets of at least one billion dollars, and is a
member of the Federal Deposit Insurance Corporation (FDIC), in the case of
banks, or insured by the FDIC in the case of savings and loan associations;
provided, however, that such limitation will not prohibit investments in
foreign branches of domestic banks which meet the foregoing requirements. A
Fund will not invest in time-deposits maturing in more than seven days.
SHORT-TERM CORPORATE DEBT INSTRUMENTS. These include commercial paper (i.e.,
short-term, unsecured promissory notes issued by corporations to finance
short-term credit needs). Commercial paper is usually sold on a discount basis
and has a maturity at the time of issuance not exceeding nine months. Also
<PAGE>
included are non-convertible corporate debt securities (e.g., bonds and
debentures). Corporate debt securities with a remaining maturity of less than
13 months are liquid (and tend to become more liquid as their maturities
lessen) and are traded as money market securities. A Fund may purchase
corporate debt securities having greater maturities.
REPURCHASE AGREEMENTS. A Fund may invest in repurchase agreements. A repurchase
agreement is an instrument under which the investor (such as a Fund) acquires
ownership of a security (known as the "underlying security") and the seller
(i.e., a bank or primary dealer) agrees, at the time of the sale, to repurchase
the underlying security at a mutually agreed upon time and price, thereby
determining the yield during the term of the agreement. This results in a fixed
rate of return insulated from market fluctuations during such period, unless
the seller defaults on its repurchase obligations. The underlying securities
will consist only of securities issued by the U.S. Government, its agencies or
instrumentalities (U.S. Government Securities). Repurchase agreements are, in
effect, collateralized by such underlying securities, and, during the term of a
repurchase agreement, the seller will be required to mark-to-market such
securities every business day and to provide such additional collateral as is
necessary to maintain the value of all collateral at a level at least equal to
the repurchase price. Repurchase agreements usually are for short periods,
often under one week, and will not be entered into by a Fund for a duration of
more than seven days if, as a result, more than 15% of the value of the Fund's
net assets would be invested in such agreements or other securities which are
illiquid.
A Fund will seek to assure that the amount of collateral with respect to any
repurchase agreement is adequate. As with any extension of credit, however,
there is risk of delay in recovery or the possibility of inadequacy of the
collateral should the seller of the repurchase agreement fail financially. In
addition, a Fund could incur costs in connection with disposition of the
collateral if the seller were to default. A Fund will enter into repurchase
agreements only with sellers deemed to be creditworthy under creditworthiness
standards approved by the Board of Trustees and only when the economic benefit
to the Fund is believed to justify the attendant risks. The Board of Trustees
believes these standards are designed to reasonably assure that such sellers
present no serious risk of becoming involved in bankruptcy proceedings within
the time frame contemplated by the repurchase agreement. A Fund may enter into
repurchase agreements only with commercial banks or registered broker-dealers.
EURODOLLAR CERTIFICATES OF DEPOSIT
A Fund may invest in Eurodollar certificates of deposit issued by foreign
branches of domestic banks having total assets of $1 billion or more
(investments in Eurodollar certificates may be affected by changes in currency
rates or exchange control regulations, or changes in governmental administration
or economic or monetary policy in the United States and abroad).
OPTIONS ON SECURITIES
Each Fund (other than the Mid Cap Fund) may purchase and sell options on
individual securities.
<PAGE>
WRITING COVERED OPTIONS. A Fund may write covered call options and covered put
options on securities held in its portfolio when, in the opinion of a Portfolio
Manager, such transactions are consistent with a Fund's investment objective
and policies. Call options written by a Fund give the purchaser the right to
buy the underlying securities from the Fund at a stated exercise price; put
options give the purchaser the right to sell the underlying securities to the
Fund at a stated price.
A Fund may write only covered options, which means that, so long as a Fund is
obligated as the writer of a call option, it will own the underlying securities
subject to the option (or comparable securities satisfying the cover
requirements of securities exchanges). In the case of put options, a Fund will
hold cash and/or high-grade short-term debt obligations equal to the price to
be paid if the option is exercised. In addition, a Fund will be considered to
have covered a put or call option if and to the extent that it holds an option
that offsets some or all of the risk of the option it has written. A Fund may
write combinations of covered puts and calls on the same underlying security. A
Fund will receive a premium from writing a put or call option, which increases
the Fund's return on the underlying security if the option expires unexercised
or is closed out at a profit. The amount of the premium reflects, among other
things, the relationship between the exercise price and the current market
value of the underlying security, the volatility of the underlying security,
the amount of time remaining until expiration, current interest rates, and the
effect of supply and demand in the options market and in the market for the
underlying security. By writing a call option, a Fund limits its opportunity to
profit from any increase in the market value of the underlying security above
the exercise price of the option but continues to bear the risk of a decline in
the value of the underlying security. By writing a put option, a Fund assumes
the risk that it may be required to purchase the underlying security for an
exercise price higher than its then-current market value, resulting in a
potential capital loss unless the security subsequently appreciates in value.
A Fund may terminate an option that it has written prior to its expiration by
entering into a closing purchase transaction in which it purchases an
offsetting option. A Fund realizes a profit or loss from a closing transaction
if the cost of the transaction (option premium plus transaction costs) is less
or more than the premium received from writing the option. Because increases in
the market price of a call option generally reflect increases in the market
price of the security underlying the option, any loss resulting from a closing
purchase transaction may be offset in whole or in part by unrealized
appreciation of the underlying security.
If a Fund writes a call option but does not own the underlying security, and
then it writes a put option, the Fund may be required to deposit cash or
securities with its broker as "margin" or collateral for its obligation to buy
or sell the underlying security. As the value of the underlying security
varies, the Fund may have to deposit additional margin with the broker. Margin
requirements are complex and are fixed by individual brokers, subject to
minimum requirements currently imposed by the Federal Reserve Board and by
stock exchanges and other self-regulatory organizations.
<PAGE>
PURCHASING PUT OPTIONS. A Fund may purchase put options to protect its
portfolio holdings in an underlying security against a decline in market value.
Such hedge protection is provided during the life of the put option since the
Fund, as holder of the put option, is able to sell the underlying security at
the put exercise price regardless of any decline in the underlying security's
market price. For a put option to be profitable, the market price of the
underlying security must decline sufficiently below the exercise price to cover
the premium and transaction costs. By using put options in this manner, a Fund
will reduce any profit it might otherwise have realized from appreciation of
the underlying security by the premium paid for the put option and by
transaction costs.
PURCHASING CALL OPTIONS. A Fund may purchase call options to hedge against an
increase in the price of securities that the Fund wants ultimately to buy. Such
hedge protection is provided during the life of the call option since a Fund,
as holder of the call option, is able to buy the underlying security at the
exercise price regardless of any increase in the underlying security's market
price. In order for a call option to be profitable, the market price of the
underlying security must rise sufficiently above the exercise price to cover
the premium and transaction costs. These costs will reduce any profit a Fund
might have realized had it bought the underlying security at the time it
purchased the call option.
OVER-THE-COUNTER (OTC) OPTIONS. The Staff of the Division of Investment
Management of the Securities and Exchange Commission has taken the position
that OTC options purchased by a Fund and assets held to cover OTC options
written by a Fund are illiquid securities. Although the Staff has indicated
that it is continuing to evaluate this issue, pending further developments, a
Fund will enter into OTC options transactions only with primary dealers in U.S.
Government Securities and, in the case of OTC options written by a Fund, only
pursuant to agreements that will assure that the Fund will at all times have
the right to repurchase the option written by it from the dealer at a specified
formula price. A Fund will treat the amount by which such formula price exceeds
the amount, if any, by which the option may be "in the money" as an illiquid
investment. It is the present policy of each Fund not to enter into any OTC
option transaction if, as a result, more than 15% of the Fund's net assets
would be invested in (i) illiquid investments (determined under the foregoing
formula) relating to OTC options written by the Fund, (ii) OTC options
purchased by the Fund, (iii) securities which are not readily marketable and
(iv) repurchase agreements maturing in more than seven days.
RISK FACTORS IN OPTIONS TRANSACTIONS. The successful use of a Fund's options
strategies depends on the ability of a Portfolio Manager to forecast interest
rate and market movements correctly.
When it purchases an option, a Fund runs the risk that it will lose its entire
investment in the option in a relatively short period of time, unless the Fund
exercises the option or enters into a closing sale transaction with respect to
the option during the life of the option. If the price of the underlying
<PAGE>
security does not rise (in the case of a call) or fall (in the case of a put)
to an extent sufficient to cover the option premium and transaction costs, a
Fund will lose part or all of its investment in the option. This contrasts with
an investment by a Fund in the underlying securities, since the Fund may
continue to hold its investment in those securities notwithstanding the lack of
a change in price of those securities.
The effective use of options also depends on a Fund's ability to terminate
option positions at times when a Portfolio Manager deems it desirable to do so.
Although a Fund will take an option position only if a Portfolio Manager
believes there is a liquid secondary market for the option, there is no
assurance that the Fund will be able to effect closing transactions at any
particular time or at an acceptable price.
If a secondary trading market in options were to become unavailable, a Fund
could no longer engage in closing transactions. Lack of investor interest might
adversely affect the liquidity of the market for particular options or series
of options. A marketplace may discontinue trading of a particular option or
options generally. In addition, a market could become temporarily unavailable
if unusual events -- such as volume in excess of trading or clearing capability
- -- were to interrupt normal market operations.
A marketplace may at times find it necessary to impose restrictions on
particular types of options transactions, which may limit a Fund's ability to
realize its profits or limit its losses.
Disruptions in the markets for the securities underlying options purchased or
sold by a Fund could result in losses on the options. If trading is interrupted
in an underlying security, the trading of options on that security is normally
halted as well. As a result, a Fund as purchaser or writer of an option will be
unable to close out its positions until options trading resumes, and it may be
faced with losses if trading in the security reopens at a substantially
different price. In addition, the Options Clearing Corporation (OCC) or other
options markets may impose exercise restrictions. If a prohibition on exercise
is imposed at the time when trading in the option has also been halted, a Fund
as purchaser or writer of an option will be locked into its position until one
of the two restrictions has been lifted. If a prohibition on exercise remains
in effect until an option owned by a Fund has expired, the Fund could lose the
entire value of its option.
Special risks are presented by internationally-traded options. Because of time
differences between the United States and various foreign countries, and
because different holidays are observed in different countries, foreign options
markets may be open for trading during hours or on days when U.S. markets are
closed. As a result, option premiums may not reflect the current prices of the
underlying interest in the United States.
FUTURES CONTRACTS AND RELATED OPTIONS
Each Fund (other than the Mid Cap Fund) may buy and sell certain future
contracts (and in certain cases related options).
<PAGE>
A futures contract sale creates an obligation by the seller to deliver the type
of financial instrument called for in the contract in a specified delivery
month for a stated price. A futures contract purchase creates an obligation by
the purchaser to take delivery of the type of financial instrument called for
in the contract in a specified delivery month at a stated price. The specific
instruments delivered or taken at settlement date are not determined until on
or near that date. The determination is made in accordance with the rules of
the exchanges on which the futures contract was made. Futures contracts are
traded in the United States only on a commodity exchange or boards of trade --
known as "contract markets" -- approved for such trading by the Commodity
Futures Trading Commission, and must be executed through a futures commission
merchant or brokerage firm which is a member of the relevant contract market.
Although futures contracts by their terms call for actual delivery or
acceptance of the underlying financial instruments, the contracts usually are
closed out before the settlement date without the making or taking of delivery.
Closing out a futures contract sale is effected by purchasing a futures
contract for the same aggregate amount of the specific type of financial
instrument with the same delivery date. If the price of the initial sale of the
futures contract exceeds the price of the offsetting purchase, the seller is
paid the difference and realizes a gain. Conversely, if the price of the
offsetting purchase exceeds the price of the initial sale, the seller realizes
a loss. Similarly, the closing out of a futures contract purchase is effected
by the purchaser's entering into a futures contract sale. If the offsetting
sale price exceeds the purchase price, the purchaser realizes a gain, and if
the purchase price exceeds the offsetting sale price, the purchaser realizes a
loss.
Unlike when a Fund purchases or sells a security, no price is paid or received
by the Fund upon the purchase or sale of a futures contract, although the Fund
is required to deposit with its custodian in a segregated account in the name
of the futures broker an amount of cash and/or U.S. Government Securities. This
amount is known as "initial margin." The nature of initial margin in futures
transactions is different from that of margin in security transactions in that
futures contract margin does not involve the borrowing of funds by a Fund to
finance the transactions. Rather, initial margin is in the nature of a
performance bond or good faith deposit on the contract that is returned to a
Fund upon termination of the futures contract, assuming all contractual
obligations have been satisfied. Futures contracts also involve brokerage
costs.
Subsequent payments, called "variation margin," to and from the broker (or the
custodian) are made on a daily basis as the price of the underlying security or
commodity fluctuates, making the long and short positions in the futures
contract more or less valuable, a process known as "marking to market."
A Fund may elect to close some or all of its futures positions at any time
prior to their expiration. The purpose of making such a move would be to reduce
or eliminate the hedge position then currently held by a Fund. A Fund may close
its positions by taking opposite positions which will operate to terminate the
Fund's position in the futures contracts. Final determinations of variation
<PAGE>
margin are then made, additional cash is required to be paid by or released to
a Fund, and the Fund realizes a loss or gain. Such closing transactions involve
additional commission costs.
A Fund will enter into futures contracts only when, in compliance with the
SEC's requirements, cash or high quality liquid debt securities equal in value
to the commodity value (less any applicable margin deposits) have been
deposited in a segregated account of a Fund's custodian.
OPTIONS ON FUTURES CONTRACTS. A Fund may purchase and write call and put
options on futures contracts it may buy or sell and enter into closing
transactions with respect to such options to terminate existing positions. A
Fund may use such options on futures contracts in lieu of purchasing and
selling the underlying futures contracts. Such options generally operate in the
same manner as options purchased or written directly on the underlying
investments.
