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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-
12
LIBERTY ALL-STAR EQUITY FUND
LIBERTY ALL-STAR GROWTH FUND, INC.
-------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
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(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:
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LIBERTY ALL-STAR EQUITY FUND
LIBERTY ALL-STAR GROWTH FUND, INC.
[________, 2006]
Dear Fellow Shareholders:
The enclosed Proxy Statement discusses four proposals to be voted upon by
the Shareholders of each of the above-named Liberty All-Star Funds (each a
"Fund," collectively the "Funds"). Please review the Proxy Statement and cast
your vote on each of the proposals. THE BOARD OF TRUSTEES/DIRECTORS OF EACH
FUND RECOMMENDS THAT YOU VOTE FOR EACH PROPOSAL.
As discussed in more detail in the enclosed Proxy Statement, Banc of
America Investment Advisors, Inc., each Fund's current fund manager, has decided
to sell to ALPS Advisers, Inc. ("ALPS Advisers") its business of managing the
Funds. To provide for continuity in the operation of the Funds, you are being
asked to approve (1) new fund management agreements between the Funds and ALPS
Advisers and (2) new portfolio management agreements between the Funds, ALPS
Advisers and each of the Portfolio Managers that currently manage Fund assets.
ALPS Advisers is a wholly-owned subsidiary of ALPS Holdings, Inc., a Denver,
Colorado-based company that provides a wide range of fund services, including
fund administration, fund distribution, and fund accounting.
Under these new agreements, ALPS Advisers and the Portfolio Managers will
provide investment advisory services to each Fund on substantially the same
terms and for the same fees that are currently in effect. The Funds' multi-
manager structure and investment objectives will not change as a result of the
sale transaction (the "Transaction"), and the senior investment advisory
personnel who currently manage each Fund's assets are expected to continue to do
so after the Transaction. The Funds' association with ALPS Advisers and its
affiliates also will make available to the Funds additional resources, which
could provide future benefits.
In connection with the Transaction, you are also being asked to approve
(1) a proposal to elect three new trustees/directors for the Funds and (2) a
policy to permit the Funds and ALPS Advisers and to enter into new agreements
with Portfolio Managers, and then obtain the required shareholder approval of
the new agreement at the next regularly scheduled annual meeting of the Funds.
Approval of that policy would permit ALPS Advisers to continue the current
practice used by the Funds to hire new Portfolio Managers.
The Transaction and each proposal are discussed in detail in the enclosed
Proxy Statement. The Transaction, which is subject to various conditions, will
not change the names of the Funds or alter the number of shares you own in that
Fund.
THE BOARD OF TRUSTEES/DIRECTORS OF EACH FUND RECOMMENDS A VOTE FOR EACH
PROPOSAL.
Your vote is important no matter how many shares you own. Voting your
shares early will avoid costly follow-up mail and telephone solicitation. After
reviewing the enclosed materials, please complete, sign and date your proxy
card(s) and mail it promptly in the enclosed return envelope, or help save time
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and postage costs by calling the toll free number and following the
instructions. You may also vote via the Internet by logging on to ______ and
following the instructions that will appear. If we do not hear from you by
__________, 2006, our proxy solicitor, The Altman Group ("Altman"), may contact
you. This will ensure that your vote is counted even if you cannot attend the
Special Meeting in person. If you have any questions about the proposals or the
voting instructions, please call Altman at 1-800-499-6377.
Very truly yours,
_____________________________________
William R. Parmentier, Jr.
President and Chief Executive Officer
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LIBERTY ALL-STAR EQUITY FUND ("Equity Fund")
LIBERTY ALL-STAR GROWTH FUND, INC. ("Growth Fund")
(EACH A "Fund," COLLECTIVELY, THE "Funds")
100 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
1-800-499-6377
________________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
__________, 2006
________________________
To the Shareholders of the Funds:
NOTICE IS HEREBY GIVEN that a special meeting ("Meeting") of Shareholders
of the Funds will be held [in the America Room, 2nd Floor, at 100 Federal
Street, Boston, Massachusetts on _______, 2006 at _:00 a.m. Boston time.]
As discussed in more detail in the enclosed Proxy Statement, Banc of
America Investment Advisors, Inc. ("BAIA") recently entered into an asset
purchase agreement with ALPS Holdings, Inc. ("ALPS") and ALPS Advisers, Inc.
("ALPS Advisers" or "Fund Manager") whereby BAIA will sell certain assets
related to BAIA's business of providing investment advisory and certain
administrative services to the Funds to ALPS Advisers (the "Transaction"),
subject to certain conditions (as discussed in the enclosed Proxy Statement).
Before the closing of the Transaction (the "Closing"), ALPS Advisers will be
registered with the Securities and Exchange Commission as an investment adviser.
ALPS Advisers is a wholly-owned subsidiary of ALPS, a Denver, Colorado-based
company that provides a wide range of fund services, including fund
administration, fund distribution, and fund accounting.
Upon the Closing, each Fund's Fund Management Agreement with BAIA and each
Fund's Portfolio Management Agreements with BAIA and the Portfolio Managers
listed below will automatically terminate. To provide for continuity in the
operation of the Funds, the Shareholders of each Fund are being asked to vote
FOR the following proposals:
1. To elect three new Trustees/Directors;
2. To approve a new Fund Management Agreement between the Fund and ALPS
Advisers to become effective upon the Closing;
3. To approve new Portfolio Management Agreements for the Fund with
ALPS Advisers and each of the current Portfolio Managers listed below to
become effective upon the Closing;
EQUITY FUND
3a. Chase Investment Counsel Corporation
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3b. Matrix Asset Advisers, Inc.
3c. Pzena Investment Management, LLC
3d. Schneider Capital Management Corporation
3e. TCW Investment Management Company
GROWTH FUND
3f. TCW Investment Management Company
3g. M.A. Weatherbie & Co., Inc.
3h. William Blair & Company, L.L.C.
4. To approve a policy to permit the Fund and ALPS Advisers to enter
into Portfolio Management Agreements in advance of Shareholder approval;
and
5. To transact any other business as may properly come before the
Meeting.
YOUR BOARD OF TRUSTEES/DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE
PROPOSALS.
As described in the enclosed Proxy Statement, each Fund Management
Agreement provides that, following the Transaction, ALPS Advisers will provide
the same investment advisory services to each Fund on substantially the same
terms and the same fee rates calculated on a daily rather than a weekly basis.
Likewise, each Portfolio Management Agreement provides that, following the
Transaction, each Portfolio Manager will continue to provide the same sub-
advisory services to each Fund on substantially the same terms and the same fee
rates calculated on a daily rather than a weekly basis. Each proposal is
discussed in greater detail in the enclosed Proxy Statement. You are entitled to
vote at the Meeting if you owned shares of one or both of the Funds at the close
of business on September 7, 2006 ("Record Date"). If you attend the Meeting,
you may vote your shares in person. However, we urge you, whether or not you
expect to attend the Meeting in person, to complete, date, sign and return the
enclosed proxy card(s) in the enclosed postage-paid envelope or vote by
telephone or through the Internet.
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YOUR VOTE IS IMPORTANT - PLEASE SIGN, DATE AND 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.
By order of the Board of Trustees of the Equity Fund
and the Board of Directors of the Growth Fund
James R. Bordewick, Jr.
Secretary of the Funds
___________, 2006
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IMPORTANT INFORMATION TO HELP YOU UNDERSTAND
AND VOTE ON THE PROPOSALS
While we strongly encourage you to read the full text of the enclosed Proxy
Statement, we are also providing you with a brief overview of the subject of the
Shareholder vote. Your vote is important.
QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. Banc of America Investment Advisors, Inc. ("BAIA") recently entered into
an asset purchase agreement with ALPS Holdings, Inc. ("ALPS") and ALPS
Advisers, Inc. ("ALPS Advisers") whereby BAIA will sell certain assets
related to BAIA's business of providing investment advisory and certain
administrative services to Liberty All-Star Equity Fund and Liberty All-
Star Growth Fund, Inc. (each a "Fund," collectively the "Funds") to ALPS
Advisers (the "Transaction"), subject to certain conditions (as discussed
in the Proxy Statement). Before the closing of the Transaction (the
"Closing"), ALPS Advisers will be registered with the Securities and
Exchange Commission ("SEC") as an investment adviser. ALPS Advisers is a
wholly-owned subsidiary of ALPS, a Denver, Colorado-based company that
provides a wide range of fund services, including fund administration,
fund distribution, and fund accounting. The parties expect the Closing to
occur in December 2006, subject to the satisfaction of certain conditions
outlined in the Proxy Statement.
As a result of the Transaction, each Fund's Fund Management Agreement with
BAIA and its Portfolio Management Agreements with its Portfolio Managers
will automatically terminate. Therefore, in order to provide for continued
management of the Funds, shareholders of each Fund will need to approve a
new Fund Management Agreement and new Portfolio Management Agreements.
The Proxy Statement provides additional information about ALPS Advisers
and each proposal. If Shareholders approve the proposals, the
effectiveness of each is contingent upon the Closing occurring, and each
proposal will become effective only upon the Closing. If the Transaction
is not consummated, none of the proposals will become effective.
EACH FUND'S BOARD OF TRUSTEES/DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE
PROPOSALS DESCRIBED IN THE PROXY STATEMENT.
Q. WHY ARE YOU SENDING ME THIS INFORMATION?
A. You are receiving these proxy materials because you own shares in one or
both of the Funds and have the right to vote on these very important
proposals concerning your investment.
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Q. WHY AM I BEING ASKED TO ELECT NEW TRUSTEES/DIRECTORS?
