LIBERTY ALL STAR GROWTH FUND INC /MD/
DEF 14A, 2000-03-15
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<PAGE>

                                 SCHEDULE 14A
                               (Rule 14a-101)

                     INFORMATION REQUIRED IN PROXY STATEMENT

                             SCHEDULE 14A INFORMATION
                     Proxy Statement Pursuant to Section
                 14(a) of the Securities Exchange Act of 1934


Filed by the Registrant [ X ]

Filed by a Party other than the Registrant [  ]

Check the appropriate box:
[   ]  Preliminary Proxy Statement
[ X ]  Definitive Proxy Statement
[   ]  Definitive Additional Materials
[   ]  Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[   ]  Confidential, For Use of the Commission Only (as permitted by
       Rule 14a-6(e)(2))



                        LIBERTY ALL-STAR GROWTH FUND, INC.
              ________________________________________________
               (Name of Registrant as Specified In Its Charter)

    _______________________________________________________________________
   (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[ X ]  No fee required.

[   ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

       1) Title of each class of securities to which transaction applies:


       2)  Aggregate number of securities to which transaction applies:


       3)  Per unit price or other underlying value of transaction computed
           pursuant to Exchange Act Rule 0-11 (set forth the amount on which
           the filing fee is calculated and state how it was determined):

       4)  Proposed maximum aggregate value of transaction:


       5)  Total fee paid:


 [   ]    Fee paid previously with preliminary materials:


 [   ]    Check box if any part of the fee is offset as provided by Exchange
          Act Rule 0-11(a)(2) and identify the filing for which the offsetting
          fee was paid previously.  Identify the previous filing by
          registration statement number, or the form or schedule and the date
          of its filing.

      1)  Amount Previously Paid:


      2)  Form, Schedule or Registration Statement no.:


      3)  Filing Party:


      4)  Date Filed:




<PAGE>


                     LIBERTY ALL-STAR GROWTH FUND, INC.
                         Federal Reserve Plaza
                     Boston, Massachusetts 02210
                            (617) 722-6000

                NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

                           April 19, 2000

To the Shareholders of Liberty All-Star Growth Fund, Inc.:

         NOTICE IS HEREBY GIVEN that the 2000 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 19,  2000 at 11:00  a.m.,  Boston  time.  The purpose of the Meeting is to
consider and act upon the following matters:

1.       To approve  the  conversion  of the Fund from a  closed-end  investment
         company to an open-end investment company.

2.       To approve a Distribution Plan.

3.       To elect two Directors of the Fund.

4.       To approve the Fund's Portfolio  Management  Agreement with M.A.
         Weatherbie & Co., Inc.

5.       To  approve  a new  Portfolio  Management  Agreement  with  Oppenheimer
         Capital which will replace the current Portfolio  Management  Agreement
         which will terminate upon change in control of Oppenheimer Capital upon
         acquisition by Allianz AG.

6.       To   ratify   the    selection   by   the   Board   of   Directors   of
         PricewaterhouseCoopers  LLP as the Fund's independent  auditors for the
         year ending December 31, 2000.

7.       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 1,
2000 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.

                                         By order of the Board of Directors

                                         Nancy L. Conlin, Secretary


<PAGE>


         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.

         YOUR BOARD OF DIRECTORS  RECOMMENDS THAT YOU VOTE AGAINST  PROPOSAL 1 ,
AND RECOMMENDS THAT YOU VOTE FOR ALL OF THE OTHER PROPOSALS.  PROPOSAL 2 WILL BE
EFFECTIVE ONLY IF PROPOSAL 1 IS APPROVED.




March 13, 2000


<PAGE>


                    LIBERTY ALL-STAR GROWTH FUND, INC.
                         PROXY STATEMENT
                     Annual Meeting of Shareholders

                                                              April 19, 2000

         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 19, 2000 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 13, 2000 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. to coordinate the distribution
of proxy  material to, and to solicit the return of proxies  from,  individuals,
banks,  brokers,  nominees  and  other  custodians  at  a  fee  of  $5,000  plus
out-of-pocket  expenses.  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 preceded by the Fund's 1999 Annual Report to  Shareholders,  which was mailed
to shareholders on February 29, 2000.

         The Meeting is being held to vote on the matters described below.

PROPOSAL 1.  APPROVAL OF THE CONVERSION OF ALL-STAR FROM CLOSED-END
             TO OPEN-END STATUS AND CERTAIN RELATED AMENDMENTS TO
             ALL-STAR'S AGREEMENT AND ARTICLES OF INCORPORATION

I.       BACKGROUND AND SUMMARY

         The Fund is  registered  as a closed-end  investment  company under the
Investment  Company Act of 1940 (the "Investment  Company Act") and has operated
as a closed-end fund since its inception in December 16, 1985.

         As part of the  settlement  of  litigation  relating to the Fund's 1995
annual meeting, Liberty Asset Management agreed to recommend to the Fund's Board
of  Directors  that  the  Fund's  proxy  statement  for the  annual  meeting  of
shareholders  to be held in the year 2000  include a proposal to change the Fund
from a closed-end investment company to an open-end mutual fund. Neither Liberty
Asset Management nor the Fund's Directors are obligated,  however,  to recommend
approval of this proposal to  shareholders.  The affirmative vote of the holders
of 66 2/3rds percent of the


<PAGE>


outstanding  shares of Common  Stock will be  required to  authorize  the Fund's
conversion  from  a  closed-end  to  an  open-end   investment   company.   This
"super-majority"  vote  would be  required  for such  conversion  regardless  of
whether or not the proposal is recommended by the Board of Directors.

         Shareholders  will have the  opportunity  to vote at the meeting on the
question of whether the Fund should be converted  from a  closed-end  fund to an
open-end fund. The Fund has been notified that a shareholder  intends to solicit
shareholders  "with  respect to any matters to be  considered  at the  meeting."
Pursuant to Rule 240.14a-7(a)(2), the Fund will mail soliciting materials at the
expense of the  requesting  shareholder.  The  Directors,  as  discussed in more
detail below,  unanimously  recommend that shareholders vote AGAINST  converting
the Fund to an open-end  fund.  This  recommendation  is based on the Directors'
view that, as a closed-end  fund,  the Fund is afforded  significant  investment
advantages.

         If approved,  the  conversion  would result in the  "delisting"  of the
Fund's  shares  from the New York Stock  Exchange  where they  currently  may be
bought or sold at  prevailing  market  prices.  The  shares  would  then  become
redeemable  directly from the Fund at net asset value. Other differences between
closed-end and open-end investment companies are described below.

         A conversion  from  closed-end to open-end  status would also require a
number of changes in the Agreement and Articles of Incorporation  (the "Articles
of Incorporation") under which the Fund was established.  Accordingly,  approval
of this  proposal  would  also  authorize  the  Fund's  Directors  to make  such
amendments,  as they may deem  necessary to operate the Fund as an open-end fund
if this  proposal is approved.  These  changes are  described in greater  detail
below.

         The  Directors  regularly  review the overall  performance  and trading
information  for the Fund. At their December 15, 1999 meeting,  the Directors of
the Fund  carefully  reviewed  and  evaluated  information  about  the  possible
advantages and  disadvantages  of converting from a closed-end fund structure to
an open-end fund structure and whether the Fund's long-term  shareholders  would
benefit by this conversion.

FOR THE REASONS  DESCRIBED  BELOW,  THE  DIRECTORS OF THE FUND HAVE  UNANIMOUSLY
CONCLUDED THAT THE CONVERSION OF THE FUND TO OPEN-END STATUS WOULD NOT BE IN THE
BEST  LONG-TERM  INTERESTS OF THE FUND AND ITS  SHAREHOLDERS.  ACCORDINGLY,  THE
DIRECTORS OF THE FUND  UNANIMOUSLY  RECOMMEND THAT  SHAREHOLDERS  VOTE "AGAINST"
THIS PROPOSAL.

II.      THE REASONS FOR VOTING AGAINST CONVERSION TO AN OPEN-END FUND

         The  Directors  believe  that the  Fund's  closed-end  status  provides
significant  investment  benefits  not  available in an open-end  fund.  Because
closed-end fund shares are not redeemable,  closed-end funds are not required to
maintain cash or short-term investments in anticipation of possible redemptions.
Therefore,  the assets of closed-end  funds can be fully  invested in pursuit of
each funds investment objectives.  Open-end funds, in contrast, generally engage
in a continuous public offering of their shares,  which provides the opportunity
for growth of assets and reduced expense ratios.  However,  as an open-end fund,
the  unpredictable  cash flows associated with sales and redemptions of open-end
fund shares,  as well as the need to maintain cash reserves in  anticipation  of
possible  redemptions,  tend to reduce the  investment  flexibility  of open-end
funds.  Furthermore,  since shares of open-end funds are generally redeemable at
any time,  such  funds  face the risk of higher  expense  ratios if  significant
redemptions are not offset by sales of new shares.

         The  Directors  have  reviewed and  evaluated  industry  reports  which
indicate that the supposed  benefit of open-ending  the Fund - immediate gain to
shareholders who cash out of the Fund - will result in seriously disadvantageous
consequences  for shareholders who continue to hold the Fund. These reports have
demonstrated that only a small number of selling  shareholders  actually benefit
from an open-end  conversion.  A study  reported by Morgan  Stanley  Dean Witter
entitled  "Misconceptions About Benefits of Open-Ending Closed-End Funds," dated
February 9, 1998, concluded that converting a closed-end fund to open-end status
to eliminate the fund's  discount may actually be  detrimental  to the long-term
performance  and expense ratios of the fund. The Board also reviewed data from a
research  study  by  CDA/Wiesenberger   entitled   "CDA/Wiesenberger   Study  of
Closed-End  Funds that Open-End,"  dated September 18, 1998. This research study
concluded  that  conversion  from  a  closed-end  to an  open-end  structure  is
generally not in the best interest of long-term  investors.  Using data from ten
open-ended  conversions  which  occurred  in  1997  and  1998,  CDA/Wiesenberger
concluded  that the  selling  pressures  caused by  shareholders  which  want to
capture short-term gains in market price after an open-ending announcement leads
to  plunging  net assets  and a  consequent  increase  in  expense  ratios,  the
realization  of   significant   capital  gains  and  increased  tax  burdens  on
shareholders  which remain invested in the converted fund and the possibility of
an altered investment style.

         The Fund's operating  expenses may increase if the Fund is converted to
open-end status. As an open-end fund, the Fund would be required, as a practical
matter,  to make a continuous  public  offering of its shares in order to offset
redemptions  and maintain the economies of scale  available at its current size.
All  shareholders  would  bear  the  brokerage  and  other  transactional  costs
associated  with  purchases  and sales of  securities in response to the sale or
redemption of shares if the Fund were  converted to open-end  status  (except to
the extent that the Directors will impose a temporary redemption fee proposed by
the Directors (see Section V below)). Furthermore, in order to market the Fund's
shares  effectively  to  conform  generally  to  sales  practices  of  competing
dealer-sold  funds,  following a conversion  to open-end  status,  the Directors
recommend that  shareholders  approve the adoption of a distribution  plan under
Rule 12b-1 of the 1940 Act.

         To implement a distribution plan, the Directors recommend that the Fund
create three  separate  classes of shares,  each with its own expenses.  Class A
shares  will have a  front-end  load  (sales  charge)  of 5.75%  imposed  on the
purchase  of Class A  shares.  Class B and  Class C shares  will  each  charge a
Contingent Deferred Sales Charge (CDSC) of 5.00% and 1.00%,  respectively,  upon
redemption  of shares  within a specified  period of time.  These sales  charges
parallel  those of the only other All-Star  open-end fund - All-Star  Growth and
Income Fund. In addition to the sales charge, the distribution plan would permit
the Fund to pay an annual  service fee of 0.25% on net assets of Class A, B, and
C shares  and annual  distribution  fees of up to 0.75% of the Fund's net assets
for Class B and C shares,  as is the case with the Liberty  All-Star  Growth and
Income Fund.

