LIBERTY ALL-STAR GROWTH FUND, INC.
Federal Reserve Plaza
Boston, Massachusetts 02210
(617) 722-6000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 22, 1998
To the Shareholders of Liberty All-Star Growth Fund, Inc.:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Shareholders of
Liberty All-Star Growth Fund, Inc. (the "Fund") will be held in Room AV-1, 3rd
Floor, Federal Reserve Plaza, 600 Atlantic Avenue, Boston, Massachusetts, on
April 22, 1998 at 11:00 a.m., Boston time. The purpose of the Meeting is to
consider and act upon the following matters:
1. To elect three Directors of the Fund.
2. To approve the Fund's new Portfolio Management Agreement with
Oppenheimer Capital following a change of control.
3. To approve a new Fund Management Agreement with Liberty Asset Management
Company and new Portfolio Management Agreements with the Fund's Portfolio
Managers providing for increases in the fees paid by the Fund on net assets in
excess of $125 million.
4. To ratify the selection by the Board of Directors of KPMG Peat Marwick
LLP as the Fund's independent auditors for the year ending December 31, 1998.
5. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on February 23, 1998
as the record date for the determination of the shareholders of the Fund
entitled to notice of, and to vote at, the Meeting and any adjournments thereof.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ALL THE PROPOSALS.
By order of the Board of Directors
John L. Davenport, Secretary
YOUR VOTE IS IMPORTANT--PLEASE RETURN YOUR PROXY PROMPTLY.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. WE URGE YOU, WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, TO INDICATE YOUR VOTING
INSTRUCTIONS ON THE ENCLOSED PROXY, DATE AND SIGN IT, AND RETURN IT IN THE
ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. WE ASK
YOUR COOPERATION IN MAILING YOUR PROXY PROMPTLY.
February 23, 1998
LIBERTY ALL-STAR GROWTH FUND, INC.
PROXY STATEMENT
Annual Meeting of Shareholders
April 22, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Liberty All-Star Growth Fund,
Inc. (the "Fund") to be used at the Annual Meeting of Shareholders of the Fund
to be held on April 22, 1998 at 11:00 a.m. Boston time in Room AV-1, 3rd Floor,
Federal Reserve Plaza, 600 Atlantic Avenue, Boston, Massachusetts, and at any
adjournments thereof (such meeting and any adjournments being referred to as the
"Meeting").
The solicitation of proxies for use at the Meeting is being made primarily
by the mailing on or about March 2, 1998 of this Proxy Statement and the
accompanying proxy. Supplementary solicitations may be made by mail, telephone,
telegraph or personal interview by officers and Directors of the Fund and
officers and employees of its manager, Liberty Asset Management Company
("Liberty Asset Management") and its affiliates. In addition, the Fund has
retained Corporate Investor Communications, Inc. as agent to solicit the return
of proxies from Fund shareholders and to coordinate the distribution of proxy
material to and to solicit the return of proxies from banks, brokers, nominees
and other custodians at a fee of $5,000 plus out-of-pocket expenses estimated at
$3,000. Authorization to execute proxies may be obtained from shareholders
through telephonically or electronically transmitted instructions. The expenses
in connection with preparing this Proxy Statement and of the solicitation of
proxies for the Meeting will be paid by the Fund. The Fund will reimburse
brokerage firms and others for their expenses in forwarding solicitation
material to the beneficial owners of shares. This Proxy Statement is accompanied
by the Fund's 1997 Annual Report to Shareholders.
The Meeting is being held to vote on the matters described below.
PROPOSAL 1. ELECTION OF DIRECTORS
The Fund 's Board of Directors is divided into three classes, each of which
serves for three years. The term of office of one of the classes expires at the
final adjournment of the Annual Meeting of Shareholders (or special meeting in
lieu thereof) each year. Unless authority is withheld, the enclosed proxy will
be voted for the election of Harold W. Cogger and Richard W. Lowry as the
Directors to hold office until the final adjournment of the Annual Meeting of
Shareholders for the year 2001 (or special meeting in lieu thereof), and John J.
Neuhauser as an additional Director to hold office until the final adjournment
of the Annual Meeting of Shareholders for the year 2000 (or special meeting in
lieu thereof). Messrs Cogger and Lowry have served as Directors since April 17,
1996 and May 27, 1994, respectively, and Mr. Neuhauser has been nominated for
election for the first time. Each of them has consented to serve as a Director
following the Meeting if elected, and is expected to be able to do so. If any of
Messrs. Cogger, Lowry or Neuhauser is unable or unwilling to do so at the time
of the Meeting, proxies will be voted for such substitute as the Directors may
recommend (unless authority to vote for the election of Directors has been
withheld).
Information about the nominees for election as a Director follows:
Principal Occupation
Name/Age and Address During Past Five Years Fund Shares Owned(1)
==================== ========================= ====================
Harold W. Cogger * Executive Vice President and
(Age 62) Director, Liberty Financial
Liberty Financial Companies, Inc. (since March,
Companies, Inc. 1995); Director (since October,
600 Atlantic Avenue 1981) and Chairman of the Board
Boston, MA 02210 (since March, 1996), The
Colonial Group, Inc.; Director
(since March, 1984), Executive
Vice President (October, 1989 to
July, 1993), Colonial Management
Associates, Inc.; President
(since March, 1996), Vice
President (July, 1993 to March,
1996), Stein Roe & Farnham
Incorporated. 1,230
Richard W. Lowry Private investor (since August,
(Age 61)(2) 1987); Chairman and Chief
10701 Charleston Executive Officer, U.S. Plywood
Drive Corporation, manufacturer and
Vero Beach, FL distributor of wood products
32963 (August, 1985 to August, 1987). 1,200(3)
John J. Neuhauser Dean, Boston College School of
(Age 54) Management (since September,
140 Commonwealth 1977.) Director of Hyde
Avenue Athletic Industries, Inc.
Chestnut Hill, MA (athletic footwear), a public
02167 company. -0-
The following Directors continue to serve in such capacity until their
terms of office expire and their successors are elected and qualified:
Principal Occupation
Name/Age and Address During Past Five Years Fund Shares Owned(1)
==================== ============================== ====================
Robert J. Birnbaum Retired (since January, 1994);
(Age 70)(2) Special Counsel, Dechert, Price
313 Bedford Road & Rhoads (September, 1988 to
Ridgewood, NJ 07450 December, 1993); President and
Chief Operating Officer, New
York Stock Exchange, Inc. (May,
1985 to June, 1988). Director
of The Emerging Germany Fund
(investment company). 2,398
James E. Grinnell Private investor (since
(Age 68)(2) November, 1988); President and
22 Harbor Avenue Chief Executive Officer,
Marblehead, MA Distribution Management Systems,
01945 Inc. (1983 to May, 1986); Senior
Vice President-Operations, The
Rockport Company, importer and
distributor of shoes (May, 1986
to November, 1988). 600
- -----------------------
(1) Shows all shares owned beneficially, directly or indirectly, on the record
date for the Meeting. Such ownership includes voting and investment control. The
Fund's Directors and officers as a group then so owned less than 1% of the
shares of the Fund outstanding.
(2) Member of the Audit Committee.
(3) Held by the trustee of a trust of which Mr. Lowry is the sole beneficiary.
* "Interested person" of the Fund, as defined in the Investment Company Act of
1940, by reason of his positions with Liberty Financial Companies, Inc., the
indirect parent of Liberty Asset Management, and its
affiliates.
The term of office of Mr. Birnbaum will expire on final adjournment of the
Annual Meeting (or special meeting in lieu thereof) in 1999, and the term of
office of Mr. Grinnell will expire on final adjournment of the Annual Meeting
(or special meeting in lieu thereof) in the year 2000. Mr. Birnbaum has served
as a Director since November 6, 1995, and Mr. Grinnell has served as a Director
since May 27, 1994. Messrs. Birnbaum, Grinnell, Lowry and Neuhauser are also
trustees of Colonial Trusts I through VII (the "Colonial Trusts"), the umbrella
trusts for an aggregate of 39 open-end funds (the "Colonial Funds") managed by
Colonial Management Associates, Inc. ("Colonial"), an affiliate of Liberty Asset
Management, five closed-end funds managed by Colonial (the "Colonial Closed-End
Funds"), and LFC Utilities Trust, an open-end investment company managed by
Stein Roe & Farnham Incorporated, another affiliate of Liberty Asset Management.
Messrs. Birnbaum, Cogger, Grinnell and Lowry are also trustees of Liberty
All-Star Equity Fund, another closed-end multi-managed fund managed by Liberty
Asset Management, and Mr. Neuhauser is a nominee for election as such trustee at
its 1998 annual meeting of shareholders.
During 1997 the full Board of Directors of the Fund held five meetings, and
the Audit Committee, which is comprised of all the Directors who are not
"interested persons" of the Fund, met twice. All Directors were present at all
meetings.
The Audit Committee makes recommendations to the full Board as to the firm
of independent accountants to be selected, reviews the methods, scope and
results of audits and fees charged by such accountants, and reviews the Fund's
internal accounting procedures and controls. The Fund has no nominating or
compensation committee.
Compensation
Liberty Asset Management or its affiliates pay the compensation of all the
officers of the Fund. The Fund pays the Directors who are not affiliated with
Liberty Asset Management (the "independent Directors") an annual retainer of
$5,000 per annum, plus $1,200 per meeting attended, with a minimum of $11,000
per annum if less than five meetings are held and all meetings are attended,
plus out-of-pocket expenses relating to attendance at meetings. The total fees
accrued to the independent Directors as a group during the year ended December
31, 1997 by the Fund were $33,000 and out-of-pocket expenses relating to their
attendance at meetings were $1,952.