A. In connection with the Transaction, the Trustees/Directors have
recommended that the Shareholders elect three new Trustees/Directors to
each Fund's Board, as recommended by ALPS. One of the nominees for
Trustee/Director is the President and a Director of ALPS and ALPS Advisers
and, if elected, will be the only Trustee/Director on each Fund's Board
who is an "interested person" (as defined in the Investment Company Act of
1940, as amended ("Investment Company Act")) ("Interested
Trustee/Director"). The other two nominees for Trustee/Director currently
serve as Trustees/Directors who are not "interested persons" (as defined
in the Investment Company Act) ("Disinterested Trustees/Directors") of
funds for which either ALPS Fund Services, Inc., a wholly-owned subsidiary
of ALPS, serves as administrator or ALPS Distributors, Inc., a wholly-
owned subsidiary of ALPS, serves as distributor. If all of the proposed
nominees are elected, each Fund's Board will consist of seven
Trustees/Directors, six of whom will be Disinterested Trustees/Directors
and one of whom will be an Interested Trustee/Director.
Q. WHY AM I BEING ASKED TO VOTE ON THE NEW AGREEMENTS?
A. Completion of the Transaction will result in an assignment of each Fund's
advisory contracts, and as a result, will automatically terminate each
Fund's Fund Management Agreement and Portfolio Management Agreements
pursuant to the Investment Company Act. To ensure that the operation of
your Fund can continue without any interruption and that ALPS Advisers and
each Portfolio Manager can provide your Fund with the same services that
are currently being provided to your Fund, your approval of the new
agreements is sought. For the Closing to occur, certain conditions must
be satisfied or waived, including, among others, the approval of the new
agreements by Shareholders of the Funds.
Q. WHY AM I BEING ASKED TO VOTE ON THE POLICY REGARDING SHAREHOLDER APPROVAL
OF PORTFOLIO MANAGEMENT AGREEMENTS?
A. Each Fund currently operates under an exemptive order issued by the SEC
that allows the Fund and BAIA to defer Shareholder approval of a new
Portfolio Management Agreement until the next annual meeting of Fund
Shareholders. Upon the Closing, the Funds no longer will be able to rely
on that exemptive relief because it terminates once BAIA is no longer the
Funds' investment adviser. The Funds and ALPS Advisers will apply to the
SEC for a new exemptive order for the same relief [that may be] subject to
a number of additional conditions. If the SEC grants the Funds and ALPS
Advisers a new exemptive order, a Fund and ALPS Advisers will not be
permitted to rely on the new order unless the Shareholders of the Fund
have approved the operation of the Fund in a manner that permits the Fund
and ALPS Advisers to enter into Portfolio Management Agreements in advance
of Shareholder approval. You are being asked to approve this policy so
that your Fund can operate under a new exemptive order as soon as it is
issued.
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Q. HOW WILL THE TRANSACTION AFFECT ME AS A FUND SHAREHOLDER?
A. Your Fund and its investment objectives will not change as a result of the
completion of the Transaction, and you will still own the same shares in
the same Fund. The terms of the new agreements are substantially the same
as the existing agreements. The management fee rates that the Funds
currently pay for investment advisory services will be the same fee rates
calculated on a daily rather than a weekly basis. The Portfolio Managers
that currently manage the Funds are expected to continue to manage the
Funds following the Transaction. ALPS Advisers does not anticipate any
changes in the senior investment advisory personnel who currently manage
the Funds at the Fund Manager level. ALPS has entered into employment
agreements that will take effect upon the Closing with William R.
Parmentier, Jr., the Funds' President and Chief Executive Officer, and
Mark T. Haley, the Funds' Senior Vice President, who are currently
responsible for the Funds' day-to-day operations. However, there can be
no assurance that any particular employee of BAIA will choose to remain
employed by BAIA before the Transaction or by ALPS Advisers after the
Transaction.
Q. WILL EITHER FUND'S NAME CHANGE?
A. No. The name of each Fund will not change.
Q. WILL THERE BE ANY PORTFOLIO MANAGER CHANGES?
A. No. The Portfolio Managers that currently manage the Fund are expected to
continue to manage the Funds after the Transaction, using the same
investment objectives and strategies currently in place.
Q. WILL THE FEES PAYABLE UNDER THE NEW AGREEMENTS INCREASE AS A RESULT OF THE
TRANSACTION?
A. No. The proposals to approve the new agreements do not seek any increase
in fee rates.
Q. HOW DO THE TRUSTEES/DIRECTORS OF MY FUND RECOMMEND THAT I VOTE?
A. The Trustees/Directors of your Fund recommend that you vote FOR each of
the proposals.
Q. WILL MY FUND PAY FOR THIS PROXY SOLICITATION OR FOR THE COSTS OF THE
TRANSACTION?
A. No. The Funds will not bear these costs. BAIA and ALPS Advisers have
agreed to bear any costs that would otherwise be borne by the Funds.
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Q. HOW DO I VOTE MY SHARES?
A. For your convenience, there are several ways you can vote:
BY MAIL: Vote, sign and return the enclosed proxy card(s) in the enclosed
self-addressed, postage-paid envelope;
BY TELEPHONE: Call the number printed on the enclosed proxy card(s);
BY INTERNET: Access the website address printed on the enclosed proxy
card(s); and
IN PERSON: Attend the Meeting as described in the Proxy Statement. If you
wish to attend the Meeting, please notify us by calling 1-800-499-6377.
Q. WHY ARE TWO PROXY CARDS ENCLOSED?
A. If you own shares of both Funds, you will receive a separate proxy card
for each Fund.
Q. WHOM SHOULD I CALL FOR ADDITIONAL INFORMATION ABOUT THIS PROXY STATEMENT?
A. If you need any assistance, or have any questions regarding the proposals
or how to vote your shares, please call our proxy solicitor, The Altman
Group, at 1-800-499-6377.
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LIBERTY ALL-STAR EQUITY FUND ("Equity Fund")
LIBERTY ALL-STAR GROWTH FUND, INC. ("Growth Fund")
(EACH A "Fund," COLLECTIVELY, THE "Funds")
100 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
1-800-499-6377
_______________________
PROXY STATEMENT
________________________
FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON _________, 2006
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Boards of Trustees/Directors of the Funds to be used at
the Special Meeting of Shareholders of the Funds to be held in the [America Room
on the 2nd floor of 100 Federal Street, Boston, Massachusetts on ________, 2006
at __:00 a.m. Boston time] and at any adjournments thereof (such meeting and any
adjournments being referred to as the "Meeting").
SOLICITATION OF PROXIES
The solicitation of proxies for use at the Meeting is being made primarily
by the Funds by the mailing on or about _________, 2006 of the Notice of Special
Meeting of Shareholders, this Proxy Statement and the accompanying proxy.
Supplementary solicitations may be made by mail, telephone or personal interview
by officers and Trustees/Directors of the Funds and officers, employees and
agents of the Funds' investment adviser, Banc of America Investment Advisors,
Inc. ("BAIA"), and/or its affiliates and by The Altman Group, the firm that has
been engaged to assist in the solicitation of proxies. Authorization to execute
proxies may be obtained from Shareholders through instructions transmitted by
telephone, facsimile or other electronic means.
At the Meeting, Shareholders of each Fund will be asked:
1. To elect three new Trustees/Directors;
2. To approve a new Fund Management Agreement between each Fund and
ALPS Advisers to become effective upon completion of the Transaction (the
"Closing") as described in this Proxy Statement; and
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3. To approve new Portfolio Management Agreements for each Fund with
ALPS Advisers, Inc. and each of the current Portfolio Managers listed
below to become effective upon the Closing as described in this Proxy
Statement.
EQUITY FUND
3a. Chase Investment Counsel Corporation
3b. Matrix Asset Advisers, Inc.
3c. Pzena Investment Management, LLC
3d. Schneider Capital Management Corporation
3e. TCW Investment Management Company
GROWTH FUND
3f. TCW Investment Management Company
3g. M.A. Weatherbie & Co., Inc.
3h. William Blair & Company, L.L.C.
4. To approve a policy to permit the Fund and ALPS Advisers, Inc.
("ALPS Advisers" or "Fund Manager") to enter into Portfolio Management
Agreements in advance of Shareholder approval;
The Boards have set the close of business on September 7, 2006 as the
record date ("Record Date"), and only Shareholders of record on the Record Date
will be entitled to vote on these proposals at the Meeting. Additional
information regarding outstanding shares and voting your proxy are included at
the end of this Proxy Statement in the sections entitled "General Information"
and "Voting Information."
GENERAL OVERVIEW
THE TRANSACTION
On September 7, 2006, BAIA entered into an asset purchase agreement with
ALPS Holdings, Inc. ("ALPS") and ALPS Advisers, Inc. ("ALPS Advisers") whereby
ALPS Advisers has agreed to purchase certain assets related to BAIA's business
of providing investment advisory and certain administrative services to the
Funds (the "Transaction"). Upon the Closing, ALPS Advisers will serve as
investment adviser to each Fund and ALPS Fund Services, Inc. ("ALPS Fund
Services") will serve as the administrator to each Fund. ALPS Advisers and ALPS
Fund Services are wholly-owned subsidiaries of ALPS, a Denver, Colorado-based
company that provides a wide range of fund services, including fund
administration, fund distribution, and fund accounting.
The Closing is subject to certain terms and conditions, including, among
others: (1) each Fund obtaining Shareholder approval to enter into a new Fund
Management Agreement and new Portfolio Management Agreements, as set forth in
this Proxy Statement; and (2) BAIA and ALPS Advisers obtaining any necessary
regulatory approvals. Although there is no assurance that the Closing will
occur, if each of the terms and conditions is satisfied or waived, BAIA, ALPS
and ALPS Advisers anticipate that the Closing will take place in December 2006.