         If  shareholders  vote to convert the Fund to an open-end  fund and the
distribution plan is approved,  the shares of shareholders remaining in the Fund
will be  converted  to Class A shares (see  below).  The sales  charge for these
converted  Class A shares  would be  waived  (along  with the  sales  charge  on
reinvested  dividends) but the 12b-1 Plan fees and the other expenses associated
with an open-end mutual fund would be charged to all Fund shares,  including the
converted Class A shares. Additional purchases of Class A shares will be subject
to an initial sales charge.

         Comparative Fee and Cost Information.  The fee and expense tables below
are intended to assist Fund  shareholders  in comparing  the Fund's  anticipated
fees and expenses  following a vote to open-end the Fund. The fee table compares
the Fund's  expenses  with and without a 12b-1 fee in effect (see  Proposal  2).
Fees and expenses are paid from Fund  assets,  and are shown as a percentage  of
average net assets,  unless noted  otherwise.  The tables  describe the fees and
expenses you may pay if you buy and hold shares of the Fund.

Shareholder Fees (paid directly from your investment)

                                                 Closed-End Fund  Open-End Fund
Maximum sales charge (load) on purchases (%)
(as a percentage of the offering price)                  NONE            5.75%*
- --------------------------------------------------- ---------------- ----------
Maximum deferred sales charge (load) on
redemptions (%) (as a percentage of the
lesser of purchase price or redemption price)            NONE              NONE
- --------------------------------------------------- ---------------- ----------
- --------------------------------------------------- ---------------- ----------
Maximum sales charge (load) imposed on reinvested
dividends (%) (as a percentage of the
lesser of purchase price or redemption price)            NONE              NONE
- --------------------------------------------------- ---------------- ----------

         *The  sales  charge  (load)  applies  only to the  purchases  of new or
additional Class A Shares if conversion of the Fund is approved.

Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>


                                                                                      Open-End
                                                     Closed-End    Open-End Class   Class A Fees
                                                      Fund Fees      A Fees With       Without
                                                                     12b-1 Plan*     12b-1 Plan

<S>                                                     <C>             <C>             <C>
Management and administration fee (%)                   1.00%           1.00%           1.00%

Distribution and service (12b-1) fees (%)               NONE            0.25%           NONE

Other expenses (%)                                      0.20%           0.36%           0.36%

Total annual fund operating expenses  (%)               1.20%           1.61%           1.36%

</TABLE>

         *The Board recommends approval of the 12b-1 Plan, upon conversion to an
open-end  fund, in order to  efficiently  operate and grow the Fund's assets and
performance levels.

Example+

This  Example is intended to help you compare the cost of  investing in the Fund
with the cost of investing in other mutual funds.  The Example  assumes that you
invest $10,000 in the Fund for the time periods indicated and then redeem all of
your shares at the end of those  periods.  The Example  also  assumes  that your
investment  has a 5% return  each year and that the  Fund's  operating  expenses
remain the same.  Although  your actual  costs may be higher or lower,  based on
these assumptions your costs would be:

<TABLE>
<CAPTION>


                                                    1 Year*            3 Years             5 Year            10 Years
<S>                                                  <C>                 <C>               <C>                <C>
Class A Shares (sales charge waived for
shares converted to open-end status)                 $364                $508               $876              $1,911

Class A Shares (includes sales charges
applied to new and/or additional purchases           $929               $1,054
of shares)                                                                                 $1,401             $2,376
</TABLE>

+The Example  calculates the Fund's expenses  assuming the approval of the 12b-1
Plan and the fees  associated  with the Plan. If the 12b-1 Plan is not approved,
your costs would be lower.

*Includes a 2.0%  redemption fee charged to any shares redeemed during the first
twelve months of open-ending the Fund.

         The Board of Directors  believes  that,  if the Fund is converted to an
open-end  investment  company, a distribution plan would be reasonably likely to
benefit the Fund and its shareholders.  Distribution fees can stimulate sales of
shares of the Fund,  thereby  tending to offset  redemptions  that are likely to
occur upon  conversion  and avoiding a shrinkage  in the Fund's  size,  with the
attendant loss of economies of scale and investment flexibility.

         If  shareholders  approve the conversion of the Fund to open-end status
but do not approve the proposed  distribution  plan,  the Board has been advised
that  distribution  of Fund shares will not likely be as  successful  as that of
other similar funds which have a distribution plan in effect. Consequently,  the
Fund's  sales level may be  considerably  lower than  necessary  to  effectively
manage the Fund and increase its asset levels.

         Open-end  funds,  since they  continually  issue new  shares,  have the
ability to increase in size.  This growth could result in  efficiencies as fixed
costs are  spread  over a larger  pool of assets  reducing  the  Fund's  expense
ration. Alternatively, since they also continually redeem shares, open-end funds
can also decrease in size. In that case,  expense  ratios may increase.  Liberty
Asset  Management  has advised the  Directors  that it is possible that the Fund
might  experience  significant  redemptions  following any  conversion,  thereby
shrinking in size.  Furthermore,  the studies reviewed by the Directors indicate
that fund  performance  can be  affected  (most  notably in the first six months
after  open-ending  the Fund) due to fewer assets being  invested as a result of
actual and anticipated redemptions. Depending on the size of the redemptions and
any sales of new shares, increased expense ratios could result.

         The need to sell securities as an open-end fund to meet redemptions may
have adverse tax consequences to shareholders remaining in the Fund. If the Fund
sells securities to meet  redemptions and realizes a gain for tax purposes,  the
Fund will be required to allocate  the tax gain to  remaining  shareholders.  In
order to retain its  qualification as a regulated  investment  company under the
Internal Revenue Code and thus be relieved of taxation at the investment company
level,  the Fund is required to  distribute  net realized  capital  gains to its
shareholders who do not redeem their shares and remain shareholders of the Fund.
This would have two negative  consequences.  First,  non-redeeming  shareholders
would recognize and be required to pay taxes on a greater amount of capital gain
than would otherwise be the case. Secondly, the Fund may need to sell additional
portfolio  securities  in order to make the  required  distribution  of realized
capital  gains,  thereby  further  reducing  the size of the  fund and  possibly
causing the realization of additional net capital gains.

         Another  reason  that  the  Directors   recommend  voting  against  the
conversion to open-end status is that the impact of large-scale  redemptions may
be  magnified  inasmuch  as the  Fund  employs  the  multi-manager,  multi-style
approach to  investment  management.  The  Directors  believe  that the volatile
outflow  of cash that will  follow  the  open-ending  of the Fund,  is likely to
disrupt the balance of  investment  styles  among the fund's  managers,  and may
induce the  portfolio  managers to make  investment  decisions  based on factors
other than the portfolio managers' pre-determined  investment approaches.  These
effects on portfolio  management  and a decrease in the fund's asset base due to
redemptions could hamper Liberty Asset  Management's  ability to find and retain
quality investment sub-advisors for the Fund.

FOR ALL OF THE FOREGOING REASONS, THE DIRECTORS UNANIMOUSLY
RECOMMEND THAT SHAREHOLDERS VOTE AGAINST THIS PROPOSAL.

III.     THE PRINCIPAL DIFFERENCES BETWEEN A CLOSED-END AND OPEN-END FUND

         In  evaluating  this  proposal,  shareholders  may wish to consider the
following differences between closed-end and open-end funds:

         CHANGES IN CAPITAL.  Closed-end  funds raise their  capital  through an
initial public offering and generally do not raise additional capital after that
time.  Closed-end funds therefore have limited  opportunities to gain additional
economies of scale through growth of assets. At the same time, because shares of
closed-end funds cannot be redeemed, the risk of higher expense ratios resulting
from a decline in assets is also limited.

         Open-end funds, in contrast,  generally  engage in a continuous  public
offering of their shares,  which provides the  opportunity  for growth of assets
and reduced  expense  ratios.  However,  because  shares of  open-end  funds are
generally  redeemable  at any time,  such funds face the risk of higher  expense
ratios if significant redemptions are not offset by sales of new shares.

         REDEMPTION OF SHARES.  Shares of open-end  funds may be redeemed at any
time at their net asset value (subject only to the right of the Fund to withhold
payment  for up to seven days or to impose a temporary  redemption  fee or, with
the permission of the SEC, to suspend  redemptions under emergency  conditions).
In contrast,  shares of closed-end funds are not redeemable and can generally be
bought and sold at current  market  prices  only on the  exchange  on which such
funds are listed.  The share's current market price may be trading at a discount
(below net asset value) or at a premium (above net asset value).  Currently, the
Fund's  shares are trading at a discount to net asset value.  As of February 17,
2000, the Fund's discount to net asset value was 20.0%. Converting the Fund from
closed-end to open-end status would eliminate the discount  between market price
and net asset value,  but would also eliminate the  possibility  that the Fund's
shares might trade at a premium in the future.

         Over the last ten fiscal years,  the Fund's discount to net asset value
has been as follows:
<TABLE>
<CAPTION>
                  1999     1998      1997      1996        1995       1994      1993     1992     1991      1990
<S>              <C>      <C>       <C>       <C>         <C>        <C>       <C>       <C>      <C>     <C>
December         -19.8%   -12.2%    -7.4%     -17.9%      -11.1%     -14.6%    -2.8%     -2.7%    -3.5%    6.3%*
September        -14.1%    -6.3%    -2.2%     -18.1%      -16.4%     -8.7%     -6.1%     -7.0%    -7.6%    -3.5%
June             -13.8%    -9.1%    -8.3%     -14.9%      -15.2%     -6.6%     -5.2%     -5.7%    -5.5%   -10.0%
March            -13.5%    -6.1%    -7.6%     -15.5%      -16.7%     -4.4%     -4.9%     -6.3%    -3.1%    -7.1%
</TABLE>

*The Fund's shares were trading at a premium over the Fund's net asset value.


         REGULATORY  REQUIREMENTS.   Both  closed-end  and  open-end  funds  are
registered  with the SEC  under the  Investment  Company  Act of 1940 and,  with
certain  differences  relating largely to the sale and redemption of shares, are
generally  subject to the same  regulatory  requirements of that Act. The Fund's
shares are  listed for  trading  on the New York  Stock  Exchange  (NYSE  ticker
symbol:  ASG).  That listing would be terminated in the event of a conversion to
open-end  status.  If open-end funds engage in a continuous  public  offering of
their shares, they are required to maintain current  registrations under federal
and state securities laws, which involves additional costs.

         ANNUAL  SHAREHOLDER  MEETINGS.  The Fund is  currently  required by the
rules of the New York Stock Exchange to hold annual meetings of shareholders for
the purpose of electing  Directors and  ratifying the selection of auditors.  As
noted  above,  conversion  of the  Fund  to  open-end  status  would  result  in
termination of the Fund's listing on the New York Stock Exchange with the result
that the Fund  would no longer  be  required  to hold  annual  meetings  (a cost
savings to the Fund). The Fund would hold annual shareholder meetings only on an
as-needed basis. However, under the terms of exemptive orders issued to the Fund
and to Liberty  Asset  Management  by the  Securities  and Exchange  Commission,
shareholder  meetings will be necessary to seek shareholder  approval of changes
in sub-advisors recommended by Liberty Asset Management.

         INVESTMENT FLEXIBILITY.  As noted above, the cash flows associated with
sales and  redemptions of open-end fund shares,  as well as the need to maintain
cash  reserves  in  anticipation  of  possible  redemptions,  tend to reduce the
investment flexibility of open-end funds.

         LEVERAGE.   Open-end   investment   companies  are  prohibited  by  the
Investment   Company  Act  from   issuing   "senior   securities"   representing
indebtedness (i.e. bonds, debentures, notes and other similar securities), other
than indebtedness to banks when there is asset coverage of at least 300% for all
borrowings,  and may not issue preferred stock.  Closed-end investment companies
are permitted to issue senior securities representing indebtedness when the 300%
asset  coverage  test is met,  may issue  preferred  stock  subject  to  various
limitations,  and are not limited to borrowings  from banks.  Issuance of senior
securities or preferred  stock can cause a fund's net asset value to become more
volatile.  The Fund has not issued senior  securities and/or preferred stock but
may in the future if it remains closed-end.