The following table shows, for the year ended December 31, 1997, the
compensation received from the Fund by each current Director, and the aggregate
compensation paid to each current Director for service on the Board of Directors
of the Fund and the Board of Trustees of the Colonial Trusts, the Colonial
Closed-End Funds, LFC Utilities Trust and Liberty All-Star Equity Fund (of which
Messrs. Birnbaum, Grinnell and Lowry are also trustees). The Fund has no bonus,
profit sharing or retirement plans.
Total Compensation from the
Aggregate Fund, the Colonial Funds, the
Compensation Colonial Closed-End Funds, LFC
Name from the Fund Utilities Trust and Liberty All-Star Equity Fund
========= ============= =================================
Harold W. -0- -0-
Cogger
Robert J. $11,000 $120,749
Birnbaum
James E. $11,000 $121,498
Grinnell
Richard W. $11,000 $121,498
Lowry
Officers
- --------
The following are the executive officers of the Fund, in addition to Mr.
Harold W. Cogger who serves as Chairman of the Board of Directors.
Principal Occupation
Position During Past
Name/Age and Address with Fund Five Years
====================== ========= ===========================
Richard R. Christensen President President and Chief
(Age 64) and Chief Executive Officer,
Liberty Asset Executive Liberty Asset Management
Management Company Officer (since January, 1995);
600 Atlantic Avenue President, Liberty
Boston, MA 02210 Investment Services,
Inc. (April, 1987 to
March, 1995).
William R. Parmentier Vice Senior Vice President
(Age 45) President - and Chief Investment
Liberty Asset Chief Officer, Liberty Asset
Management Company Investment Management (since May,
600 Atlantic Avenue Officer 1995); Consultant
Boston, MA 02210 (October, 1994 to May,
1995); President, GQ
Asset Management, Inc.
(July, 1993 to October,
1994); Assistant
Treasurer, Grumman
Corporation (December,
1974 to July, 1993).
Christopher S. Carabell Vice Vice
(Age 33) President President-Investments,
Liberty Asset Liberty Asset Management
Management Company (since March, 1996);
600 Atlantic Avenue Associate Director, U.S.
Boston, MA 02210 Equity Research of
Rogers Casey & Associates, investment
consultants (January, 1995 to February,
1996); Director of Investments, Boy
Scouts of America (June, 1990 to January,
1995).
Timothy J. Jacoby Treasurer Senior Vice President,
(Age 45) and Fund Administration,
Colonial Management Controller Colonial Management
Associates, Inc. Associates, Inc. (since
One Financial Center September, 1996); Senior
Boston, MA 02111 Vice President, Fidelity
Accounting and Custody Services (October,
1993 to September, 1996); Assistant
Treasurer, Fidelity Group of Funds
(August, 1990 to September, 1993).
John L. Davenport Secretary Vice President and
(Age 61) Associate General
Liberty Financial Counsel, Liberty
Companies, Inc. Financial Companies,
600 Atlantic Avenue Inc. and predecessor
Boston, MA 02210 (since January, 1984).
Mr. Christensen has served as President of the Fund since November 30,
1994; Mr. Cogger has served as Chairman of the Board since April 18, 1996; Mr.
Parmentier has served as Vice President - Chief Investment Officer since April
18, 1996; Mr. Carabell was elected Vice President on April 17, 1997; Mr. Jacoby
was appointed Treasurer effective October 10, 1996 and Controller effective
October 16, 1997; and Mr. Davenport has served as Secretary since May 27, 1994.
Mr. Christensen also serves as President and a trustee of the Stein Roe Variable
Investment Trust and the Liberty Variable Investment Trust, other trusts with
funds managed by Liberty Asset Management or affiliates thereof; Mr. Jacoby
serves as Treasurer and Controller of the Liberty Variable Investment Trust, the
Colonial Trusts and the Colonial Closed-End Funds; and Messrs. Christensen,
Carabell, Davenport, Jacoby and Parmentier serve as officers of Liberty All-Star
Equity Fund. Each officer of the Fund serves at the pleasure of the Board of
Directors.
PROPOSAL 2. TO APPROVE NEW PORTFOLIO MANAGEMENT AGREEMENT
WITH OPPENHEIMER CAPITAL FOLLOWING CHANGE IN CONTROL
Background
- -----------
The Fund allocates its portfolio assets on an approximately equal basis
among a number of independent investment management firms ("Portfolio Managers")
recommended by Liberty Asset Management, currently three in number, each of
which employs a different investment style, and from time to time rebalances the
portfolio among the Portfolio Managers so as to maintain an approximately equal
allocation of the portfolio among them throughout all market cycles. The
Portfolio Managers recommended by Liberty Asset Management represent a blending
of different styles which, in its opinion, is appropriate for the Fund's
investment objective. Liberty Asset Management continuously analyses and
evaluates the investment performance and portfolios of the Fund's Portfolio
Managers and from time to time recommends changes in the Portfolio Managers.
Since last year's annual meeting control of Oppenheimer Capital, a
Portfolio Manager of the Fund since May, 1994, was transferred to new owners in
the transactions described below, resulting in the termination of the Fund's
prior portfolio management agreement with that firm. After reviewing the
proposed change of control transactions and considering Liberty Asset
Management's opinion that they would not have an adverse effect on the nature or
quality of the services being provided by Oppenheimer Capital, the Board of
Directors on April 17, 1997 approved a new portfolio management agreement at the
same fee and on substantially identical other terms and conditions as the prior
agreement, and the new agreement was executed effective with the closing of the
change in control transactions on November 5, 1997. See PROPOSAL 3 below for the
terms and conditions of the Fund's portfolio management agreements with its
current Portfolio Managers, including Oppenheimer Capital.
Under the terms of an exemptive order issued to the Fund and Liberty Asset
Management by the Securities and Exchange Commission, the Fund may, in advance
of shareholder approval, enter into a new portfolio management agreement with a
Portfolio Manager or its successor following a change in control of the
Portfolio Manager, provided that the new agreement is at a fee no higher than,
and is on other terms and conditions substantially similar to, the Fund's
agreements with its other Portfolio Managers, and that its continuance is
subject to approval by shareholders at the Fund's next annual meeting.
Accordingly, the Fund's new portfolio management agreement with Oppenheimer
Capital is being submitted for shareholder approval at the Meeting.
The Change in Control Transactions
On November 4, 1997, PIMCO Advisors L.P. ("PIMCO Advisors"), a registered
investment adviser with $125 billion in assets under management through various
subsidiaries, and its affiliates acquired control of Oppenheimer Capital for an
aggregate purchase price of approximately $294 million paid in partnership units
and exchangeable debt. On November 30, 1997, Oppenheimer Capital merged with a
subsidiary of PIMCO Advisors and, as a result, Oppenheimer Capital became an
indirect wholly-owned subsidiary of PIMCO Advisors. PIMCO Advisors has two
general partners: PIMCO Partners, G.P. ("PIMCO G.P."), a California general
partnership, and PIMCO Advisors Holdings L.P. (formerly Oppenheimer Capital,
L.P.), a New York Stock Exchange-listed Delaware limited partnership of which
PIMCO G.P. is the sole general partner. PIMCO GP beneficially owns or controls
(through its general partner interest in PIMCO Advisors Holdings, L.P., formerly
Oppenheimer Capital, L.P.), more than 80% of the units of limited partnership
("Units") of PIMCO Advisors. PIMCO GP has two general partners. The first of
these is Pacific Investment Management Company, which is a direct subsidiary of
Pacific Life Insurance Company ("Pacific Life"). The managing general partner of
PIMCO GP is PIMCO Partners L.L.C. ("PPLLC"), a California limited liability
company. PPLLC's members are the Managing Directors (the "PIMCO Managers") of
Pacific Investment Management Company, a subsidiary of PIMCO Advisors (the
"PIMCO Subpartnership"). The PIMCO Managers are: William H. Gross, Dean S.
Meiling, James F. Muzzy, William F. Podlich, III, Brent R. Harris, John L.
Hague, William S. Thompson Jr., William S. Powers, David H. Edington, Benjamin
Trosky, William R. Benz, II and Lee R. Thomas, III. PIMCO Advisors is governed
by a Management Board, which consists of sixteen members, pursuant to a
delegation by its general partners. PIMCO GP has the power to designate up to
nine members of the Management Board and the PIMCO Subpartnership, of which the
PIMCO Managers are the Managing Directors, has the power to designate up to two
members. In addition, PIMCO GP, as the controlling general partner of PIMCO
Advisors, has the power to revoke the delegation to the Management Board and
exercise control of PIMCO Advisors. As a result, Pacific Life and/or the PIMCO
Managers may be deemed to control PIMCO Advisors. Pacific Life and the PIMCO
Managers disclaim such control. Because of direct or indirect power to appoint
25% of the members of the Equity Board, (i) Pacific Life and (ii) the PIMCO
Managers and/or the PIMCO Subpartnership may each be deemed, under applicable
provisions of the Investment Company Act of 1940, to control PIMCO Advisors.
Pacific Life, the PIMCO Subpartnership and the PIMCO Managers disclaim such
control.
The Fund's initial portfolio management agreement with Oppenheimer Capital
was approved by shareholders on May 27,1994 incident to Liberty Asset
Management's assumption from the Fund's prior investment adviser, Growth Stock
Outlook, Inc., of administrative responsibilities for the Fund and investment
responsibilities for 20% of its portfolio. Following shareholder approval, the
Fund entered into a new portfolio management agreement with Oppenheimer Capital
on November 6, 1995, when Liberty Asset Management assumed investment
responsibilities for the balance of the Fund's portfolio. For the year ended
December 31, 1997 Oppenheimer Capital received $196,753 for its portfolio
management services to the Fund. Mr. John Lindenthal, Managing Director of
Oppenheimer Capital, has managed the portion of the Fund's portfolio allocated
to Oppenheimer Capital since its initial appointment as a Fund Portfolio Manager
in May, 1994, and continues to do so.