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POST-TRANSACTION STRUCTURE AND OPERATIONS
As noted above, upon the Closing, ALPS Advisers will become the investment
adviser to the Funds. The Portfolio Managers that currently manage the Funds
are expected to continue to manage the Funds following the Transaction. ALPS
Advisers does not anticipate any changes in the senior investment advisory
personnel who currently manage the Funds at the Fund Manager level. ALPS has
entered into employment agreements that will take effect upon the Closing with
William R. Parmentier, Jr., the Funds' President and Chief Executive Officer,
and Mark T. Haley, the Funds' Senior Vice President, who are currently
responsible for the Funds' day-to-day operations. However, there can be no
assurance that any particular employee of BAIA will choose to remain employed by
BAIA before the Transaction or by ALPS Advisers after the Transaction.
ALPS currently does not anticipate any changes to the organization and
structure of the Funds other than the addition of two new Trustees/Directors who
are not "interested persons" (as defined in the Investment Company Act of 1940,
as amended ("Investment Company Act")) ("Disinterested Trustees/Directors") and
one new Trustee/Director who is an "interested person" (as defined in the
Investment Company Act) ("Interested Trustee/Director") as described in Proposal
1 below, if elected by Shareholders of the Funds. Upon the Closing, the Funds
will be entering into an agreement with ALPS Fund Services for the provision of
administration and bookkeeping and pricing services. ALPS Fund Services will
also provide broker/dealer and shareholder support services to the Funds through
its existing internal support desk. The Board of each Fund will continue to
make decisions regarding the auditors, custodian and transfer agent of the
Funds. ALPS is not proposing any changes to these existing service providers at
this time.
ANTICIPATED BENEFITS OF THE TRANSACTION
Although there can be no assurance as to any benefit resulting from the
Transaction, ALPS anticipates the following possible benefits:
o combining the fund administration, accounting, compliance and
distribution experience of ALPS with the investment management
personnel of the Funds may provide an environment for success;
o the market support, shareholder services and wholesaling
capabilities of ALPS should support the trading of the Funds in the
secondary market;
o ALPS employs a Director of Closed-End Funds to help develop and
maintain the Funds' relationships with closed-end fund underwriters
and the closed-end fund analyst community;
o ALPS maintains a nationwide network of internal and external
wholesalers focused on ALPS' closed-end fund offerings, which may
increase the Funds' market exposure; and
o affiliating with ALPS, which has made the growth of its asset
management operations a key component of its business plans, is
expected to provide a high level of service to the Funds.
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ELECTION OF NEW TRUSTEES/DIRECTORS
In connection with the Transaction, ALPS has proposed, and the
Disinterested Trustees/Directors have agreed, to recommend to Shareholders the
election of three new Trustees/Directors to each Fund's Board. One of the
nominees for Trustee/Director is the President and a Director of ALPS and ALPS
Advisers, who, if elected, will be the only Interested Trustee/Director on each
Fund's Board. The other two nominees for Trustee/Director currently serve as
Disinterested Trustees of funds for which either ALPS Fund Services, a wholly-
owned subsidiary of ALPS, serves as administrator or ALPS Distributors, Inc.
("ALPS Distributors"), a wholly-owned subsidiary of ALPS, serves as distributor.
If all of the proposed nominees are elected by Shareholders, each Fund's Board
will consist of seven Trustees/Directors, six of whom will be Disinterested
Trustees/Directors and one of whom will be an Interested Trustee/Director. If
elected by the Shareholders of each Fund, the new Trustees/Directors will not
take office until the Closing.
NEW FUND MANAGEMENT AND PORTFOLIO MANAGEMENT AGREEMENTS
BAIA currently serves as investment adviser to each Fund. Upon the
Closing, ALPS Advisers will become the investment adviser to each Fund and the
Funds will thereby undergo a change in control. This change in control is deemed
to be an "assignment" of each Fund's existing Fund Management Agreement
("Existing Fund Management Agreement") and existing Portfolio Management
Agreements ("Existing Portfolio Management Agreement" and together, "Existing
Agreements") under the Investment Company Act. As required by the Investment
Company Act, each Fund's Existing Agreements provide for their automatic
termination in the event of an assignment, and each will, therefore, terminate
upon the Closing. Accordingly, Shareholders of each Fund are being asked to
approve a new Fund Management Agreement ("New Fund Management Agreement") and
new Portfolio Management Agreements ("New Portfolio Management Agreements" and
together, "New Agreements") with substantially the same terms and the same fee
rates, calculated on a daily rather than a weekly basis, as the Existing
Agreements to allow ALPS Advisers and the various Portfolio Managers to manage
each Fund. If approved by the Shareholders of each Fund, the New Agreements
will not become effective until the Closing. For each Fund, the proposal to
approve the New Portfolio Management Agreements is subject to the approval of
the New Fund Management Agreement. If the Transaction is not completed for any
reason, the Existing Agreements will remain in effect for each Fund.
APPROVAL OF THE POLICY REGARDING SHAREHOLDER APPROVAL OF PORTFOLIO MANAGEMENT
AGREEMENTS
Each Fund currently operates under an exemptive order issued by the
Securities and Exchange Commission ("SEC") that allows the Fund and BAIA to
defer Shareholder approval of a new Portfolio Management Agreement until the
next annual meeting of Fund Shareholders. Upon the Closing, the Funds no longer
will be able to rely on this exemptive relief because it terminates once BAIA is
no longer the Funds' investment adviser. The Funds and ALPS Advisers will apply
to the SEC for a new exemptive order for the same relief [that may be] subject
to a number of additional conditions. If the SEC grants the Funds and ALPS
Advisers a new exemptive order, the Funds and ALPS Advisers will not be
permitted to rely on the new order unless the Shareholders of each Fund have
14
approved the operation of the Funds in a manner that permits the Funds and ALPS
Advisers to enter into Portfolio Management Agreements in advance of Shareholder
approval. Approval of this proposal is sought so that the Funds can operate
under a new exemptive order as soon as it is issued. If the Transaction is not
completed for any reason, the current orders will continue in effect.
15
PROPOSAL 1: ELECTION OF THREE NEW TRUSTEES/DIRECTORS
In connection with the Transaction, Shareholders of each Fund are being
asked to vote for the election of three persons to serve as additional
Trustees/Directors of each Fund. The Trustees/Directors of each Fund provide
broad supervision over the affairs of the Fund, including oversight of the Fund
Manager and the Fund's officers. The Fund Manager is responsible for the
investment management of each Fund's assets and for providing a variety of other
administrative services to each Fund. The officers of each Fund are responsible
for its operations.
NOMINEES
The Board, including a majority of the Disinterested Trustees/Directors,
has nominated George R. Gaspari and Edmund J. Burke to be elected as
Trustee/Director by the applicable Fund's Shareholders. On September __, 2006,
the Board, including a majority of the Disinterested Trustees/Directors,
nominated [ ] to be elected as Trustee/Director by the
applicable Fund's Shareholders. Mr. Burke is the President and a Director of
ALPS and ALPS Advisers and, if elected, will be the only Interested
Trustee/Director on each Fund's Board. Messrs. Gaspari and [ ]
currently serve as Disinterested Trustees of funds for which either ALPS Fund
Services, a wholly-owned subsidiary of ALPS, serves as administrator or ALPS
Distributors, a wholly-owned subsidiary of ALPS, serves as distributor. Each
person now serving as Trustee/Director will continue to serve as such following
the Transaction.
Each nominee has consented to serve as Trustee/Director if elected. If
any of them is unable or unwilling to do so at the time of the Meeting, proxies
will be voted for such substitute as the applicable Board may recommend (unless
authority to vote for the election of Trustees or Directors, as the case may be,
has been withheld). If all of the nominees are elected, each Fund's Board will
consist of seven Trustees/Directors, six of whom will be Disinterested
Trustees/Directors and one of whom will be an Interested Trustee/Director. The
nominees' appointment to each Fund's Board would take effect upon the Closing.
Shares of the Funds represented by duly executed proxies will be voted as
instructed on the proxy. If no instructions are given when the enclosed proxy is
executed and returned, the enclosed proxy will be voted FOR the election of each
nominee.
The table below sets forth the name, address and year of birth of each
nominee, the proposed term of office (which will end on the final adjournment of
the annual meeting (or special meeting in lieu thereof) held in the year set
forth in the table), their principal business occupations during at least the
last five years, the number of portfolios to be overseen by each nominee and
their other directorships of public companies.
16
-----------------------------------------------------------------------------------------------------------------------------------
NAME, YEAR OF PROPOSED PROPOSED PRINCIPAL NUMBER OF OTHER DIRECTORSHIPS
BIRTH AND ADDRESS TERM OF TERM OF OCCUPATION(S) DURING PORTFOLIOS IN HELD
OFFICE FOR OFFICE FOR PAST FIVE YEARS FUND
THE THE COMPLEX TO
EQUITY GROWTH BE OVERSEEN
FUND FUND BY NOMINEE
-----------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED NOMINEES
-----------------------------------------------------------------------------------------------------------------------------------
[__________] 2007 2008 [_________] 2 [________]
-----------------------------------------------------------------------------------------------------------------------------------
George R. Gaspari 2008 2008 Financial Services 2 Trustee and Chairman, The Select
(Born 1940) Consultant (since 1996) Sector SPDR Trust (since 1998).
(formerly Senior
P.O. Box 844 Vice President
124 Island Drive and Chief
Highland Lakes, NJ Administrative,
07422 Operating and
Financial
Officer for
Evergreen Asset
Management Corp.
(from 1987 to
1996).
-----------------------------------------------------------------------------------------------------------------------------------
INTERESTED NOMINEE
-----------------------------------------------------------------------------------------------------------------------------------
Edmund J. Burke (1) 2009 2009 President and a 2 President, Financial Investors Trust
(Born 1961) Director of ALPS (since 2001), President,
(since 2005), Reaves Utility Income Fund
1625 Broadway President and a (since 2004), Trustee and
Suite 2200 Director of ALPS President, Clough Global Allocation
Denver, CO 80202 Advisers (since Fund (Trustee since 2006; President
2001), President since 2004), Trustee and
and a Director President, Clough Global Allocation
of ALPS Equity Fund (Trustee since 2006;
Financial President since 2005), Trustee and
Services, Inc. President, Clough Global
(since 1991). Opportunities Fund (since 2006).