         SHAREHOLDER  PRIVILEGES.  Shareholders  of the Fund  currently have the
option of  participating in the Fund's Dividend  Reinvestment  Plan, under which
cash  distributions  paid by the  Fund  are  generally  reinvested  through  the
purchase of additional fund shares at market prices (which  currently  reflect a
discount from net asset value). At times when the Fund's shares are trading at a
premium over their net asset value, such reinvestments are made at the higher of
net asset value or 95% of market value.  If the Fund were to convert to open-end
status,  shareholders  would no longer be able to reinvest  dividends at a price
below  net  asset  value  per  share.  Upon  conversion  to  an  open-end  fund,
shareholders will have an exchange privilege available to them.  Shareholders of
the Fund currently do not have that  privilege.  Currently,  All-Star Growth and
Income Fund is the only open-end  All-Star fund available to  shareholders.  Any
direct exchange privileges would be limited to that fund.



IV.      THE  POSSIBLE CONSEQUENCES RESULTING FROM CONVERSION OF
         ALL-STAR TO OPEN-END STATUS

         In addition  to those  matters  described  above,  shareholders  should
consider  the  following  possible  consequences  of  conversion  of the Fund to
open-end status:

         Closed-end funds operate with a relatively fixed capitalization,  while
the  capitalization  of open-end funds fluctuates  depending on whether the Fund
experiences net sales or net redemptions of its shares. Accordingly, if the Fund
were to convert to an open-end  fund,  it is possible  that the Fund's  managers
would be subject to pressures to sell  portfolio  securities at times when their
investment styles would indicate that they should be investing, and to invest in
new portfolio  securities when their investment  styles would indicate that they
should be  reducing  the Fund's  exposure to the market.  In a  closed-end  fund
structure,  the Fund's  managers are able to ride through  market swings without
being  pressured  to  invest  new  money  or  liquidate  portfolio  holdings  at
inopportune  times,  and can  manage  their  portion  of the Fund with a greater
emphasis on long-term considerations

         One  advantage  to an  open-end  fund  structure  is the  ability of an
open-end fund to quickly take advantage of new investment opportunities. Withers
assets  fully  invested,  a  closed-end  fund would need to  liquidate  all or a
portion  of its  position  in  various  portfolio  securities  in  order to take
advantage of new investment  opportunities  (unlike open-end funds that may have
cash available).  However, closed-end funds, such as the Fund, do not experience
the  unpredictable  cash flows  associated  with net sales or net redemptions of
open-end fund shares.  Consequently,  the manager of a closed-end  fund does not
have to invest additional cash from new sales at time when market conditions are
unfavorable or to sell securities at inopportune times to meet  redemptions.  As
stated above,  significant  redemptions following a conversion would require the
Fund to sell portfolio securities,  significantly reducing the asset size of the
Fund. These transactions involve brokerage and other transaction costs and could
result in the recognition of capital gains for federal income tax purposes. Such
costs and liabilities  would be borne by all shareholders  remaining,  except to
the extent that the Directors  impose a temporary  redemption  fee, as described
below.

         The Directors  believe that, in deciding  whether to open-end the Fund,
the performance of the Fund is an important factor to consider.  Currently,  the
Fund's  shares are selling at a discount to net asset  value.  Conversion  to an
open-end  fund would  eliminate  any  possibility  of a discount,  thus assuring
shareholders of the ability to redeem at net asset value.  However,  in light of
the Fund's long-term performance,  the Directors do not believe that eliminating
the  possibility  of a discount  justifies the  fundamental  changes which would
result from open-end status,  including the loss of the investment advantages of
closed-end status and the likelihood of increased operating expenses and taxable
gains.

         Furthermore,  although the current size of the Fund's discount may seem
to provide a powerful  basis for  converting  the Fund to open-end  status,  the
discount  offers a  positive  feature.  Under the  Fund's  current  distribution
policy,  all of the Fund's  distributions  have been  declared  payable in newly
issued shares to all  shareholders  except those who do not  participate  in the
Fund's


     Dividend  Reinvestment  Plan and who elect to receive  cash.  For the three
year period ending  December  1999,  more than half of the Fund's  shareholders
have re-invested  their  distributions  and are purchasing  more than a dollar
of net assets for every dollar re-invested, while paying no brokerage commission
on the additional shares.

         The  Directors  believe that most  shareholders  of the Fund  purchased
their shares with a long-term investment perspective that recognizes the special
advantages of the closed-end structure. In addition, many shareholders purchased
their fund shares at a discount and have not been as  adversely  affected by the
current  discount.  Some  shareholders  may be more  disadvantaged  than  others
depending on when they purchased  their shares.  Consequently,  the Directors do
not  believe  that  the  recent  history  of  greater  discounts,  which  may be
temporary,  should  be viewed  as  grounds  for  depriving  shareholders  of the
advantages of the closed-end structure.

         Finally,  if shareholders vote to convert the Fund to an open-end fund,
then the Directors have approved the  implementation  of a temporary  redemption
fee of up to 2.0% of the value of shares redeemed for a period of up to one year
following the Fund's conversion to an open-end investment company. The Directors
have approved the  imposition of this fee because they believe that  immediately
following a conversion to open-end  status,  significant  redemptions  of shares
would  disrupt  long-term  portfolio  management  of the  Fund  and  dilute  the
interests of the  remaining  shareholders.  Imposition  of a  redemption  fee is
intended to compensate  remaining  long-term  shareholders  for the costs of the
liquidation  of a significant  percentage of the Fund's  portfolio as well as to
deter certain redemptions.

V.       MEASURES TO BE ADOPTED IN THE EVENT SHAREHOLDERS VOTE TO CONVERT THE
FUND TO OPEN-END STATUS

         In the  event  that  shareholders  vote  to  convert  the  Fund  from a
closed-end  fund to an open-end fund, a number of additional  actions would need
to be taken  not  only to  effect  the  conversion  of the  Fund to an  open-end
investment  company  but also to allow  the fund to  operate  effectively  as an
open-end investment company.

         DISCONTINUATION  OF 10% PAYOUT POLICY.  The Fund currently has a policy
of paying distributions on its common shares totaling 10% of its net asset value
per year,  payable  in four  quarterly  distributions  of 2.5% of the Fund's net
asset  value  at the  close of the NYSE on the  Friday  prior to each  quarterly
declaration  date. If total  distributions  under the 10% pay-out policy for any
calendar year exceed the Fund's net investment  income and net realized  capital
gains for that year,  the excess is  generally  treated as a tax-free  return of
capital (up to the amount of the shareholder's basis in his or her shares), thus
reducing  the  shareholder's  basis  in the  shares  and  increasing  his or her
potential gain or reducing his or her potential loss on the sale of the shares.

         The Board of Directors  believes that a 10% distribution  policy is not
appropriate to an open-end  investment  company because of the need for open-end
funds to maintain  higher cash reserves to meet  redemptions and the need of the
Fund  managers  to  manage   continuous   in-flows  and  out-flows  of  capital.
Accordingly,  in the event  shareholders vote to convert the Fund to an open-end
fund,  the Fund's  10%  distribution  policy  would be  discontinued.  Like most
investment  companies,  the Fund would make  distributions of its net investment
income and net realized gains, if any.

         REDEMPTION  FEE.  In order to reduce the number of  redemptions  of the
Fund's shares immediately  following conversion (thereby reducing any disruption
of the Fund's  normal  portfolio  management),  and to offset the  brokerage and
other  costs  of such  redemptions,  for a  period  of one  year  following  the
conversion to an open-end  fund, the Fund will impose a fee of up to 2.0% of the
redemption  proceeds payable to the Fund on all redemptions  (whether in cash or
in kind subject to the  discretion of the Directors to waive the fee for certain
in kind redemptions).

         REDEMPTIONS  IN KIND.  The Board of Directors has reserved the right to
meet redemptions occurring during the first year following the Fund's conversion
to an  open-end  fund by  delivering  the  Fund's  portfolio  securities  to the
redeeming shareholder in kind, rather than paying cash. Such redemptions in kind
would shift the brokerage cost of liquidating the portfolio  securities from the
Fund to the redeeming  shareholder,  and, to the extent  appreciated  securities
were  delivered,  would avoid the  recognition  of capital  gains by the Fund. A
shareholder  receiving  redemption  in kind  during  the  first  year  following
conversion may still be liable for a redemption fee.

         UNDERWRITING  AND  DISTRIBUTION.  If  conversion to an open-end fund is
approved, Liberty Funds Distributor,  Inc. (LFDI), an affiliate of Liberty Asset
Management,  would become the principal  underwriter  of the shares of the Fund.
The  shares  would  be  offered  and  sold  directly  by LFDI  and by any  other
broker-dealers who enter into selling agreements with LFDI, although there is no
assurance  that  LFDI or any such  other  broker-dealer  firms  would be able to
generate sufficient sales of fund shares to offset redemptions,  particularly in
the initial months following conversion.

         Fund  shares  would be  offered at their NAV plus a sales  charge.  The
sales  charges for Class A shares would not exceed 5.75% of the offering  price.
In the  event  that  the  proposal  to  convert  the Fund to an open end fund is
approved,  the initial  sales charge for Class A shares will be waived for those
shareholders   remaining  in  the  fund  (and  for  shares   purchased   through
reinvestment  of  dividends).  Additional  purchases  of Class A shares  will be
subject to a sales charge.  It is further  anticipated that Class B and C shares
will  charge a CDSC of 5.00% and 1.00%  respectively.  These  charges  will only
apply if the shares are sold within a specific period of time.

         The Board of Directors has also adopted and recommended to shareholders
that they approve a distribution  plan to take effect if the requisite number of
shareholders  vote to convert the Fund to an open-end  fund (see Proposal 2). In
implementing the distribution plan, the fund would create three separate classes
of shares each with varying loads and expenses (see above  description  of Class
A, B, and C Shares loads and expenses). Pursuant to the plan, the Fund would pay
to LFDI an annual service fee of 0.25% on net assets of Class A, B, and C shares
and annual distribution fees of up to 0.75% of the Fund's net assets for Class B
and C shares.  Shareholders  remaining in the Fund will be issued Class A Shares
without the Class A Shares sales charge.

         AMENDMENT  AND  RESTATEMENT  OF ALL-STAR'S  ARTICLES OF  INCORPORATION.
Conversion  of the Fund from a  closed-end  to an  open-end  fund would  require
certain  changes  to the Fund's  Articles  of  Incorporation.  The  Articles  of
Incorporation  would be  amended  to  require  the Fund to  purchase  all shares
offered  to it for  redemption  at a price  equal to the net asset  value of the
shares next  determined,  less any  redemption  charge  fixed by the  Directors.
Notwithstanding   this   provision,   all  shares  would  be   redeemable  at  a
shareholder's option.

         The  Articles  of  Incorporation  would  also  be  amended  to  include
provisions  commonly  found in the  governing  documents of open-end  investment
companies.  Specifically,  the  Articles  of  Incorporation  would be amended to
authorize the issuance of additional  series of shares and classes  thereof from
time to time as the Directors in their  discretion  may  determine.  Each series
would have its own investment objective, policies and restrictions and shares of
each series would represent interests in separate investment portfolios, each of
which would be accounted  for  separately on the books of the  Corporation  with
respect  to  income,  earnings,   profits,   proceeds,  assets  and  liabilities
attributable  to that  series.  Shares of each series  would be entitled to vote
separately to approve  investment  advisory  agreements,  changes in fundamental
investment  restrictions and distribution  plans, but shares of all series would
vote together on the election of Directors and the ratification of the selection
of  accountants.  Classes of a series would have such  preferences or special or
relative rights,  and privileges as the Directors may determine,  and each class
would vote separately on issues that relate exclusively to that class.