See Appendix A for information regarding other registered investment
companies with investment objectives similar to the Fund's for which a
subsidiary of Oppenheimer Capital provides investment advisory or portfolio
management services.
Required Vote
Approval of the new portfolio management agreement with Oppenheimer Capital
requires the affirmative vote of a "majority of the outstanding voting
securities" of the Fund which, under the Investment Company Act of 1940, means
the affirmative vote of the lesser of (a) 67% or more of the shares of the Fund
present at the Meeting or represented by proxy if the holders of more than 50%
of the outstanding shares are present or represented by proxy, or (b) more than
50% of the outstanding shares. See INFORMATION ABOUT THE MEETING below.
In the event that the shareholders of the Fund fail to approve the new
portfolio management agreement with Oppenheimer Capital, the agreement will
terminate and Liberty Asset Management will cause the portfolio assets under
management by Oppenheimer Capital to be invested in money market instruments or
other cash equivalent holdings or derivative investments pending the
reappointment of Oppenheimer Capital or the appointment of a new Portfolio
Manager.
The Board of Directors unanimously recommends that the shareholders vote
FOR approval of the new portfolio management agreement with Oppenheimer Capital.
PROPOSAL 3. TO APPROVE A NEW FUND MANAGEMENT AGREEMENT WITH LIBERTY ASSET
MANAGEMENT COMPANY AND NEW PORTFOLIO MANAGEMENT AGREEMENTS WITH THE FUND'S
PORTFOLIO MANAGERS PROVIDING FOR INCREASES IN THE FEES PAID BY THE FUND ON NET
ASSETS IN EXCESS OF $125 MILLION
Background
Under a fund management agreement dated November 6, 1995, Liberty Asset
Management implements and operates the Fund's multi-manager methodology and has
overall supervisory responsibility for the general management and investment of
the Fund's securities portfolio. Liberty Asset Management selects, monitors, and
from time to time recommends changes in the Portfolio Managers for the Fund, and
pays their fees. See PROPOSAL 2 Background. For these services, Liberty Asset
Management is paid a fund management fee by the Fund and pays a portion thereof
to the Portfolio Managers, as described below.
The Fund's Portfolio Managers operate under substantially identical
portfolio management agreements with the Fund and Liberty Asset Management
pursuant to which, for a fee paid by Liberty Asset Management from its fund
management fee as described below, each Portfolio Manager manages the portion of
the Fund's investment portfolio allocated to it from time to time by Liberty
Asset Management. See MANAGEMENT below for a description of the portfolio
management agreements and of the Fund's portfolio transaction and brokerage
practices, including the allocation of Fund portfolio brokerage to brokers or
dealers that provide or make available research products and services to Liberty
Asset Management and the Portfolio Managers.
Liberty Asset Management is also responsible under the fund management
agreement for providing the Fund with officers and office space and with
necessary administrative services, including shareholder and broker-dealer
communications and oversight of transfer agency, custodial and other services
provided by others. For these services the Fund pays Liberty Asset Management an
administrative fee, as described below. Colonial Management Associates, Inc., an
affiliate of Liberty Asset Management, provides pricing and bookkeeping services
to the Fund. See MANAGEMENT below.
The Fund's initial fund management agreement with Liberty Asset Management
and its portfolio management agreements with the initial Portfolio Managers were
entered into on May 27, 1994, when Liberty Asset Management assumed
administrative responsibility for the Fund (then called "The Charles Allmon
Trust, Inc.") and investment responsibility for 20% of its net assets for
management in accordance with the multi-manager methodology. Growth Stock
Outlook, Inc., the Fund's founder and original investment manager and
administrator, retained investment responsibility for the balance of its assets.
The current fund management agreement and the portfolio management agreements
with the Fund's then Portfolio Managers were entered into on November 6, 1995,
when Liberty Asset Management assumed investment responsibility for all of the
Fund's portfolio and its conversion to a multi-managed fund was completed. At
that time the Fund's investment objective was returned to its original objective
of long-term capital appreciation, its name was changed to "Liberty All-Star
Growth Fund, Inc.", and its Board of Directors was reconstituted. The
approximately 79% of the Fund's assets then being managed by Growth Stock
Outlook, Inc., over 80% of which was invested in U.S. Treasury Bills and other
short-term cash equivalents, was assigned in substantially equal proportions to
the Fund's then three Portfolio Managers and within three months was
substantially fully invested in equity securities in accordance with their
respective investment styles. The May 1994 and November 1995 agreements and the
1995 changes in the Fund's investment objective and name were approved by the
Fund's shareholders at their annual meetings in those years.
The 1994 and 1995 fund management and portfolio management agreements were
entered into pursuant to an Asset Acquisition and Fund Management Transition
Agreement dated February 9, 1994, as amended May 24, 1995, among Liberty Asset
Management, Growth Stock Outlook, Inc. and Mr. Charles Allmon, Growth Stock
Outlook's principal stockholder. The total of the fund management and
administrative fees payable to Liberty Asset Management under the fund
management agreements were at the same rate as the total management fee paid to
Growth Stock Outlook prior to May 27, 1994.
The Proposal
The Board of Directors proposes that shareholders approve a new fund
management agreement with Liberty Asset Management in the form attached as
Appendix B and new portfolio management agreements in the form attached as
Appendix C among the Fund, Liberty Asset Management and each of the current
Portfolio Managers. The proposed new fund management agreement and new portfolio
management agreements are identical in all substantive respects to the existing
agreements, except for an increase in the fees payable by the Fund to Liberty
Asset Management, and by Liberty Asset Management to the Portfolio Managers, on
net assets in excess of $125 million and an adjustment in the portions of the
total fee allocated to fund management and to administration. The annual fees
paid under the current agreements and that would be paid under the proposed new
agreements are shown below (fees are payable quarterly based on the indicated
percentages of the Fund's average weekly net assets during the prior quarter):
Fund Management
Fee Paid to LAMCO
and Portfolio Manage-
Average weekly ment Fee Paid to Port- Administrative
Net Asset Value folio Managers Fee Paid to LAMCO Total Fees
=============== ====================== ================ ===========
Current fee schedule:
- --------------------
First $125 million 0.75% (0.40% to 0.25% 1.00%
Portfolio Managers)
Next $125 million 0.5625% (0.30% to 0.1875% 0.75%
Portfolio Managers)
Over $250 million 0.375% (0.20% to 0.125% 0.50%
Portfolio Managers)
Proposed fee schedule
- ---------------------
First $300 million 0.80% (0.40% to 0.20% 1.00%
Portfolio Managers)
Over $300 million 0.72% (0.36% to 0.18% 0.90%
Portfolio Managers)
As shown above, there would be no change in the total annual fee paid by the
Fund on average weekly net assets up to $125 million. As of February 17, 1998,
the Fund's net assets were $176,586,000. The total annual fee paid by the Fund
would increase from 0.75% to 1.00% on average weekly net assets from $125
million to $250 million, from 0.50% to 1.00% on average weekly net assets from
$250 million to $300 million, and from 0.50% to 0.90% on average weekly net
assets over $300 million. The allocation of the total annual fee as between the
fund management fee and administrative fee components would be adjusted to
conform such allocation to the Fund's sister fund, Liberty All-Star Equity Fund,
and to prevailing practice in the industry.
For the 1997 calendar year the Fund paid Liberty Asset Management total
fund management and administrative fees of $1,455,145, of which Liberty Asset
Management paid a total of $586,341 to the Portfolio Managers and retained the
balance of $868,804. If the proposed new agreements had been in effect during
1997, the Fund would have paid Liberty Asset Management total fees of
$1,527,476, of which Liberty Asset Management would have paid the Portfolio
Managers a total of $610,990, representing an increase of 5.5% in the total fees
retained by Liberty Asset Management and 4.2% in the total fees paid to the
Portfolio Managers. As shown in the table below, the ratio of the Fund's total
expenses to its average net assets for 1997 would have increased from 1.20% to
1.25%, for an increase from $12 to $13 of expenses for one year per $1,000 of
net asset value (assuming a 5% annual return).
1997 1997
Annual Expenses Actual Pro Forma
------- ---------
Management and administrative fees 0.95% 1.00%
Other expenses 0.25% 0.25%
Total annual expenses 1.20% 1.25%
Example: You would pay the following expenses on a $1,000 investment (at net
asset value), assuming a 5% annual return:
1 Year 3 Years 5 Years 10 Years
- ----------------- ---------------- ----------------- -----------------
Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
- ----- --------- ------ --------- ----- --------- ------ ---------
$12 $13 $38 $40 $66 $69 $145 $151
The 5% return and 1.25% total annual expenses are assumptions and should
not be considered indicative of future Fund performance or expenses, which will
vary.