-----------------------------------------------------------------------------------------------------------------------------------
(1) Mr. Burke would be an "Interested person" of the Funds, as defined in the
Investment Company Act, because he is an officer of ALPS and ALPS Advisers.
Each Fund's Board is divided into three classes of Trustees/Directors.
Each class of Trustees/Directors serves for staggered three-year terms. The term
of office of a class expires at the final adjournment of the Annual Meeting of
Shareholders (or special meeting in lieu thereof) each year. Since the term of
office of one class will expire each year, certain nominees will serve less than
three years during their initial term as Trustee/Director of each Fund.
17
CURRENT TRUSTEES/DIRECTORS
The table below sets forth the name, address and year of birth of the
current Trustees/Directors of the Funds, the year each was first elected or
appointed to office, the term of office (which will end on the final adjournment
of the annual meeting (or special meeting in lieu thereof) held in the year set
forth in the table), their principal business occupations during at least the
last five years, the number of portfolios overseen by each Trustee/Director in
the Fund Complex and their other directorships of public companies.
-----------------------------------------------------------------------------------------------------------------------------------
NAME, POSITION POSITION PRINCIPAL OCCUPATION(S) NUMBER OF OTHER
YEAR OF WITH WITH DURING PAST FIVE YEARS PORTFOLIOS IN DIRECTORSHIPS
BIRTH AND EQUITY GROWTH FUND COMPLEX HELD
ADDRESS FUND, FUND, OVERSEEN BY
(1) LENGTH OF LENGTH OF TRUSTEE/DIRECTOR
SERVICE SERVICE (2)
AND TERM AND TERM
OF OFFICE OF OFFICE
-----------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES/DIRECTORS
-----------------------------------------------------------------------------------------------------------------------------------
John A. Trustee; Director; Retired (since December 1999); 2 None
Benning 2002; 2009 2002; 2008 (formerly Senior Vice President,
(Born General Counsel and Secretary,
1934) Liberty Financial Companies, Inc. and
Vice President, Secretary and Director,
Liberty Asset Management
Company (from 1985 to 1999)).
-----------------------------------------------------------------------------------------------------------------------------------
Thomas W. Trustee; Director; Chief Executive Officer, Stone Harbor 4 None
Brock 2005; 2008 2005; 2009 Investment Partners LP (since April 2006)
(Born (formerly Adjunct Professor, Columbia
University Graduate School of Business
(from 1998 to 2006), Chairman, CEO,
Salomon Brothers Asset Management, Inc.
(from 1993 to 1998)).
-----------------------------------------------------------------------------------------------------------------------------------
Richard Trustee; Director; Private investor since August 1987 83 None
W. Lowry 1986; 2007 1994; 2007 (formerly Chairman and Chief Executive
(Born Chairman Chairman Officer, U.S. Plywood Corporation
1936) (building products manufacturer)
(until 1987)).
-----------------------------------------------------------------------------------------------------------------------------------
John J. Trustee; Director; University Professor, Boston College 83 None
Neuhauser 1998; 2007 1998; 2009 (since December 2005); Academic
(Born Vice President and Dean of Faculties,
1943) Boston College (from August 1999
to December 2005).
-----------------------------------------------------------------------------------------------------------------------------------
18
(1) All the Trustees/Directors are members of each Fund's Audit
Committee. The address of each Trustee/Director is c/o Liberty All-Star Funds,
100 Federal Street, Boston, MA 02110.
(2) At August 31, 2006, Messrs. Lowry and Neuhauser also served as
trustees of 74 open-end and 7 closed-end management investment company
portfolios within the Columbia Funds group of funds. As of August 31, 2006, Mr.
Brock also served as manager or director of BACAP Alternative Multi-Strategy
Fund, LLC and Columbia Management Multi-Strategy Hedge Fund, LLC (the
"Registered Hedge Funds"). "Fund Complex" includes the Funds, the Columbia Funds
and the Registered Hedge Funds.
PRINCIPAL OFFICERS
Each person listed below currently serves as an officer of the Funds. The
Board elects the Funds' officers each year. Each Fund officer holds office until
his or her successor is duly elected by the Board and qualified, or his or her
removal, resignation or death. Each Fund officer serves at the pleasure of the
Board. Except for Messrs. Parmentier and Haley, each other person serving as an
officer of the Funds is expected to resign no later than the Closing. The
following table provides basic information about the officers of the Funds as of
the date of this Proxy Statement, including their principal occupations during
the past five years, although their specific titles may have varied over that
period.
-----------------------------------------------------------------------------------------------------------------------------------
NAME, YEAR OF BIRTH POSITION WITH FUND AND YEAR PRINCIPAL OCCUPATION(S) DURING PAST FIVE
AND ADDRESS (1) FIRST APPOINTED TO OFFICE YEARS
-----------------------------------------------------------------------------------------------------------------------------------
William R. President and Chief Senior Vice President of BAIA since April 2005;
Parmentier, Jr. Executive Officer; Chief Investment Officer - External
(Born 1952) 1999 Managers of BAIA from July 1998 to March 2005; and
Director of BAIA, from April 2004 to March 2005.
-----------------------------------------------------------------------------------------------------------------------------------
Mark T. Senior Vice President; Vice President of BAIA since April 1999.
Haley, CFA 1999
(Born 1964)
-----------------------------------------------------------------------------------------------------------------------------------
Mary Joan Senior Vice President Senior Vice President and Chief Compliance Officer
Hoene and Chief Compliance of funds in the Columbia Fund Complex; Partner, Carter,
(Born 1949) Officer; 2004 Ledyard & Milburn LLP (law firm) from January 2001 to August 2004.
-----------------------------------------------------------------------------------------------------------------------------------
J. Kevin Treasurer, Chief Financial Managing Director of Columbia Management Advisors, LLC ("CMA")
Connaughton Officer and Senior Vice since February 1998.
(Born 1964) President; 2003
-----------------------------------------------------------------------------------------------------------------------------------
James R. Senior Vice President, Associate General Counsel, Bank of America
Bordewick, Jr. Secretary Counsel, since April 2005; Senior Vice President and
(Born 1959) and Chief Legal Associate General MFS Investment Management
Officer; 2006 (investment management) prior to April 2005.
-----------------------------------------------------------------------------------------------------------------------------------
Michael G. Chief Accounting Officer Managing Director of CMA since February 2001.
Clarke and Assistant Treasurer;
(Born 1969) 2004
-----------------------------------------------------------------------------------------------------------------------------------
19
-----------------------------------------------------------------------------------------------------------------------------------
NAME, YEAR OF BIRTH POSITION WITH FUND AND YEAR PRINCIPAL OCCUPATION(S) DURING PAST FIVE
AND ADDRESS (1) FIRST APPOINTED TO OFFICE YEARS
-----------------------------------------------------------------------------------------------------------------------------------
Jeffrey R. Deputy Treasurer; 2004 Group Operations Manager of CMA since October 2004;
Coleman Vice President - CDC IXIS Asset Management Services,
(Born 1969) Inc. (asset management) from August 2000 to September 2004.
-----------------------------------------------------------------------------------------------------------------------------------
Joseph F. Deputy Treasurer; 2006 Senior Compliance Manager of CMA since January 2005;
DiMaria Director of Trustee Administration of CMA from May
(Born 1968) 2003 to January 2005; Senior Audit Manager,
PricewaterhouseCoopers from July 2000 to April 2003.
-----------------------------------------------------------------------------------------------------------------------------------
Ty S. Deputy Treasurer; 2006 Vice President of CMA since 2002; Assistant Vice President
Edwards and Director, State Street Corporation prior to 2002.
(Born 1966)
-----------------------------------------------------------------------------------------------------------------------------------
Barry S. Controller; 2006 Vice President-Fund Treasury of CMA since October 2004;
Vallan Vice President-Trustee Reporting from April 2002
(Born 1969) to October 2004; Management Consultant,
PricewaterhouseCoopers prior to October 2002.
-----------------------------------------------------------------------------------------------------------------------------------
Ryan C. Assistant Secretary; 2005 Assistant General Counsel, Bank of America since March 2005;
Larrenaga Associate, Ropes & Gray LLP (law firm) from February 2005.
(Born 1970)
-----------------------------------------------------------------------------------------------------------------------------------
Peter Fariel Assistant Secretary; 2006 Associate General Counsel, Bank of America since April 2005;
(Born 1957) Partner, Goodwin Procter LLP (law firm) prior to April 2005.
-----------------------------------------------------------------------------------------------------------------------------------
Julian Quero Assistant Treasurer; 2006 Senior Compliance Manager of the CMA since April 2002;
(Born 1967) Assistant Vice President of Taxes and Distributions
of CMA from 2001 to April 2002.
-----------------------------------------------------------------------------------------------------------------------------------
(1) The address of each officer, other than Messrs. Parmentier and Haley
and Ms. Hoene, is c/o Liberty All-Star Funds, One Financial Center, Boston, MA
02111. The address of Messrs. Parmentier and Haley and Ms. Hoene is c/o Liberty
All-Star Funds, 100 Federal Street, Boston, MA 02110.
Messrs. Connaughton, Clarke, Coleman, DiMaria, Edwards, Vallan, Bordewick,
Larrenaga, Fariel and Quero and Ms. Hoene hold the same offices with the
Columbia Funds, which consist of 153 open-end funds and 7 closed-end funds as of
August 31, 2006. Messrs. Bordewick, Larrenaga and Fariel and Ms. Hoene hold the
same offices with the Registered Hedge Funds.