         The  Articles of  Incorporation  would be further  amended to eliminate
certain  provisions that relate  specifically to the Fund's  closed-end  status,
such as the conversion,  voting  percentage and other provisions  relating to an
open-ending.

         Finally,   the  Directors   would  also  make  certain   technical  and
non-material  changes to the Articles of Incorporation and conforming changes to
the Fund's  Bylaws if the  shareholders  vote in favor of the  conversion of the
Fund to an open-end fund.

         Therefore,  a vote in favor of converting  the Fund to open-end  status
would also authorize the Directors to amend the Fund's Articles of Incorporation
to reflect such changes.

VI.  IF THE CONVERSION IS NOT APPROVED

         In the event that  shareholders  do not approve the  conversion  of the
Fund to open-end status, the Fund would continue as a closed-end fund.

THE DIRECTORS  BELIEVE THAT THE CONTINUED  OPERATION OF THE FUND AS A CLOSED-END
INVESTMENT  COMPANY IS IN THE BEST  LONG-TERM  INTERESTS  OF  SHAREHOLDERS,  AND
UNANIMOUSLY  RECOMMEND  A VOTE  AGAINST THE  CONVERSION  OF ALL-STAR TO OPEN-END
STATUS AT THIS TIME.

Required Vote

         Approval of the  conversion  of the Fund to open-end  status and of the
related  amendments  to the Fund's  Articles of  Incorporation  will require the
"yes" vote from holders of 66 2/3rds  percent of the  outstanding  shares of the
Fund's Common Stock.

         If such conversion is approved,  the conversion  would become effective
following  compliance with all necessary  regulatory  requirements under federal
and  state  law.  The  Fund  would  seek to  complete  this  process  as soon as
reasonably  practicable,  but it is  estimated  that this process may require at
least several months.

THE BOARD OF DIRECTORS UNAMIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
AGAINST PROPOSAL 1.

PROPOSAL 2.  APPROVAL OF DISTRIBUTION PLAN

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL
REGARDLESS OF HOW YOU VOTE ON PROPOSAL 1.  THIS PROPOSAL WILL BE EFFECTIVE ONLY
 IF OPEN-ENDING IS APPROVED

         The Fund's Board of Directors  has  approved a  Distribution  Plan (the
"Plan") and 12b-1 Plan Implementing Agreement (Agreement) pursuant to Rule 12b-1
under the Investment  Company Act to take effect if, and only,  if,  contrary to
the  recommendation  of the  Directors,  the  shareholders  of the Fund  vote to
convert  the Fund to an  open-end  investment  company.  Copies  of the Plan and
Agreement are attached to this proxy statement as Appendix A.

         Under the Plan,  the Fund would be  authorized to pay to LFDI a service
fee,  accrued daily and paid monthly,  at an annual rate of 0.25% for Class A, B
and C shares  and a  distribution  fee of 0.75%  for Class B and C shares of the
Fund's average daily net assets,  regardless of the amount of expenses  incurred
by LFDI, to compensate  LFDI for its activities and expenses  intended to result
in  the  sale  of  shares  of the  Fund,  including  expenses  of  printing  and
distributing prospectuses used for sales purposes,  preparation and distribution
of sales  literature,  advertising  and marketing  expenses,  interest  expense,
promotional  incentives and other compensation paid to its employees or to other
dealers that sell shares of the Fund, and payments to financial institutions and
other  third  parties.  Amounts  payable  by the Fund under the Plan would be in
addition to any sales charge  payable by investors in connection  with purchases
of shares of the Fund. Shareholders of the Fund will have their shares converted
to Class A shares of the  open-end  fund and will not be subject to the  initial
Class A sales charge on converted shares.

         The shares would be offered and sold  directly by LFDI and by any other
broker-dealers who enter into selling agreements with LFDI ("broker-dealers"). A
service fee will be paid to LFDI (or  broker-dealers)  for promoting the sale of
shares and the  retention of assets and for  furnishing  continuing  service and
assistance to Fund  shareholders.  The Fund will pay LFDI any applicable service
fees  quarterly on Fund shares for which LFDI (or  broker-dealers)  is the named
dealer of record of the shareholder as of the time such services are determined.
If  payments to LFDI under the Plan  together  with such sales  charges  were to
exceed  its  distribution  expenses,  LFDI  would  realize  a profit  from  such
distribution  activities.  The Board of Directors  believes that, if the Fund is
converted to an open-end investment company, the Plan would be reasonably likely
to benefit the Fund and its shareholders  through stimulating sales of shares of
the Fund,  thereby tending to offset  redemptions  that are likely to occur upon
conversion and avoiding a shrinkage in the Fund's size,  with the attendant loss
of economies of scale and investment flexibility.

         There is no assurance  that the Plan would succeed in enabling the Fund
to avoid  substantial  net redemptions  following its  conversion,  and the fees
payable  pursuant to the Plan (up to a maximum of the Fund's average net assets)
would add to its  expenses and reduce the value of a  shareholder's  account and
the Fund's net investment income available for distribution.

         If  shareholders  vote to convert  the Fund to an  open-end  investment
company  (Proposal 1) and the Plan is approved by  shareholders,  the Plan would
remain in effect for one year from the date of its adoption,  and would continue
in effect thereafter only if such continuance is specifically  approved at least
annually  by vote of both a majority  of the  Directors  and a  majority  of the
Directors  who are not  "interested  persons"  of the  Fund (as  defined  in the
Investment Company Act) and who have no direct or indirect financial interest in
the  operation  of the  Plan  or in any  agreements  related  to it  ("Qualified
Directors").

         The Plan would be  terminable  at any time by vote of a majority of the
Qualified  Directors  or  by  vote  of a  majority  of  the  outstanding  voting
securities (as defined below).  If the Plan were terminated or not renewed,  the
Fund would owe no amounts to LFDI under the Plan other than unpaid  distribution
fees accrued through the date of the Plan's termination or expiration,  and LFDI
would  have no right to  recover  its  distribution  expenses  in  excess of the
accrued distribution fee and amounts due through sales charges.

         The Plan  could not be  amended to  increase  materially  the amount of
distribution  expenses permitted thereunder without the approval of shareholders
and could not be materially amended in any way without a vote of the majority of
both the Directors and the Qualified Directors.

         Rule 12b-1  requires that the selection and nomination of Directors who
are not "interested  persons" of the Fund be committed to the discretion of such
disinterested  Directors.  In addition,  as required by the Rule, if the Plan is
approved and  implemented,  the Directors  would review on a quarterly basis the
amounts  expended by the Fund  pursuant to the Plan and the  purposes  for which
such expenditures were made.

         The Plan  will not be  implemented  unless  shareholders  vote  both to
convert the Fund to an open-end  investment company (Proposal 1) and approve the
Plan (Proposal 2).

Required Vote

         Approval of this proposal  requires the affirmative vote of a "majority
of the  outstanding  voting  securities"  of the Fund. The term "majority of the
outstanding  voting   securities,"  as  defined  in  the  1940  Act,  means  the
affirmative  vote of the lesser of (1) 67% of the voting  securities of the Fund
present at the  meeting if more than 50% of the  outstanding  shares of the Fund
are present in person or by proxy or (2) more than 50% of the outstanding shares
of the Fund.

THE BOARD OF  DIRECTORS  UNANIMOUSLY  RECOMMENDS  THAT YOU VOTE FOR  PROPOSAL  2
REGARDLESS OF HOW YOU VOTE ON PROPOSAL 1. THIS  PROPOSAL WILL BE EFFECTIVE  ONLY
IF OPEN-ENDING IS APPROVED.

PROPOSAL 3.  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 James E. Grinnell and John J.  Neuhauser
as the  Directors  to hold  office  until the final  adjournment  of the  Annual
Meeting of Shareholders  for the year 2003 (or special meeting in lieu thereof).
Messrs.  Grinnell and Neuhauser have served as Directors  since May 27, 1994 and
April 23, 1998, respectively.  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 either
of Messrs.  Grinnell 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:
<TABLE>
<CAPTION>
                                                                                                               Fund Shares
Name/Age and Address                          Principal Occupation During Past Five Years                      Owned(1)
<S>                                           <C>                                                              <C>
James E. Grinnell (Age 70)(2)                 Private investor (since November, 1988); President and Chief
22 Harbor Avenue                              Executive Officer, Distribution Management Systems, Inc. (1983
Marblehead, MA  01945                         to May, 1986); Senior Vice President-Operations, The Rockport
                                              Company,  importer and distributor
                                              of shoes (May,  1986 to  November,
                                              1988).
                                                                                                               1,404

John J. Neuhauser(2) (Age 56)                 Academic Vice President and Dean of Faculties, Boston College
84 College Road                               (since August, 1999); Dean, Boston College School of
Chestnut Hill, MA  02467-3838                 Management (September, 1977 to September, 1999).  Director of
                                              Hyde Athletic Industries, Inc. (athletic footwear).                111
</TABLE>

         The following  Directors continue to serve in such capacity until their
terms of office expire and their successors are elected and qualified:
<TABLE>
<CAPTION>
                                                                                                               Fund Shares
Name/Age and Address                          Principal Occupation During Past Five Years                      Owned(1)
<S>                                           <C>                                                              <C>
Robert J. Birnbaum (Age 72)(2)                Retired (since January, 1994); Special Counsel, Dechert, Price
313 Bedford Road                              & Rhoads (September, 1988 to December, 1993); President and
Ridgewood, NJ  07450                          Chief Operating Officer, New York Stock Exchange, Inc. (May,
                                              1985 to June, 1988).  Director of  Dresdner RCM Europe Fund
                                              (investment company); Director, Options Exchange Board

                                                                                                               3,297

John V. Carberry (Age 53)(3)                  Senior Vice President, Liberty Financial Companies, Inc.
Liberty Financial Companies, Inc.             (since February, 1998); Managing Director, Salomon Brothers,
600 Atlantic Avenue                           Inc. (December, 1974 to February, 1998).
Boston, MA  02210                                                                                             1,089
</TABLE>


<PAGE>


<TABLE>
<CAPTION>
                                                                                                               Fund Shares
Name/Age and Address                          Principal Occupation During Past Five Years                      Owned(1)
<S>                                           <C>                                                              <C>
Richard W. Lowry(2) (Age 63)                  Private investor (since August, 1987); Chairman and Chief
10701 Charleston Drive                        Executive Officer, U.S. Plywood Corporation, manufacturer and
Vero Beach, FL  32963                         distributor of wood products (August, 1985 to August, 1987).
                                                                                                               1,263(4)

William E. Mayer (Age 59)                     Partner, Development Capital, LLC (since December, 1996);
500 Park Avenue, 5th Floor                    Dean, College of Business and Management, University of
New York, NY  10022                           Maryland (October, 1992 to November, 1996). Director, Johns
                                              Manville Corporation (building products) and Lee Enterprises.      500
</TABLE>
- -----------------------
(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) "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.

(4) Held by the trustee of a trust of which Mr. Lowry is the sole beneficiary.

         The term of office of Mr. Lowry will expire on final adjournment of the
Annual  Meeting (or special  meeting in lieu thereof) in the year 2001,  and the
term of office of Messrs.  Birnbaum,  Carberry  and Mayer  will  expire on final
adjournment  of the Annual  Meeting (or special  meeting in lieu thereof) in the
year 2002.  Mr. Lowry has served as a Director  since May 27, 1994,  and Messrs.
Birnbaum,  Carberry and Mayer have served as Directors  since  November 6, 1995,
June 30, 1998 and December 17, 1998, respectively.  Messrs. Birnbaum,  Carberry,
Grinnell, Lowry, Mayer and Neuhauser are also trustees of Liberty Funds Trusts I
through VII (the "Liberty  Trusts"),  the umbrella trusts for an aggregate of 63
open-end funds (the "Colonial Funds") managed by Colonial Management Associates,
Inc.  ("Colonial"),  or other  affiliates  of Liberty  Asset  Management,  eight
closed-end funds managed by Colonial (the "Colonial Closed-End Funds"),  Liberty
Funds Trust VIII, an open-end  investment company managed by Stein Roe & Farnham
Incorporated, another affiliate of Liberty Asset Management, Liberty Funds Trust
IX, the umbrella trust for Liberty  All-Star Growth and Income Fund, an open-end
multi-managed  fund managed by Liberty  Asset  Management  and Liberty  Variable
Investment  Trust ("LVIT"),  the umbrella trust for 12 open-end funds managed by
Colonial  or its  affiliates  that serve as  investment  vehicles  for  variable
annuities and variable life  insurance  products,  and Liberty  All-Star  Equity
Fund, another closed-end multi-manager fund managed by Liberty Asset Management.

