LIBERTY ALL-STAR GROWTH AND INCOME FUND
One Financial Center
Boston, Massachusetts 02111-2621
INFORMATION STATEMENT REGARDING
CHANGE OF A PORTFOLIO MANAGER
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY.
Background
Liberty All-Star Growth and Income Fund (the "Fund") is a series of
Liberty Funds Trust IX (the "Trust"), a Massachusetts business trust organized
in 1998. The principal underwriter of the Fund is Liberty Funds Distributor,
Inc. ("LFD") and the administrator of the Fund is Colonial Management
Associates, Inc. ("CMA"). Both LFD and CMA are affiliates of Liberty Asset
Management Company ("LAMCO"), the Fund's advisor.
The Fund is a "multi-managed" fund that allocates its portfolio assets
among a number of independent investment management organizations ("Portfolio
Managers") -- currently five in number -- recommended by the Fund's advisor,
LAMCO, 600 Atlantic Avenue, Boston, Massachusetts 02210-2214. Each Portfolio
Manager employs a different investment style. From time to time LAMCO rebalances
the Fund's portfolio assets among the Portfolio Managers in order to maintain an
approximately equal allocation of portfolio assets among them throughout all
market cycles.
LAMCO continuously monitors and evaluates the Fund's portfolio managers on
a quantitative and qualitative basis. The evaluation process focuses on the
firm's philosophy, investment process, people and performance. It was concluded
that after evaluation based on the aforementioned criteria that LAMCO deemed it
necessary to replace J.P. Morgan Investment Management Inc. ("J.P. Morgan") with
Mastrapasqua & Associates, Inc. ("Mastrapasqua") effective November 1, 2000.
Under an exemptive order issued by the Securities and Exchange
Commission on September 28, 1999, the Fund may enter into a portfolio management
agreement with a new Portfolio Manager without a vote of shareholders of the
Fund, provided that the shareholders of the Fund are furnished information about
the new Portfolio Manager and its portfolio management agreement within 90 days
of the effective date of the Portfolio Manager change. This Information
Statement is being furnished in connection with the replacement of J.P. Morgan
by Mastrapasqua as a Portfolio Manager of the Fund, as recommended by LAMCO and
approved by the Board of Trustees of the Trust on October 25, 2000.
Reasons for a portfolio management change include a change or deviation
in the fundamental investment philosophy or process of the firm; a major change
in the ownership and/or organizational structure of the firm; a departure of key
investment professionals and a period of poor performance versus relevant
benchmarks.
Information about Mastrapasqua
Mastrapasqua, located 814 Church Street, Suite 600, Nashville,
Tennessee 37203, is an independently owned firm. Established in 1993,
Mastrapasqua is an investment advisor to individuals, foundations, endowments,
retirement plans, mutual funds, and other institutions. Ownership of
Mastrapasqua lies 100% with its employees. Frank Mastrapasqua, Ph.D., Chairman
and Chief Executive Officer, Thomas A. Trantum, President, and Mauro
Mastrapasqua, First Vice President, are deemed to be control persons of
Mastrapasqua by virtue of the aggregate ownership by them of more than 25% of
the outstanding voting stock of Mastrapasqua. As of September 30, 2000,
Mastrapasqua had $2.5 billion in assets under management.
The following are the directors and principal executive officers of
Mastrapasqua:
Name and Address Position with Mastrapasqua Principal Occupation
Frank Mastrapasqua Chairman and Chief Executive Chairman and Chief
814 Church Street Officer Executive Officer
Suite 600 of Mastrapasqua
Nashville, TN 37203
Thomas A. Trantum President President of
814 Church Street Mastrapasqua
Suite 600
Nashville, TN 37203
Mauro Mastrapasqua First Vice President First Vice President
814 Church Street of Mastrapasqua
Suite 600
Nashville, TN 37203
Mr. Frank Mastrapasqua, Chairman and CEO, and Mr. Thomas A. Trantum,
President, co-manage that portion of the Fund's portfolio assigned to
Mastrapasqua. Both Messrs. Frank Mastrapasqua and Trantum have been employed at
Mastrapasqua since the firm was established in 1993.
Mastrapasqua's investment style is designed to identify growth stocks
that can be purchased at value prices.
On November 1, 2000, the Trustees and Officers of the Trust owned none
of the outstanding shares of Mastrapasqua.