During 2005, the Board of Trustees/Directors of the Funds held five
meetings and the Audit Committee held four meetings. Each of these Board and
Committee meetings was held jointly. All sitting Trustees/Directors were present
at all meetings. Mr. Brock was appointed Trustee/Director in August and,
20
therefore, did not attend meetings held prior to that month. The Funds do not
have a formal policy on Trustee/Director attendance at annual meetings of
Shareholders. None of the Trustees/Directors attended the Funds' 2006 annual
shareholder meetings.
Shareholders may communicate with the Trustees/Directors as a group or
individually. Any such communications should be sent to a Fund's Board or an
individual Trustee/Director in writing, c/o the Secretary of the Liberty All-
Star Funds, One Financial Center, Mail Stop MA5-515-11-05, Boston, MA 02111-
2621. The Secretary may determine not to forward any letter to the Board or a
Trustee/Director that does not relate to the business of a Fund.
AUDIT COMMITTEE
Messrs. Benning, Brock, Lowry and Neuhauser (Committee Chairman) are
members of the Audit Committee of each Fund. Each Fund's Audit Committee is
comprised only of members who are Disinterested Trustees/Directors and are
"independent" (as defined in the New York Stock Exchange ("NYSE") Listing
Standards for trustees/directors of closed-end investment companies) of the
Funds.
Each Audit Committee has adopted a written Audit Committee charter that
sets forth the Audit Committee's structure, duties and powers, and methods of
operation. The principal functions of each Audit Committee are to assist Board
oversight of: (1) the integrity of each Fund's financial statements, (2) each
Fund's compliance with legal and regulatory requirements, (3) the qualifications
and independence of the independent registered public accounting firm (also
referred to herein as the independent accountants), (4) the performance of
BAIA's internal audit function, and (5) the performance of the independent
accountants. Each Audit Committee is directly responsible for the appointment,
compensation, retention and oversight of the work of the independent accountants
(including the resolution of disagreements between management and the
independent accountants regarding financial reporting) for the purpose of
preparing or issuing an audit report or performing other review or attest
services for the Fund. A copy of the Audit Committee Charter was attached to
the proxy statement regarding the annual meeting of shareholders on April 28,
2006.
NOMINATION INFORMATION
Neither Fund currently has a nominating or compensation committee. Each
Fund's Board does not believe that a nominating committee is necessary because,
to date, the Board of each Fund has been small and composed principally or
entirely of Disinterested Trustees/Directors.
When necessary or appropriate, the Disinterested Trustees/Directors of
each Fund serve as an AD HOC committee for the consideration of Trustee/Director
nominations. No AD HOC nominating committee of either Fund has adopted a
charter. Disinterested Trustees/Directors are nominated only by an AD HOC
nominating committee. Each Fund's current Trustees/Directors are not "interested
persons" of the Fund under the Investment Company Act and are "independent"
under NYSE Listing Standards.
The Disinterested Trustees/Directors consider prospective Trustee/Director
candidates from any reasonable source, including current Disinterested
Trustees/Directors, Fund management, Fund Shareholders and other persons or
21
entities. Although the Funds do not have a formal policy, Shareholders of a Fund
who wish to nominate a candidate to a Fund's Board may send information
regarding prospective candidates to the Funds' Secretary at One Financial
Center, Mail Stop MA5-515-11-05, Boston, MA 02111-2621. The information should
include evidence of the Shareholders' Fund ownership, a full listing of the
proposed candidate's education, experience, current employment, date of birth,
names and addresses of at least three professional references, information as to
whether the candidate is not an "interested person" under the Investment Company
Act and "independent" under NYSE Listing Standards in relation to the Fund, and
such other information as may be helpful to the Disinterested Trustees/Directors
in evaluating the candidate. All satisfactorily completed information packages
regarding a candidate will be forwarded to a Disinterested Trustee/Director for
consideration. Recommendations for candidates will be evaluated in light of
whether the number of Trustees/Directors of a Fund is expected to be increased
and in light of anticipated vacancies. All nominations from Fund Shareholders
will be acknowledged. During periods when the Disinterested Trustees/Directors
are not recruiting new Board members, nominations will be maintained on file
pending the active recruitment of Trustees/Directors.
The Disinterested Trustees/Directors have no formal list of qualifications
for Trustee/Director nominees. However, the Disinterested Trustees/Directors may
consider, among other things, whether prospective nominees have distinguished
records in their primary careers, unimpeachable integrity, and substantive
knowledge in areas important to the Board's operations, such as background or
education in finance, auditing, securities law, the workings of the securities
markets, or investment advice. For candidates to serve as Disinterested
Trustees/Directors, independence from the Funds' investment adviser, its
affiliates and other principal service providers is critical, as is an
independent and questioning mind-set. In each case, the Disinterested
Trustees/Directors will evaluate whether a candidate is an "interested person"
under the Investment Company Act and "independent" under NYSE Listing Standards.
The Disinterested Trustees/Directors also consider whether a prospective
candidate's workload should allow him or her to attend the vast majority of
Board meetings, be available for service on Board committees, and devote the
additional time and effort necessary to stay apprised of Board matters and the
rapidly changing regulatory environment in which the Funds operate. Different
substantive areas may assume greater or lesser significance at particular times,
in light of a Board's present composition and its perceptions about future
issues and needs.
The Disinterested Trustees/Directors initially evaluate prospective
candidates on the basis of their resumes, considered in light of the criteria
discussed above. Those prospective candidates that appear likely to be able to
fill a significant need of the Boards would be contacted by a Disinterested
Trustee/Director by telephone to discuss the position; if there appeared to be
sufficient interest, an in-person meeting with one or more Disinterested
Trustees/Directors would be arranged. If the Disinterested Trustees/Directors,
based on the results of these contacts, believed they had identified a viable
candidate, they would air the matter with the full group of Trustees/Directors
for input. Any request by Fund management to meet with the prospective candidate
would be given appropriate consideration. The Funds have not paid a fee to third
parties to assist in finding nominees.
COMPENSATION OF CURRENT TRUSTEES/DIRECTORS
22
The following table shows, for the year ended December 31, 2005, the
compensation received from each Fund by the Trustees/Directors, and the
aggregate compensation paid to the Trustees/Directors for service on the Boards
of funds within the Fund Complex. Neither Fund has a bonus, profit-sharing or
retirement plan.
------------------------------------------------------------------
| |AGGREGATE |AGGREGATE |TOTAL |
| |COMPENSATION |COMPENSATION|COMPENSATION |
| |FROM THE EQUITY|FROM THE |FROM THE FUND|
| |FUND |GROWTH FUND |COMPLEX |
------------------------------------------------------------------
|DISINTERESTED TRUSTEES/DIRECTORS |
------------------------------------------------------------------
|John A. Benning |$24,386 |$7,614 |$32,000 |
------------------------------------------------------------------
|Thomas W. Brock (1) |$13,042 |$4,050 |$42,842 |
------------------------------------------------------------------
|Richard W. Lowry (1) |$32,010 |$9,990 |$142,500 |
------------------------------------------------------------------
|John J. Neuhauser (1)|$26,927 |$8,406 |$137,833 |
------------------------------------------------------------------
(1) In addition to receiving compensation for their services as
Trustees/Directors of the Funds, Messrs. Lowry and Neuhauser received
compensation for service as Trustees/Directors of the Columbia Funds, and Mr.
Brock received compensation for service as Director/Manager of the Registered
Hedge Funds. As noted above, the Funds, the Columbia Funds and the Registered
Hedge Funds are part of the Fund Complex.
SHARE OWNERSHIP
The following table shows the dollar range of equity securities
beneficially owned by each nominee and each Trustee/Director as of December 31,
2005 (i) in each of the Funds, and (ii) in all funds overseen by the
Trustee/Director in the Fund Complex.
-------------------------------------------------------------------------------
|DOLLAR RANGE OF |DOLLAR RANGE OF |AGGREGATE DOLLAR RANGE OF
|EQUITY SECURITIES|EQUITY SECURITIES|EQUITY SECURITIES OWNED
|OWNED IN THE |OWNED IN THE |IN ALL FUNDS OVERSEEN BY
|EQUITY FUND (1) |GROWTH FUND (1) |TRUSTEE/DIRECTOR IN FUND
| | |COMPLEX
-------------------------------------------------------------------------------
DISINTERESTED NOMINEES
-------------------------------------------------------------------------------
[_________] | | |
-------------------------------------------------------------------------------
George R. Gaspari| | |
-------------------------------------------------------------------------------
INTERESTED NOMINEE
-------------------------------------------------------------------------------
Edmund J. Burke | | |
-------------------------------------------------------------------------------
DISINTERESTED TRUSTEES/DIRECTORS
-------------------------------------------------------------------------------
John A. Benning |Over $100,000 |$10,001 - $50,000|Over $100,000
-------------------------------------------------------------------------------
23
-------------------------------------------------------------------------------
|DOLLAR RANGE OF |DOLLAR RANGE OF |AGGREGATE DOLLAR RANGE OF
|EQUITY SECURITIES|EQUITY SECURITIES|EQUITY SECURITIES OWNED
|OWNED IN THE |OWNED IN THE |IN ALL FUNDS OVERSEEN BY
|EQUITY FUND (1) |GROWTH FUND (1) |TRUSTEE/DIRECTOR IN FUND
| | |COMPLEX
-------------------------------------------------------------------------------
Thomas W. Brock |None |None |None
-------------------------------------------------------------------------------
Richard W. Lowry |Over $100,000 |$1 - $10,000 |Over $100,000
-------------------------------------------------------------------------------
John J. Neuhauser|$1 - $10,000 |$1 - $10,000 |Over $100,000
-------------------------------------------------------------------------------
(1) Securities valued as of December 31, 2005.