         During 1999 the full Board of Directors of the Fund held four meetings,
and the Audit Committee, which is comprised of all the Directors who are not
"interested persons" of the Fund, met three times.  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

         Beginning  January  1,  1999,  the  aggregate  of the fees paid to each
Director by the Fund and by Liberty  All-Star  Equity Fund and Liberty  All-Star
Growth and Income Fund, two other investment  companies managed by Liberty Asset
Management  that have the same  Board of  Directors  as the Fund and hold  their
meetings  concurrently  with those of the Fund,  consists of  Directors  fees of
$125,000  per  annum,  assuming  a  minimum  of four  meetings  are held and all
meetings are attended.  One third of the retainer and the fees for  concurrently
held meetings will be allocated  among the Fund and the two other funds on a per
fund basis, and the remaining two thirds will be allocated among the three funds
based on their net assets.

         The following  table shows,  for the year ended  December 31, 1999, 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 Boards of  Trustees  of the  Liberty  Trusts,  the  Colonial
Closed-End  Funds,  Liberty  Funds Trust VIII,  Liberty Funds Trust IX, LVIT and
Liberty  All-Star  Equity Fund (the  "Liberty  Funds  Complex")  comprised of an
aggregate  of 71 funds  (including  the  Fund).  The Fund has no  bonus,  profit
sharing or retirement plan.

                      Aggregate Compensation from      Total Compensation from
Name                    the Fund                       the Liberty Funds Complex
                                                       (including the Fund)
Robert J. Birnbaum        $5,033                              $122,000
John V. Carberry            -0-                                 -0-
James E. Grinnell         $5,033                              $125,000
Richard W. Lowry          $5,033                              $122,000
William E. Mayer          $5,033                              $126,000
John J. Neuhauser         $5,033                              $126,252

Officers

         The following  are the  executive  officers of the Fund, in addition to
Mr. John V. Carberry who serves as Chairman of the Board of Directors.
<TABLE>
<CAPTION>
                                                                           Principal Occupation During
Name/Age and Address                             Position with Fund         Past Five Years
<S>                                              <C>                        <C>
William R. Parmentier, Jr. (Age 47)              President, Chief           President and Chief Executive Officer (since
Liberty Asset Management Company                 Executive                  June, 1998) and Chief Investment Officer (since
600 Atlantic Avenue                              Officer and Chief          May, 1995), Senior Vice President (May, 1995 to
Boston, MA  02210                                Investment Officer         June, 1998), Liberty Asset Management; Consultant
                                                                            (October, 1994 to May, 1995); President, GQ Asset
                                                                            Management, Inc. (July, 1993 to October, 1994);
                                                                            Assistant Treasurer, Grumman Corporation
                                                                            (December, 1974 to July, 1993).

</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                                                                            Principal Occupation During
Name/Age and Address                             Position with Fund         Past Five Years
<S>                                              <C>                        <C>
Christopher S. Carabell (Age 36)                 Vice President             Senior Vice President - Product Development and
Liberty Asset Management Company                                            Marketing (since January, 1999), Vice
600 Atlantic Avenue                                                         President-Investments, Liberty Asset Management
Boston, MA  02210                                                           (March, 1996 to January, 1999); Associate
                                                                            Director, U.S. Equity Research, Rogers Casey
                                                                            & Associates, investment consultants
                                                                            (January, 1995 to February, 1996); Director
                                                                            of Investments, Boy Scouts of America (June, 1990
                                                                            to January, 1995).

Mark T. Haley (Age 35)                           Vice President             Vice President-Investments (since
Liberty Asset Management Company                                            January, 1999), Director of Investment
600 Atlantic Avenue                                                         Analysis (December, 1996 to December, 1998),
Boston, MA 02210                                                            Investment Analyst (Januay, 1994 to November, 1996),
                                                                            Liberty Asset Management.

Joseph R. Palombo (Age 46)                       Vice President             Vice President, Liberty Trusts (since April,
Liberty Funds Group                                                         1999); Executive Vice President and Director,
One Financial Center                                                        Colonial (since April, 1999); Executive Vice
Boston, MA 02111                                                            President and Chief Administrative Officer,
                                                                            Liberty Funds Group LLC (LFG)(since April, 1999);
                                                                            Managing Director, Putnam Investments (from December,
                                                                            1993 to January, 1999).

Timothy J. Jacoby (Age 47)                       Treasurer                  Treasurer and Chief Financial Officer, Liberty
Liberty Funds Group                                                         Trusts (since October, 1996); Senior Vice
245 Summer Street                                                           President (since September, 1996), Chief
Boston, MA  02111                                                           Financial Officer and Treasurer (July, 1997 to
                                                                            December, 1999), Colonial; Senior Vice President,
                                                                            Fidelity Accounting and Custody Services(October,
                                                                            1993 to September, 1996); Assistant Treasurer,
                                                                            Fidelity Group of Funds (August, 1990 to September,
                                                                            1993).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                            Principal Occupation During
Name/Age and Address                             Position with Fund         Past Five Years
<S>                                              <C>                        <C>
J. Kevin Connaughton (Age 35)                    Controller                 Controller and Chief Accounting Officer, Liberty
Liberty Funds Group                                                         Trusts and Vice President, Colonial (since
245 Summer Street                                                           February, 1998); Senior Tax Manager, Coopers &
Boston, MA  02210                                                           Lybrand, LLP (April, 1996 to January, 1998); Vice
                                                                            President, 440 Financial Group/First Data Investor
                                                                            Services Group (March, 1994 to April, 1996); Vice
                                                                            President, The Boston Company (subsidiary of Mellon
                                                                            Bank) (December, 1993 to March, 1994).

Nancy L. Conlin (Age 46)                         Secretary                  Secretary, Liberty Trusts (since April, 1998);
Liberty Funds Group                                                         Assistant Secretary, Liberty Trusts (July, 1994
One Financial Center                                                        to April, 1998); Director, Senior Vice President,
Boston, MA 02111                                                            General Counsel, Clerk and Secretary, Colonial
                                                                            (since April, 1998);  Vice President, Counsel,
                                                                            Assistant Secretary and Assistant Clerk, Colonial
                                                                            (July, 1994 to April, 1998); Vice President,
                                                                            General Counsel and Secretary, LFG (since December,
                                                                            1998); Vice President, General Counsel and Clerk,
                                                                            LFG (April, 1998 to December, 1998); Assistant
                                                                            Clerk, LFG (July, 1994 to April,1998).
</TABLE>

         Mr.  Carberry  has served as Chairman of the Board since June 30, 1998;
Mr.  Parmentier  has served as  President,  Chief  Executive  Officer  and Chief
Investment  Officer  since April 29,  1999;  Mr.  Carabell was elected as a Vice
President on April 17, 1997, and Messrs.  Haley and Palombo were elected as Vice
Presidents on April 29, 1999,  respectively;  Mr. Jacoby was appointed Treasurer
effective October 10, 1996; Mr.  Connaughton was elected Controller on April 23,
1998; and Ms. Conlin has served as Secretary  since April 29, 1999. Mr. Carberry
is a Trustee of, and Ms. Conlin and Messrs. Jacoby and Connaughton hold the same
offices with,  Liberty  All-Star Equity Fund, the Liberty  Trusts,  the Colonial
Closed-End Funds, LVIT, Liberty Funds Trust VIII and Liberty Funds Trust IX, and
Messrs.  Carabell,  Haley and  Parmentier  hold the same  offices  with  Liberty
All-Star Equity Fund and Liberty Funds Trust IX. Each officer of the Fund serves
at the pleasure of the Board of Directors.

Required Vote

         A  plurality  of  the  votes  cast  at  the  Meeting,  if a  quorum  is
represented, is required for the election of each Director.



PROPOSAL 4.  TO APPROVE PORTFOLIO MANAGEMENT AGREEMENT WITH
                     M.A. WEATHERBIE & CO., INC.

Background - The Multi-Manager Methodology

         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.

New Portfolio Manager

         Effective May 1, 1999, M.A. Weatherbie & Co., Inc. replaced
Mississippi Valley Advisors, Inc. (Mississippi Valley), a Portfolio Manager
 since January 2, 1996.  Under the terms of an exemptive order issued to
the Fund and Liberty Asset Management by the Securities and Exchange Commission
the Fund may enter into a portfolio management agreement with a new or
additional Portfolio Manager recommended by Liberty Asset Management, in advance
of shareholder approval, or enter into a new portfolio management agreement
with a Portfolio Manager or its successor, 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
M.A. Weatherbie & Co., Inc. is being submitted for shareholder approval
at the Meeting.

         Mississippi   Valley's   investment   style  is  to   invest  in  small
capitalization growth companies that sell at a reasonable current price relative
to their  projected  growth  rates.  Liberty  Asset  Management  in  early  1999
determined  to recommend  the  replacement  of  Mississippi  Valley with another
Portfolio Manager  practicing a similar small  capitalization  growth investment
style focusing more on a growth-oriented  style.  Liberty Asset Management first
analyzed information regarding the personnel, investment process and performance
of a large number of investment  management  firms practicing such an investment
style,  ultimately reducing the number of potential  candidates to four. Liberty
Asset  Management  then analyzed the four  candidates in terms of their historic
returns,  volatility and portfolio  characteristics  when combined with those of
the Fund's two other Portfolio Managers. In making its recommendation, the Board
has relied upon and given equal  consideration to each of the factors  presented
to them by Liberty Asset Management. Based on the foregoing and on Liberty Asset
Management's qualitative analysis, Liberty Asset Management recommended, and the
Board of Directors on April 29, 1999  approved,  the  termination  of the Fund's
portfolio  management agreement with Mississippi Valley and its replacement with
M.A. Weatherbie & Co., Inc., effective May 1, 1999.


         M.A. Weatherbie & Co., Inc. (Weatherbie), a registered investment
advisor, located at 265 Franklin Street, Boston, MA 02110, was founded in 1995
by Matthew A. Weatherbie.  Mr. Weatherbie is the principal officer and he
serves as President of Weatherbie and manages that portion of the Fund's
portfolio assigned to Weatherbie.  Prior to founding Weatherbie, Mr. Weatherbi
was a Managing Director at Putnam Investments (Putnam).  From 1983 until 1995,
Mr. Weatherbie managed the Putnam Voyager Fund during the time it grew from $200
million in assets to more than $5 billion in assets.  Mr. Weatherbie was also
founding Chief Investment Officer of Putnam's Specialty Growth Equities Group,
responsible for the firm's aggressive growth investments, which
totaled $13 billion at the time of his departure from Putnam.  Mr. Weatherbie
has over 26 years of investment experience.  As of December 31, 1999, Weatherbie
managed over $374 million in assets.

         Reference is made to MANAGEMENT - Portfolio  Transactions and Brokerage
below for the direction by the Fund's Portfolio Managers,  including Weatherbie,
of Fund portfolio  transactions  to  broker-dealers  that make certain  research
services available to Liberty Asset Management.

         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 Weatherbie is
being submitted for shareholder approval at the Meeting.

Terms of Portfolio Management Agreement with Weatherbie

         The portfolio  management  agreement with Weatherbie is at the same fee
rates and is on other terms and conditions substantially similar to those of the
portfolio management  agreements with the Fund's two other Portfolio Managers. A
copy of the portfolio  management  agreement with Weatherbie is attached to this
proxy statement as Appendix B.