Consideration by the Board of Directors
The Board of Directors of the Fund met on October 16, 1997 and on December
18, 1997 to consider, among other things, the proposed fee change and new
management agreements and their impact on the Fund's expenses. The principal
factors considered by the Board at those meetings were (i) the fact that the
published fee schedules of the Fund's current Portfolio Managers are generally
higher than the portfolio management fees payable to them under the current
portfolio management agreements, and (ii) the unwillingness expressed during
Liberty Asset Management's portfolio manager searches by some investment
management firms practicing investment styles suitable for the Fund to provide
their services for the fees provided in the current portfolio management
agreements. The Board also considered the fee structures (including the portions
of the total fees paid to the fund manager and the portfolio managers) of other
multi-managed funds (including Liberty All-Star Equity Fund), the net profits
derived by Liberty Asset Management and its affiliates from its management and
administration of the Fund, and the current and proposed total management and
administrative fees and other expenses of the Fund compared to those of
single-manager closed-end funds comparable in their investment objectives and
policies to the Fund. The Board also reviewed information presented at their
June 19, 1997 meeting in connection with their annual review of the current
agreements regarding the performance of the Fund relative to that of other
comparable closed-end and open-end funds and the nature and quality of the
investment management, administrative, compliance and other services rendered to
the Fund by Liberty Asset Management and its affiliates.
The Board also took note of the fact that from its commencement of
operations in March, 1986 until May, 1990 the Fund paid total management fees at
the annual rate of 1.00% of average weekly net assets, with no fee reduction
breakpoints, and that the fee reduction breakpoints incorporated into the
current fee schedule shown in the above table were first implemented in May,
1990 in part due to the fact that the Fund had since its inception been 67 to 82
percent invested in money market instruments and cash or other cash equivalent
holdings. Also due in part to this substantial investment in such cash and cash
equivalents, the Fund's investment objective was changed in May, 1990 from its
original investment objective of long-term capital appreciation (with income
being a consideration in the selection of investments but not an investment
objective), to long-term capital appreciation as a primary objective and current
income as a secondary objective, in each case with an emphasis on preservation
of capital. The Board noted that within three months of the Fund's full
conversion to a multi-managed fund in November, 1995 the Fund's portfolio was
substantially fully invested in equity securities in accordance with the return
to its original investment objective of long-term capital appreciation, and has
remained so since.
Based on the foregoing, the Board at its December 18, 1997 meeting
unanimously approved the proposed new fund management agreement with Liberty
Asset Management and the proposed new portfolio management agreements among the
Portfolio Managers, Liberty Asset Management and the Fund. If approved by
shareholders, the new agreements will become effective August 1, 1998.
If the proposed new agreements are approved by shareholders, under the
terms of the exemptive order referred to under PROPOSAL 2 - Background above,
the Fund will be permitted to enter into, in advance of shareholder approval,
portfolio management agreements at the fee described above with new or
additional Portfolio Managers recommended by LAMCO.
Required Vote
Approval of the proposed new fund management and portfolio management
agreements requires the affirmative vote of a "majority of the outstanding
voting securities" (see Required Vote under PROPOSAL 2 above).
In the event that the shareholders of the Fund fail to approve the proposed
new agreements, the current agreements will remain in effect, subject to annual
renewal by the Board of Directors.
The Board of Directors unanimously recommends that the shareholders vote
FOR approval of the proposed new fund management agreement and portfolio
management
agreements.
PROPOSAL 4. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
By vote of the Board of Directors, including the vote of the non-interested
Directors, the firm of KPMG Peat Marwick LLP has been selected as independent
auditors for the Fund for the year ending December 31, 1998. Such selection is
being submitted to the shareholders for ratification. The employment of KPMG
Peat Marwick LLP is conditioned on the right of the Fund by majority vote of its
shareholders to terminate such employment. Such firm has acted as independent
auditors for the Fund since its commencement of operations in 1986.
The services provided by the Fund 's independent auditors include
examination of its annual financial statements, assistance and consultation in
connection with Securities and Exchange Commission filings, and review of the
Fund 's annual federal income tax returns. Representatives of KPMG Peat Marwick
LLP are expected to be present at the Meeting and will be given the opportunity
to make a statement if they should so desire.
OTHER BUSINESS
The Board of Directors knows of no other business to be brought before the
Meeting. However, if any other matters properly come before the Meeting, it is
the intention of the Board that proxies that do not contain specific
instructions to the contrary will be voted on such matters in accordance with
the judgment of the persons designated therein as proxies.
MANAGEMENT
Liberty Asset Management, 600 Atlantic Avenue, Boston, Massachusetts 02210,
is the Fund's manager. Liberty Asset Management is an indirect wholly-owned
subsidiary of Liberty Financial Companies, Inc. ("Liberty Financial"), the
address of which is also 600 Atlantic Avenue, Boston, Massachusetts 02210.
Approximately 75% of the common stock of Liberty Financial is owned by Liberty
Mutual Insurance Company, Boston, Massachusetts, and the balance is listed on
the New York Stock Exchange. Liberty Asset Management's Chief Executive Officer
is Richard R. Christensen (see PROPOSAL 1 Officers), and its Board of Directors
is comprised of Mr. Christensen and Kenneth R. Leibler, C. Allen Merritt Jr. and
Lindsay Cook, officers of Liberty Financial. Pursuant to its fund management
agreement with the Fund, Liberty Asset Management implements and operates the
Fund's multi-manager methodology described under PROPOSAL 2 - Background above
and has overall supervisory responsibility for the general management and
investment of the Fund 's securities portfolio, subject to the Fund 's
investment objective and policies and any directions of the Directors.
Liberty Asset Management is also responsible under the fund management
agreement for the provision of administrative services to the Fund, including
the provision of office space, shareholder and broker-dealer communications,
compensation of all officers and employees of the Fund who are officers or
employees of Liberty Asset Management or its affiliates, and supervision of
transfer agency, dividend disbursing, custodial and other services provided by
others. Certain of Liberty Asset Management's administrative responsibilities to
the Fund have been delegated to its affiliate, Colonial Management Associates,
Inc.
Colonial Management Associates, Inc. also provides pricing and bookkeeping
services to the Fund for which the Fund paid it $53,749 for the year ended
December 31, 1997.
Under the Fund's portfolio management agreements, each Portfolio Manager
has discretionary investment authority with respect to the portion of the Fund's
assets allocated to it by Liberty Asset Management from time to time, subject to
the Fund's investment objective and policies, to the supervision and control of
the Directors, and to instructions from Liberty Asset Management. 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 names and addresses of the Fund's current Portfolio Managers are as
follows:
Oppenheimer Capital William Blair & Company, L.L.C. Mississippi Valley
Oppenheimer Tower 222 West Adams Street Advisors, Inc.
World Financial Center Chicago, IL 60606 One Mercantile Center
New York, NY 10281 Seventh & Washington
Streets
St. Louis, Mo 63101
Portfolio Transactions and Brokerage
Each of the Fund's Portfolio Managers 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 to 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.
In addition, under their portfolio management agreements with the Fund and
Liberty Asset Management, the Portfolio Managers, in selecting brokers or
dealers to execute portfolio transactions for the Fund, are authorized to
consider (and Liberty Asset Management may request them to consider) brokers or
dealers that provide to Liberty Asset Management, directly or through third
parties, research products or services such as research reports; subscriptions
to financial publications and research compilations; portfolio analyses;
economic reports; compilations of securities prices, earnings, dividends and
other data; computer hardware and software, quotation equipment and services
used for research; and services of economic or other consultants. 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 Liberty Asset Management 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 Liberty Asset Management 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
Liberty Asset Management in connection with its management of Liberty All-Star
Equity Fund and other multi-managed clients of Liberty Asset Management. In
instances where Liberty Asset Management 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, Liberty Asset Management 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.
Liberty Asset Management from time to time reaches understandings with each
of the Fund's 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 or make available research products and
services to Liberty Asset Management and the commissions to be charged to the
Fund in connection therewith. These amounts may differ among the Portfolio
Managers based on the nature of the market for the types of securities managed
by them and other factors.
Although the Fund does 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 Fund's
procedures adopted pursuant to Rule 17e-1 under the Investment Company Act.
During 1997 no Fund portfolio transactions were placed with any Portfolio
Manager or its broker-dealer affiliate.
INFORMATION ABOUT THE MEETING
All proxies solicited by the Board of Directors which are properly executed
and returned in time to be voted at the Meeting will be voted at the Meeting in
accordance with the instructions thereon. If no specification is made on a
proxy, it will be voted FOR the election as Director of the nominees named under
PROPOSAL 1, FOR approval of the Fund's new portfolio management agreement with
Oppenheimer Capital referred to under PROPOSAL 2, FOR approval of the new fund
management agreement and the new portfolio management agreements referred to
under PROPOSAL 3, and FOR the ratification of the Board's selection of the
Fund's independent auditors for 1998. Any proxy may be revoked at any time prior
to its use by written notification received by the Fund's Secretary, by the
execution of a later-dated proxy, or by attending the Meeting and voting in
person.
The election of Directors is by plurality of votes cast at the Meeting.
Approval of the new portfolio management agreement with Oppenheimer Capital
(PROPOSAL 2) and the new fund management and portfolio management agreements
(PROPOSAL 3) requires the affirmative vote of a "majority of the outstanding
voting securities" of the Fund, as defined under PROPOSAL 2 above. Ratification
of the selection of the Fund 's independent auditors requires the affirmative
vote of a majority of the votes cast at the Meeting, a quorum being present.
Under Maryland law, abstentions do not constitute a vote "for" or "against" a
matter and will be disregarded in determining the "votes cast", but the shares
represented thereby will be considered to be present for the purposes of
determining the presence of a quorum. Only shareholders of record may vote.
Broker-dealer firms holding Fund shares in "street name" for the benefit of
their customers and clients will request the instructions of such customers and
clients on how to vote their shares on each proposal before the Meeting. The
Fund understands that, under the rules of the New York Stock Exchange, if no
instructions have been received prior to the date specified in such
broker-dealer firm's request for voting instructions, the broker-dealer firms
may grant authority to the proxies designated by the Fund to vote for the
election of the Directors, for approval of the new portfolio management
agreement with Oppenheimer Capital, and for the ratification of the selection of
the Fund 's independent auditors. Broker "non-votes" with respect to approval of
the proposed new fund management and portfolio management agreements (i.e.,
proxies from broker-dealer firms or nominees indicating that they have not
received instructions from the beneficial owner entitled to vote shares on such
approval) will be treated the same as abstentions.