REQUIRED VOTE
The election of Trustees of the Equity Fund is by a plurality of the
shares voting at the Meeting. The election of the Directors of the Growth Fund
is by a majority vote of the shares represented in person or by proxy at the
Meeting and entitled to vote.
THE BOARDS RECOMMEND THAT SHAREHOLDERS OF EACH FUND
VOTE "FOR" PROPOSAL 1.
24
PROPOSAL 2: APPROVAL OF THE NEW FUND MANAGEMENT AGREEMENT
Shareholders of each Fund are being asked to approve a New Fund Management
Agreement between the Fund and ALPS Advisers. As described above, each Fund's
Existing Fund Management Agreement will terminate upon the Closing. Therefore,
approval of the New Fund Management Agreements is sought so that the operation
of each Fund can continue without interruption. If the Transaction is not
completed for any reason, the Existing Agreements will continue in effect.
BOARD APPROVAL AND RECOMMENDATION
On September 7, 2006, the Trustees/Directors of each Fund, all of whom are
Disinterested Trustees/Directors, unanimously approved the New Fund Management
Agreement for the Fund and unanimously recommended that Shareholders of each
Fund approve the New Fund Management Agreement. A summary of the Board's
considerations is provided below in the section entitled "Evaluation by the
Boards."
DESCRIPTION OF THE EXISTING AND NEW FUND MANAGEMENT AGREEMENTS
The form of the New Fund Management Agreement is set forth in Exhibit A to
this Proxy Statement. The description of terms in this section is qualified in
its entirety by reference to Exhibit A. Exhibit B shows the date of each
Existing Fund Management Agreement, the date when the Existing Fund Management
Agreement was last approved by the Board, the date when the Existing Fund
Management Agreement was last submitted to a vote of Shareholders of each Fund,
including the purpose of such submission, and the advisory fee rates under both
the Existing Fund Management Agreement and the New Fund Management Agreement for
each Fund.
Under each Existing Fund Management Agreement, BAIA is responsible for
providing administrative services to the respective Fund, including: providing
office space, communicating with shareholders and broker-dealers, compensating
Fund officers who are also officers or employees of BAIA or its affiliates and
supervising the provision of transfer agency, dividend disbursing, custodial and
other services to the Fund. BAIA has entered into a Sub-Administration
Agreement with its affiliate, Columbia Management Advisors, LLC ("CMA"), for the
provision of certain administrative services to the Funds. CMA also provides
pricing and bookkeeping services to the Funds under a separate Pricing and
Bookkeeping Agreement ("Existing Pricing Agreement") with the Funds.
The terms of each New Fund Management Agreement are substantially the same
as the terms of the respective Existing Fund Management Agreement. However,
administrative, pricing and bookkeeping services will be provided to each Fund
by ALPS Fund Services under a separate Administration, Bookkeeping and Pricing
Services Agreement ("New Administration Agreement"). The fee rates for
investment management and administrative services under the New Fund Management
Agreements and the New Administration Agreements are the same as the fee rates
for those services under the Existing Fund Management Agreements, though fees
will be calculated on a daily rather than a weekly basis under the New Fund
Management Agreements and the New Administration Agreements. ALPS has advised
the Boards that it does not anticipate that the Transaction will result in any
25
reduction in the quality of services now provided to the Funds or have any
adverse effect on the ability of ALPS Advisers or ALPS Fund Services to fulfill
its obligations to the Funds.
The following discussion of the New Fund Management Agreement describes
both the Existing Fund Management Agreement and the New Fund Management
Agreement for each Fund. The next several paragraphs briefly summarize some
important provisions of the Existing and New Fund Management Agreements, but for
a complete understanding of the Agreements, you should read Exhibits A and B.
SERVICES PROVIDED BY THE FUND MANAGER
The New Fund Management Agreement for each Fund requires the Fund Manager
to provide general management services to the Fund and to provide overall
supervisory responsibility for the general management and investment of each
Fund's assets, subject to the review and approval of the Trustees/Directors.
The Fund Manager is responsible for setting each Fund's investment program and
strategies, revising the programs, as necessary, and monitoring and reporting
periodically to the Trustees/Directors concerning the implementation of the
programs.
The New Fund Management Agreement for each Fund provides for the Fund
Manager and the Fund to appoint one or more Portfolio Managers to have full
discretion and to make all determinations with respect to the investment and
reinvestment of the portion of the Fund's assets assigned to that Portfolio
Manager. The New Fund Management Agreement requires the Fund Manager to: (i)
advise the Trustees/Directors which Portfolio Managers the Fund Manager believes
are best suited to invest the assets of the Fund; (ii) monitor and evaluate the
investment performance of each Portfolio Manager; (iii) allocate and reallocate
the portion of the Fund's assets to be managed by each Portfolio Manager; (iv)
recommend changes of or additional Portfolio Managers when deemed appropriate by
the Fund Manager; (v) coordinate and monitor the investment activities of the
Portfolio Managers to ensure compliance with the Fund's investment policies and
restrictions and applicable laws; (vi) have full investment discretion to make
all determinations with respect to the investment of the Fund's assets not then
managed by a Portfolio Manager; and (vii) implement procedures reasonably
designed to ensure that the Portfolio Managers comply with the Fund's investment
objectives, policies and restrictions. The New Fund Management Agreement also
requires the Fund Manager to provide officers, office space and certain
administrative services to each Fund.
TERM OF THE NEW FUND MANAGEMENT AGREEMENT
The New Fund Management Agreement for each Fund provides that it will
continue in effect for an initial period beginning on the Closing date, or such
later date on which the Shareholders of the Fund approve the New Fund Management
Agreement, and ending on the second anniversary of that date. After that, it
will continue in effect from year to year as long as the continuation is
approved at least annually (i) by the Fund's respective Board or by vote of a
majority of the outstanding voting securities of the Fund, and (ii) by vote of a
majority of the Fund's Disinterested Trustees/Directors.
26
TERMINATION OF THE NEW FUND MANAGEMENT AGREEMENT
The New Fund Management Agreement for a Fund may be terminated without
penalty by vote of the Trustees/Directors, including a majority of the Fund's
Disinterested Trustees/Directors, or by vote of a majority of the outstanding
voting securities of the Fund, on sixty days' written notice to the Fund
Manager, or by the Fund Manager upon sixty days' written notice to the Fund, and
each terminates automatically in the event of its "assignment" as defined in the
Investment Company Act. The Investment Company Act defines "assignment" to
include, in general, transactions in which a significant change in the ownership
of an investment adviser or its parent company occurs.
LIABILITY OF THE FUND MANAGER
Each New Fund Management Agreement provides that the Fund Manager will not
be liable to the Fund or its Shareholders, except for liability arising from the
Fund Manager's willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations or duties.
DIFFERENCES BETWEEN THE EXISTING AND NEW FUND MANAGEMENT AGREEMENTS
Each New Fund Management Agreement is substantially the same as the
corresponding Existing Fund Management Agreement. However, as noted above,
responsibility for the administrative services provided in the Existing Fund
Management Agreement will instead be provided pursuant to the New Administration
Agreement. In addition, the New Fund Management Agreement clarifies the
investment management and other related services to be provided to the Fund by
the Fund Manager and the expenses to be paid by the Fund. Also, fees will be
calculated and accrued under the New Fund Management Agreements based on the
Fund's average daily net assets and will be payable monthly. Under the Existing
Fund Management Agreement for the Equity Fund, fees are calculated based on the
Fund's average weekly net assets and are payable monthly. Under the Existing
Fund Management Agreement for the Growth Fund, fees are calculated based on the
Fund's average weekly net assets and are payable quarterly. Language also has
been added to the New Fund Management Agreement requiring the Fund Manager to
comply with various regulatory requirements and SEC interpretive releases
relating to compliance programs, codes of ethics and soft dollars.
Each New Fund Management Agreement also has been revised to reflect
changes resulting from the Transaction. The material terms of the New Fund
Management Agreements that will be different from the terms of the Existing Fund
Management Agreements are that: (1) ALPS Advisers will replace BAIA as
investment adviser; (2) the dates of execution and termination will coincide
with the Closing date and approval by Shareholders; and (3) the New Fund
Management Agreement will require ALPS Advisers to implement procedures
reasonably designed to ensure that the Portfolio Managers comply with each
Fund's investment objectives, policies and restrictions.
REQUIRED VOTE
Approval of each New Fund Management Agreement requires the affirmative
vote of a "majority of the outstanding voting securities" of each Fund, which,
under the Investment Company Act, means the affirmative vote of the lesser of
(a) 67% or more of the shares of the Fund present at the Meeting or represented
27
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 BOARDS RECOMMEND THAT SHAREHOLDERS OF EACH FUND
VOTE "FOR" PROPOSAL 2.
28
PROPOSAL 3: APPROVAL OF NEW PORTFOLIO MANAGEMENT AGREEMENTS
Shareholders of each Fund are being asked to approve New Portfolio
Management Agreements among the relevant Fund, ALPS Advisers and each Portfolio
Manager listed below.
EQUITY FUND
3a. Chase Investment Counsel Corporation
3b. Matrix Asset Advisers, Inc.
3c. Pzena Investment Management, LLC
3d. Schneider Capital Management Corporation
3e. TCW Investment Management Company
GROWTH FUND
3f. TCW Investment Management Company
3g. M.A. Weatherbie & Co., Inc.
3h. William Blair & Company, L.L.C.
As described above, each Existing Portfolio Management Agreement will
automatically terminate upon the Closing. Therefore, approval of the New
Portfolio Management Agreements is sought so that the operation of each Fund can
continue without interruption. For each Fund, this proposal to approve New
Portfolio Management Agreements is subject to the approval of the proposal to
approve a New Fund Management Agreement. If the Transaction is not completed
for any reason, the Existing Agreements will continue in effect.
