LIBERTY TAX-MANAGED GROWTH FUND
LIBERTY TAX-MANAGED GROWTH FUND II
(the "Funds")
SUPPLEMENT TO PROSPECTUS
(Replacing Supplement dated November 1, 2000)
On December 13-14, 2000, the Board of Trustees approved interim sub-advisory
agreements with Stein Roe Investment Counsel LLC (SRIC) on behalf of the Funds.
SRIC is an indirect wholly-owned subsidiary of Liberty Financial Companies, Inc.
and was established to be a successor to the business previously conducted by
the Private Capital Management (PCM) division of Stein Roe & Farnham
Incorporated (SRF), the Funds' investment advisor. A core portfolio team of
investment professionals within PCM runs the day-to-day business of each Fund,
including placing all orders for the purchase and sale of each Fund's portfolio
securities. In a transaction scheduled to close by December 31, 2000 (Closing),
Liberty will sell its entire interest in SRIC, and SRIC will become an
unaffiliated entity that will be operated and substantially owned by former
executives of PCM. At special meetings to be held on December 27, 2000,
shareholders of each Fund will be asked to approve a sub-advisory agreement with
SRIC, which, if approved at the special meetings, will be effective on or about
January 1, 2001 (Sub-Advisory Agreements). The same core portfolio team of PCM
investment professionals that has been running the day-to-day business of each
Fund is expected to continue to do so as part of SRIC.
On or about December 15, SRF and SRIC will enter into interim sub-advisory
agreements on behalf of the Funds, which will be on substantially the same terms
as the Sub-Advisory Agreements and which will terminate automatically on the
Closing date. In the event that the requisite shareholder vote for the
Sub-Advisory Agreements is not obtained by the Closing date, SRF and SRIC will
enter into another set of interim sub-advisory agreements, again on
substantially the same terms as the Sub-Advisory Agreements but with additional
provisions required by Rule 15a-4 under the Investment Company Act of 1940. Rule
15a-4 allows SRIC, upon the termination of the previous interim sub-advisory
agreements, to continue to act as sub-adviser with respect to the Funds for a
period of up to 150 days after the Closing date. When the Funds obtain the
requisite shareholder approval for the Sub-Advisory Agreements, these interim
sub-advisory agreements will be terminated and the Sub-Advisory Agreements will
take effect.
December 15, 2000