All shareholders of record on February 23, 1998 are entitled to one vote
for each share held. As of that date 12,937,680 shares of common stock of the
Fund were issued and outstanding. Based on a Schedule 13G as amended through
November 12, 1997 mailed to the Fund by such firm pursuant to section 13(g) of
the Securities Exchange Act of 1934 (the "Exchange Act"), Bowling Portfolio
Management, Inc. ("Bowling"), 2651 Observatory Avenue, Cincinnati, Ohio 45208,
beneficially owned 650,375 shares of common stock of the Fund, representing
5.03% of the shares outstanding on the record date, as to 55,707 of which shares
Bowling has voting power. Bowling represented in such Schedule 13G that it
acquired these shares in the ordinary course of its business as an investment
adviser and not for the purpose of changing or influencing control of the Fund.
To the knowledge of the Fund, on the record date for the Meeting no other
shareholder owned beneficially, as defined by Rule 13d-3 under the Exchange Act,
more than 5% of the outstanding shares of the Fund.
In the event a quorum is present at the Meeting but sufficient votes to
approve any of the above proposals have not been received, the persons named as
proxies may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. A shareholder vote may be taken on one or more of the
proposals referred to above prior to such adjournment if sufficient votes have
been received and it is otherwise appropriate. Any such adjournment will require
the affirmative vote of a majority of those shares present at the Meeting in
person or by proxy. If a quorum is present, the persons named as proxies will
vote those proxies which they are entitled to vote FOR any such proposal in
favor of such adjournment and will vote those proxies required to be voted for
rejection of such proposal against any such adjournment.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Fund 's Directors and
officers and persons who own more than ten percent of the Fund's outstanding
shares and certain officers and directors of Liberty Asset Management
(collectively, "Section 16 reporting persons"), to file with the Securities and
Exchange Commission ("SEC") initial reports of ownership and reports of changes
in ownership of Fund shares. Section 16 reporting persons are required by SEC
regulations to furnish the Fund with copies of all Section 16(a) forms they
file.
To the Fund 's knowledge, based solely on a review of the copies of such
reports furnished to the Fund and on representations that no other reports were
required, during the year ended December 31, 1996, the Section 16 reporting
persons complied with all Section 16(a) filing requirements applicable to them.
SUBMISSION OF CERTAIN SHAREHOLDER PROPOSALS
Under the proxy rules of the Securities and Exchange Commission,
shareholder proposals meeting tests contained in those rules may, under certain
conditions, be included in the Fund 's proxy material for a particular annual
shareholders meeting. Under the foregoing proxy rules, proposals submitted for
inclusion in the proxy material for the 1999 Annual Meeting must be received by
the Fund on or before October 27, 1998. The fact that the Fund receives a
shareholder proposal in a timely manner does not ensure its inclusion in its
proxy material, since there are other requirements in the proxy rules relating
to such inclusion.
February 23, 1998
APPENDIX A
OpCap Advisors, a subsidiary of Oppenheimer Capital, is the manager or
sub-advisor to the registered investment companies listed below. These
investment companies have similar investment objectives to the Fund.
Approximate Net Advisory Fee Rate
Assets (as of (based on average net
Fund January 23, 1998) asset value)
================= ================ =======================
Oppenheimer Quest 1.0% on the first
Value Fund, Inc. $1,168,166,193 $400 million;
.90% on the next $400
Oppenheimer Quest million;
Opportunity Value $4,202,234,526 .85% of net assets
Fund between $800 million
but less than $4
billion; and .80% on
assets over $4
billion but less than
$8 billion and .75%
on assets over $8
billion.(1)
Oppenheimer Quest $266,293,562 1.0% on the first
Capital Value Fund, $400 million; .90% on
Inc. the next $400 million;
.85% of the net
assets in excess of
$800 million(2)
Enterprise Accumulation
Trust:
Equity Portfolio $511,021,880 .40% of the first $1
Managed Portfolio $2,624,372,848 billion;
.30% on assets over
$1 billion; and
.25% for assets in
excess of $2
billion(3)
Enterprise Group of Funds: .40% of the first
Equity Portfolio $5,332,414 $100 million;
Managed Portfolio $349,493,760 .30% on assets in
excess of $100
million(4)
Penn Series Funds, Inc.:
Value Equity Fund $297,506,114 .50%(5)
Endeavor Series Trust:
Value Equity $210,253,204 .40%(6)
Portfolio
Opportunity Value
Portfolio 27,190,603
WNL Series Trust:
Elite Value Asset
Allocation
Portfolio $9,583,891 .40%(7)
The Saratoga
Advantage Trust:
Large Capitalization
Value Portfolio $33,003,232 .30%(7)
OCC Accumulation Trust: .80% of the first $400 million of
Equity Portfolio $28,400,402 average net assets:
Managed Portfolio $474,973,835 .75% of the next $400
million of average
net assets and .70%
of assets in excess
of $800 million(8)
(1) With respect to each of these funds, Oppenheimer Funds, Inc. ("OFI") is the
investment adviser and OpCap Advisors is the sub-adviser. OFI pays OpCap
Advisors monthly an annual fee based on the average daily net assets of the
fund equal to 40% of the advisory fee collected by OFI based on the total
net assets of the fund as of November 22, 1995 (the "base amount") plus 30%
of the investment advisory fee collected by OFI based on the total net
assets of the fund that exceed the base amount.
(2) OFI is the investment advisor and OpCap Advisors is the sub-adviser. OFI
pays OpCap Advisors a sub-advisory fee equal to 40% of the net advisory fee
calculated by OFI for the fund based on the total net assets of the fund as
of February 28, 1997 and remaining 120 days later (the "base amount") plus
30% of the investment advisory fee collected by OFI based on the total
assets that exceed that base amount. OFI is waiving the following portion
of its advisory fee: .15% of the first $200 million of average daily net
assets, .40% of the next $200 million, .30% of the next $400 million and
.25% of average net assets in excess of $800 million.
(3) These fees are for investment advisory services only. Management services
are provided to the portfolios by a party other than OpCap Advisors. The
manager, which pays the investment advisory fee to OpCap Advisors, receives
a management fee, on an annual basis, of 0.80% of the first $400 million of
the average daily net assets; .75% on the next $400 million and .70% on
assets above $800 million of each of the portfolios.
(4) This fee is for investment advisory services only. Management services are
provided to the portfolios by a party other than OpCap Advisors. The
manager, which pays the investment advisory fee to OpCap Advisors, receives
a management fee of .75% of the average daily net assets of the portfolios.
(5) These fees are for investment advisory services only. Administrative
services are provided to these funds by a party other than OpCap Advisors.
The funds are each charged on an annual basis a fee for administrative
services of 0.15% of their respective average daily net assets.
(6) This fee is for investment advisory services only. Management services are
provided to the portfolios by a party other than OpCap Advisors. The
manager, which pays the investment advisory fee to OpCap Advisors, receives
a management fee of .80% of average daily net assets of the portfolios.
(7) This fee is for investment advisory services only. Management services are
provided to the portfolio by a party other than OpCap Advisors. The
manager, which pays the investment advisory fee to OpCap Advisors, receives
a management fee of 0.65% of the average daily net assets of the portfolio.
(8) OpCap Advisors has agreed to waive its management fee and reimburse
expenses so that the total operating expenses (net of any expense offsets
and excluding the amount of any interest, taxes, brokerage commissions and
extraordinary expenses) of such portfolios do not exceed 1.00% of their
respective average daily net assets.
APPENDIX B
FUND MANAGEMENT AGREEMENT
FUND MANAGEMENT AGREEMENT dated August 1, 1998 between Liberty All-Star
Growth Fund, Inc., a corporation organized under the laws of the State of
Maryland (the "Company"), and Liberty Asset Management Company, a corporation
organized under the laws of the State of
Delaware (the "Manager").
WHEREAS, the Company desires to employ the Manager (i) to provide certain
administrative services as described herein to the Company, and (ii) to provide
investment management services as described herein in accordance with the
Company's investment objective and policies as stated in the Company's
Registration Statement, as from time to time in effect, under the Investment
Company Act of 1940 (the "Investment Company Act") and in conformity with the
Company's Articles of Incorporation and the Investment Company Act, as the same
may from time to time be amended.
WHEREAS the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and desires to provide services to
the Company in consideration of and on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, the Company and the Manager agree as follows:
1. Employment of the Manager. The Company hereby employs the Manager to
administer its business and administrative operations as set forth in Section
2(A) of this Agreement, and to manage the investment and reinvestment of the
Company's assets as set forth in Section 2(B) below, all subject to the
direction of the Board of Directors of the Company, for the period, in the
manner, and on the terms hereinafter set forth. The Manager hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth. The Manager shall for all purposes herein be
deemed to be an independent contractor and shall, except as expressly provided
or authorized (whether herein or otherwise), have no authority to act for or
represent the Company in any way or otherwise be deemed an agent of the Company.