THE MULTI-MANAGER METHODOLOGY
Each Fund allocates its portfolio assets among a number of independent
investment management firms ("Portfolio Managers") recommended by the Fund
Manager and approved by the Board, currently five for the Equity Fund and three
for the Growth Fund. Each Portfolio Manager employs a different investment
style and/or strategy, and from time to time the Fund Manager rebalances each
Fund's portfolio among the Portfolio Managers. The Funds' multi-manager
methodology is based on the premise that most investment management firms
consistently employ a distinct investment style which causes them to emphasize
stocks with particular characteristics, and that, because of changing investor
preferences, any given investment style will move into and out of market favor
and will result in better performance under certain market conditions but poorer
market performance under other conditions. The Funds' multi-manager methodology
seeks to achieve more consistent and less volatile performance over the long
term than if a single Portfolio Manager was employed.
The Portfolio Managers recommended by the Fund Manager represent a
blending of different styles which, in the Fund Manager's opinion, is
appropriate for the Funds' investment objectives and which is sufficiently broad
so that at least one of such styles can reasonably be expected to be in relative
market favor in all reasonably foreseeable market conditions. The Fund Manager
continuously analyzes and evaluates the investment performance and portfolios of
the Funds' Portfolio Managers and from time to time recommends changes in the
Portfolio Managers. Such recommendations could be based on factors such as a
29
change in a Portfolio Manager's investment style or a Portfolio Manager's
divergence from the investment style for which it was selected, changes deemed
by the Fund Manager to be potentially adverse in a Portfolio Manager's personnel
or ownership or other structural or organizational changes affecting the
Portfolio Manager, or a deterioration in a Portfolio Manager's investment
performance when compared to that of other investment management firms employing
similar investment styles. Portfolio Manager changes may also be made to change
the mix of investment styles employed by the Funds' Portfolio Managers.
Portfolio Manager changes, as well as rebalancings of the Funds' assets among
the Portfolio Managers, may result in portfolio turnover in excess of what would
otherwise be the case. Increased portfolio turnover results in increased
brokerage commission and transaction costs, and may result in the recognition of
additional capital gains.
BOARD APPROVAL AND RECOMMENDATION
On September 7, 2006, the Trustees/Directors of each Fund, all of whom are
Disinterested Trustees/Directors, unanimously approved each New Portfolio
Management Agreement for each Fund and unanimously recommended that Shareholders
approve each New Portfolio Management Agreement relating to that Fund. A summary
of the Boards' considerations is provided below in the section entitled
"Evaluation by the Boards."
In accordance with the Existing Order, the Shareholders of each Fund have
previously approved each Existing Portfolio Management Agreement, other than the
Existing Portfolio Management Agreement among the Equity Fund, BAIA and Chase
Investment Counsel Corporation ("Chase"). BAIA continuously monitors and
evaluates each Portfolio Manager on a quantitative and qualitative basis. The
evaluation process focuses on, but is not limited to, the firm's philosophy,
investment process, personnel and performance.
After evaluation based on the aforementioned criteria, BAIA deemed it in
the best interest of the Equity Fund to terminate Mastrapasqua Asset Management,
Inc. ("Mastrapasqua"), a portfolio manager of the Equity Fund since November 1,
2000, and to replace Mastrapasqua with Chase because BAIA believed that Chase's
investment philosophy and management style would be more compatible with the
philosophies of the Equity Fund's other Portfolio Managers. BAIA also believed
that Chase's investment management process and performance record would benefit
the Equity Fund. Based upon these factors and Chase's generally favorable
performance record, BAIA recommended that the Board approve the Existing
Portfolio Management Agreement between the Equity Fund, BAIA and Chase.
Based on the foregoing and on BAIA's quantitative and qualitative
analysis, BAIA recommended, and the Equity Fund's Board of Trustees approved on
May 10, 2006, the termination of the Equity Fund's portfolio management
agreement with Mastrapasqua and its replacement with Chase, effective June 1,
2006. Shareholders are not being asked to approve this Existing Portfolio
Management Agreement with Chase at the Meeting. Instead, Shareholder approval
is sought to approve the New Portfolio Management Agreements, which are between
each Fund, ALPS Advisers and each respective Portfolio Manager.
30
DESCRIPTION OF THE EXISTING AND NEW PORTFOLIO MANAGEMENT AGREEMENTS
The form of the New Portfolio Management Agreement is set forth in Exhibit
C to this Proxy Statement. The description of terms in this section is
qualified in its entirety by reference to Exhibit C. Exhibit D shows the date of
each Existing Portfolio Management Agreement, the date when each Existing
Portfolio Management Agreement was last approved by the Board with respect to
each Fund, the date when each Existing Portfolio Management Agreement was last
submitted to a vote of Shareholders of each Fund, including the purpose of such
submission, and the advisory fee rates under both the Existing Portfolio
Management Agreements and the New Portfolio Management Agreements for each Fund.
The terms of each New Portfolio Management Agreement are substantially the
same as those of the respective Existing Portfolio Management Agreement. The
Funds do not pay any fees under either the Existing Portfolio Management
Agreements or the New Portfolio Management Agreements. All payments to a
Portfolio Manager under an Existing Portfolio Management Agreement are made by
BAIA and, if the New Portfolio Management Agreements are approved, will be made
by ALPS Advisers. The fee rates to be paid by ALPS Advisers under each New
Portfolio Management Agreement are the same as the fee rates paid by BAIA under
the respective Existing Portfolio Management Agreement. However, under the New
Portfolio Management Agreements, fees will be calculated on a daily rather than
a weekly basis. ALPS Advisers and each Portfolio Manager have advised the
Boards that they do not anticipate that the Transaction will result in any
reduction in the quality of services now provided to the Funds or have any
adverse effect on the ability of any Portfolio Manager to fulfill its
obligations under the New Portfolio Management Agreements.
The following discussion of the New Portfolio Management Agreement
describes both the Existing Portfolio Management Agreements and the New
Portfolio Management Agreements for each Fund. Each New Portfolio Management
Agreement matches the form in Exhibit C, except for items specific to a Fund,
such as the Fund's name and fee rate. The next several paragraphs briefly
summarize some important provisions of the Existing and New Portfolio Management
Agreements, but for a complete understanding of the Agreements, you should read
Exhibits C and D.
SERVICES PROVIDED BY THE PORTFOLIO MANAGERS
The New Portfolio Management Agreement for each Fund essentially provides
that the Portfolio Manager, under the Board's and the Fund Manager's supervision
and subject to the Fund's registration statement, will: (1) formulate and
implement an investment program for the Fund's assets assigned to the Portfolio
Manager; (2) decide what securities to buy and sell for the Fund's portfolio (or
the portion of the Fund's portfolio managed by the Portfolio Manager); (3)
select brokers and dealers to carry out portfolio transactions for the Fund (or
the portion of the Fund's portfolio managed by the Portfolio Manager); and (4)
report results to the Board of the Fund.
TERM OF THE NEW PORTFOLIO MANAGEMENT AGREEMENTS
The New Portfolio Management Agreement provides that it will continue in
effect for an initial period beginning on the Closing date, or such later date
on which the Shareholders of each Fund approve the New Fund Management
31
Agreement, and ending on the second anniversary of that date. After that, it
will continue in effect from year to year as long as the continuation is
approved at least annually (i) by each Fund's respective Board or by vote of a
majority of the outstanding voting securities of the Fund, and (ii) by vote of a
majority of each Fund's Disinterested Trustees/Directors.
TERMINATION OF THE NEW PORTFOLIO MANAGEMENT AGREEMENTS
The New Portfolio Management Agreement for each Fund may be terminated
without penalty (i) by vote of the Fund's respective Board or by vote of a
majority of the outstanding voting securities of the Fund, on thirty days'
written notice to the Portfolio Manager, (ii) by the Fund Manager upon thirty
days' written notice to the Portfolio Manager, or (iii) by the Portfolio Manager
upon ninety days' written notice to the Fund Manager and the Fund, and the New
Portfolio Management Agreements terminate automatically in the event of their
"assignment," as described above, or upon termination of the New Fund Management
Agreement.
LIABILITY OF THE PORTFOLIO MANAGER
Each New Portfolio Management Agreement provides that the Portfolio
Manager will not be liable to the Fund Manager, the relevant Fund or its
Shareholders, except for liability arising from the Portfolio Manager's willful
misfeasance, bad faith, gross negligence or violation of the standard of care
established by and applicable to the Portfolio Manager in its actions under the
New Portfolio Management Agreement or breach of its duty or obligations under
the New Portfolio Management Agreement.
DIFFERENCES BETWEEN THE EXISTING AND NEW PORTFOLIO MANAGEMENT AGREEMENTS
The New Portfolio Management Agreement for each Fund is substantially the
same as the Existing Portfolio Management Agreement. However, the New Portfolio
Management Agreement clarifies the portfolio management services that the
Portfolio Manager will provide to the Fund and requires the Portfolio Manager to
make certain additional representations and warranties. In addition, fees will
be calculated and accrued daily and will be payable monthly. Under the Existing
Portfolio Management Agreement for the Equity Fund, fees are calculated based on
the Fund's average weekly net assets and are payable monthly. Under the
Existing Portfolio Management Agreement for the Growth Fund, fees are calculated
based on the Fund's average weekly net assets and are payable quarterly.
Language also has been added to the New Portfolio Management Agreements
requiring the Portfolio Manager to comply with various regulatory requirements
relating to compliance programs.
The New Portfolio Management Agreements also have been revised to reflect
changes resulting from the Transaction. The material terms of the New Portfolio
Management Agreements that will be different from the terms of the Existing
Portfolio Management Agreements are as follows: (1) ALPS Advisers will replace
BAIA as investment adviser; (2) the dates of execution and termination will
coincide with the Closing date and approval by Shareholders; and (3) the New
Portfolio Management Agreement will require each Portfolio Manager to provide to
the Fund and the Fund Manager summaries, certifications and reports regarding
the Portfolio Manager's compliance policies and procedures.