As with options on securities, the holder or writer of an option may terminate
his position by selling or purchasing an offsetting option. There is no
guarantee that such closing transactions can be effected.
A Fund will be required to deposit initial margin and maintenance margin with
respect to put and call options on futures contracts written by it pursuant to
brokers' requirements similar to those described above. A Fund will enter into
written options on futures contracts only when, in compliance with the SEC's
requirements, cash or equivalents equal in value to the commodity value (less
any applicable margin deposits) have been deposited in a segregated account of
a Fund's custodian.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS. Successful use
of futures contracts by a Fund is subject to a Portfolio Manager's ability to
predict correctly movements in the direction of interest rates and other
factors affecting securities markets.
Compared to the purchase or sale of futures contracts, the purchase of call or
put options on futures contracts involves less potential risk to a Fund because
the maximum amount at risk is the premium paid for the options (plus
transaction costs). However, there may be circumstances when the purchase of a
call or put option on a futures contract would result in a loss to a Fund when
the purchase or sale of a futures contract would not, such as when there is no
movement in the prices of the hedged investments. The writing of an option on a
futures contract involves risks similar to those relating to the sale of
futures contracts.
There is no assurance that higher than anticipated trading activity or other
unforeseen events might not at times render certain market clearing facilities
inadequate, and thereby result in the institution by exchanges of special
procedures which may interfere with the timely execution of customer orders.
To reduce or eliminate a hedge position held by a Fund, the Fund may seek to
close out a position. The ability to establish and close out positions will be
<PAGE>
subject to the development and maintenance of a liquid secondary market. It is
not certain that this market will develop or continue to exist for a particular
futures contract. Reasons for the absence of a liquid secondary market on an
exchange include the following: (i) there may be insufficient trading interest
in certain contracts or options; (ii) restrictions may be imposed by an
exchange on opening transactions or closing transactions or both; (iii) trading
halts, suspensions or other restrictions may be imposed with respect to
particular classes or series of contracts or options, or underlying securities;
(iv) unusual or unforeseen circumstances may interrupt normal operations on an
exchange; (v) the facilities of an exchange or a clearing corporation may not
at all times be adequate to handle current trading volume; or (vi) one or more
exchanges could, for economic or other reasons, decide or be compelled at some
future date to discontinue the trading of contracts or options (or a particular
class or series of contracts or options), in which event the secondary market
on that exchange (or in the class or series of contacts or options), would
cease to exist, although outstanding contracts or options on the exchange that
had been issued by a clearing corporation as a result of trades on that
exchange would continue to be exercisable in accordance with their terms.
INDEX FUTURES CONTRACTS AND RELATED OPTIONS; ASSOCIATED RISKS. An index futures
contract is a contract to buy or sell units of an index at a specified future
date at a price agreed upon when the contract is made. Entering into a contract
to buy units of an index is commonly referred to as buying or purchasing a
contract or holding a long position in the index. Entering into a contract to
sell units of an index is commonly referred to as selling a contract or holding
a short position. A unit is the current value of the index. A Fund may enter
into stock index future contracts, debt index futures contracts, or other index
futures contracts (e.g., an interest rate futures contract). A Fund may also
purchase and sell options on index futures contracts.
There are several risks in connection with the use by a Fund of index futures
as a hedging device. One risk arises because of the imperfect correlation
between movements in the prices of the index futures and movements in the
prices of securities which are the subject of the hedge. A Fund's Portfolio
Managers will attempt to reduce this risk by selling, to the extent possible,
futures on indices the movements of which will, in its judgment, have a
significant correlation with movements in the prices of a Fund's portfolio
securities sought to be hedged.
Successful use of index futures by a Fund for hedging purposes is also subject
to a Portfolio Manager's ability to predict correctly movements in the
direction of the market. It is possible that, where a Fund has sold futures to
hedge its portfolio against a decline in the market, the index on which the
futures are written may advance and the value of securities subject to the
hedge held in a Fund's portfolio may decline. If this occurs, a Fund would lose
money on the futures and also experience a decline in the value in its
portfolio securities. However, while this could occur to a certain degree, over
time the value of a Fund's portfolio should tend to move in the same direction
as the market indices which are intended to correlate to the price movements of
the portfolio securities sought to be hedged. It is also possible that, if a
Fund has hedged against the possibility of a decline in the market adversely
affecting securities held in its portfolio and securities prices increase
<PAGE>
instead, a Fund will lose part or all of the benefit of the increased values of
those securities that it has hedged because it will have offsetting losses in
its futures positions. In addition, in such situations, if a Fund has
insufficient cash, it may have to sell securities to meet daily variation
margin requirements.
In addition to the possibility that there may be an imperfect correlation, or
no correlation at all, between movements in the index futures and the
securities of the portfolio being hedged, the prices of index futures may not
correlate perfectly with movements in the underlying index due to certain
market distortions. First, all participants in the futures markets are subject
to margin deposit and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors may close futures contracts through
offsetting transactions which would distort the normal relationship between the
index and futures markets. Second, margin requirements in the futures markets
are less onerous than margin requirements in the securities markets, and as a
result the futures markets may attract more speculators than the securities
markets. Increased participation by speculators in the futures markets may also
cause temporary price distortions. Due to the possibility of price distortions
in the futures markets and also because of the imperfect correlation between
movements in the index and movements in the prices of index futures, even a
correct forecast of general market trends by a Fund's Portfolio Managers may
still not result in a successful hedging transaction.
Options on index futures are similar to options on securities except that
options on index futures give the purchaser the right, in return for the
premium paid, to assume a position in an index futures contract (a long
position if the option is a call and a short position if the option is a put),
at a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account which represents the
amount by which the market price of the index futures contract, at exercise,
exceeds (in the case of a call) or is less than (in the case of a put) the
exercise price of the option on the index future. If an option is exercised on
the last trading day prior to the expiration date of the option, the settlement
will be made entirely in cash equal to the difference between the exercise
price of the option and the closing level of the index on which the future is
based on the expiration date. Purchasers of options who fail to exercise their
options prior to the exercise date suffer a loss of the premium paid.
SECURITIES LOANS
A Fund may make loans of its portfolio securities amounting to not more than
30% of its total assets. The risks in lending portfolio securities, as with
other extensions of credit, consist of possible delay in recovery of the
securities or possible loss of rights in the collateral should the borrower
fail financially. As a matter of policy, securities loans are made to
broker-dealers pursuant to agreements requiring that loans be continuously
secured by collateral in cash or short-term debt obligations at least equal at
all times to the value of the securities on loan. This collateral is deposited
<PAGE>
with the Trust's custodian which segregates and identifies these assets on its
books as security for the loan. The borrower pays to a Fund an amount equal to
any dividends, interest or other distributions received on securities lent. The
borrower is obligated to return identical securities on termination of the
loan. A Fund retains all or a portion of the interest received on investment of
the cash collateral or receives a fee from the borrower. Although voting rights
or rights to consent with respect to the loaned securities pass to the
borrower, a Fund retains the right to call the loans at any time on reasonable
notice, and it will do so in order that the securities may be voted by a Fund
if the holders of such securities are asked to vote upon or consent to matters
materially affecting the investment. A Fund may also call such loans in order
to sell the securities involved. The Trust has adopted these policies, in part,
so that interest, dividends and other distributions received on the loaned
securities, the interest or fees paid by the borrower to a Fund for the loan,
and the investment income from the collateral will qualify under certain
investment limitations under Subchapter M of the Internal Revenue Code.
LOWER RATED DEBT SECURITIES
A Fund may invest in debt securities rated lower than Baa by Moody's Investors
Service, Inc. or BBB by Standard & Poor's Corporation, or comparable unrated
debt securities. Relative to debt securities of higher quality,
1. an economic downturn or increased interest rates may have a more
significant effect on the yield, price and potential for default for
lower rated debt securities;
2. the secondary market for lower rated debt securities may at times
become less liquid or respond to adverse publicity or investor
perceptions, increasing the difficulty in valuing or disposing of the
bonds;
3. a Portfolio Manager's credit analysis of lower rated debt securities
may have a greater impact on the Fund's achievement of its investment
objective; and
4. lower rated debt securities may be less sensitive to interest rate
changes, but are more sensitive to adverse economic developments.
In addition, certain lower rated debt securities may not pay interest in cash
on a current basis.
FORWARD COMMITMENTS ("WHEN-ISSUED" AND "DELAYED DELIVERY" SECURITIES)
A Fund may enter into contracts to purchase securities for a fixed price at a
future date beyond customary settlement time ("forward commitments" and "when
issued securities") if the Fund holds until the settlement date, in a
segregated account, cash or liquid securities in an amount sufficient to meet
the purchase price, or if the Fund enters into offsetting contracts for the
forward sale of other securities it owns. Forward commitments may be considered
securities in themselves, and involve a risk of loss if the value of the
security to be purchased declines prior to the settlement date. Where such
purchases are made through dealers, a Fund relies on the dealer to consummate
the sale. The dealer's failure to do so may result in the loss to a Fund of an
advantageous yield or price. Although a Fund will generally enter into forward
<PAGE>
commitments with the intention of acquiring securities for its portfolio or for
delivery pursuant to options contracts it has entered into, a Fund may dispose
of a commitment prior to settlement if the Fund's Portfolio Manager deems it
appropriate to do so. A Fund may realize short-term profits or losses
(generally taxed at ordinary income tax rates in the hands of the shareholders)
upon the sale of forward commitments.
WHEN, AS AND IF ISSUED SECURITIES
Each of the Growth Opportunities, Small Cap, Mid Cap and Large Cap Funds may
purchase securities on a "when, as and if issued" basis under which the
issuance of the security depends upon the occurrence of a subsequent event,
such as approval of a merger, corporate reorganization, leveraged buyout or
debt restructuring. The commitment for the purchase of any such security will
not be recognized in the portfolio of a Fund until the Fund's Portfolio Manager
determines that issuance of the security is probable. At such time, the Fund
will record the transaction and, in determining its net asset value, will
reflect the value of the security daily. At such time, the Fund will also
establish a segregated account with its custodian bank in which it will
continuously maintain cash or U.S. Government Securities or other liquid
portfolio securities equal in value to recognized commitments for such
securities. Settlement of the trade will ordinarily occur within three Business
Days of the occurrence of the subsequent event. Once a segregated account has
been established, if the anticipated event does not occur and the securities
are not issued, a Fund will have lost an investment opportunity. Each of the
Growth Opportunities, Small Cap, Mid Cap and Large Cap Funds may purchase
securities on such basis without limit. An increase in the percentage of a
Fund's assets committed to the purchase of securities on a "when, as and if
issued" basis may increase the volatility of its net asset value. The Advisor
does not believe that the net asset value of a Fund will be adversely affected
by its purchase of securities on such basis. Each of the Growth Opportunities,
Small Cap, Mid Cap and Large Cap Funds may also sell securities on a "when, as
and if issued" basis provided that the issuance of the security will result
automatically from the exchange or conversion of a security owned by the Fund
at the time of the sale.
FOREIGN SECURITIES
A Fund may invest in securities traded in markets outside the United States.
Foreign investments can be affected favorably or unfavorably by changes in
currency rates and in exchange control regulations. There may be less publicly
available information about a foreign company than about a U.S. company, and
foreign companies may not be subject to accounting, auditing and financial
reporting standards comparable to those applicable to U.S. companies.
Securities of some foreign companies are less liquid or more volatile than
securities of U.S. companies, and foreign brokerage commissions and custodian
fees may be higher than in the United States. Investments in foreign securities
can involve other risks different from those affecting U.S. investments,
including local political or economic developments, expropriation or
nationalization of assets and imposition of withholding taxes on dividend or
interest payments. Foreign securities, like other assets of a Fund, will be
held by the Fund's custodian or by a subcustodian or depository. See also
"Foreign Currency Transactions" below.
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A Fund may invest in foreign entities that may be treated as "passive foreign
investment companies" for U.S. federal income tax purposes. See "Taxes" below.
FOREIGN CURRENCY TRANSACTIONS
A Fund may engage in currency exchange transactions to protect against
uncertainty in the level of future currency exchange rates.
A Fund may engage in both "transaction hedging" and "position hedging." When it
engages in transaction hedging, a Fund enters into foreign currency
transactions with respect to specific receivables or payables of the Fund
generally arising in connection with the purchase or sale of its portfolio
securities. A Fund will engage in transaction hedging when it desires to "lock
in" the U.S. dollar price of a security it has agreed to purchase or sell, or
the U.S. dollar equivalent of a dividend or interest payment in a foreign
currency. By transaction hedging a Fund attempts to protect itself against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold, or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
A Fund may purchase or sell a foreign currency on a spot (or cash) basis at the
prevailing spot rate in connection with the settlement of transactions in
portfolio securities denominated in that foreign currency. A Fund may also
enter into contracts to purchase or sell foreign currencies at a future date
("forward contracts") and purchase and sell foreign currency futures contracts.
For transaction hedging purposes a Fund may also purchase exchange-listed and
over-the-counter call and put options on foreign currency futures contracts and
on foreign currencies. Over-the-counter options are considered to be illiquid
by the SEC staff. A put option on a futures contract gives a Fund the right to
assume a short position in the futures contract until expiration of the option.
A put option on currency gives a Fund the right to sell a currency at an
exercise price until the expiration of the option. A call option on a futures
contract gives a Fund the right to assume a long position in the futures
contract until the expiration of the option. A call option on currency gives a
Fund the right to purchase a currency at the exercise price until the
expiration of the option.
When it engages in position hedging, a Fund enters into foreign currency
exchange transactions to protect against a decline in the values of the foreign
currencies in which its portfolio securities are denominated (or an increase in
the value of currency for securities which a Fund expects to purchase, when the
Fund holds cash or short-term investments). In connection with position
hedging, a Fund may purchase put or call options on foreign currency and
foreign currency futures contracts and buy or sell forward contracts and
foreign currency futures contracts. A Fund may also purchase or sell foreign
currency on a spot basis.
The precise matching of the amounts of foreign currency exchange transactions
and the value of the portfolio securities involved will not generally be
<PAGE>
possible since the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of those securities
between the dates the currency exchange transactions are entered into and the
dates they mature.