2. Obligation of and Services to be Provided by the Manager. The Manager
undertakes to provide the services hereinafter set forth and to assume
the following obligations:
A. Administrative Services
(1) The Manager shall provide, either directly or through an affiliate,
general administrative services and oversee the operations of the Company
("Administrative Services"). The Administrative Services shall not include
custodial, transfer agency, or pricing and bookkeeping services, but shall
include, without limitation:
(i) the maintenance of the Company's offices within the Manager's
offices in Boston, Massachusetts and the maintenance of the corporate
books and records of the Company, other than the books and records
maintained by the transfer agent, the custodian or the fund accountant
of the Company, and making arrangements for the meetings of the
Directors of the Company, including the preparation of agendas and
supporting materials therefor;
(ii) the preparation of such financial information as is
reasonably necessary for reports to shareholders of the Company,
reports to the Board of Directors and the officers of the Company, and
reports of the Company to the Securities and Exchange Commission, the
Internal Revenue Service and other Federal and state regulatory
agencies;
(iii) the provision of such advice that may be reasonably
necessary properly to account for the Company's financial transactions
and to maintain the Company's accounting procedures and records so as
to insure compliance with generally accepted accounting and tax
practices and rules;
(iv) the monitoring of the preparation and maintenance by the
Company's custodian or other agents of all records that may be
reasonably required in connection with the audit performed by the
Company's independent auditors, the Securities and Exchange Commission,
the Internal Revenue Service or other Federal or state regulatory
agencies;
(v) the preparation of communications and
reports to shareholders of the Company and
making arrangements for meetings of such
shareholders;
(vi) the preparation and filing of all reports and all updating
and other amendments to the Company's registration statements necessary
to maintain the registration of the Company under the 1940 Act and the
listing of its common stock on the New York Stock Exchange;
(vii) the preparation of the Company's tax returns;
(viii) the periodic computation, and reporting as necessary to the
Directors of the Company, of the Company's compliance with its
investment objective, policies and restrictions and the portfolio
diversification and other portfolio requirements of the Investment
Company Act and the Internal Revenue Code of 1986, as amended (the
"Code"); and
(ix) the negotiation of agreements or other arrangements with, and
general oversight and coordination of, agents and others retained by
the Company to provide custodial, transfer agency, net asset value
computation, portfolio accounting, legal, tax and accounting services.
2. The Manager will permit individuals who are officers or employees of the
Manager to serve (if duly elected or appointed) as officers, Directors, members
of any committee of the Board of Directors, members of any advisory board, or
members of any other committee of the Company, without remuneration or other
cost to the Company.
B. Investment Management Services.
(1)The Manager shall have overall supervisory responsibility for
the general management and investment of the Company's assets, subject
to and in accordance with the investment objectives and policies of the
Company, and any directions which the Board of Directors of the Company
may issue to the Manager from time to time.
(2)The Manager shall provide overall investment programs and
strategies with respect to the Company's assets, shall revise such
programs as necessary and shall monitor and report periodically to the
Board of Directors of the Company concerning the implementation of the
programs.
(3)The Company intends to appoint one or more persons or companies
("Portfolio Managers"), each such Portfolio Manager to have full
investment discretion and to make all determinations with respect to
the investment and reinvestment of the portion of the Company's assets
assigned to that Portfolio Manager by the Manager and the purchase and
sale of portfolio securities with those assets, all within the
Company's investment objectives, policies and restrictions, and the
Company will take such steps as may be necessary to implement such
appointments. The Manager shall not be responsible or liable for the
investment merits of any decision by a Portfolio Manager to purchase,
hold or sell a security for the portfolio of the Company. The Manager
shall advise the Board of Directors of the Company which Portfolio
Managers the Manager believes are best suited to invest the Company's
assets; shall monitor and evaluate the investment performance of each
Portfolio Manager employed by the Company; shall allocate and
reallocate from time to time, in its discretion, the portion of the
Company's assets to be managed by each Portfolio Manager; shall
recommend changes of or additional Portfolio Managers when appropriate;
and shall coordinate the investment activities of the Portfolio
Managers to ensure compliance with the Company's investment policies
and restrictions and applicable laws, including the Investment Company
Act and the Code.
(4)The Manager shall render regular reports to the Company, at
regular meetings of the Board of Directors, of, among other things, the
decisions which it has made with respect to the allocation of the
Company's assets among Portfolio Managers.
3. Allocation of Expenses
(1) Expenses paid by the Manager. The Manager shall at its own expense
furnish or provide and pay the cost of such office space, office equipment,
personnel and office services as the Manager requires for the performance of its
administrative and investment management services hereunder. The Manager shall
not be obligated to bear any other expenses incidental to the operations or
business of the Company, and the payment or assumption by the Manager of any
expense of the Company that the Manager is not required by this Agreement to pay
or assume shall not obligate the Manager to pay or assume the same or any
similar expense on any subsequent occasion.
(2) Expenses paid by the Company. The Company shall pay all expenses
incurred in the operation of the Company including, among other things, expenses
for legal and auditing services, costs of printing proxies, stock certificates
and shareholder reports, charges of the custodian, any sub-custodian and
transfer agent, Securities and Exchange Commission fees, fees and expenses of
Directors of the Company who are not "affiliated persons" (as defined in the
Investment Company Act) of the Manager, any other investment adviser of the
Company, or any of their affiliated persons, accounting and pricing costs,
membership fees in trade associations, insurance, interest, brokerage costs,
taxes, stock exchange listing fees and expenses, expenses of qualifying the
Company's shares for sale in various states, litigation and other extraordinary
or nonrecurring expenses, and other expenses properly payable by the Company.
4. Activities and Affiliates of the Manager.
A. The services of the Manager to the Company hereunder are not to be
deemed exclusive, and the Manager and any of its affiliates shall be free
to render similar services to others. The Manager shall use the same skill
and care in the management of the Company's assets as it uses in the
administration of other accounts to which it provides asset management,
consulting and portfolio manager selection services, but shall not be
obligated to give the Company more favorable or preferential treatment
vis-a-vis its other clients.
B. Subject to and in accordance with the Articles of Incorporation and
By-Laws of the Company and to Section 10(a) of the Investment Company Act,
it is understood that Directors, officers, agents and shareholders of the
Company may be interested in the Manager or its affiliates as directors,
officers, agents or stockholders of the Manager or its affiliates; that
directors, officers, agents and stockholders of the Manager or its
affiliates are or may be interested in the Company as Directors, officers,
agents, shareholders or otherwise; that the Manager or its affiliates may
be interested in the Company as shareholders or otherwise; and that the
effect of any such interests shall be governed by the Investment Company
Act.
5. Fees for Services: Compensation of Portfolio Managers. The
compensation of the Manager for its services under this Agreement
shall be calculated and paid by the Fund in accordance with the
Exhibit I attached hereto. The Manager will compensate the
Portfolio Managers as provided in Exhibit I.
6. Liabilities of the Manager.
A. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of obligations or duties hereunder on the part of the
Manager, the Manager shall not be subject to liability to the Company or to any
shareholder of the Company for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
B. No provision of this Agreement shall be construed to protect any
Director or officer of the Company, or the Manager, from liability in violation
of Sections 17(h) and (i) of the Investment Company Act.
7. Renewal and Termination.
A. This Agreement shall continue in effect until July 31, 1999, and shall
continue in effect thereafter provided such continuance is specifically approved
at least annually by (i) the Company's Board of Directors or (ii) a vote of a
"majority" (as defined in the Investment Company Act) of the Company's
outstanding voting securities, provided that in either event such continuance is
also approved by a majority of the Board of Directors who are not "interested
persons" (as defined in the Investment Company Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. The aforesaid requirement that continuance of this Agreement
be "specifically approved at least annually" shall be construed in a manner
consistent with the Investment Company Act and the Rules and Regulations
thereunder.
B. This Agreement:
(a) may at any time be terminated without the payment of any penalty either
by vote of the Board of Directors of the Company or by vote of a majority
of the outstanding voting securities of the Company, on sixty (60) days'
written notice to the Manager;
(b)shall immediately terminate in the event of its
assignment (as that term is defined in the Investment
Company Act); and
(c)may be terminated by the Manager on sixty (60)
days' written notice to the Company.
C. Any notice under this Agreement shall be given in writing addressed and
delivered or mailed postpaid to the other party to this Agreement at its
principal place of business.
8. Use of Name. The Company may use the name "Liberty All-Star" only so
long as this Agreement remains in effect. If this Agreement is no longer in
effect, the Company (to the extent it lawfully can) shall cease using such name
or any other name indicating that it is advised by or otherwise connected with
the Manager. The Manager may grant the non-exclusive right to use the name
"Liberty All-Star" to any other entity, including any other investment company
of which the Manager or any of its affiliates is the investment adviser or
distributor.
9. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
10. Governing Law. To the extent that state law has not been preempted by
the provisions of any law of the United States heretofore or hereafter enacted,
as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the Commonwealth
of Massachusetts.
11. Prior Agreement Superceded. This Agreement supercedes and
replaces the Fund Management Agreement dated November 6, 1995 between
the Company and the Manager.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
LIBERTY ALL-STAR GROWTH FUND, INC.
By:________________________________
Title:_____________________________
LIBERTY ASSET MANAGEMENT COMPANY
By:________________________________
Title:_____________________________
EXHIBIT I
MANAGER FEE
(A) For the Administrative Services provided to the Company pursuant to
Section 2(A) of this Agreement, the Company will pay to the Manager, on the
first business day of each calendar quarter, a fee for the previous calendar
quarter at the rate of:
.05% (.20% annually) of the average weekly
net assets of the Company up to and including
$300 million; and
.045% (.18% annually) of the average weekly
net assets of the Company exceeding $300 million;
(B) For the investment management services provided to the Company pursuant
to Section 2(B) of this Agreement, the Company will pay to the Manager, on the
first business day of each calendar quarter, a fee for the previous calendar
quarter at the rate of:
.20% (.80% annually) of the average weekly
net assets of the Company up to and including
$300 million; and
.18% (.72% annually) of the average weekly net assets of the
Company exceeding $300 million.