The portfolio management agreement dated November 1, 2000, among the
Fund, LAMCO and Mastrapasqua is substantially identical to the Fund's agreements
with its other Portfolio Managers. Under the portfolio management agreements,
including Mastrapasqua, each Portfolio Manager has discretionary investment
authority with respect to the portion of the Fund's portfolio assets allocated
to it by LAMCO, subject to the Fund's investment objective and policies, to the
supervision and control of the Trustees of the Trust, and to any instructions
from LAMCO. The Portfolio Managers are required to use their best professional
judgment in making timely investment decisions for the Fund. The Portfolio
Managers, however, will not be liable for actions taken or omitted in good faith
and believed to be within the authority conferred by their portfolio management
agreements and without willful misfeasance, bad faith or gross negligence.
The Fund pays LAMCO an advisory fee of 0.60% per annum of the average
daily net assets of the Fund. LAMCO in turn pays each Portfolio Manager of the
Fund, including Mastrapasqua and excluding OpCap Advisors, a fee, accrued daily
and paid monthly, at the annual rate of 0.30% of the average daily net assets of
that portion of the Fund's portfolio assets assigned to that Portfolio Manager.
The portfolio manager agreement with OpCap Advisors provides for a fee of 0.40%
per year of the average daily net asset value of the portion of the Fund's
portfolio assigned to it up to $100 million and 0.30% of such average daily net
asset 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. Any
increase in the fee payable to OpCap Advisors following the expiration of its
fee waiver agreement will be borne by LAMCO. For the Fund's fiscal year ended
December 31, 1999, the Fund paid a portfolio management fee of $14,000 to J.P.
Morgan. No fees or payments were made by the Fund to Mastrapasqua or an
affiliate of Mastrapasqua during the Fund's fiscal year ended December 31, 1999.
Other Funds Managed by Mastrapasqua
In addition to the management services provided by Mastrapasqua to the
Fund, Mastrapasqua also provides management services to other investment
companies. Information with respect to the assets of and management fees payable
to Mastrapasqua by those funds having investment objectives similar to those of
the Fund is set forth below:
Total Net Assets at Annual Management Fee
September 30, 2000 as a % of
Fund (in millions) Average Daily Net Assets
Touchstone Funds $193 0.515%
Evaluation Associates, Inc. $11 0.385%
Mastrapasqua Growth Value Fund $20 1.00%
Portfolio Transactions and Brokerage
Each of the Fund's Portfolio Managers, including Mastrapasqua, has
discretion to select brokers and dealers to execute portfolio transactions
initiated by the Portfolio Manager for the portion of the 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 Fund 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 the Fund.
The Portfolio Managers are authorized to cause the Fund 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 them, viewed in terms of that particular
transaction or in terms of all the client accounts (including the Fund) 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.
The portfolio management agreements with the Fund's Portfolio Managers,
including Mastrapasqua, provide that LAMCO has the right to request that
transactions giving rise to brokerage commissions, in amounts to be agreed upon
from time to time between LAMCO and the Portfolio Manager, be executed by
brokers and dealers (to be agreed upon from time to time between LAMCO and the
Portfolio Manager) which provide research products and services to LAMCO or to
the Fund or other accounts managed by LAMCO (collectively with the Fund, "LAMCO
Clients"). The commissions paid on such transactions may exceed the amount of
commissions another broker would have charged for effecting those transactions.
Research products and services made available to LAMCO through brokers and
dealers executing transactions for LAMCO Clients involving brokerage commissions
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; quotation
equipment; and related computer hardware and software. All of these research
products and services are used by LAMCO in connection with its selection and
monitoring of portfolio managers (including the Portfolio Managers) for LAMCO
Clients, the assembly of a mix of investment styles appropriate to LAMCO's
Clients' investment objectives, and the determination of overall portfolio
strategies.
LAMCO from time to time reaches understandings with each of the
Portfolio Managers as to the amount of the Fund's portfolio transactions
initiated by such Portfolio Manager that are to be directed to brokers and
dealers which provide research products and services to LAMCO. These amounts may
differ among the Portfolio Managers based on the nature of the markets for the
types of the securities managed by them and other factors.
These research products and services are used by LAMCO in connection
with its management of LAMCO Clients' portfolios, regardless of the source of
the brokerage commissions. In instances where LAMCO receives from broker-dealers
products or services which are used both for research purposes and for
administrative or other non-research purposes, LAMCO makes a good faith effort
to determine the relative proportions of such products or services which may be
considered as investment research, based primarily on anticipated usage, and
pays for the costs attributable to the non-research usage in cash.
For the fiscal year ended December 31, 1999, the Fund did not pay
brokerage commissions to any affiliated brokers.
Further information concerning the Fund is contained in its most recent
annual and semi-annual reports to shareholders, which are obtainable free of
charge by writing LFD at One Financial Center, Boston, Massachusetts 02111-2621
or by calling 1-800-426-3750.
707-19/026E-1200 Dated: January 20, 2001