It is impossible to forecast with precision the market value of portfolio
securities at the expiration or maturity of a forward or futures contract.
Accordingly, it may be necessary for a Fund to purchase additional foreign
currency on the spot market (and bear the expense of such purchase) if the
market value of the security or securities being hedged is less than the amount
of foreign currency the Fund is obligated to deliver and if a decision is made
to sell the security or securities and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of the foreign
currency received upon the sale of the portfolio security or securities if the
market value of such security or securities exceeds the amount of foreign
currency a Fund is obligated to deliver.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which a Fund owns or intends to purchase or
sell. They simply establish a rate of exchange which one can achieve at some
future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they
tend to limit any potential gain which might result from the increase in value
of such currency.
CURRENCY FORWARD AND FUTURES CONTRACTS
Each of the Growth and Income, Growth Opportunities, Small Cap and Large Cap
Funds may enter into currency forward and future contracts. Upon entering into
such contracts, in compliance with the SEC's requirements, cash or liquid
securities, equal in value to the amount of a Fund's obligation under the
contract (less any applicable margin deposits and any assets that constitute
"cover" for such obligation), will be segregated with the Fund's custodian.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract as agreed by the parties, at a price set at the time
of the contract. In the case of a cancelable contract, the holder has the
unilateral right to cancel the contract at maturity by paying a specified fee.
The contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A
contract generally has no deposit requirement, and no commissions are charged
at any stage for trades. A currency futures contract is a standardized contract
for the future delivery of a specified amount of a foreign currency at a future
date at a price set at the time of the contract. Currency futures contracts
traded in the United States are designed and traded on exchanges regulated by
the CFTC, such as the New York Mercantile Exchange.
Forward currency contracts differ from currency futures contracts in certain
respects. For example, the maturity date of a forward contract may be any fixed
number of days from the date of the contract agreed upon by the parties, rather
than a predetermined date in a given month. Forward contracts may be in any
<PAGE>
amounts agreed upon by the parties rather than predetermined amounts. Also,
forward contracts are traded directly between currency traders so that no
intermediary is required. A forward contract generally requires no margin or
other deposit.
At the maturity of a forward or futures contract, a Fund may either accept or
make delivery of the currency specified in the contract, or at or prior to
maturity enter into a closing transaction involving the purchase or sale of an
offsetting contract. Closing transactions with respect to forward contracts are
usually effected with the currency trader who is a party to the original
forward contract. Closing transactions with respect to futures contracts are
effected on a commodities exchange; a clearing corporation associated with the
exchange assumes responsibility for closing out such contracts.
Positions in currency futures contracts may be closed out only on an exchange
or board of trade which provides a secondary market in such contracts. Although
a Fund intends to purchase or sell currency futures contracts only on exchanges
or boards of trade where there appears to be an active secondary market, there
is no assurance that a secondary market on an exchange or board of trade will
exist for any particular contract or at any particular time. In such event, it
may not be possible to close a futures position and, in the event of adverse
price movements, a Fund would continue to be required to make daily cash
payments of variation margin.
CURRENCY OPTIONS
The Growth and Income, Growth Opportunities, Small Cap and Large Cap Funds may
each enter into currency option transactions. In general, options on currencies
operate similarly to options on securities and are subject to many similar
risks. Currency options are traded primarily in the over-the-counter market,
although options on currencies have recently been listed on several exchanges.
Options are traded not only on the currencies of individual nations, but also
on the European Currency Unit ("ECU"). The ECU is composed of amounts of a
number of currencies, and is the official medium of exchange of the European
Economic Community's European Monetary System.
A Fund will only purchase or write currency options when the Fund's Portfolio
Manager believes that a liquid secondary market exists for such options. There
can be no assurance that a liquid secondary market will exist for a particular
option at any specified time. Currency options are affected by all of those
factors which influence exchange rates and investments generally. To the extent
that these options are traded over the counter, they are considered to be
illiquid by the SEC staff.
The value of any currency, including the U.S. dollar, may be affected by
complex political and economic factors applicable to the issuing country. In
addition, the exchange rates of currencies (and therefore the values of
currency options) may be significantly affected, fixed, or supported directly
or indirectly by government actions. Government intervention may increase risks
<PAGE>
involved in purchasing or selling currency options, since exchange rates may
not be free to fluctuate in respect to other market forces.
The value of a currency option reflects the value of an exchange rate, which in
turn reflects relative values of two currencies, the U.S. dollar and the
foreign currency in question. Because currency transactions occurring in the
interbank market involve substantially larger amounts than those that may be
involved in the exercise of currency options, investors may be disadvantaged by
having to deal in an odd lot market for the underlying currencies in connection
with options at prices that are less favorable than for round lots. Foreign
governmental restrictions or taxes could result in adverse changes in the cost
of acquiring or disposing of currencies.
There is no systematic reporting of last sale information for currencies and
there is no regulatory requirement that quotations available through dealers or
other market sources be firm or revised on a timely basis. Available quotation
information is generally representative of very large round-lot transactions in
the interbank market and thus may not reflect exchange rates for smaller
odd-lot transactions (less than $1 million) where rates may be less favorable.
The interbank market in currencies is a global, around-the-clock market. To the
extent that options markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place in
the underlying markets that cannot be reflected in the options markets.
SETTLEMENT PROCEDURES
Settlement procedures relating to a Fund's investments in foreign securities
and to a Fund's foreign currency exchange transactions may be more complex than
settlements with respect to investments in debt or equity securities of U.S.
issuers, and may involve certain risks not present in a Fund's domestic
investments, including foreign currency risks and local custom and usage.
Foreign currency transactions may also involve the risk that an entity involved
in the settlement may not meet its obligations.
FOREIGN CURRENCY CONVERSION
Although foreign exchange dealers do not charge a fee for currency conversion,
they do realize a profit based on the difference (spread) between prices at
which they are buying and selling various currencies. Thus, a dealer may offer
to sell a foreign currency to a Fund at one rate, while offering a lesser rate
of exchange should the Fund desire to resell that currency to the dealer.
Foreign currency transactions may also involve the risk that an entity involved
in the settlement may not meet its obligation.
RULE 144A SECURITIES
A Fund may purchase securities that have been privately placed but that are
eligible for purchase and sale under Rule 144A of the Securities Act of 1933
("1933 Act"). That Rule permits certain qualified institutional buyers, such as
a Fund, to trade in privately placed securities that have not been registered
for sale under the 1933 Act. A Fund's Portfolio Manager, under the supervision
of the Board of Trustees, will consider whether securities purchased under Rule
144A are illiquid and thus subject to the Fund's investment restriction on
<PAGE>
illiquid securities. A determination of whether a Rule 144A security is liquid
or not is a question of fact. In making this determination, a Fund's Portfolio
Manager will consider the trading markets for the specific security, taking
into account the unregistered nature of a Rule 144A security. In addition, the
Portfolio Manager could consider the (1) frequency of trades and quotes, (2)
number of dealers and potential purchasers, (3) dealer undertakings to make a
market, and (4) nature of the security and of marketplace trades (e.g., the
time needed to dispose of the security, the method of soliciting offers, and
the mechanics of transfer). The liquidity of Rule 144A securities will be
monitored and, if as a result of changed conditions, it is determined by the
Portfolio Manager that a Rule 144A security is no longer liquid, a Fund's
holdings of illiquid securities would be reviewed to determine what, if any,
steps are required to assure that the Fund does not invest more than its
investment restriction on illiquid securities allows. Investing in Rule 144A
securities could have the effect of increasing the amount of a Fund's assets
invested in illiquid securities if qualified institutional buyers are unwilling
to purchase such securities.
CONVERTIBLE SECURITIES
Each of the Growth Opportunities, Small Cap, Mid Cap and Large Cap Funds may
invest in convertible securities. A convertible security is a fixed-income
security, such as a bond or preferred stock, which may be converted at a stated
price within a specified period of time into a specified number of shares of
common stock of the same or a different issuer. Convertible securities are
senior to common stock in a corporation's capital structure, but usually are
subordinated to non-convertible debt securities. While providing a fixed income
stream (generally higher in yield than the income derivable from a common stock
but lower than that afforded by a similar non-convertible debt security), a
convertible security also affords an investor the opportunity, through its
conversion feature, to participate in the capital appreciation of the common
stock into which it is convertible.
In general, the market value of a convertible security is the higher of its
"investment value" (i.e., its value as a fixed-income security) or its
"conversion value" (i.e., the value of the underlying shares of common stock if
the security is converted). As a fixed-income security, the market value of a
convertible security generally increases when interest rates decline and
generally decreases when interest rates rise. However, the price of a
convertible security also is influenced by the market value of the security's
underlying common stock.
VARIABLE AND FLOATING RATE DEMAND AND MASTER DEMAND NOTES
A Fund may, from time to time, buy variable or floating rate demand notes
issued by corporations, bank holding companies and financial institutions and
similar taxable and tax-exempt instruments issued by government agencies and
instrumentalities. These securities will typically have a maturity over one
year but carry with them the right of the holder to put the securities to a
remarketing agent or other entity at designated time intervals and on specified
notice. The obligation of the issuer of the put to repurchase the securities
may be backed up by a letter of credit or other obligation issued by a
financial institution. The purchase price is ordinarily par plus accrued and
unpaid interest. Generally, the remarketing agent will adjust the interest rate
every seven days (or at other specified intervals) in order to maintain the
interest rate of the prevailing rate for securities with a seven-day or other
<PAGE>
designated maturity. A Fund's investment in demand instruments which provide
that the Fund will not receive the principal note amount within seven days'
notice, in combination with the Fund's other investments which are not readily
marketable, will be limited to an aggregate total of 10% of that Fund's net
assets.
A Fund may also buy variable rate master demand notes. The terms of these
obligations permit a Fund to invest fluctuating amounts at varying rates of
interest pursuant to direct arrangements between the Fund, as lender, and the
borrower. These instruments permit weekly and, in some instances, daily changes
in the amounts borrowed. A Fund has the right to increase the amount under the
note at any time up to the full amount provided by the note agreement, or to
decrease the amount, and the borrower may repay up to the full amount of the
note without penalty. The notes may or may not be backed by bank letters of
credit. Because the notes are direct lending arrangements between a Fund and
borrower, it is not generally contemplated that they will be traded, and there
is no secondary market for them, although they are redeemable (and, thus,
immediately repayable by the borrower) at principal amount, plus accrued
interest, at any time. In connection with any such purchase and on an ongoing
basis, a Fund's Portfolio Manager will consider the earning power, cash flow
and other liquidity ratios of the issuer, and its ability to pay principal and
interest on demand, including a situation in which all holders of such notes
make demand simultaneously.
SHORT SALES AGAINST THE BOX
Each of the Growth Opportunities, Small Cap, Mid Cap and Large Cap Funds may
from time to time make short sales of securities it owns or has the right to
acquire through conversion or exchange of other securities it owns. A short
sale is "against the box" to the extent that a Fund contemporaneously owns or
has the right to obtain at no added cost securities identical to those sold
short. In a short sale, a Fund does not immediately deliver the securities sold
and does not receive the proceeds from the sale. A Fund is said to have a short
position in the securities sold until it delivers the securities sold, at which
time it receives the proceeds of the sale. When a short sale transaction is
closed out by delivery of the securities, any gain or loss on the transaction
is taxable as a short term capital gain or loss.
To secure its obligation to deliver the securities sold short, a Fund will
deposit in a separate escrow account with its custodian an equal amount of the
securities sold short or securities convertible into or exchangeable for such
securities. A Fund may close out a short position by purchasing and delivering
an equal amount of the securities sold short, rather than by delivering
securities already held by the Fund, because the Fund may want to continue to
receive interest and dividend payments on securities in its portfolio that are
convertible into the securities sold short.
A Fund may make a short sale in order to hedge against market risks when the
Fund's Portfolio Manager believes that the price of a security may decline,
causing a decline in the value of a security owned by the Fund or a security
convertible into or exchangeable for such security. However, to the extent that
in a generally rising market a Fund maintains short positions in securities
<PAGE>
rising with the market, the net asset value of the Fund would be expected to
increase to a lesser extent than the net asset value of an investment company
that does not engage in short sales. A Fund may also make a short sale when it
does not want to sell the security it owns, because, among other reasons, it
wishes to defer recognition of gain or loss for Federal income tax purposes. In
such case, any future losses in the Fund's long position should be reduced by a
gain in the short position. The extent to which such gains or losses are
reduced will depend upon the amount of the security sold short relative to the
amount the Fund owns, either directly or indirectly, and, in the case where the
Fund owns convertible securities, changes in the investment value or conversion
premiums. Additionally, a Fund may use short sales when it is determined that a
convertible security can be bought at a small conversion premium and has a
yield advantage relative to the underlying common stock sold short. The
potential risk in this strategy is the possible loss of any premium over
conversion value in the convertible security at the time of purchase. The
purpose of this strategy is to produce income from the yield advantage and to
provide the potential for again should the conversion premium increase.
TAXES
The following discussion is a brief summary of some of the important federal
(and, where noted, state) income tax consequences affecting each Fund and its
shareholders. The discussion is very general. Therefore, prospective investors
are urged to consult their tax advisors about the impact an investment in a
Fund may have on their particular tax situations.
TAXATION OF A FUND.
FEDERAL TAXES. Each Fund (even though it is a fund in a Trust with multiple
series) is treated as a separate entity for federal income tax purposes under
the Internal Revenue Code of 1986, as amended (the "Code"). Each Fund has
elected (or in the case of a new Fund, intends to elect) to be, and intends to
qualify to be treated each year as, a "regulated investment company" under
Subchapter M of the Code by meeting all applicable requirements of Subchapter
M, including requirements as to the nature of that Fund's gross income, the
amount of its distributions (as a percentage of both its overall income and any
tax-exempt income), and the composition of its portfolio assets. As a regulated
investment company, a Fund will not be subject to any federal income or excise
taxes on its net investment income and net realized capital gains that it
distributes to shareholders in accordance with the timing requirements imposed
by the Code. If a Fund failed to qualify as a "regulated investment company" in
any year, it would incur a regular federal corporate income tax on all of its
taxable income, whether or not distributed, and distributions from that Fund
would generally be taxable as ordinary dividend income to the shareholders.