(C) Pursuant to Section 5 of this Agreement, the Manager will pay to each
Portfolio Manager, on or before the fifth business day of each calendar quarter,
a fee for the previous calendar quarter at the rate of:
.10% (.40% annually) of the Portfolio Manager's Percentage (as
defined below) of the average weekly net assets of the Company up to
and including $300 million; and
.09% (.36% annually) of the Portfolio Manager's Percentage of the
average weekly net assets of the Company exceeding $300 million.
Each quarterly payment set forth above shall be based on the average weekly
net assets of the Company during such previous calendar quarter. The fee for the
period from the date this Agreement becomes effective to the end of the calendar
quarter will be prorated according to the proportion that such period bears to
the full quarterly period. Upon any termination of this Agreement before the end
of a calendar quarter, the fee for the part of that calendar quarter during
which this Agreement was in effect shall be prorated according to the proportion
that such period bears to the full quarterly period and will be payable upon the
date of termination of this Agreement. For the purpose of determining fees
payable to the Manager, the value of the Company's net assets will be computed
at the times and in the manner specified in the Company's Registration Statement
under the Investment Company Act as from time to time in effect.
"Portfolio Manager's Percentage" means the percentage obtained by dividing
the average weekly net assets of that portion of the Company's assets assigned
to that Portfolio Manager by the total of the Company's average weekly net
assets.
APPENDIX C
PORTFOLIO MANAGEMENT AGREEMENT
August 1, 1998
[Name and address of
Portfolio Manager]
Re: Portfolio Management Agreement
Ladies and Gentlemen:
Liberty All-Star Growth Fund, Inc. (the "Fund") is a diversified closed-end
investment company registered under the Investment Company Act of 1940 (the
"Act"), and is subject to the rules and regulations promulgated thereunder.
Liberty Asset Management Company (the "Fund Manager") evaluates and
recommends portfolio managers for the assets of the Fund, and is responsible for
the day-to-day administration of the Fund.
1. Employment as a Portfolio Manager. The Fund being duly authorized hereby
employs _____________________ (the "Portfolio Manager") as a discretionary
portfolio manager, on the terms and conditions set forth herein, of that portion
of the Fund's assets which the Fund Manager determines to assign to the
Portfolio Manager (those assets being referred to as the "Portfolio Manager
Account"). The Fund Manager may, from time to time, allocate and reallocate the
Fund's assets among the Portfolio Manager and the other portfolio managers of
the Fund's assets.
2. Acceptance of Employment; Standard of Performance. The Portfolio Manager
accepts its employment as a discretionary portfolio manager and agrees to use
its best professional judgment to make timely investment decisions for the
Portfolio Manager Account in accordance with the provisions of this Agreement.
3. Portfolio Management Services of Portfolio Manager. In providing
portfolio management services to the Portfolio Manager Account, the Portfolio
Manager shall be subject to the investment objectives, policies and restrictions
of the Fund as set forth in its current Registration Statement under the Act, as
the same may be modified from time to time (the "Registration Statement"), and
the investment restrictions set forth in the Act and the Rules thereunder (as
and to the extent set forth in the Registration Statement or in other
documentation furnished to the Portfolio Manager by the Fund or the Fund
Manager), to the supervision and control of the Board of Directors of the Fund,
and to instructions from the Fund Manager. The Portfolio Manager shall not,
without the prior approval of the Fund or the Fund Manager, effect any
transactions which would cause the Portfolio Manager Account, treated as a
separate fund, to be out of compliance with any of such restrictions or
policies.
4. Transaction Procedures. All portfolio transactions for the Portfolio
Manager Account will be consummated by payment to or delivery by the custodian
of the Fund (the "Custodian"), or such depositories or agents as may be
designated by the Custodian in writing, as custodian for the Fund, of all cash
and/or securities due to or from the Portfolio Manager Account, and the
Portfolio Manager shall not have possession or custody thereof or any
responsibility or liability with respect to such custody. The Portfolio Manager
shall advise and confirm in writing to the Custodian all investment orders for
the Portfolio Manager Account placed by it with brokers and dealers at the time
and in the manner set forth in Schedule A hereto (as amended from time to time
by the Fund Manager). The Fund shall issue to the Custodian such instructions as
may be appropriate in connection with the settlement of any transaction
initiated by the Portfolio manager. The Fund shall be responsible for all
custodial arrangements and the payment of all custodial charges and fees, and,
upon giving proper instructions to the Custodian, the Portfolio Manager shall
have no responsibility or liability with respect to custodial arrangements or
the acts, omissions or other conduct of the Custodian.
5. Allocation of Brokerage. The Portfolio Manager shall have authority and
discretion to select brokers and dealers to execute portfolio transactions
initiated by the Portfolio Manager for the Portfolio Manager Account, and to
select the markets on or in which the transaction will be executed.
A. In doing so, the Portfolio Manager's primary responsibility shall be
to seek to obtain best net price and execution for the Fund. However, this
responsibility shall not obligate the Portfolio Manager to solicit
competitive bids for each transaction or to seek the lowest available
commission cost to the Fund, so long as the Portfolio Manager reasonably
believes that the broker or dealer selected by it can be expected to obtain
a "best execution" market price on the particular transaction and
determines in good faith that the commission cost is reasonable in relation
to the value of the brokerage and research services (as defined in Section
28(e)(3) of the Securities Exchange Act of 1934) provided by such broker or
dealer to the Portfolio Manager viewed in terms of either that particular
transaction or of the Portfolio Manager's overall responsibilities with
respect to its clients, including the Fund, as to which the Portfolio
Manager exercises investment discretion, notwithstanding that the Fund may
not be the direct or exclusive beneficiary of any such services or that
another broker may be willing to charge the Fund a lower commission on the
particular transaction.
B. Subject to the requirements of paragraph A above, the Fund Manager
shall have the right to request that transactions giving rise to brokerage
commissions, in an amount to be agreed upon by the Fund Manager and the
Portfolio Manager, shall be executed by brokers and dealers that provide
brokerage or research services to the Fund Manager, or as to which an
on-going relationship will be of value to the Fund in the management of its
assets, which services and relationship may, but need not, be of direct
benefit to the Portfolio Manager Account.
C. The Portfolio Manager shall not execute any portfolio transactions
for the Portfolio Manager Account with a broker or dealer which is an
"affiliated person" (as defined in the Act) of the Fund, the Portfolio
Manager or any other Portfolio Manager of the Fund without the prior
written approval of the Fund. The Fund Manager will provide the Portfolio
Manager with a list of brokers and dealers which are "affiliated persons"
of the Fund or its Portfolio Managers.
6. Proxies. The Fund will vote or direct the voting of all proxies
solicited by or with respect to the issuers of securities in which assets of the
Portfolio Manager Account may be invested from time to time. At the request of
the Fund, the Portfolio Manager shall provide the Fund with its recommendations
as to the voting of such proxies.
7. Fees for Services. The compensation of the Portfolio Manager for its
services under this Agreement shall be calculated and paid by the Fund Manager
in accordance with the attached Schedule C. Pursuant to the Fund Management
Agreement between the Fund and the Fund Manager, the Fund Manager is solely
responsible for the payment of fees to the Portfolio Manager from the fund
management fees paid to it by the Fund, and the Portfolio Manager agrees to seek
payment of its fees solely from the Fund Manager.
8. Other Investment Activities of Portfolio Manager. The Fund acknowledges
that the Portfolio Manager or one or more of its affiliates has investment
responsibilities, renders investment advice to and performs other investment
advisory services for other individuals or entities ("Client Accounts"), and
that the Portfolio Manager, its affiliates or any of its or their directors,
members, officers, agents or employees may buy, sell or trade in any securities
for its or their respective accounts ("Affiliated Accounts"). Subject to the
provisions of paragraph 2 hereof, the Fund agrees that the Portfolio Manager or
its affiliates may give advice or exercise investment responsibility and take
such other action with respect to other Client Accounts and Affiliated Accounts
which may differ from the advice given or the timing or nature of action taken
with respect to the Portfolio Manager Account, provided that the Portfolio
Manager acts in good faith, and provided further, that it is the Portfolio
Manager's policy to allocate, within its reasonable discretion, investment
opportunities to the Portfolio Manager Account over a period of time on a fair
and equitable basis relative to the Client Accounts and the Affiliated Accounts,
taking into account the cash position and the investment objectives and policies
of the Fund and any specific investment restrictions applicable thereto. The
Fund acknowledges that one or more Client Accounts and Affiliated Accounts may
at any time hold, acquire, increase, decrease, dispose of or otherwise deal with
positions in investments in which the Portfolio Manager Account may have an
interest from time to time, whether in transactions which involve the Portfolio
Manager Account or otherwise. The Portfolio Manager shall have no obligation to
acquire for the Portfolio Manager Account a position in any investment which any
Client Account or Affiliated Account may acquire, and the Fund shall have no
first refusal, coinvestment or other rights in respect of any such investment,
either for the Portfolio Manager Account or otherwise.
9. Limitation of Liability. The Portfolio Manager shall not be liable for
any action taken, omitted or suffered to be taken by it in its reasonable
judgment, in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement, or in
accordance with (or in the absence of) specific directions or instructions from
the Fund, provided, however, that such acts or omissions shall not have resulted
from the Portfolio Manager's willful misfeasance, bad faith or gross negligence,
a violation of the standard of care established by and applicable to the
Portfolio Manager in its actions under this Agreement or breach of its duty or
of its obligations hereunder (provided, however, that the foregoing shall not be
construed to protect the Portfolio Manager from liability in violation of
Section 17(i) of the Act).