         Under the Fund's portfolio management  agreements  (including that with
Weatherbie),  each  Portfolio  Manager has  discretionary  investment  authority
(including  the selection of brokers and dealers for the execution of the Fund's
portfolio  transactions)  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.

         From the fund  management  fees it  receives  from the Fund  (0.80% per
annum of the Fund's average weekly net asset value up to $300 million, and up to
0.72% per annum of the Fund's  average  weekly net asset value in excess of $300
million).  Liberty  Asset  Management  pays each  Portfolio  Manager a quarterly
portfolio  management  fee at the rate of .10% (.40%  annually) of the Portfolio
Manager's  Percentage  (as  defined in  Schedule C of Appendix B) of the average
weekly net assets of the Fund up to and including $300 million, and 0.09% (0.36%
annually) of the Portfolio Manager's Percentage of the average weekly net assets
of the Fund exceeding $300 million.  "Portfolio Manager's  Percentage" means the
percentage  obtained by dividing the average weekly net assets of the portion of
the Fund's assets assigned to that Portfolio  Manager by the total of the Fund's
average  weekly  net  assets.  For the  fiscal  year ended  December  31,  1999,
Weatherbie  received  $512,373.98 for its portfolio  management  services to the
Fund. As of December 31, 1999, the Fund's net assets were $216,180,552.

         If approved by  shareholders at the Meeting,  the Portfolio  Management
Agreement  with  Weatherbie  will remain in effect until July 31, 2000, and will
continue  thereafter  until  terminated  by the Fund or the  Portfolio  Manager,
provided  such  continuance  is  approved  at  least  annually  by the  Board of
Directors,  including a majority of the independent Directors, or by the vote of
a "majority of the  outstanding  voting  securities"  (as defined under Required
Vote below) of the Fund.

Required Vote

         Approval of the portfolio management agreement with Weatherbie 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
portfolio management agreement with Weatherbie, the agreement will terminate and
Liberty Asset  Management  will cause the portfolio  assets under  management by
Weatherbie to be reallocated to one or more of the other  Portfolio  Managers or
invested in money market  instruments or other cash equivalent  holdings pending
the reappointment of Weatherbie or the appointment of a new Portfolio Manager.

         The Board of Directors  unanimously  recommends  that the  shareholders
vote FOR approval of the portfolio management agreement with Weatherbie.

  PROPOSAL 5.  TO APPROVE A NEW PORTFOLIO MANAGEMENT
               AGREEMENT WITH OPPENHEIMER CAPITAL WHICH WILL
               REPLACE THE CURRENT PORTFOLIO MANAGEMENT AGREEMENT
               WHICH WILL TERMINATE UPON CHANGE IN CONTROL OF
               ALLIANZ AG

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  analyzes  and
evaluates the  investment  performance  and  portfolios of the Fund's  Portfolio
Managers and from time to time recommends changes in the Portfolio Managers.

         One of the Fund's Portfolio Managers, Oppenheimer Capital, will undergo
a change of control as a result of the consummation of the Transaction described
below  under  Description  of  the  Transaction,   resulting  in  the  automatic
termination of its Portfolio  Management  Agreement dated August 1, 1998.  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 December 15, 1999  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  will be  executed
effective with the closing of the change in control transactions.

         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.  A copy of
the  Portfolio  Management  Agreement  is  attached to this proxy  statement  as
Appendix C.

         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.  Following shareholder
approval on April 22, 1998,  the Fund entered  into a new  portfolio  management
agreement  with  Oppenheimer  Capital on August 1, 1998,  following  a change in
control.  As of December 31, 1999,  Oppenheimer  Capital had over $52 billion in
assets under management.  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. For the fiscal year ended December 31, 1999,
Oppenheimer Capital received  $785,531.48 for its portfolio  management services
to the Fund.

         See Appendix D 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.

         Description  of the  Transaction.  On October 31, 1999,  PIMCO Advisors
L.P. ("PIMCO Advisors"),  its two general partners, PIMCO Advisors Holdings L.P.
("PAH") and PIMCO Partners G.P.  ("Partners GP"),  certain of their  affiliates,
Allianz of America,  Inc. ("Allianz of America") and certain other parties named
therein  entered  into an  Implementation  and  Merger  Agreement  (the  "Merger
Agreement") pursuant to which Allianz of America will acquire majority ownership
of PIMCO Advisors.

         As a result of the transactions  contemplated by the Merger  Agreement,
Allianz  of  America  will  control  PIMCO   Advisors,   after  having  acquired
approximately  70% of the  outstanding  partnership  interests in PIMCO Advisors
(together,  the  "Transaction"),  while the  remainder  will continue to be held
indirectly by Pacific Life.  The  Transaction is expected to be completed by the
end of the  first  quarter  of 2000,  although  there is no  assurance  that the
Transaction will be completed.

         Oppenheimer  Capital,  an  indirect  wholly-owned  subsidiary  of PIMCO
Advisors,  located at 1345 Avenue of the Americas, New York, NY 10105 and serves
as investment  manager of the Fund.  Openheimer Capital will undergo a change of
control as a result of the  consummation  of the  Transaction,  resulting in the
automatic  termination of its current  Portfolio  Management  Agreement with the
Fund (the "Existing Portfolio  Management  Agreement").  Following completion of
the Transaction,  it is expected that Oppenheimer Capital will continue to serve
as  a  portfolio  manager  of  the  Fund.  Therefore,  in  connection  with  the
Transaction  and as required by the  Investment  Company Act of 1940, as amended
(the "1940  Act"),  shareholders  of the Fund are being  asked in  Proposal 5 to
approve  a  Portfolio  Management  Agreement  between  the Fund and  Oppenheimer
Capital which is substantially  identical to the Existing  Portfolio  Management
Agreement (the "New Portfolio Management Agreement").  If the Transaction is not
completed  for any reason,  the  Existing  Management  Agreement  will remain in
effect.

         Post-Transaction  Structure  and  Operations.  Upon  completion  of the
Transaction, PIMCO Advisors and its subsidiaries, including Oppenheimer Capital,
will be  controlled  by  Allianz  of  America.  Allianz  of America is a holding
company that owns several  insurance  and financial  service  companies and is a
subsidiary  of Allianz AG which,  together with its  subsidiaries,  comprise the
world's second largest insurance group as measured by premium income. Allianz of
America will control  PIMCO  Advisors  through its managing  member  interest in
PacPartners  LLC,  which  will be the sole  general  partner  of PIMCO  Advisors
following the  Transaction.  While  Allianz of America will control  PacPartners
LLC,  Pacific  Life will  hold a portion  of its  continuing  interest  in PIMCO
Advisors  through an interest in PacPartners  LLC.  Allianz of America,  through
subsidiaries,  will be the managing member of PacPartners LLC and will have full
authority and control over all actions taken by  PacPartners  LLC as the general
partner of PIMCO Advisors,  provided that Pacific Life's consent is required for
certain extraordinary actions.

         Operationally,  PIMCO  Advisors is expected to become a unit of Allianz
Asset  Management  ("AAM"),  the division of Allianz of America that coordinates
global  Allianz  group  asset  management  activities.  PIMCO  Advisors  and its
subsidiaries are currently  expected to continue to operate in the United States
under their existing names.


         Description  of Allianz and Its  Affiliates.  Allianz AG, the parent of
Allianz of America,  is a publicly traded German  Aktiengesellschaft  and which,
together with its  subsidiaries,  comprise the world's second largest  insurance
group as  measured  by  premium  income.  Allianz  AG is a leading  provider  of
financial  services,  particularly in Europe, and is represented in 68 countries
world-wide through  subsidiaries,  branch and representative  offices, and other
affiliated entities.  The Allianz group currently has assets under management of
more than $390  billion,  and in its last  fiscal year wrote  approximately  $50
billion in gross insurance premiums. After completion of the Transaction,  PIMCO
Advisors and the Allianz  group  combined  will have over $650 billion in assets
under management.  Allianz AG's address is: Koniginstrasse 28, D-80802,  Munich,
Germany.

         Affiliates of Allianz AG currently  include  Dresdner Bank AG, Deutsche
Bank AG,  Munich Re, and  HypoVereinsbank.  These  entities,  as well as certain
broker-dealers that might be deemed to be controlled by or affiliated with these
entities,  such as Bankers Trust Company, BT Alex. Brown Incorporated,  Deutsche
Bank  Securities,  Inc. and Dresdner  Kleinwort Benson North America LLC, may be
considered as "Affiliated Brokers". Once the Transaction is completed, absent an
SEC  exemption or other  relief,  the Fund would  generally  be  precluded  from
effecting principal transactions with the Affiliated Brokers, and its ability to
purchase securities from underwriting  syndicates including an Affiliated Broker
or to utilize the Affiliated Brokers for agency transactions would be subject to
restrictions.  Oppenheimer Capital does not believe that applicable restrictions
on  transactions  with the Affiliated  Brokers  described  above will materially
adversely affect its ability, post-closing, to provide services to the Fund, the
Fund's ability to take advantage of market opportunities,  or the Fund's overall
performance.

         Section 15(f) of the 1940 Act.  Section 15(f) provides a  non-exclusive
safe harbor for an investment  adviser or any affiliated  persons to receive any
amount or benefit  in  connection  with a change of  control  of the  investment
adviser to an investment company as long as two conditions are satisfied. First,
an "unfair  burden"  must not be imposed on  investment  company  clients of the
adviser  as a result  of the  transaction,  or any  express  or  implied  terms,
conditions or  understandings  applicable to the  transaction.  The term "unfair
burden"  (as  defined  in the 1940 Act)  includes  any  arrangement  during  the
two-year  period  after the  transaction  whereby  the  investment  advisor  (or
predecessor or successor advisor), or any "interested person" (as defined in the
1940 Act) (an "Interested Person") of any such adviser,  receives or is entitled
to receive any  compensation,  directly or  indirectly,  from such an investment
company  or its  security  holders  (other  than fees for bona  fide  investment
advisory or other  services)  or from any other  person in  connection  with the
purchase or sale of securities  or other  property to, from or on behalf of such
investment  company.  The Board of  Directors  of the Fund has been advised that
neither PIMCO  Advisors nor  Oppenheimer  Capital is aware of any  circumstances
arising from the Transaction that might result in an unfair burden being imposed
on the Fund.  Allianz and each of the other parties to the Agreement have agreed
to use their reasonable best efforts to assure  compliance with Section 15(f) as
it applies to the Transaction during such two-year period.

         The second  condition  of Section  15(f) is that during the  three-year
period after the  transaction,  at least 75% of each such  investment  company's
board of directors must not be Interested  Persons of the investment advisor (or
predecessor  or successor  advisor).  The Fund has been advised by LAMCO that an
unfair burden will not be placed on the Fund as at least 75% of the Fund's Board
of Directors  are  presently  not  "Interested  Persons" (as defined in the 1940
Act).

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.

The Board of Directors  unanimously  recommends that the  shareholders  vote FOR
approval of the portfolio management agreement with Oppenheimer Capital.

PROPOSAL 6.  RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

         By  vote  of  the  Board  of  Directors,  including  the  vote  of  the
non-interested  Directors,  the  firm of  PricewaterhouseCoopers  LLP  has  been
selected as independent  auditors for the Fund for the year ending  December 31,
2000. Such selection is being submitted to the  shareholders  for  ratification.
The employment of PricewaterhouseCoopers  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 September 30, 1999 and
PricewaterhouseCoopers  LLP is  completing  the Fund's  December 31, 1999 audit.
Prior to  September  30,  1999,  KPMG Peat  Marwick  LLP,  acted as  independent
auditors for the Fund since its commencement of operations in 1985.

         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
PricewaterhouseCoopers  LLP are expected to be present at the  Meeting,  will be
given the  opportunity  to make a statement if they should so desire and will be
available to respond to appropriate questions.