EXCISE TAX. To the extent that a Fund does not annually distribute
substantially all taxable income and realized gains, it is subject to an excise
tax. The Advisor intends to avoid this tax except when the cost of processing
the distribution is greater than the tax.
<PAGE>
TAX ACCOUNTING PRINCIPLES. To qualify as a "regulated investment company," a
Fund must (a) derive at least 90% of its gross income from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of stock securities or foreign currencies or other income
(including but not limited to gains from options, futures or forward contracts)
derived with respect to its business of investing in such stock securities or
currencies; (b) diversify its holdings so that, at the close of each quarter of
its taxable year, (i) at least 50% of the value of its total assets consists of
cash, cash items, U.S. Government securities, and other securities limited
generally with respect to any one issuer to not more than 5% of the total
assets of the Fund and not more than 10% of the outstanding voting securities
of such issuer, and (ii) not more than 25% of the value of its total assets is
invested in the securities of any issuer (other than U.S. Government
securities) and (c) must distribute at least 90% of its ordinary income
(inclusive of net short term capital gains) earned each year.
MASSACHUSETTS TAXES. As long as it qualifies as a regulated investment company
under the Code, a Fund will not be required to pay Massachusetts income or
excise taxes.
TAXATION OF SHAREHOLDERS.
FUND DISTRIBUTIONS. Shareholders of a Fund normally will have to pay federal
income tax and any state or local income taxes on the dividends and capital
gain distributions they receive from that Fund. Any distributions from ordinary
income and from net short-term capital gains are taxable to shareholders as
ordinary income for federal income tax purposes whether paid in cash or
reinvested in additional shares. Distributions of net capital gain (i.e., the
excess of net long-term capital gain over net short-term capital loss), whether
paid in cash or reinvested in additional shares, are taxable to shareholders as
long-term capital gains, without regard to the length of time the shareholders
have held their shares. Any dividend that is declared by a Fund in October,
November, or December of any calendar year, payable to shareholders of record
in such a month, and paid during the following January will be treated as if
received by the shareholders on December 31 of the year in which the dividend
was declared. Each Fund will notify shareholders regarding the federal tax
status of its distributions after the end of each calendar year.
Distributions by a Fund will have the effect of reducing the per share net
asset value of that Fund's shares by the amount of the distribution.
Shareholders purchasing shares shortly before the record date of a distribution
may thus pay the full price for the shares and then effectively receive a
portion of the purchase price back as a taxable distribution.
DISPOSITIONS OF SHARES. The sale, exchange or redemption of shares of a Fund
may give rise to a gain or loss. In general, any gain or loss realized upon a
taxable disposition of shares by a shareholder that holds such shares as a
capital asset generally will be treated as long-term capital gain or loss if
<PAGE>
the shares have been held for more than 12 months and otherwise as short-term
capital gain or loss. However, any loss realized upon a taxable disposition of
shares held for six months or less will be treated as long-term, rather than
short-term, capital loss to the extent of any distributions of net capital gain
received by the shareholder with respect to those shares. All or a portion of
any loss realized upon a taxable disposition of shares will be disallowed if
other shares are purchased within 30 days before or after the disposition. In
such a case, the basis of the newly purchased shares will be adjusted to
reflect the disallowed loss.
DIVIDENDS RECEIVED DEDUCTIONS. If a Fund receives dividend income from U.S.
corporations, a portion of that Fund's ordinary income dividends is normally
eligible for the dividends received deduction for corporations if the recipient
otherwise qualifies for that deduction with respect to its holding of shares of
that Fund. 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.
RETURN OF CAPITAL DISTRIBUTIONS. To the extent that a distribution is a return
of capital for federal tax purposes, it reduces the cost basis of the shares on
the record date and is similar to a partial return of the original investment
(on which a sales charge may have been paid). There is no recognition of a gain
or loss, however, unless the return of capital exceeds the cost basis in the
shares.
U.S. GOVERNMENT SECURITIES. Dividends paid by a Fund that are derived from
interest on obligations of the U.S. government and certain of its agencies and
instrumentalities (but generally not distributions of capital gains realized
upon the disposition of such obligations) may be exempt from state and local
income taxes. Each Fund intends to advise its shareholders of the extent, if
any, to which its dividends consist of such interest. Shareholders are urged to
consult their tax advisers regarding the possible exclusion of such portion of
their dividends for state and local income tax purposes.
DIVIDEND/ACCOUNTING POLICIES. The Fund's current dividend and accounting
policies will affect the amount, timing, and character of distributions to
shareholders and may, under certain circumstances, make an economic return of
capital taxable to shareholders.
CERTAIN SPECIFIC INVESTMENTS. Any investment in zero-coupon bonds, deferred
interest bonds, payment-in-kind bonds, certain stripped securities, and certain
securities purchased at a market discount will cause a Fund to recognize income
prior to the receipt of cash payments with respect to those securities. In
order to distribute this income and avoid a tax on the Fund, a Fund may be
required to liquidate portfolio securities that it might otherwise have
continued to hold, potentially resulting in additional taxable gain or loss to
that Fund.
OPTIONS AND FUTURES CONTRACTS. A Fund's transactions in options and futures
contracts will be subject to special tax rules that may affect the amount,
timing and character of Fund income and distributions to shareholders. For
<PAGE>
example, certain positions held on the last business day of each taxable year
will be marked to market (i.e., treated as if closed out) on that day, and any
gain or loss associated with the positions will be treated as 60% long-term and
40% short-term capital gain or loss. Certain positions held by a Fund that
substantially diminish its risk of loss with respect to other positions in its
portfolio may constitute "straddles," and may be subject to special tax rules
that would cause deferral of Fund losses, adjustments in the holding periods of
Fund securities, and conversion of short-term into long-term capital losses.
Certain tax elections exist for straddles that may alter the effects of these
rules. The Fund intends to limit its activities in options and futures
contracts to the extent necessary to meet the requirements of Subchapter M of
the Code.
FOREIGN INVESTMENTS. Special tax considerations apply with respect to foreign
investments by a Fund. Foreign exchange gains and losses realized by a Fund
will generally be treated as ordinary income and loss. Use of non-U.S.
currencies for non-hedging purposes and investment by a Fund in certain
"passive foreign investment companies" may be limited in order to avoid a tax
on the Fund. If a Fund does invest in passive foreign investment companies, it
may be required to pay additional tax (and interest) in respect of
distributions from, and gains attributable to the sale or other disposition of
the stock of, such entities. If a Fund is eligible to make and makes either a
"qualified electing fund" election or a "mark to market" election with respect
to an investment in a passive foreign investment company, then that Fund may
have taxable income from such investment regardless of whether or not that Fund
receives any actual distributions of cash from such passive foreign investment
company in any given year. In order to distribute this income and avoid a tax
at the Fund level, a Fund may be required to liquidate portfolio securities
that it might have otherwise continued to hold, potentially resulting in
additional taxable gain or loss to that Fund.
FOREIGN INCOME TAXES. Investment income received by a Fund from foreign
securities may be subject to foreign income taxes withheld at the source; a
Fund expects to be able to pass through to shareholders foreign tax credits
with respect to such foreign taxes. The United States has entered into tax
treaties with many foreign countries that may entitle a Fund to a reduced rate
of tax or an exemption from tax on such income; each Fund intends to qualify
for treaty reduced rates where available. It is not possible, however, to
determine a Fund's effective rate of foreign tax in advance, since the amount
of each Fund's assets to be invested within various countries is not known.
U.S. TAXATION OF NON-US. PERSONS. Dividends and certain other payments (but not
including distributions of net capital gains) to persons who are not citizens
or residents of the United States or U.S. entities ("Non-U.S. Persons") are
generally subject to U.S. tax withholding at the rate of 30%. The Fund intends
to withhold U.S. federal income tax at the rate of 30% (or any lower rate
permitted under an applicable treaty) on taxable dividends and other payments
to Non-U.S. Persons that are subject to such withholding. Any amounts
overwithheld may be recovered by such persons by filing a claim for refund with
the U.S. Internal Revenue Service within the time period appropriate to such
claims.
<PAGE>
BACKUP WITHHOLDING. Certain distributions and redemptions may be subject to a
31% backup withholding unless a taxpayer identification number and
certification that the shareholder is not subject to the withholding is
provided to the Fund. This number and form may be provided by either a Form W-9
or the accompanying application. In certain instances, LFS may be notified by
the Internal Revenue Service that a shareholder is subject to backup
withholding.
MANAGEMENT OF THE FUNDS
The Advisor is the investment advisor to each Fund. The Advisor is a indirect
subsidiary of Liberty Financial, which in turn is a direct majority-owned
subsidiary of Liberty Corporate Holdings, Inc., which in turn is a direct
majority-owned subsidiary of LFC Management Corporation, which in turn is a
direct subsidiary of Liberty Mutual Equity Corporation, which in turn is a
direct wholly-owned subsidiary of Liberty Mutual Insurance Company (Liberty
Mutual). Liberty Mutual is an underwriter of workers' compensation insurance
and a property and casualty insurer in the United States. Liberty Financial's
address is 600 Atlantic Avenue, Boston, MA 02210. Liberty Mutual's address is
175 Berkeley Street, Boston, MA 02117.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust, together with information as to their
principal addresses and business occupations during the last five years, are
shown below.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
POSITION PRINCIPAL OCCUPATIONS DURING
NAME AND ADDRESS AGE WITH THE TRUST PAST FIVE YEARS
Robert J. Birnbaum 71 Trustee Consultant (formerly Special
313 Bedford Road Counsel, Dechert Price &
Ridgewood, NJ 07450 Rhoads from September, 1988 to
December, 1993, President, New
York Stock Exchange from May,
1985 to June, 1988, President,
American Stock Exchange, Inc.
from 1977 to May, 1985).
John V. Carberry* 52 Chairman of the Senior Vice President of Liberty
Federal Reserve Plaza Board and Trustee Financial Companies, Inc.
600 Atlantic Avenue (formerly Managing Director,
Boston, MA 02110 Salomon Brothers (investment
banking) from January, 1988 to
January, 1998).
James E. Grinnell 70 Trustee Private Investor since
22 Harbor Avenue November, 1988.
Marblehead, MA 01945
<PAGE>
Richard W. Lowry 63 Trustee Private Investor since
10701 Charleston Drive August, 1987.
Vero Beach, FL 32963
William E. Mayer* 59 Trustee Partner, Development Capital,
500 Park Avenue, 5th Floor LLC (venture capital) (formerly
New York, NY 10022 Dean, College of Business and
Management, University of
Maryland from October, 1992 to
November, 1996; Dean, Simon
Graduate School of Business,
University of Rochester from
October, 1991 to July, 1992).
John J. Neuhauser 56 Trustee Academic Vice President and
84 College Road Dean of Faculties since August,
Chestnut Hill, MA 02467-3838 1999, Boston College (formerly
Dean, Boston College School of
Management from September,
1977 to September, 1999).
Christopher S. Carabell 36 Vice President Senior Vice President-Product
Federal Reserve Plaza Development and Marketing of
600 Atlantic Avenue the Advisor since January, 1999
Boston, MA 02210 (formerly Vice President-
Investments, March, 1996 to
January, 1999); Associate
Director, U.S. Equity Research,
Rogers Casey & Associates,
January, 1995 to March, 1996;
Director of Investments, Boy
Scouts of America, Inc., June,
1990 to January, 1995.
J. Kevin Connaughton 35 Controller and Controller and Chief Accounting
Chief Accounting Officer of the Liberty Funds
Officer Group-Boston (Liberty Funds)
since February, 1998; Vice
President of Colonial
Management Associates, Inc.
(Administrator) since February,
1998 (formerly Senior Tax
Manager, Coopers & Lybrand,
LLP from April, 1996 to
January, 1998; Vice President,
440 Financial Group/First Data
<PAGE>
Investor Services Group from
March, 1994 to April, 1996).
Mark T. Haley 35 Vice President Vice President-Investments of
Federal Reserve Plaza the Advisor since January, 1999
600 Atlantic Avenue (formerly Director of Investment
Boston, MA 02210 Analysis from December, 1996 to
December, 1998); Investment
Analyst from January, 1994 to
November, 1996).
Timothy J. Jacoby 47 Treasurer and Treasurer and Chief Financial
One Financial Center Chief Financial Officer of the Liberty Funds
Boston, MA 02111 Officer since October, 1996 (formerly
Controller and Chief Accounting
Officer from October, 1997 to
February, 1998), Senior Vice
President of the Administrator
since September, 1996; Vice
President, Chief Financial
Officer and Treasurer since
December, 1998 to Liberty
Funds Group LLC (LFG)
(formerly Vice President, Chief
Financial Officer and Treasurer
from July, 1997 to December,
1998 to The Colonial Group
(TCG); Senior Vice President of
SR&F since August, 1998
(formerly Senior Vice President,
Fidelity Accounting and Custody
Services from September, 1993
to September, 1996).
Nancy L. Conlin 46 Secretary Secretary of the Liberty Funds since
One Financial Center April, 1998 (formerly Assistant
Boston, MA 02111 Secretary from July, 1994 to April,
1998); Director, Senior Vice
President, General Counsel, Clerk
and Secretary of the Administrator
since April, 1998 (formerly Vice
President, Counsel, Assistant
Secretary and Assistant Clerk from
July, 1994 to April, 1998); Vice
President, General Counsel and
Secretary of LFG since December,
1998 (formerly Vice President,
General Counsel and Clerk of TCG
<PAGE>
from April, 1998 to December, 1998
(formerly Assistant Clerk from July,
1994 to April, 1998).
Joseph R. Palombo 46 Vice President Vice President of the Liberty Funds
One Financial Center since April, 1999; Executive Vice
Boston, MA 02111 President and Director of the
Administrator since April, 1999;
Executive Vice President and Chief
Administrative Officer of LFG since
April, 1999 (formerly Chief
Operating Officer, Putnam Mutual
Funds from 1994 to 1998).