10. Confidentiality. Subject to the duty of the Portfolio Manager and the
Fund to comply with applicable law, including any demand of any regulatory or
taxing authority having jurisdiction, the parties hereto shall treat as
confidential all information pertaining to the Portfolio Manager Account and the
actions of the Portfolio Manager and the Fund in respect thereof.
11. Assignment. This Agreement shall terminate automatically in the event
of its assignment, as that term is defined in Section 2(a)(4) of the Act. The
Portfolio Manager shall notify the Fund in writing sufficiently in advance of
any proposed change of control, as defined in Section 2(a)(9) of the Act, as
will enable the Fund to consider whether an assignment as defined in Section
2(a)(4) of the Act will occur, and whether to take the steps necessary to enter
into a new contract with the Portfolio Manager.
12. Representations, Warranties and Agreements of the Fund. The Fund
represents, warrants and agrees that:
A. The Portfolio Manager has been duly appointed to provide investment
services to the Portfolio Manager Account as contemplated hereby.
B. The Fund has delivered to the Portfolio Manager such instructions
governing the investment of the Portfolio Manager Account as are necessary
for the Portfolio Manager to carry out its obligations under this
Agreement.
13. Representations, Warranties and Agreements of the Portfolio Manager.
The Portfolio Manager represents, warrants and agrees that:
A. It is registered as an "Investment Adviser" under the Investment
Advisers Act of 1940 ("Advisers Act").
B. It will maintain, keep current and preserve on behalf of the Fund,
in the manner required or permitted by the Act and the Rules thereunder,
the records identified in Schedule B (as Schedule B may be amended from
time to time by the Fund Manager). The Portfolio Manager agrees that such
records are the property of the Fund, and will be surrendered to the Fund
promptly upon request.
C. It will adopt a written code of ethics complying with the
requirements of Rule l7j-l under the Act and will provide the Fund with a
copy of the code of ethics and evidence of its adoption. Within 45 days of
the end of each year while this Agreement is in effect, an officer or
general partner of the Portfolio Manager shall certify to the Fund that the
Portfolio Manager has complied with the requirements of Rule l7j-l during
the previous year and that there has been no violation of its code of
ethics or, if such a violation has occurred, that appropriate action was
taken in response to such violation. Upon the written request of the Fund,
the Portfolio Manager shall permit the Fund to examine the reports required
to be made by the Portfolio Manager under Rule l7j-l(c)(l).
D. Upon request, the Portfolio Manager will promptly supply the Fund
with any information concerning the Portfolio Manager and its stockholders,
employees and affiliates which the Fund may reasonably require in
connection with the preparation of its Registration Statement or amendments
thereto, proxy material, reports and other documents required to be filed
under the Act, the Securities Act of 1933, or other applicable securities
laws.
14. Amendment. This Agreement may be amended at any time, but (except for
Schedules A and B which may be amended by the Fund Manager acting alone) only by
written agreement among the Portfolio Manager, the Fund Manager and the Fund,
which amendment, other than amendments to Schedules A and B, is subject to the
approval of the Board of Directors and the Shareholders of the Fund as and to
the extent required by the Act.
15. Effective Date; Term. This Agreement shall continue in effect until
July 31, 1999 and shall continue in effect thereafter provided such continuance
is specifically approved at least annually by (i) the Fund's Board of Directors
or (ii) a vote of a "majority" (as defined in the Act) of the Fund's outstanding
voting securities, provided that in either event such continuance is also
approved by a majority of the Board of Directors who are not "interested
persons" (as defined in the Act) of any party to this Agreement, by vote cast in
person at a meeting called for the purpose of voting on such approval. The
aforesaid requirement that continuance of this Agreement be "specifically
approved at least annually" shall be construed in a manner consistent with the
Act and the Rules and Regulations thereunder.
16. Termination. This Agreement may be terminated by any party, without
penalty, immediately upon written notice to the other parties in the event of a
breach of any provision thereof by a party so notified, or otherwise upon not
less than thirty (30) days' written notice to the Portfolio Manager in the case
of termination by the Fund or the Fund Manager, or ninety (90) days' written
notice to the Fund and the Fund Manager in the case of termination by the
Portfolio Manager, but any such termination shall not affect the status,
obligations or liabilities of any party hereto to the other parties.
17. Applicable Law. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter enacted, as
the same may be amended from time to time, this Agreement shall be administered,
construed and enforced according to the laws of the Commonwealth of
Massachusetts.
18. Severability. If any term or condition of this Agreement shall be
invalid or unenforceable to any extent or in any application, then the remainder
of this Agreement, and such term or condition except to such extent or in such
application, shall not be affected thereby, and each and every term and
condition of this Agreement shall be valid and enforced to the fullest extent
and in the broadest application permitted by law.
19. Prior Agreement Superceded. This Agreement supercedes and replaces
the Portfolio Management Agreement dated among the Fund, the Fund Manager
and the Portfolio Manager.
LIBERTY ALL-STAR GROWTH FUND, INC.
By:____________________________________
Title:_________________________________
LIBERTY ASSET MANAGEMENT COMPANY
By:____________________________________
Title:_________________________________
ACCEPTED:
[Name of Portfolio Manager]
By:
Title:
SCHEDULES: A. Operational Procedures For Portfolio Transactions (omitted)
B. Record Keeping Requirements (omitted)
C. Fee Schedule
SCHEDULE C
PORTFOLIO MANAGER FEE
For services provided to the Portfolio Manager Account, the Fund Manager
will pay to the Portfolio Manager, on or before the fifth business day of each
calendar quarter, a fee for the previous calendar quarter at the rate of:
.10% (.40% annually) of the Portfolio Manager's Percentage (as defined
below) of the average weekly net assets of the Fund up to and including
$300 million; and
.09% (.36% annually) of the Portfolio Manager's Percentage of the average
weekly net assets of the Fund exceeding $300 million.
Each quarterly payment set forth above shall be based on the average weekly
net assets during such previous calendar quarter. The fee for the period from
the date this Agreement becomes effective to the end of the calendar quarter in
which such effective date occurs will be prorated according to the proportion
that such period bears to the full quarterly period. Upon any termination of
this Agreement before the end of a calendar quarter, the fee for the part of
that calendar quarter during which this Agreement was in effect shall be
prorated according to the proportion that such period bears to the full
quarterly period and will be payable upon the date of termination of this
Agreement. For the purpose of determining fees payable to the Portfolio Manager,
the value of the Fund's net assets will be computed at the times and in the
manner specified in the Registration Statement as from time to time in effect.
"Portfolio Manager's Percentage" means the percentage obtained by dividing
the average weekly net assets in the Portfolio Manager Account by the Fund's
average weekly net assets.
LIBERTY ALL-STAR GROWTH FUND, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF LIBERTY
ALL-STAR GROWTH FUND, INC.
PROXY FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
The undersigned, revoking previous proxies, hereby appoints Richard R.
Christensen, John A. Benning and John L. Davenport, or any one or more of them,
attorneys, with power of substitution, to vote all shares of Liberty All-Star
Growth Fund, Inc. (the "Fund") which the undersigned is entitled to vote at the
1998 Annual Meeting of the Fund to be held in Room AV-1, 3rd Floor, Federal
Reserve Plaza, 600 Atlantic Avenue, Boston, Massachusetts on April 22, 1998 at
11:00 a.m. and at any adjournments thereof. All powers may be exercised by a
majority of said proxy holders or substitutes voting or acting or, if only one
votes or acts, then by that one. This undersigned directs said proxy holders to
vote as specified upon the proposals shown below, each of which is described in
the proxy statement for the Meeting, receipt of which is acknowledged.
SAID PROXIES WILL VOTE THIS PROXY AS DIRECTED, OR IF NO DIRECTION IS INDICATED,
FOR THE NOMINEES LISTED IN PROPOSAL 1 UNLESS AUTHORITY TO DO SO IS SPECIFICALLY
WITHHELD IN THE MANNER PROVIDED, AND FOR PROPOSALS 2, 3 AND 4, AND WILL USE
THEIR DISCRETION WITH RESPECT TO ANY MATTERS REFERRED TO IN ITEM 5.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
PLEASE DO NOT FOLD, STAPLE OR MUTILATE CARD.
- --------------------------------------------------------------------------------
LIBERTY ALL-STAR GROWTH FUND, INC.
RECORD DATE SHARES:
1. ELECTION OF DIRECTORS
Nominees: For All Nominees Withhold For All Except
Harold W. Cogger (Class of 2001)
Richard W. Lowry (Class of 2001)
John J. Neuhauser (Class of 2000)
NOTE: If you do not wish your shares voted "FOR" a particular nominee,
mark the "FOR ALL EXCEPT" box and strike a line through the name(s) of
the nominee(s). Your shares will be voted "For" the remaining
nominee(s).
2. APPROVAL OF NEW PORTFOLIO MANAGEMENT AGREEMENT WITH OPPENHEIMER CAPITAL
FOR / / AGAINST / / ABSTAIN / /
3. APPROVAL OF NEW FUND MANAGEMENT WITH LIBERTY
ASSET MANAGEMENT COMPANY AND NEW PORTFOLIO
MANAGEMENT AGREEMENTS WITH PORTFOLIO MANAGERS
FOR / / AGAINST / / ABSTAIN / /
4. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
FOR / / AGAINST / / ABSTAIN / /
5. In their discretion, upon such other business as
may properly come before the Meeting.
Please sign exactly as your name(s) Date appear(s) above.
Corporate proxies should be signed by an authorized officer.
- ------------------------------------------------------
Shareholder sign here
Co-owner sign here
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DETACH CARD DETACH CARD