         On January 14, 1999,  PicewaterhouseCoopers  LLP consented to the entry
of an order of the Securities and Exchange Commission ("SEC") censuring the firm
for violations of the  independence  rules related to client stock  ownership by
certain    individuals   of   the   firm   and   persons    related   to   them.
PricewaterhouseCoopers  LLP also  agreed to  establish a $2.5  million  fund for
programs to further awareness and education throughout the accounting profession
related  to  the   independence   requirements  of  public   accounting   firms.
PricewaterhouseCoopers LLP also has agreed to implement a comprehensive internal
program of  training  and  compliance  systems  and audits  designed  to prevent
similar violations in the future.

Required Vote

         A  majority  of  the  votes  cast  at  the  Meeting,  if  a  quorum  is
represented,  is required for the  ratificiation of selection of the independent
auditors.

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 72% of the common stock of Liberty Financial
is owned through  subsidiaries  by Liberty  Mutual  Insurance  Company,  Boston,
Massachusetts,  and the balance is held by the public and listed on the New York
Stock Exchange. Liberty Asset Management's Chief Executive Officer is William R.
Parmentier (see PROPOSAL 3 - Officers),  and its Board of Directors is comprised
of William R. Parmentier,  President and Chief Investment Officer, Liberty Asset
Management and President of the Fund, John V. Carberry, Director and Chairman of
the Board of the Fund,  and  Lindsay  Cook,  an officer  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 4 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  recommends to the Board of Directors
multiple independent investment management firms (currently three in number) for
appointment as Portfolio Managers of the Fund, each of which employs a different
investment  style,  and from time to time rebalances the Fund's  portfolio among
the Portfolio  Managers so as to maintain an  approximately  equal allocation of
the portfolio  among the  investment  styles  practiced by them  throughout  all
market cycles. 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.

         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., One Financial Center, Boston,  Massachusetts 02111. For its administrative
services the Fund pays  Liberty  Asset  Management  an annual fee at the rate of
0.20% of the Fund's average weekly net asset value up to $400 million,  0.18% of
such average  weekly net asset value  exceeding $400 million up to $800 million,
0.162% of such average weekly net asset value  exceeding $800 million up to $1.2
billion,  and 0.146% of such  average  weekly net asset  value in excess of $1.2
billion.  This administrative  service fee is in addition to the fund management
fees paid by the Fund to Liberty Asset Management described above.

         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,  in
addition to Weatherbie, are as follows:

  Oppenheimer Capital      William Blair & Company, L.L.C.  M.A. Weatherbie &
  Oppenheimer Tower        222 West Adams Street             Co., Inc.
  World Financial Center   Chicago, IL  60606               265 Franklin Street
  New York, NY  10281                                       Boston, MA 02110

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 Fund's  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,  Liberty All-Star Growth and Income
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  1999,  no Fund  portfolio  transactions  were placed with any  Portfolio
Manager or its broker-dealer affiliate.

         On  February  15,  2000,  the Fund was  issued  by the  Securities  and
Exchange  Commission  exemptive relief from Sections 10(f),  17(a) and 17(e) and
Rule 17e-1 under the Investment Company Act of 1940 to permit (1) broker-dealers
which are, or are affiliated with,  Portfolio  Managers of the Fund to engage in
principal  transactions  with, and provide brokerage  services to, portion(s) of
the Fund  advised  by another  Portfolio  Manager  and (2) the Fund to  purchase
securities either directly from a principal underwriter which is an affiliate of
a  Portfolio  Manager or from an  underwriting  syndicate  of which a  principal
underwriter is affiliated with a Portfolio Manager of the Fund.

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  AGAINST  conversion  of the Fund to an  open-end
investment  company  referred  to  under  PROPOSAL  1,  FOR  the  approval  of a
Distribution  Plan referred to under  PROPOSAL 2 (subject to such Plan not being
effective if Proposal 1 is not approved by the requisite vote), FOR the election
as Director of the nominees  named under  PROPOSAL 3, FOR approval of the Fund's
Portfolio  Management  Agreement  with M.A.  Weatherbie & Co., Inc.  referred to
under  PROPOSAL 4, FOR the new  Portfolio  Management  Agreement to be effective
upon change in control of  Oppenheimer  Capital upon  acquisition  by Allianz AG
referred to under PROPOSAL 5, and FOR the ratification of the Board's  selection
of the Fund's  independent  auditors for 2000 referred to under  PROPOSAL 6. 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 approval of the conversion of the Fund from a closed-end investment
company to an open-end  investment  company  requires the affirmative  vote of a
super-majority of the shares of Common Stock entitled to vote at the Meeting, as
defined under PROPOSAL 1. Approval of the 12b-1 Distribution  Plan,  approval of
the Fund's Portfolio  Management Agreement with M.A. Weatherbie & Co., Inc., and
approval of the new Portfolio  Management  Agreement to be effective upon change
in control of Oppenheimer  Capital requires the affirmative vote of a "majority"
of the outstanding shares of the Fund as defined under Proposals 2, 4 and 5. The
election of Directors is by plurality of votes cast at the Meeting. 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.
Only shareholders of record on February 1, 2000 may vote.

         Abstentions  and  broker  non-votes  will be  counted  as  present  for
purposes  of  determining  whether a quorum is  present.  If a proposal  must be
approved by a percentage of votes cast on the proposal,  abstentions  and broker
non-votes  will not be counted as "votes  cast" on the proposal and will have no
effect  on the  result  of the  vote.  If the  proposal  must be  approved  by a
percentage of shares present at the meeting or of the Fund's outstanding shares,
abstentions  and  broker  non-votes  will have the effect of votes  against  the
proposal.  "Broker  non-votes"  occur  where:  (i) shares are held by brokers or
nominees,  typically in "street name;" (ii)  instructions have not been received
from the beneficial  owners or persons entitled to vote; and (iii) the broker or
nominee does not have discretionary voting power on a particular matter.

         All shareholders of record on February 1, 2000 are entitled to one vote
for each share held.  As of that date  16,302,347  shares of common stock of the
Fund were issued and  outstanding.  To the  knowledge of the Fund, on the record
date for the Meeting no 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  made,  all  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 Annual Meeting for the year 2001 must be
received  by the Fund on or  before  October  26,  2000.  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.

March 13, 2000


<PAGE>


                              Appendix A

                        DISTRIBUTION AGREEMENT

      Liberty  All-Star  Growth Fund,  Inc.  (Fund) and Liberty Funds
Distributor,  Inc.  (LFDI),  a Massachusetts
corporation, agree effective _________:

1.         APPOINTMENT OF LFDI. The Fund may create multiple  classes of shares.
           (Shares) The Fund  appoints  LFDI as the  principal  underwriter  and
           distributor of Shares of Fund.

      2.  SALE OF SHARES.

      a. LFDI's  Right  to  Purchase  Shares  From the  Fund.  LFDI,  acting  as
         principal for its own account and not as agent for the Fund, shall have
         the right to purchase  Shares and shall sell Shares in accordance  with
         the Fund's  prospectus on a "best efforts"  basis.  LFDI shall purchase
         Shares, at a price equal to the net asset value, only as needed to fill
         orders. LFDI will receive all sales charges.  LFDI will notify the Fund
         at the end of each business day of the Shares purchased.

      b. Appointment  of Agent for Certain  Sales of Shares at Net Asset  Value.
         The Fund may at any time designate its shareholder servicing,  transfer
         and dividend disbursing agent as its agent to accept orders for Class A
         Shares  at net  asset  value  from  individuals  or  entities  that are
         entitled to purchase such shares as provided in the Fund's  prospectus,
         and to issue Shares directly to such purchasers.

      c. Refusal to Sell  Shares;  Direct  Issue of Shares.  The Fund may at any
         time (i) refuse to sell Shares  hereunder or (ii) issue Shares directly
         to shareholders as a stock split or dividend.

      3.  REDEMPTION  OF SHARES.  The Fund will  redeem in  accordance  with its
prospectus  all Shares  tendered  by LFDI  pursuant  to  shareholder  redemption
requests.  LFDI  will  notify  the Fund at the end of each  business  day of the
Shares tendered.  The Fund will impose a temporary redemption fee of 2.0% of the
redemption proceeds on all shareholder redemption requests which are tendered by
LFDI during the first year of implementation of this Agreement.

      4.  COMPLIANCE.  LFDI  will  comply  with  applicable  provisions  of  the
prospectus of the Fund and with  applicable  laws and rules relating to the sale
of Shares and  indemnifies the Fund for any damage or expense from unlawful acts
by LFDI and persons acting under its direction or authority.

      5. EXPENSES. The Fund will pay all expenses associated with:

         a.   the registration and qualification of Shares for sale;

         b.   shareholder meetings and proxy solicitation;

         c.   Share certificates;

         d.   communications to shareholders; and

         e.   taxes payable upon the issuance of Shares to LFDI.

         In connection with the distribution of shares of the Fund, LFDI will be
entitled  to receive  payments  pursuant  to any  Distribution  Plan and related
agreement from time to time in effect between any Trust and LFDI with respect to
a Fund or any particular class of shares of a Fund, (b) any contingent  deferred
sales  charges  applicable  to the  redemption  of  shares  of a Fund  or of any
particular class of shares of a Fund,  determined in the manner set forth in the
then current  Prospectus  and Statement of Additional  Information of that Fund,
and (c) any applicable  front-end sales charges applicable to the sale of shares
of a Fund or of any  particular  class of shares of a Fund,  less any applicable
dealer discount.

         LFDI  will pay all  expenses  associated  with  advertising  and  sales
literature  including  those  of  printing  and  distributing  prospectuses  and
shareholder reports,  proxy materials and other shareholder  communications used
as sales literature.

      6.  CONTINUATION, AMENDMENT OR TERMINATION.

      A - This  Agreement (a)  supersedes and replaces any contract or agreement
relating to the subject  matter  hereof in effect prior to the date hereof,  (b)
shall continue in effect only so long as specifically approved at least annually
by the Directors or  shareholders of the Fund and (c) may be amended at any time
by written agreement of the parties, each in accordance with the Act.

      B - This Agreement (a) shall terminate immediately upon the effective date
of any later dated agreement  relating to the subject matter hereof, and (b) may
be terminated  upon 60 days notice without penalty by a vote of the Directors or
by LFDI or otherwise in accordance  with the Act and will terminate  immediately
in the event of assignment  (as defined  under the Act).  Upon  termination  the
obligations  of  the  parties  under  this  Agreement  shall  cease  except  for
unfulfilled  obligations  and  liabilities  arising  prior to  termination.  All
notices shall be in writing and delivered to the office of the other party.

      7. AGREEMENT AND DECLARATION OF TRUST. A copy of the document establishing
the Fund is filed with the Secretary of The Commonwealth of Massachusetts. As to
the Fund,  this Agreement is executed by officers not as individuals  and is not
binding  upon  any  of the  Directors,  officers  or  shareholders  of the  Fund
individually but only upon the assets of the Fund.

Agreed:

LIBERTY ALL-STAR GROWTH FUND, INC.              LIBERTY FUNDS DISTRIBUTOR, INC.

By:                                             By:
Title                                           Title



<PAGE>


                        12B1- PLAN IMPLEMENTING AGREEMENT

      Liberty All-Star Growth Fund, Inc. and Liberty Funds Distributor,  Inc.
(LFDI), a Massachusetts  corporation,
agree effective _____________:

      1. 12B-1 PLAN.  The Fund has  adopted a  so-called  "Rule 12b-1 Plan" (the
"Plan") pursuant to Rule 12b-1 (the "Rule") under the Investment  Company Act of
1940 (the "Act"). Under the Rule, the Fund may, pursuant to the Plan, pay LFDI a
specified  portion of its assets to be used for the  purposes  specified  in its
Plan.  The Plan shall  continue in effect with respect to a Class of Shares only
so long as specifically approved for that Class at least annually as provided in
the Rule. The Plan may not be amended to increase  materially the service fee or
distribution  fee with  respect to a Class of Shares  without  such  shareholder
approval as is required by the Rule or any  applicable  orders of the Securities
and  Exchange  Commission,  and all  material  amendments  of the  Plan  must be
approved in the manner  described in the Rule.  The Plan may be terminated  with
respect to a Class of Shares at any time as provided in the Rule without payment
of any penalty.