William R. Parmentier, Jr. 47 President, Chief President and Chief Executive
Federal Reserve Plaza Executive Officer Officer (since June, 1998) and Chief
600 Atlantic Avenue and Chief Investment Officer (since May,
Boston, MA 02210 Investment Officer 1995), Senior Vice President (from
May, 1995 to June, 1998) of the
Advisor; Consultant (from October,
1994 to May, 1995); Officer
President, GQ Asset Management,
Inc. (from July, 1993 to October,
1994).
</TABLE>
As indicated in the above table, certain Trustees and officers of the Trust
also hold positions with the Advisor, Liberty Financial, the Administrator,
Stein Roe and/or certain of their affiliates. Certain of the Trustees and
officers of the Trust hold comparable positions with certain other investment
companies.
* A Trustee who is an "interested person" (as defined in the Act) of the
Trust or the Advisor.
The business address of the officers of the Trust is 600 Atlantic Avenue,
Boston, MA 02110.
The Boards of Trustees or Directors of the Trust, Liberty All-Star Equity Fund
and Liberty All-Star Growth Fund, Inc. are comprised of the same persons and
expect to hold their regular meetings concurrently. Each Trustee or Director
will receive an aggregate annual retainer of $10,000 and attendance fees of
$3,000 for each joint meeting attended, with a minimum total of $25,000 if less
than five meetings are held and all meetings are attended, plus out-of-pocket
expenses relating to attendance at meetings. One third of the aggregate of the
Trustees and Directors fees and expenses will be allocated among the Trust,
Liberty All-Star Equity Fund and Liberty All-Star Growth Fund, Inc. on a per
fund basis, and the remaining two-thirds will be allocated based on the
relative net assets of the three funds.
<PAGE>
The Administrator and/or its affiliate, Colonial Advisory Services, Inc., has
rendered investment advisory services to investment company, institutional and
other clients since 1931. The Administrator currently serves as investment
advisor and/or administrator for 43 open-end and 5 closed-end management
investment company portfolios (collectively, Colonial funds). Trustees and
officers of the Trust, who are also officers of the Advisor, the Administrator
or its affiliates, will benefit from the advisory fees, sales commissions and
agency fees paid or allowed by the Trust. More than 30,000 financial advisors
have recommended Colonial funds to over 800,000 clients worldwide, representing
more than $17 billion in assets.
The Agreement and Declaration of Trust (Declaration) of the Trust provides that
the Trust will indemnify its Trustees and officers against liabilities and
expenses incurred in connection with litigation in which they may be involved
because of their offices with the Trust but that such indemnification will not
relieve any officer or Trustee of any liability to the Trust or its
shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of his or her duties. The Trust, at its expense, provides
liability insurance for the benefit of its Trustees and officers.
Under an Administration Agreement with each Fund, the Administrator has
contracted to perform the following administrative services:
(a) providing office space, equipment and clerical personnel;
(b) arranging, if desired by the Trust, for its Directors, officers
and employees to serve as Trustees, officers or agents of the
Trust;
(c) preparing and, if applicable, filing all documents required for
compliance by the Funds with applicable laws and regulations;
(d) preparation of agendas and supporting documents for and minutes
of meetings of Trustees, committees of Trustees and
shareholders;
(e) coordinating and overseeing the activities of the Funds' other
third-party service providers; and
(f) maintaining certain books and records of the Funds.
The Advisor is paid a monthly fee at the annual rate of average daily net
assets. See "Investment Management and Other Services - General."
PORTFOLIO TRANSACTiONS AND BROKERAGE
Each of the Funds' Portfolio Managers has discretion to select brokers and
dealers to execute portfolio transactions initiated by the Portfolio Manager
for the portion of the applicable Fund's portfolio assets allocated to it, and
to select the markets in which such transactions are to be executed. The
portfolio management agreements with the Funds provide, in substance, that 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 a Fund.
<PAGE>
The Portfolio Managers are authorized to cause the Funds 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 the Funds) 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.
In addition, the portfolio management agreements with the Funds' Portfolio
Managers provide that the Advisor has the right to request that transactions
giving rise to brokerage commissions, in amounts to be agreed upon from time to
time between the Advisor and the Portfolio Manager, be executed by brokers and
dealers (to be agreed upon from time to time between the Advisor and the
Portfolio Manager) which provide or make available research products and
services to the Advisor. The commissions paid on such transactions may exceed
the amount of commission another broker would have charged for effecting that
transaction. Research products and services made available to the Advisor
through brokers and dealers executing transactions for a Fund and other clients
of the Advisor include performance 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
and performance data; data relating to portfolio manager changes by pension
plan fiduciaries; and related computer hardware and software, all of which are
used by the Advisor in connection with its selection and monitoring of
Portfolio Managers, the assembly of an appropriate mix of investment styles,
and the determination of overall portfolio strategies. These research products
and services may also be used by the Advisor in connection with its management
of other multi-managed clients of the Advisor. In instances where the Advisor
receives from or through brokers and dealers products or services which are
used both for research purposes and for administrative or other non-research
purposes, the Advisor 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 Advisor from time to time reaches understandings with each of the Funds'
Portfolio Managers as to the amount of the portfolio transactions for a Fund
and other multi-managed clients of the Advisor initiated by such Portfolio
Manager that are to be directed to brokers and dealers that provide or make
available research products and services to the Advisor and the commissions to
be charged to a Fund in connection therewith. These amounts may differ among
<PAGE>
the Portfolio Managers based on the nature of the market for the types of
securities managed by them and other factors.
Although the Funds do not permit a Portfolio Manager to act or have a
broker-dealer 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
accordance with the Funds' procedures adopted pursuant to Rule 17e-1 under the
Act.
The Growth Opportunities Fund seeks to achieve its investment objective, not by
buying, holding and selling individual portfolio securities, but by investing
substantially all of its assets in shares of Underlying Liberty Funds. The
Growth Opportunities Fund will not incur brokerage commission expenses or sales
charges in connection with its purchases and redemptions of Underlying Liberty
Funds. The Growth Opportunities Fund bears its pro rata share of the brokerage
and other transaction costs incurred by the Underlying Liberty Funds.
PRINCIPAL UNDERWRITER
LFD, located at One Financial Center, Boston, Massachusetts 02111, is the
principal underwriter of the Funds' shares. LFD has no obligation to buy the
Funds' shares, and purchases the Funds' shares only upon receipt of orders from
authorized financial service firms (FSFs) or investors.
INVESTOR SERVICING AND TRANSFER AGENT
LFS is the Trust's investor servicing agent (transfer, plan and dividend
disbursing agent), for which it receives fees which are paid monthly by the
Trust. The fee paid to LFS is based on the average daily net assets of each
Fund plus reimbursement for certain out-of-pocket expenses. See "Other Charges
and Expenses" in this SAI for information on fees received by LFS. The
agreement continues indefinitely but may be terminated by 90 days' notice by
the Fund to LFS or generally by 6 months' notice by LFS to the Fund. The
agreement limits the liability of LFS to the Fund for loss or damage incurred
by the Fund to situations involving a failure of LFS to use reasonable care or
to act in good faith in performing its duties under the agreement. It also
provides that the Fund will indemnify LFS against, among other things, loss or
damage incurred by LFS on account of any claim, demand, action or suit made on
or against LFS not resulting from LFS's bad faith or negligence and arising out
of, or in connection with, its duties under the agreement.
DETERMINATION OF NET ASSET VALUE
Each Fund determines net asset value (NAV) per share for each Class as of the
close (normally 4:00 p.m. Eastern time) of the New York Stock Exchange
(Exchange) each day the Exchange is open. Currently, the Exchange is closed
Saturdays, Sundays and the following holidays: New Year's Day, Martin Luther
King Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas. The NAV of the Growth Opportunities Fund is
<PAGE>
based on the NAV of the shares of the Underlying Liberty Funds held by it. Debt
securities generally are valued by a pricing service which determines
valuations based upon market transactions for normal, institutional-size
trading units of similar securities. However, in circumstances where such
prices are not available or where the Administrator deems it appropriate to do
so, an over-the-counter or exchange bid quotation is used. Securities listed on
an exchange or on NASDAQ are valued at the last sale price. Listed securities
for which there were no sales during the day and unlisted securities are valued
at the last quoted bid price. Options are valued at the last sale price or in
the absence of a sale, the mean between the last quoted bid and offering
prices. Short-term obligations with a maturity of 60 days or less are valued at
amortized cost pursuant to procedures adopted by the Trustees. The values of
foreign securities quoted in foreign currencies are translated into U.S.
dollars at the exchange rate for that day. Portfolio positions for which there
are no such valuations and other assets are valued at fair value as determined
by the Administrator in good faith under the direction of the Trust's Trustees.
Generally, trading in certain securities (such as foreign securities) is
substantially completed each day at various times prior to the close of the
Exchange. Trading on certain foreign securities markets may not take place on
all business days in New York, and trading on some foreign securities markets
takes place on days which are not business days in New York and on which the
Fund's NAV is not calculated. The values of these securities used in
determining the NAV are computed as of such times. Also, because of the amount
of time required to collect and process trading information as to large numbers
of securities issues, the values of certain securities (such as convertible
bonds and U.S. Government securities) are determined based on market quotations
collected earlier in the day at the latest practicable time prior to the close
of the Exchange. Occasionally, events affecting the value of such securities
may occur between such times and the close of the Exchange which will not be
reflected in the computation of the Fund's NAV. If events materially affecting
the value of such securities occur during such period, then these securities
will be valued at their fair value following procedures approved by the Trust's
Trustees.
HOW TO BUY SHARES
The Prospectuses contain a general description of how investors may buy shares
of the Funds and tables of charges. This SAI contains additional information
which may be of interest to investors.
The Funds will accept unconditional orders for shares to be executed at the
public offering price based on the NAV per share next determined after the
order is placed in good order. The public offering price is the NAV plus the
applicable sales charge, if any. In the case of orders for purchase of shares
placed through FSFs, the public offering price will be determined on the day
the order is placed in good order, but only if the FSF receives the order prior
to the time at which shares are valued and transmits it to the Fund before the
Fund processes that day's transactions. If the FSF fails to transmit before the
Fund processes that day's transactions, the customer's entitlement to that
day's closing price must be settled between the customer and the FSF. If the
FSF receives the order after the time at which the Fund values its shares, the
<PAGE>
price will be based on the NAV determined as of the close of the Exchange on
the next day it is open. If funds for the purchase of shares are sent directly
to LFS, they will be invested at the public offering price next determined
after receipt in good order. Payment for shares of the Funds must be in U.S.
dollars; if made by check, the check must be drawn on a U.S. bank.
A Fund receives the entire NAV of shares sold. For shares subject to an initial
sales charge, LFD's commission is the sales charge shown in the Fund's
Prospectus less any applicable FSF discount. The FSF discount is the same for
all FSFs, except that LFD retains the entire sales charge on any sales made to
a shareholder who does not specify a FSF on the Investment Account Application
(Application). LFD generally retains 100% of any asset-based sales charge
(distribution fee) or contingent deferred sales charge. Such charges generally
reimburse LFD for any up-front and/or ongoing commissions paid to FSFs.
Checks presented for the purchase of shares of the Funds which are returned by
the purchaser's bank will subject such purchaser to a $15 service fee for each
check returned. Checks must be drawn on a U.S. bank and must be payable in U.S.
dollars.
LFS acts as the shareholder's agent whenever it receives instructions to carry
out a transaction on the shareholder's account. Upon receipt of instructions
that shares are to be purchased for a shareholder's account, the designated FSF
will receive the applicable sales commission. Shareholders may change FSFs at
any time by written notice to LFS, provided the new FSF has a sales agreement
with LFD.
Shares credited to an account are transferable upon written instructions in
good order to LFS and may be redeemed as described under "How to Sell Shares"
in the Prospectus. Certificates will not be issued for Class A shares unless
specifically requested and no certificates will be issued for Class B, C or Z
shares. Shareholders may send any certificates which have been previously
acquired to LFS for deposit to their account.
LFD may, at its expense, provide special sale incentives (such as cash payments
in addition to the commissions specified in the Funds' SAI) to FSFs that agree
to promote the sale of shares of a Fund or other funds that LFD distributes. At
its discretion, LFD may offer special sales incentives only to selected FSFs or
FSFs who have previously sold or expect to sell significant amounts of a Fund's
shares.
SPECIAL PURCHASE PROGRAMS/INVESTOR SERVICES
The following special purchase programs/investor services may be changed or
eliminated at any time.
FUNDAMATIC PROGRAM. As a convenience to investors, shares of each Fund may be
purchased through the Fundamatic Program. Preauthorized monthly bank drafts or
electronic funds transfer for a fixed amount of at least $50 are used to
purchase a Fund's shares at the public offering price next determined after LFD
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receives the proceeds from the draft (normally the 5th or the 20th of each
month, or the next business day thereafter). If your Fundamatic purchase is by
electronic funds transfer, you may request the Fundamatic purchase for any day.
Further information and application forms are available from FSFs or from LFD.
AUTOMATED DOLLAR COST AVERAGING (CLASSES A, B AND C). The Automated Dollar Cost
Averaging program allows you to exchange $100 or more on a monthly basis from
any mutual fund advised by the Administrator, Crabbe Huson, Newport and Stein
Roe in which you have a current balance of at least $5,000 into the same class
of shares of up to four other funds. Complete the Automated Dollar Cost
Averaging section of the Application. The designated amount will be exchanged
on the third Tuesday of each month. There is no charge for exchanges made
pursuant to the Automated Dollar Cost Averaging program. Exchanges will
continue so long as your fund balance is sufficient to complete the transfers.
Your normal rights and privileges as a shareholder remain in full force and
effect. Thus you can buy any fund, exchange between the same Class of shares of
funds by written instruction or by telephone exchange if you have so elected
and withdraw amounts from any fund, subject to the imposition of any applicable
CDSC.
Any additional payments or exchanges into your Fund will extend the time of the
Automated Dollar Cost Averaging program.
An exchange is generally a capital sale transaction for federal income tax
purposes.
You may terminate your program, change the amount of the exchange (subject to
the $100 minimum), or change your selection of funds, by telephone or in
writing; if in writing by mailing your instructions to Liberty Funds Services,
Inc. P.O. Box 1722, Boston, MA 02105-1722.
You should consult your FSF or investment advisor to determine whether or not
the Automated Dollar Cost Averaging program is appropriate for you.
LFD offers several plans by which an investor may obtain reduced initial or
contingent deferred sales charges. These plans may be altered or discontinued
at any time. See "Programs For Reducing or Eliminating Sales Charges" for more
information.
TAX-SHELTERED RETIREMENT PLANS. LFD offers prototype tax-qualified plans,
including Individual Retirement Accounts (IRAs), and Pension and Profit-Sharing
Plans for individuals, corporations, employees and the self-employed. The
minimum initial Retirement Plan investment is $25. Investors Bank & Trust
Company is the Trustee of LFD prototype plans and charges a $15 annual fee.
Detailed information concerning these Retirement Plans and copies of the
Retirement Plans are available from LFD.
Participants in non-LFD prototype Retirement Plans (other than IRAs) also are
charged a $15 annual fee unless the plan maintains an omnibus account with LFS.
Participants in LFD prototype Plans (other than IRAs) who liquidate the total
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value of their account will also be charged a $15 close-out processing fee
payable to LFS. The fee is in addition to any applicable CDSC. The fee will not
apply if the participant uses the proceeds to open a LFD IRA Rollover account
in any fund, or if the Plan maintains an omnibus account.
Consultation with a competent financial and tax advisor regarding these Plans
and consideration of the suitability of fund shares as an investment under the
Employee Retirement Income Security Act of 1974 or otherwise is recommended.
TELEPHONE ADDRESS CHANGE SERVICES. By calling LFS, shareholders or their FSF of
record may change an address on a recorded telephone line. Confirmations of
address change will be sent to both the old and the new addresses. Telephone
redemption privileges are suspended for 30 days after an address change is
effected.
CASH CONNECTION. Dividends and any other distributions, including Systematic
Withdrawal Plan (SWP) payments, may be automatically deposited to a
shareholder's bank account via electronic funds transfer. Shareholders wishing
to avail themselves of this electronic transfer procedure should complete the
appropriate sections of the Application.
AUTOMATIC DIVIDEND DIVERSIFICATION. The automatic dividend diversification
reinvestment program (ADD) generally allows shareholders to have all
distributions from the Fund automatically invested in the same class of shares
of another fund distributed by LFD. An ADD account must be in the same name as
the shareholder's existing open account with the particular fund. Call LFS for
more information at 1-800-422-3737.
PROGRAMS FOR REDUCING OR ELIMINATING SALES CHARGES
RIGHT OF ACCUMULATION AND STATEMENT OF INTENT (Available only on the Class A
shares). Reduced sales charges on Class A shares can be effected by combining a
current purchase with prior purchases of Class A, B, C, T and Z shares of the
funds distributed by LFD. The applicable sales charge is based on the combined
total of:
1. the current purchase; and
2. the value at the public offering price at the close of business on the
previous day of all Liberty Funds' Class A shares held by the shareholder
(except shares of any money market fund, unless such shares were acquired
by exchange from Class A shares of another fund other than a money market
fund and Class B, C and Z shares).
LFD must be promptly notified of each purchase which entitles a shareholder to
a reduced sales charge. Such reduced sales charge will be applied upon
confirmation of the shareholder's holdings by LFS. The Fund may terminate or
amend this Right of Accumulation.
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Any person may qualify for reduced sales charges on purchases of Class A shares
made within a thirteen-month period pursuant to a Statement of Intent
(Statement). A shareholder may include, as an accumulation credit toward the
completion of such Statement, the value of all Class A, B, C and Z shares held
by the shareholder on the date of the Statement in funds (except shares of any
money market fund, unless such shares were acquired by exchange from Class A
shares of another non-money market fund). The value is determined at the public
offering price on the date of the Statement. Purchases made through
reinvestment of distributions do not count toward satisfaction of the
Statement.
During the term of a Statement, LFS will hold shares in escrow to secure
payment of the higher sales charge applicable to Class A shares actually
purchased. Dividends and capital gains will be paid on all escrowed shares and
these shares will be released when the amount indicated has been purchased. A
Statement does not obligate the investor to buy or a Fund to sell the amount of
the Statement.
If a shareholder exceeds the amount of the Statement and reaches an amount
which would qualify for a further quantity discount, a retroactive price
adjustment will be made at the time of expiration of the Statement. The
resulting difference in offering price will purchase additional shares for the
shareholder's account at the applicable offering price. As a part of this
adjustment, the FSF shall return to LFD the excess commission previously paid
during the thirteen-month period.
If the amount of the Statement is not purchased, the shareholder shall remit to
LFD an amount equal to the difference between the sales charge paid and the
sales charge that should have been paid. If the shareholder fails within twenty
days after a written request to pay such difference in sales charge, LFS will
redeem that number of escrowed Class A shares to equal such difference. The
additional amount of FSF discount from the applicable offering price shall be
remitted to the shareholder's FSF of record.
Additional information about and the terms of Statements of Intent are
available from your FSF, or from LFS at 1-800-345-6611.
REINSTATEMENT PRIVILEGE. An investor who has redeemed Class A, B or C shares
may, upon request, reinstate within one year a portion or all of the proceeds
of such sale in shares of the same Class of any Fund at the NAV next determined
after LFS receives a written reinstatement request and payment. Any CDSC paid
at the time of the redemption will be credited to the shareholder upon
reinstatement. The period between the redemption and the reinstatement will not
be counted in aging the reinstated shares for purposes of calculating any CDSC
or conversion date. Investors who desire to exercise this privilege should
contact their FSF or LFS. Shareholders may exercise this Privilege an unlimited
number of times. Exercise of this privilege does not alter the Federal income
tax treatment of any capital gains realized on the prior sale of the Fund
shares, but to the extent any such shares were sold at a loss, some or all of
the loss may be disallowed for tax purposes. Consult your tax advisor.
<PAGE>
PRIVILEGES OF EMPLOYEES OR FINANCIAL SERVICE FIRMS. Class A shares of the Funds
may be sold at NAV to the following individuals whether currently employed or
retired: Trustees of the Trust; directors, officers and employees of the
Advisor and the Administrator, LFD and other companies affiliated with the
Advisor and the Administrator; registered representatives; employees of FSFs
(including their affiliates) and the Portfolio Managers and such Portfolio
Managers' immediate families that are parties to dealer agreements or other
sales arrangements with LFD; and such persons' families and their beneficial
accounts.
SPONSORED ARRANGEMENTS. Class A shares of the Funds may be purchased at reduced
or no sales charge pursuant to sponsored arrangements, which include programs
under which an organization makes recommendations to, or permits group
solicitation of, its employees, members or participants in connection with the
purchase of shares of the fund on an individual basis. The amount of the sales
charge reduction will reflect the anticipated reduction in sales expense
associated with sponsored arrangements. The reduction in sales expense, and
therefore the reduction in sales charge, will vary depending on factors such as
the size and stability of the organization's group, the term of the
organization's existence and certain characteristics of the members of its
group. The Funds reserve the right to revise the terms of or to suspend or
discontinue sales pursuant to sponsored plans at any time.
Class A shares of the Funds may also be purchased at reduced or no sales charge
by clients of dealers, brokers or registered investment advisors that have
entered into agreements with LFD pursuant to which the Funds are included as an
investment option in programs involving fee-based compensation arrangements,
and by participants in certain retirement plans.
WAIVER OF CONTINGENT DEFERRED SALES CHARGES (CDSCS) (Classes A, B, and C).
CDSCs may be waived on redemptions in the following situations with the proper
documentation:
1. Death. CDSCs may be waived on redemptions within one year following the
death of (i) the sole shareholder on an individual account, (ii) a joint
tenant where the surviving joint tenant is the deceased's spouse, or (iii)
the beneficiary of a Uniform Gifts to Minors Act (UGMA), Uniform Transfers
to Minors Act (UTMA) or other custodial account. If, upon the occurrence
of one of the foregoing, the account is transferred to an account
registered in the name of the deceased's estate, the CDSC will be waived
on any redemption from the estate account occurring within one year after
the death. If the Class B shares are not redeemed within one year of the
death, they will remain subject to the applicable CDSC, when redeemed from
the transferee's account. If the account is transferred to a new
registration and then a redemption is requested, the applicable CDSC will
be charged.
2. Systematic Withdrawal Plan (SWP). CDSCs may be waived on redemptions
occurring pursuant to a monthly, quarterly or semi-annual SWP established
with LFS, to the extent the redemptions do not exceed, on an annual basis,
12% of the account's value, so long as at the time of the first SWP
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redemption the account had had distributions reinvested for a period at
least equal to the period of the SWP (e.g., if it is a quarterly SWP,
distributions must have been reinvested at least for the three month
period prior to the first SWP redemption); otherwise CDSCs will be charged
on SWP redemptions until this requirement is met; this requirement does
not apply if the SWP is set up at the time the account is established, and
distributions are being reinvested. See below under How to Sell Shares -
Systematic Withdrawal Plan."
3. Disability. CDSCs may be waived on redemptions occurring within one year
after the sole shareholder on an individual account or a joint tenant on a
spousal joint tenant account becomes disabled (as defined in Section
72(m)(7) of the Internal Revenue Code). To be eligible for such waiver,
(i) the disability must arise AFTER the purchase of shares AND (ii) the
disabled shareholder must have been under age 65 at the time of the
initial determination of disability. If the account is transferred to a
new registration and then a redemption is requested, the applicable CDSC
will be charged.
4. Death of a Trustee. CDSCs may be waived on redemptions occurring upon
dissolution of a revocable living or grantor trust following the death of
the sole trustee where (i) the grantor of the trust is the sole trustee
and the sole life beneficiary, (ii) death occurs following the purchase
AND (iii) the trust document provides for dissolution of the trust upon
the trustee's death. If the account is transferred to a new registration
(including that of a successor trustee), the applicable CDSC will be
charged upon any subsequent redemption.
5. Returns of Excess Contributions. CDSCs may be waived on redemptions
required to return excess contributions made to retirement plans or
individual retirement accounts, so long as the FSF agrees to return the
applicable portion of any commission paid by Colonial.
6. Qualified Retirement Plans. CDSCs may be waived on redemptions required to
make distributions from qualified retirement plans following normal
retirement (as stated in the Plan document). CDSCs also will be waived on
SWP redemptions made to make required minimum distributions from qualified
retirement plans that have invested in Colonial funds for at least two
years.
The CDSC also may be waived where the FSF agrees to return all or an agreed
upon portion of the commission earned on the sale of the shares being redeemed.
HOW TO SELL SHARES
Shares may also be sold on any day the Exchange is open, either directly to a
Fund or through the shareholder's FSF. Sale proceeds generally are sent within
seven days (usually on the next business day after your request is received in
good form). However, for shares recently purchased by check, a Fund may delay
selling your shares for up to 15 days in order to protect the Fund against
<PAGE>
financial losses and dilution in net asset value caused by dishonored purchase
payment checks.
To sell shares directly to a Fund, send a signed letter of instruction or stock
power form to LFS, along with any certificates for shares to be sold. The sale
price is the net asset value (less any applicable contingent deferred sales
charge) next calculated after the Fund receives the request in proper form.
Signatures must be guaranteed by a bank, a member firm of a national stock
exchange or another eligible guarantor institution. Stock power forms are
available from FSFs, LFS, and many banks. Additional documentation is required
for sales by corporations, agents, fiduciaries, surviving joint owners and
individual retirement account holders. Call LFS for more information
1-800-345-6611.
FSFs must receive requests before the time at which the Fund's shares are
valued to receive that day's price, are responsible for furnishing all
necessary documentation to LFS and may charge for this service.
SYSTEMATIC WITHDRAWAL PLAN. If a shareholder's account balance is at least
$5,000, the shareholder may establish a SWP. A specified dollar amount or
percentage of the then current net asset value of the shareholder's investment
in a Fund will be paid monthly, quarterly or semi-annually to a designated
payee. The amount or percentage the shareholder specifies generally may not, on
an annualized basis, exceed 12% of the value, as of the time the shareholder
makes the election, of the shareholder's investment. Withdrawals from Class B
and Class C shares of a Fund under a SWP will be treated as redemptions of
shares purchased through the reinvestment of Fund distributions, or, to the
extent such shares in the shareholder's account are insufficient to cover Plan
payments, as redemptions from the earliest purchased shares of the Fund in the
shareholder's account. No CDSCs apply to a redemption pursuant to a SWP of 12%
or less, even if, after giving effect to the redemption, the shareholder's
account balance is less than the shareholder's base amount. Qualified plan
participants who are required by Internal Revenue Service regulation to
withdraw more than 12%, on an annual basis, of the value of their Class B and
Class C share account may do so but will be subject to a CDSC ranging from 1%
to 5% of the amount withdrawn in excess of 12% annually. If a shareholder
wishes to participate in a SWP, the shareholder must elect to have all of the
shareholder's income dividends and other Fund distributions payable in shares
of the Fund rather than in cash.
For federal income tax purposes, a withdrawal under the SWP constitutes a
redemption of shares, which may result in a capital gain or loss.
A shareholder or a shareholder's FSF of record may establish a SWP account by
telephone on a recorded line. However, SWP checks will be payable only to the
shareholder and sent to the address of record. SWPs from retirement accounts
cannot be established by telephone.
A shareholder may not establish a SWP if the shareholder holds shares in
certificate form. Purchasing additional shares (other than through dividend and
distribution reinvestment) while receiving SWP payments is ordinarily
<PAGE>
disadvantageous because of duplicative sales charges. For this reason, a
shareholder may not maintain a plan for the accumulation of shares of the fund
(other than through the reinvestment of dividends) and a SWP at the same time.