      2. PAYMENTS, EXPENDITURES AND REPORTS.

         A. The Fund shall pay LFDI the amount then due LFDI under a Plan on the
20th day of each month, or, if such day is not a business day, the next business
day thereafter, during the term of this Agreement.

         B. LFDI shall expend the amounts paid to it by the Fund under a Plan in
its discretion,  so long as such  expenditures are consistent with the Rule, the
Plan, and any instructions LFDI may receive from the Directors of the Fund.

         C. LFDI shall make all reports  required  under the Act,  the Rule or a
Plan to the Directors of the Fund, as provided in the Act, the Rule and any Plan
or as requested by the Directors.

      3. CONTINUATION; AMENDMENT; TERMINATION; NOTICE.

         A. This Agreement (i) supersedes and replaces any contract or agreement
relating to the subject  matter hereof in effect prior to the date hereof,  (ii)
shall continue in effect as to the Fund only so long as specifically approved at
least  annually by the  Directors or  shareholders  of the Fund and (iii) may be
amended at any time by written agreement of the parties, each in accordance with
the Act and the Rule.

         B. This Agreement (i) shall  terminate  immediately  upon the effective
date of any later dated  agreement  relating to the subject matter  hereof,  and
(ii) may be  terminated  upon 60 days' notice  without  penalty by a vote of the
Directors  or by LFDI or otherwise  in  accordance  with the Act, and (iii) will
terminate  immediately  in the event of its  assignment (as defined in the Act).
Upon termination the obligations of the parties under this Agreement shall cease
except for unfulfilled obligations and liabilities arising prior to termination.

         C. All notices  required under this  Agreement  shall be in writing and
delivered to the office of the other party.

      4. AGREEMENT AND DECLARATION OF TRUST. A copy of the document establishing
the Fund is filed with the State of Maryland.  As to the Fund this  Agreement is
executed  by officers  not as  individuals  and is not  binding  upon any of the
Directors,  officers or shareholders of the Fund  individually but only upon the
assets of the Fund.

Agreed:

LIBERTY ALL-STAR GROWTH FUND, INC.       LIBERTY FUNDS DISTRIBUTOR, INC.

By:                                       By:
Title                                     Title
<PAGE>

                       RULE 12B-1 DISTRIBUTION PLAN

         Liberty  All-Star  Growth  Fund,  Inc.  (Fund),  adopts  the  following
distribution  plan (the  Plan)  pursuant  to Rule  12b-1  (the  Rule)  under the
Investment Company Act of 1940 (Act) on behalf of the Fund, effective
- -----------.

I. PLANS  APPLYING TO CLASS A, B AND C SHARES.  Except as indicated  below,  the
Fund having Class A, B or C Shares shall pay a service fee at the annual rate of
0.25% of the net assets of its Class A, B and C Shares,  and a distribution  fee
at the annual rate of 0.75% of the average daily net assets of its Class B and C
Shares.

II. Payments of Fees Under the Plan. The Fund shall make all payments of service
and distribution fees under this Plan to Liberty Funds Distributor,  Inc. (LFDI)
monthly, on the 20th day of each month or, if such day is not a business day, on
the next  business  day  thereafter.  The Fund shall pay not,  nor shall LFDI be
entitled to receive,  any amount under this Plan if such payment would result in
LFDI  receiving  amounts in excess of those  permitted by  applicable  law or by
rules of the National Association of Securities is Dealers, Inc.

III. Use of Fees. LFDI may pay part or all of the service and distribution  fees
it receives from the Fund as  commissions  to financial  service firms that sell
Fund Shares or as  reimbursements  to financial  service firms or other entities
that  provide  shareholder  services  to record or  beneficial  owners of shares
(including third party  administrators of qualified plans).  This provision does
not obligate LFDI to make any such payments nor limit the use that LFDI may make
of the fees it receives.

IV.  Reporting.  LFDI shall provide to the Fund's  Directors,  and the Directors
shall review, at least quarterly,  reports setting forth all Plan  expenditures,
and the purposes for those  expenditures.  Amounts  payable under this paragraph
are subject to any limitations on such amounts  prescribed by applicable laws or
rules.

V.       Other Payments Authorized.  Payments by the Trust to LFDI and its
affiliates (including Colonial Management Associates, Inc.) other than as set
forth in Section I which may be indirect financing of distribution costs are
authorized by this Plan.

VI.  Continuation;  Amendment;  Termination.  This Plan shall continue in effect
with respect to a Class of Shares only so long as specifically approved for that
Class at least  annually as provided in the Rule. The Plan may not be amended to
increase  materially the service fee or distribution fee with respect to a Class
of Shares without such  shareholder  approval as is required by the Rule and any
applicable  orders of the Securities and Exchange  Commission,  and all material
amendments of the Plan must be approved in the manner described in the Rule. The
Plan may be  terminated  with  respect  to any  Class of  Shares  at any time as
provided in the Rule without payment of any penalty. The continuance of the Plan
shall be effective only if the selection and nomination of the Fund's  Directors
who are not  interested  persons  (as  defined  under  the  Act) of the  Fund is
effected by such non-interested Directors as required by the Rule.

                     Approved by the Directors as of the date set
                     forth above:

                    By: _____________________________________
                        Title



<PAGE>

                                APPENDIX B
                      PORTFOLIO MANAGEMENT AGREEMENT

                                            May 1, 1999

M.A. Weatherbie & Co., Inc.
265 Franklin Street
Boston, MA 02110

         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  M.A.  Weatherbie & Co.,  Inc.  (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, 2000 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.

LIBERTY ALL-STAR GROWTH FUND, INC.       LIBERTY ASSET MANAGEMENT COMPANY

By:                                      By:
       Title:  Secretary                       Title:  President and Chief
                                                          Executive Officer

ACCEPTED:

M.A. WEATHERBIE & CO., INC.

By:
Title:  President

SCHEDULES:  A.  Operational Procedures For Portfolio Transactions (omitted)
            B.  Record Keeping Requirements (omitted)
            C.  Fee Schedule


<PAGE>

                                    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.



<PAGE>

                                APPENDIX C

                     PORTFOLIO MANAGEMENT AGREEMENT


Oppenheimer Capital
1345 Avenue of the Americas
New York, NY 10105-4800

         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 Oppenheimer Capital (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
[DATE] 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 November 6, 1995 among the Fund, the
Fund Manager and the Portfolio Manager.

LIBERTY ALL-STAR GROWTH FUND, INC.        LIBERTY ASSET MANAGEMENT COMPANY

By:                                        By:
Title:                                     Title:

ACCEPTED:

Oppenheimer Capital
By:

Title:

SCHEDULES:  A.  Operational Procedures For Portfolio Transactions (omitted)
            B.  Record Keeping Requirements (omitted)
            C.  Fee Schedule


<PAGE>


                               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.


<PAGE>


                                     APPENDIX D


         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.
<TABLE>
<CAPTION>

Fund                           Approximate Net Assets              Advisor Fee Rate (based on average net
                               (as of February 17, 2000)           asset value)
<S>                            <C>                                 <C>
Oppenheimer Quest Value Fund   $1,191,845,535                      0.40% on the first $344 million
                                                                   0.30% on the next $56 million
                                                                   0.27% on the next $400 million
                                                                   0.255% on the next $3.2 billion
                                                                   0.24% on the next $4 billion
                                                                   0.225% on everything over $8 billion


OCC Accumulation Trust:        $63,734,602                         0.80% on the first $400 million
Equity Portfolio                                                   0.75% on the next $400 million
                                                                   0.70% on everything over $800 million

Penn Series Fund, Inc.:        $246,627,146                        On combined assets
Value Equity Portfolio                                             0.40% on the first $50 million
                                                                   0.35% on the next $200 million
                                                                   0.30% on everything over $250 million

Saratoga Advantage             $72,292,026                         0.30% on all assets
Trust-Large Capitalization
Value Portfolio

Endeavor Series Trust: Value   $188,622,100                        0.40% on all assets
Equity Portfolio

</TABLE>



<PAGE>

                  LIBERTY ALL-STAR GROWTH FUND, INC.

PROXY SOLICITED BY THE BOARD OF DIRECTORS OF LIBERTY ALL-STAR GROWTH FUND, INC.

                  PROXY FOR 2000 ANNUAL MEETING OF SHAREHOLDERS

The undersigned, revoking previous proxies, hereby appoints Suzan M. Barron,
William J. Ballou, Nancy L. Conlin, Timothy J. Jacoby and William R.
Parmentier, Jr., 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 2000 Annual Meeting
of the Fund to be held in Room AV-1, 3rd Floor, Federal Reserve Plaza, 600
Atlantic Avenue, Boston, Massachusetts on April 19, 2000 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.  The 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,
AGAINST PROPOSAL 1, FOR PROPOSAL 2 AND FOR THE NOMINEES LISTED IN IN PROPOSAL 3
UNLESS AUTHORITY TO DO SO IS SPECIFICALLY WITHHELD IN THE MANNER PROVIDED, AND
FOR PROPOSALS 4, 5 AND 6, AND WILL USE THEIR DISCRETION WITH RESPECT TO ANY
MATTERS REFERRED TO IN ITEM 7.

- ------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.  PLEASE DO NOT FOLD, STAPLE OR MUTILATE CARD.
- ------------------------------------------------------------------------------

HAS YOUR ADDRESS CHANGED?

_______________________________________________________________________________
_______________________________________________________________________________

<PAGE>


/X/ PLEASE MARK VOTES
    AS IN THIS EXAMPLE

LIBERTY ALL-STAR GROWTH FUND, INC.

Mark box at right if an address change has been noted on the reverse side of
this card         / /

CONTROL NUMBER:
RECORD DATE SHARES:

<TABLE>
<CAPTION>

<S>                                                                               <C>          <C>             <C>

1.  To approve the conversion of the Fund from a closed-end investment
    company to an open-end investment company.                                    FOR / /      AGAINST /  /   ABSTAIN /  /

2.  To approve a Distribution Plan.                                               FOR / /      AGAINST /  /   ABSTAIN /  /

3.  To elect two Directors of the Fund.                                           FOR ALL
                                                                                  NOMINEES     WITHHOLD       FOR ALL EXCEPT
                                                                                  ---------    --------       ---------------
   (01)James E. Grinnell
   (02)John J. Neuhauser


                                                                                  -----------   --------       ---------------

NOTE:  If you do not whish your shares voted "FOR" one of the nominees, mark
       the "FOR ALL EXCEPT" box and strike a line through the name of the
       nominee.  Your shares will be voted "For" the other nominee.


4. To approve the Fund's Portfolio  Management Agreement with M.A. Weatherbie
   & Co., Inc.                                                                     FOR / /      AGAINST /  /   ABSTAIN /  /

5. To approve a new  Portfolio  Management  Agreement  with
   Oppenheimer Capital which will replace the current Portfolio Management
   Agreement  which will  terminate  upon change in control of Oppenheimer
   Capital upon acquisition by Allianz AG.                                         FOR / /      AGAINST /  /   ABSTAIN /  /

6. To   ratify   the    selection   by   the   Board   of   Directors   of
   PricewaterhouseCoopers  LLP as the Fund's independent  auditors for the
   year ending December 31, 2000.                                                  FOR / /      AGAINST /  /   ABSTAIN /  /

7. In their discretion, upon such other business as may properly come before
   the Meeting.




Please sign exactly as your name(s) appear(s) above.
Corporate proxies should be signed by an authorized officer.     Date---------

- ------------------------------------------------------------------------------


Shareholder sign here                                    Co-owner sign here
- ------------------------------------------------------------------------------

</TABLE>


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