SWP payments are made through share redemptions, which may result in a gain or
loss for tax purposes, may involve the use of principal and may eventually use
up all of the shares in a shareholder's account.
A Fund may terminate a shareholder's SWP if the shareholder's account balance
falls below $5,000 due to any transfer or liquidation of shares other than
pursuant to the SWP. SWP payments will be terminated on receiving satisfactory
evidence of the death or incapacity of a shareholder. Until this evidence is
received, LFS will not be liable for any payment made in accordance with the
provisions of a SWP.
The cost of administering SWPs for the benefit of shareholders who participate
in them is borne by the Fund as an expense of all shareholders.
Shareholders whose positions are held in "street name" by certain FSFs may not
be able to participate in a SWP. If a shareholder's Fund shares are held in
"street name," the shareholder should consult his or her FSF to determine
whether he or she may participate in a SWP.
TELEPHONE REDEMPTIONS. All Fund shareholders and/or their FSFs are
automatically eligible to redeem up to $100,000 of the Fund's shares by calling
1-800-422-3737 toll-free any business day between 9:00 a.m. and the close of
trading of the Exchange (normally 4:00 p.m. Eastern time). Transactions
received after 4:00 p.m. Eastern time will receive the next business day's
closing price. Telephone redemptions are limited to a total of $100,000 in a
30-day period. Redemptions that exceed $100,000 may be accomplished by placing
a wire order trade through a broker or furnishing a signature guaranteed
request. Telephone redemption privileges for larger amounts may be elected on
the Application. LFS will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Telephone redemptions are
not available on accounts with an address change in the preceding 30 days and
proceeds and confirmations will only be mailed or sent to the address of record
unless the redemption proceeds are being sent to a pre-designated bank account.
Shareholders and/or their FSFs will be required to provide their name, address
and account number. FSFs will also be required to provide their broker number.
All telephone transactions are recorded. A loss to a shareholder may result
from an unauthorized transaction reasonably believed to have been authorized.
No shareholder is obligated to execute the telephone authorization form or to
use the telephone to execute transactions.
NON CASH REDEMPTIONS. For redemptions of any single shareholder within any
90-day period exceeding the lesser of $250,000 or 1% of the Fund's net asset
value, the Fund may make the payment or a portion of the payment with portfolio
securities held by the Fund instead of cash, in which case the redeeming
shareholder may incur brokerage and other costs in selling the securities
received.
<PAGE>
DISTRIBUTIONS
Distributions are invested in additional shares of the same Class of the Fund
at net asset value unless the shareholder elects to receive cash. Regardless of
the shareholder's election, distributions of $10 or less will not be paid in
cash, but will be invested in additional shares of the same Class of the Fund
at net asset value. Undelivered distribution checks returned by the post office
will be reinvested in your account. If a shareholder has elected to receive
dividends and/or capital gain distributions in cash and the postal or other
delivery service selected by the Transfer Agent is unable to deliver checks to
the shareholder's address of record, such shareholder's distribution option
will automatically be converted to having all dividend and other distributions
reinvested in additional shares. No interest will accrue on amounts represented
by uncashed distribution or redemption checks. Shareholders may reinvest all or
a portion of a recent cash distribution without a sales charge. A shareholder
request must be received within 30 calendar days of the distribution. A
shareholder may exercise this privilege only once. No charge is currently made
for reinvestment.
HOW TO EXCHANGE SHARES
Shares of a Fund may be exchanged for the same class of shares of the other
continuously offered funds distributed by LFD (with certain exceptions) on the
basis of the NAVs per share at the time of exchange. Class Z shares may be
exchanged for Class A shares of the other funds. The prospectus of each
LFD-distributed fund describes its investment objective and policies, and
shareholders should obtain a prospectus and consider these objectives and
policies carefully before requesting an exchange. Shares of certain
LFD-distributed funds are not available to residents of all states. Consult LFS
before requesting an exchange.
By calling LFS, shareholders or their FSF of record may exchange among accounts
with identical registrations, provided that the shares are held on deposit.
During periods of unusual market changes or shareholder activity, shareholders
may experience delays in contacting LFS by telephone to exercise the telephone
exchange privilege. Because an exchange involves a redemption and reinvestment
in another fund, completion of an exchange may be delayed under unusual
circumstances, such as if the fund suspends repurchases or postpones payment
for the fund shares being exchanged in accordance with federal securities law.
LFS will also make exchanges upon receipt of a written exchange request and,
share certificates, if any. If the shareholder is a corporation, partnership,
agent, or surviving joint owner, LFS will require customary additional
documentation. Prospectuses of the other funds are available from the Colonial
Literature Department by calling 1-800-426-3750.
A loss to a shareholder may result form an unauthorized transaction reasonably
believed to have been authorized. No shareholder is obligated to use the
telephone to execute transactions.
You need to hold your Class A shares for five months before exchanging to
certain funds having a higher maximum sales charge. Consult your FSF or LFS. In
<PAGE>
all cases, the shares to be exchanged must be registered on the records of the
fund in the name of the shareholder desiring to exchange.
Shareholders of the other LFD-distributed open-end funds generally may exchange
their shares at NAV for the same class of shares of a Fund.
For federal income tax purposes, an exchange is a taxable event, which may
result in a capital gain or loss. The exchange privilege may be revised,
suspended or terminated at any time.
SUSPENSION OF REDEMPTIONS
A Fund may not suspend shareholders' right of redemption or postpone payment
for more than seven days unless the Exchange is closed for other than customary
weekends or holidays, or if permitted by the rules of the SEC during periods
when trading on the Exchange is restricted or during any emergency which makes
it impracticable for the Fund to dispose of its securities or to determine
fairly the value of its net assets, or during any other period permitted by
order of the SEC for the protection of investors.
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Trust. However, the
Declaration disclaims shareholder liability for acts or obligations of the
Funds and the Trust and requires that notice of such disclaimer be given in
each agreement, obligation, or instrument entered into or executed by the
Trust's Trustees. The Declaration provides for indemnification out of Fund
property for all loss and expense of any shareholder held personally liable for
the obligations of a Fund. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances (which are
considered remote) in which the Fund would be unable to meet its obligations
and the disclaimer was inoperative.
The risk of the Fund incurring financial loss on account of another fund of the
Trust is also believed to be remote, because it would be limited to
circumstances in which the disclaimer was inoperative and the other fund was
unable to meet its obligations.
SHAREHOLDER MEETINGS
As described under the caption "Organization and History", the Funds will not
hold annual shareholders' meetings. The Trustees may fill any vacancies in the
Board of Trustees except that the Trustees may not fill a vacancy if,
immediately after filling such vacancy, less than two-thirds of the Trustees
then in office would have been elected to such office by the shareholders. In
addition, at such times as less than a majority of the Trustees then in office
have been elected to such office by the shareholders, the Trustees must call a
meeting of shareholders. Trustees may be removed from office by a written
<PAGE>
consent signed by a majority of the outstanding shares of the Trust or by a
vote of the holders of a majority of the outstanding shares at a meeting duly
called for the purpose, which meeting shall be held upon written request of the
holders of not less than 10% of the outstanding shares of the Trust. Upon
written request by the holders of 1% of the outstanding shares of the Trust
stating that such shareholders of the Trust, for the purpose of obtaining the
signatures necessary to demand a shareholders' meeting to consider removal of a
Trustee, request information regarding the Trust's shareholders, the Trust will
provide appropriate materials (at the expense of the requesting shareholders).
Except as otherwise disclosed in the Prospectus and this SAI, the Trustees
shall continue to hold office and may appoint their successors.
At any shareholders' meetings that may be held, shareholders of all series
would vote together, irrespective of series, on the election of Trustees or the
selection of independent accountants, but each series would vote separately
from the others on other matters, such as changes in the investment policies of
that series or the approval of the management agreement for that series.
Whenever the Growth Opportunities Fund is requested to vote on a matter
pertaining to an Underlying Liberty Fund, the Trustees of the Growth
Opportunities Fund will, in their discretion and in accordance with applicable
law, either seek instructions from shareholders of the Growth Opportunities
Fund and vote the shares only in accordance with such instructions, or vote the
shares held by the Growth Opportunities Fund in the same proportion as the vote
of all other holders of shares in such Underlying Liberty Fund.
PERFORMANCE MEASURES
TOTAL RETURN
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN. Average annual total return is the
actual return on a $1,000 investment in a particular class of shares of a Fund,
made at the beginning of a stated period, adjusted for the maximum sales charge
or applicable CDSC for the class of shares of the Fund and assuming that all
distributions were reinvested at NAV, converted to an average annual return
assuming annual compounding.
NONSTANDARDIZED TOTAL RETURN. Nonstandardized total returns may differ from
standardized average annual total returns in that they may relate to
nonstandardized periods, represent aggregate (i.e. cumulative) rather than
average annual total returns or may not reflect the sales charge or CDSC.
DISTRIBUTION RATE. The distribution rate for each class of shares of a Fund is
usually calculated by dividing annual or annualized distributions by the
maximum offering price of that class on the last day of the period. Generally,
a Fund's distribution rate reflects total amounts actually paid to
shareholders, while yield reflects the current earning power of the Fund's
portfolio securities (net of the Fund's expenses). A Fund's yield for any
period may be more or less than the amount actually distributed in respect of
such period.
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A Fund may compare its performance to various unmanaged indices published by
such sources as are listed in Appendix II.
A Fund may also refer to quotations, graphs and electronically transmitted data
from sources believed by the Advisor and the Administrator to be reputable, and
publications in the press pertaining to a Fund's performance or to the Advisor
and the Administrator or their affiliates, including comparisons with
competitors and matters of national and global economic and financial interest.
Examples include Forbes, Business Week, Money Magazine, The Wall Street
Journal, The New York Times, The Boston Globe, Barron's National Business &
Financial Weekly, Financial Planning, Changing Times, Reuters Information
Services, Wiesenberger Mutual Funds Investment Report, Lipper Analytical
Services Corporation, Morningstar, Inc., Sylvia Porter's Personal Finance
Magazine, Money Market Directory, SEI Funds Evaluation Services, FTA World
Index, Disclosure Incorporated, Bloomberg and Ibbotson.
All data are based on past performance and do not predict future results.
TAX-RELATED ILLUSTRATIONS. The Funds also may present hypothetical
illustrations (i) comparing a Fund's and other mutual funds' pre-tax and
after-tax total returns and (ii) showing the effects of income, capital gain
and estate taxes on performance.
GENERAL. From time to time, the Funds may discuss or quote their current
portfolio manager as well as other investment personnel and members of the tax
management oversight team, including such person's views on: the economy;
securities markets; portfolio securities and their issuers; investment
philosophies, strategies, techniques and criteria used in the selection of
securities to be purchased or sold for a Fund, a Fund's portfolio holdings; the
investment research and analysis process; the formulation and evaluation of
investment recommendations; and the assessment and evaluation of credit,
interest rate, market and economic risks and similar or related matters.
From time to time, the Funds may also discuss or quote the views of LFD, the
Advisor and other financial planning, legal, tax, accounting, insurance, estate
planning and other professionals, or from surveys, regarding individual and
family financial planning. Such views may include information regarding:
retirement planning; general investment techniques (e.g., asset allocation and
disciplined saving and investing); business succession; issues with respect to
insurance (e.g., disability and life insurance and Medicare supplemental
insurance); issues regarding financial and health care management for elderly
family members; and similar or related matters.
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits:
(a)(1) Agreement and Declaration of Trust (1)
(a)(2) Amendment No. 1 to Agreement and Declaration of Trust (2)
(b) Amended By-Laws dated 10/27/99 (2)
(c) Form of Specimen Share Certificate - filed as Exhibit 4 in Part
C, Item 24(b) of Post-Effective Amendment No. 45 to the
Registration Statement on Form N-1A of Liberty Funds Trust IV
(formerly Colonial Trust IV) (File Nos. 2-62492 and 811-2865),
filed with the Commission on or about March 21, 1997, and is
hereby incorporated by reference and made a part of this
Registration Statement
(d)(1) Form of Fund Management Agreement between Registrant and
Liberty Asset Management Company (LAMCO)*
(d)(2) Form of Portfolio Management Agreement among Registrant, LAMCO
and Portfolio Managers*
(e)(1) Distribution Agreement between the Registrant and Liberty Funds
Distributor, Inc. (4)
(e)(2) Appendix 1 to the Distribution Agreement between the Registrant
and Liberty Funds Distributor, Inc., as amended to reflect
inclusion of the new series of the Registrant*
(e)(3) 12b-1 Plan Implementing Agreement between the Registrant and
Liberty Funds Distributor, Inc. (4)
<PAGE>
(e)(4) Appendix 1 to the 12b-1 Plan Implementing Agreement between the
Registrant and Liberty Funds Distributor, Inc., as amended to
reflect inclusion of the new series of the Registrant*
(e)(5) Form of Selling Agreement - filed as Exhibit 6.(b) in Part C,
Item 24(b) of Post-Effective Amendment No. 49 to the
Registration Statement on Form N-1A of Liberty Funds Trust I
(formerly Colonial Trust I) (File Nos. 2-41251 and 811-2214),
filed with the Commission on or about November 10, 1998, and is
hereby incorporated by reference and made a part of this
Registration Statement
(e)(6) Form of Asset Retention Agreement - filed as Exhibit 6.(d) in
Part C, Item 24(b) of Post-Effective Amendment No. 10 to the
Registration Statement on Form N-1A of Liberty Funds Trust VI
(formally Colonial Trust VI) (File Nos. 33-45117 and 811-6529),
filed with the Commission on or about September 27, 1996, and
is hereby incorporated by reference and made a part of this
Registration Statement
(f) Not applicable
(g)(1) Global Custody Agreement with The Chase Manhattan Bank - filed
as Exhibit 8. in Part C, Item 24(b) of Post-Effective Amendment
No. 13 to the Registration Statement on Form N-1A of Liberty
Funds Trust VI (formerly Colonial Trust VI) (File Nos. 33-45117
and 811-6529), filed with the Commission on or about October
24, 1997, and is hereby incorporated by reference and made a
part of this Registration Statement
(g)(2) Amendment No. 11 to Appendix A of Global Custody Agreement with
The Chase Manhattan Bank - filed as Exhibit (g)(2) in Part C,
Item 23 of Post-Effective Amendment No. 60 to the Registration
Statement on Form N-1A of Liberty Funds Trust II (formerly
Colonial Trust I) (File Nos. 2-41251 and 811-2214), filed with
the Commission on or about March 1, 2000, and is hereby
incorporated by reference and made a part of this Registration
Statement
(h)(1) Amended and Restated Shareholders' Servicing and Transfer Agent
Agreement as amended - filed as Exhibit No. 9.(b) in Part C,
Item 24(b) of Post-Effective Amendment No. 10 to the
Registration Statement on Form N-1A of Liberty Funds Trust VI
(formerly Colonial Trust VI)(File Nos. 33-45117 & 811-6529),
filed with the Commission on or about September 27, 1996, and
is hereby incorporated by reference and made a part of this
Registration Statement
(h)(2) Amendment No. 17 to Schedule A of Amended and Restated
Shareholders' Servicing and Transfer Agent Agreement as amended
- filed as Exhibit (h)(2) in Part C, Item 23 of Pre-Effective
Amendment No. 60 to the Registration Statement on Form N-1A of
Liberty Funds Trust I (File Nos. 811-2214 and 2-41251), filed
with the Commission on or about March 1, 2000, and is hereby
incorporated by reference and made a part of this Registration
Statement
(h)(3) Amendment No. 22 to Appendix I of Amended and Restated
Shareholders' Servicing and Transfer Agent Agreement as amended
- filed as Exhibit (h)(3) in Part C, Item 23 of Pre-Effective
<PAGE>
Amendment No. 60 to the Registration Statement on Form N-1A of
Liberty Funds Trust I (File Nos. 811-2214 and 2-41251), filed
with the Commission on or about March 1, 2000, and is hereby
incorporated by reference and made a part of this Registration
Statement
(h)(4) Pricing and Bookkeeping Agreement*
(h)(5) Amended and Restated Credit Agreement with Bank of America -
filed as Exhibit (h)(8) in Part C, Item 23 of Post-Effective
Amendment No. 110 to the Registration Statement on Form N-1A of
Liberty Funds Trust III (formerly Colonial Trust III)(File Nos.
2-15184 and 811-881), filed with the Commission on or about
August 12, 1999, and is hereby incorporated by reference and
made a part of this Registration Statement
(h)(6) Administration Agreement between Registrant and Colonial
Management Associates, Inc.*
(h)(7) Stock Subscription Agreement between Registrant and LAMCO*
(i) Opinion of Counsel*
(j) Consent of Independent Accountants (4)
(k) Not applicable
(l) Not applicable
(m) Rule 12b-1 Distribution Plan (4)
(n) Not applicable
(o) Plan pursuant to Rule 18f-3(d) under the Investment Company Act
of 1940 (3)
(p) Code of Ethics of the Registrant, Colonial Management Associates,
Inc. and Liberty Funds Distributor, Inc. - filed as Exhibit (p)
in Part C, Item 23 of Post-Effective Amendment No. 59 to the
Registration Statement on Form N-1A of Liberty Funds Trust IV
(File Nos. 811-2865 and 2-62492), filed with the Commission
on or about March 17, 2000, and is hereby incorporated by
reference and made a part of this Registration Statement
Power of Attorney for: Robert J. Birnbaum, John V. Carberry, James E. Grinnell,
Richard W. Lowry, William E. Mayer, and John J. Neuhauser
(1) Incorporated by reference to the Registrant's Registration
Statement on Form N-1A, filed with the Commission on or about
November 5, 1998.
(2) Incorporated by reference to the Registrant's Pre-Effective
Amendment No. 1 on Form N-1A, filed with the Commission on or
about January 12, 1999.
(3) Incorporated by reference to the Registrant's Post-Effective
Amendment No. 2 on Form N-1A, filed with the Commission on or
about February 16, 2000.
(4) Incorporated by reference to the Registrant's Post-Effective
Amendment No. 3 on Form N-1A, filed with the Commission on or
about March 17, 2000.
* To be filed by amendment.
Item 24. Persons Controlled by or under Common Control with Registrant
None
<PAGE>
Item 25. Indemnification
See Article VII of the Amended and Restated Agreement and
Declaration of Trust incorporated by reference as Exhibit (a)(1)
hereto.
The Registrant's administrator, Colonial Management Associates,
Inc., has an ICI Mutual Insurance Company Directors and
Officers/Errors and Omissions Liability insurance policy. The
policy provides indemnification to the Registrant's trustees and
officers.
Item 26. Business and Other Connections of Investment Adviser
Certain information pertaining to business and other connections
of the Registrant's investment adviser, Liberty Asset Management
Company (LAMCO), which in turn is a indirect wholly-owned
subsidiary of Liberty Financial Companies, Inc. (LFCI), which in
turn is a majority owned subsidiary of LFC Management Corporation,
which in turn is a wholly owned subsidiary of Liberty Corporate
Holdings, Inc., which in turn is a wholly owned subsidiary of LFC
Holdings, Inc., which in turn is a wholly owned subsidiary of
Liberty Mutual Equity Corporation, which in turn is a wholly owned
subsidiary of Liberty Mutual Insurance Company. LAMCO serves as
investment adviser to the Liberty All-Star Growth and Income Fund
and is primarily engaged in the provision of its multi-management
services to Liberty All-star Equity Fund and Liberty All-Star
Growth Fund, Inc., multi-managed closed-end investment companies,
and Liberty All-Star Equity Fund, Variable Series, a multi-managed
open-end investment company that serves as an investment vehicle
for variable annuity contracts and variable life insurance
policies issued by insurance companies. LAMCO also provide
investment management services to Colonial Counselor Select
Portfolios, an open-end investment company. The information
required above is incorporated herein by reference from LAMCO's
Form ADV, as most recently filed with the Securities and Exchange
Commission. The business and other connections of the officers,
directors or partners of the Portfolio Managers of LASGIF is
incorporated by reference from the respective Portfolio Manager's
Form ADV, as most recently filed with the Securities and Exchange
Commission. The file numbers of such ADV Forms are as follows:
Westwood Management Corporation 801-18727
TCW Investment Management Company 801-29075
Item 27 Principal Underwriter
- ------- ---------------------
(a) Liberty Funds Distributor, Inc. (LFDI), a subsidiary of Colonial
Management Associates, Inc., is the Registrant's principal underwriter.
LFDI acts in such capacity for each series of Liberty Funds Trust I,
Liberty Funds Trust II, Liberty Funds Trust III, Liberty Funds Trust IV,
Liberty Funds Trust V, Liberty Funds Trust VI, Liberty Funds Trust VII,
Liberty Funds Trust IX, Liberty Variable Investment Trust, Liberty-Stein
Roe Advisor Trust, Stein Roe Income Trust, Stein Roe Municipal Trust,
Stein Roe Investment Trust, Stein Roe Floating Rate Income Fund, Stein
Roe Institutional Floating Rate Income Fund, SteinRoe Variable Investment
Trust and Stein Roe Trust.
(b) The table below lists each director or officer of the principal
underwriter named in the answer to Item 21.
<PAGE>
(1) (2) (3)
Position and Offices Positions and
Name and Principal with Principal Offices with
Business Address* Underwriter Registrant
- ------------------ ------------------- --------------
Anderson, Judith V.P. None
Babbitt, Debra V.P. and None
Comp. Officer
Bartlett, John Managing Director None
Blakeslee, James Sr. V.P. None
Blumenfeld, Alex V.P. None
Bozek, James Sr. V.P. None
Brown, Beth V.P. None
Burtman, Tracy V.P. None
Carroll, Sean V.P. None
Campbell, Patrick V.P. None
Chrzanowski, V.P. None
Daniel
Clapp, Elizabeth A. Managing Director None
Claiborne, Doug V.P. None
Conlin, Nancy L. Dir; Clerk Secretary
Davey, Cynthia Sr. V.P. None
Desilets, Marian V.P. Asst. Sec
Devaney, James Sr. V.P. None
Downey, Christopher V.P. None
Dupree, Robert V.P. None
Emerson, Kim P. Sr. V.P. None
Erickson, Cynthia G. Sr. V.P. None
Evans, C. Frazier Managing Director None
Evitts, Stephen V.P. None
Feldman, David Managing Director None
Fifield, Robert V.P. None
Fragasso, Philip Managing Director None
<PAGE>
Gerokoulis, Sr. V.P. None
Stephen A.
Gibson, Stephen E. Director; Chairman President
of the Board
Goldberg, Matthew Sr. V.P. None
Grace, Anthony V.P. None
Guenard, Brian V.P. None
Harrington, Tom Sr. V.P. None
Hodgkins, Joseph Sr. V.P. None
Huennekens, James V.P. None
Hussey, Robert Sr. V.P. None
Iudice, Jr., Philip Treasurer and CFO None
Jones, Cynthia V.P. None
Jones, Jonathan V.P. None
Kelley, Terry M. V.P. None
Kelson, David W. Sr. V.P. None
Lichtenberg, Susyn V.P. None
Lynn, Jerry V.P. None
Marsh, Curtis Sr. V.P. None
Martin, John Sr. V.P. None
Martin, Peter V.P. None
McCombs, Gregory Sr. V.P. None
McKenzie, Mary V.P. None
Menchin, Catherine Sr. V.P. None
Miller, Anthony V.P. None
Moberly, Ann R. Sr. V.P. None
Morse, Jonathan V.P. None
Nickodemus, Paul V.P. None
O'Shea, Kevin Managing Director None
Palombo, Joseph R. Director Vice President
Piken, Keith V.P. None
Place, Jeffrey Managing Director None
Powell, Douglas V.P. None
<PAGE>
Quirk, Frank V.P. None
Raftery-Arpino, Linda Sr. V.P. None
Ratto, Gregory V.P. None
Reed, Christopher B. Sr. V.P. None
Riegel, Joyce V.P. None
Robb, Douglas V.P. None
Santosuosso, Louise Sr. V.P. None
Schulman, David Sr. V.P. None
Scully-Power, Adam V.P. None
Shea, Terence V.P. None
Sideropoulos, Lou V.P. None
Sinatra, Peter V.P. None
Smith, Darren V.P. None
Soester, Trisha V.P. None
Studer, Eric V.P. None
Sweeney, Maureen V.P. None
Tambone, James CEO; Co-President None
Tasiopoulos, Lou Co-President None
Torrisi, Susan V.P. None
VanEtten, Keith H. Sr. V.P. None
Warfield, James V.P. None
Wess, Valerie Sr. V.P. None
Young, Deborah V.P. None
- --------------------------
* The address for each individual is One Financial Center, Boston, MA 02111.
Item 28. Location of Accounts and Records
Persons maintaining physical possession of accounts, books and
other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules thereunder include
Registrant's Secretary; Registrant's investment advisor, Liberty
Asset Management Company, Registrant's administrator, Colonial
Management Associates, Inc.; Registrant's principal underwriter,
Liberty Funds Distributor, Inc.; Registrant's transfer and
dividend disbursing agent, Liberty Funds Services, Inc.; and the
Registrant's custodian, The Chase Manhattan Bank. The address for
each person except the Registrant's investment advisor and
custodian is One Financial Center, Boston, MA 02111. The
<PAGE>
Registrant's investment advisor's address is Federal Reserve
Plaza, 600 Atlantic Avenue, Boston, MA 02110. The Registrant's
custodian's address is 270 Park Avenue, New York, NY 10017-2070.
Item 29. Management Services
See Item 5, Part A and Item 16, Part B
Item 30. Undertakings
Not applicable.
******************
NOTICE
A copy of the Agreement and Declaration of Trust, as amended, of Liberty Funds
Trust IX (formerly LAMCO Trust I) (the "Trust") is on file with the Secretary
of The Commonwealth of Massachusetts and notice is hereby given that the
instrument has been executed on behalf of the Trust by an officer of the Trust
as an officer and by its Trustees as trustees and not individually and the
obligations of or arising out of this instrument are not binding upon any of
the Trustees, officers or shareholders individually but are binding only upon
the assets and property of the Trust.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, Liberty Funds Trust IX (formerly LAMCO
Trust I), has duly caused this Post-Effective Amendment No. 4 to its
Registration Statement under the Securities Act of 1933 and the Amendment No. 4
to its Registration Statement under the Investment Company Act of 1940, to be
signed in this City of Boston, and The Commonwealth of Massachusetts on this
16th day of March, 2000.
LIBERTY FUNDS TRUST IX
(Formerly LAMCO Trust I)
By:/s/ WILLIAM R. PARMENTIER
---------------------------------
William R. Parmentier
President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment has been signed below by the following persons in their capacities
and on the date indicated.
SIGNATURES TITLE DATE
- ---------- ----- ----
/s/WILLIAM R. PARMENTIER President (chief March 16, 2000
--------------------- Executive officer)
William R. Parmentier
/s/TIMOTHY J. JACOBY Treasurer and Chief March 16, 2000
--------------------- Financial Officer
Timothy J. Jacoby (principal financial
officer)
/s/J. KEVIN CONNAUGHTON Controller and Chief March 16, 2000
--------------------- Accounting Officer
J. Kevin Connaughton (principal accounting
officer)
/s/JOHN V. CARBERRY* Trustee
--------------------
John V. Carberry
/s/JAMES E. GRINNELL* Trustee
--------------------
James E. Grinnell
/s/RICHARD W. LOWRY* Trustee */s/ NANCY L. CONLIN
-------------------- Nancy L. Conlin
Richard W. Lowry Attorney-in-fact
For each Trustee
March 16, 2000
/s/WILLIAM E. MAYER* Trustee
--------------------
William E. Mayer
/s/JOHN J. NEUHAUSER* Trustee
--------------------
John J. Neuhauser
/s/ROBERT J. BIRNBAUM*
--------------------
Robert J. Birnbaum
<PAGE>
Exhibit Index
No exhibits are included with this filing.