32
REQUIRED VOTE
Approval of each New Portfolio Management Agreement requires the
affirmative vote of a "majority of the outstanding voting securities" of each
Fund, which, under the Investment Company Act, 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 BOARDS RECOMMEND THAT SHAREHOLDERS OF EACH FUND VOTE
"FOR" PROPOSAL 3.
33
PROPOSAL 4: APPROVAL OF A POLICY TO PERMIT EACH FUND AND ALPS
ADVISERS, INC. TO ENTER INTO PORTFOLIO MANAGEMENT AGREEMENTS IN
ADVANCE OF SHAREHOLDER APPROVAL
Shareholders of each Fund are being asked to approve a policy to permit
the Fund and ALPS Advisers to enter into Portfolio Management Agreements in
advance of Shareholder approval.
Under the terms of an exemptive order issued to each Fund and BAIA by the
SEC (collectively, the "Existing Order"), the Funds may enter into a new
Portfolio Management Agreement in advance of Shareholder approval. The Existing
Order requires that the new Portfolio Management Agreement provide for a fee no
higher than that provided in, and be on terms and conditions substantially
similar to, the Funds' Agreements with its other Portfolio Managers. The
Existing Order also requires that a new Portfolio Management Agreement be
approved by Fund Shareholders at the regularly scheduled annual meeting next
following the date of the new Portfolio Management Agreement.
Upon the Closing, the Funds no longer will be able to rely on the Existing
Order because the Existing Order terminates once BAIA is no longer the Funds'
investment adviser. The Funds and ALPS Advisers will apply for a new exemptive
order for the same relief, subject to a number of additional conditions (the
"New Order"). There can be no assurance that the SEC will grant the New Order.
If the SEC grants the New Order, the Funds and ALPS Advisers will not be
permitted to rely on the New Order unless the Shareholders of the Funds have
approved the operation of each Fund in a manner that permits the Funds and ALPS
Advisers to enter into Portfolio Management Agreements in advance of Shareholder
approval. Approval of this proposal is sought so that the Funds can operate
under the New Order as soon as it is issued. If the Transaction is not
completed for any reason, the Existing Order will continue in effect.
BOARD APPROVAL AND RECOMMENDATION
On September 7, 2006, the Trustees/Directors of each Fund, all of whom are
Disinterested Trustees/Directors, unanimously approved the submission to
Shareholders of a policy to permit the Fund and ALPS Advisers to enter into
Portfolio Management Agreements in advance of Shareholder approval and
unanimously recommended that Shareholders of the Fund approve this proposal.
The Board recommends approval because reliance on the New Order would
facilitate the operation of the Funds by ALPS Advisers in the same manner as the
Funds are operated by BAIA in reliance on the Existing Order. Fund Shareholders
would continue to benefit because this type of exemptive relief reduces Fund
expenses to the extent that a Fund does not have to prepare and solicit proxies
each and every time the Fund and the Fund Manager enter into or modify a
Portfolio Management Agreement. The exemptive relief also permits a Fund to
hire, terminate and replace Portfolio Managers more efficiently according to the
judgment of the Board and ALPS Advisers.
If Shareholders approve the proposal, the Board will continue to oversee
the selection and engagement of Portfolio Managers. The Board, including a
majority of the Disinterested Trustees/Directors, will continue to evaluate and
34
consider for approval all new or amended Portfolio Management Agreements. In
addition, Fund Shareholders would continue to approve each New Portfolio
Management Agreement at the regularly scheduled annual meeting next following
the date of the Portfolio Management Agreement. In accordance with the
Investment Company Act, and the terms of the Portfolio Management Agreements,
the Board, including a majority of the Disinterested Trustees/Directors, will
continue to review and consider for renewal, on an annual basis, each Portfolio
Management Agreement after the initial term.
Shareholder approval of this proposal will not affect the total fees paid
by the Funds to ALPS Advisers or the amounts paid by ALPS Advisers to each
Portfolio Manager. In addition, any new Portfolio Management Agreement will
provide for a fee no higher than that provided in the Funds' existing Portfolio
Management Agreements and will be on substantially the same terms and conditions
as the existing Portfolio Management Agreements. In the event a new Portfolio
Management Agreement that became effective pursuant to the New Order provides
for fees at rates less than those provided in the existing Portfolio Management
Agreements, the difference will be passed on to the Fund and its Shareholders
through a corresponding voluntary reduction in the fees payable by the Fund to
ALPS Advisers.
If the proposal is not approved but the Transaction is approved it is
unlikely that the Funds will be able to receive exemptive relief under Section
15(a) of the Investment Company Act allowing them to continue to operate in the
current manner. However, if neither the proposal or Transaction is approved,
the Funds will be able to rely on the Existing Order.
REQUIRED VOTE
Approval of the proposal to permit the Funds and ALPS Advisers to enter
into Portfolio Management Agreements in advance of Shareholder approval requires
the affirmative vote of a "majority of the outstanding voting securities" of
each Fund, which, under the Investment Company Act, 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 BOARDS RECOMMEND THAT SHAREHOLDERS OF EACH FUND VOTE
"FOR" PROPOSAL 4.
35
EVALUATION BY THE BOARDS
BOARD MEETINGS AND CONSIDERATIONS
The Boards met in person on July 19, 2006, August 7, 2006, and [September
7], 2006 to evaluate, among other things, the Transaction, ALPS Advisers and
ALPS, to determine whether consummating the Transaction was in the best
interests of the Funds' Shareholders. At each of those meetings, and throughout
the process to consider the Transaction, the Board, including the all
Disinterested Trustees/Directors, was advised by its independent legal counsel.
In their consideration of the Transaction, the Board and its counsel
reviewed materials furnished by BAIA and ALPS and met with senior
representatives of ALPS and ALPS Advisers regarding their personnel, operations
and financial condition. The Board also reviewed the terms of the Transaction
and considered its possible effects on the Funds and their Shareholders. In
this regard, the Trustees/Directors met with representatives of BAIA, ALPS and
ALPS Advisers during board meetings and in private sessions to discuss the
anticipated effects of the Transaction. During these meetings, the
representatives of BAIA, ALPS and ALPS Advisers indicated their belief that the
Transaction would not adversely affect (1) the continued operation of the Funds;
(2) the capabilities of the senior investment advisory personnel of BAIA who
currently manage the Funds to continue to provide these and other services to
the Funds at the current levels as employees of ALPS Advisers; and (3) the
capabilities of each Portfolio Manager to continue to provide the same level of
advisory and other services to the Funds. Those representatives also indicated
that they believed that the Transaction may provide certain benefits to the
Funds, but also indicated that there could be no assurance as to any particular
benefits that may result.
In connection with the Boards' recommendation that Shareholders approve
the New Agreements required by the Transaction, the Trustees/Directors
considered the following factors, in addition to the factors discussed below:
(1)the manner in which the Funds' assets are managed will not change as
a result of the Transaction, and the same people who currently manage
the Funds assets will continue to do after the Transaction;
(2)the material terms of the New Agreements and the agreements for the
provision of administrative services to the Funds, including the fees
payable by the Funds, are substantially the same as the terms of the
Funds' existing agreements;
(3)the favorable history, reputation, qualification, and background of
ALPS;
(4)the qualifications of the ALPS and ALPS Advisers personnel who will
provide advisory and administrative services to the Funds;
(5)ALPS' and ALPS Advisers' financial condition;
36
(6)The fact that Fund Shareholders will not bear any costs in connection
with the Transaction, inasmuch as BAIA and ALPS Advisers have
committed to pay the expenses of the Funds in connection with the
Transaction, including all expenses in connection with the
solicitation of proxies; and
(7)the Funds may realize benefits as a result of the Transaction,
including possible benefits from the resources of ALPS that would now
be available to each Fund.
BOARD CONSIDERATION OF THE NEW AGREEMENTS
The Investment Company Act requires that the Board of each Fund review
each Fund's advisory contracts and consider whether to approve them and
recommend that the Shareholders of each Fund approve them. At its meeting on
[September 7], 2006, the Boards, all members of which are Disinterested
Trustees/Directors, conducted such a review and approved the New Fund Management
Agreement between each Fund and ALPS Advisers and the separate New Portfolio
Management Agreements, each among the Fund, ALPS Advisers and a Portfolio
Manager.
Prior to the Boards' approval of those agreements, the Disinterested
Trustees/Directors met to consider management's recommendations as to the
approval of each New Agreement. As part of the process to consider those
matters, legal counsel to the Disinterested Trustees/Directors requested certain
information from ALPS Advisers and each Portfolio Manager. In response to these
requests, the Disinterested Trustees/Directors received reports from ALPS
Advisers and each Portfolio Manager that addressed specific factors to be
considered by the Boards. The Boards' counsel also provided the Disinterested
Trustees/Directors and the Boards with a memorandum regarding their
responsibilities pertaining to the approval of each New Agreement. Based on its
evaluation, each Board unanimously concluded that the terms of each New
Agreement were reasonable and fair and that the approval of each New Agreement
was in the best interests of the Fund and its Shareholders.
In voting to approve each New Agreement, the Boards did not identify any
single factor as all-important or controlling. The following summary does not
identify all the matters considered by each Board, but provides a summary of the
principal matters it considered. The Boards considered whether each New
Agreement would be in the best interests of the respective Fund and its
Shareholders, based on: (1) the nature, extent and quality of the services to be
provided under the New Agreement; (2) the investment performance of the Fund;
(3) the expenses borne by the Fund (including management fees and other
expenses), the fees charged by ALPS and the Portfolio Managers to the Fund and
to their other clients, as applicable, and projected profits to be realized by
ALPS Advisers and its affiliates from their relationships with the Fund; (4) the
fact that economies of scale may be realized as the Fund grows and whether fee
levels will reflect economies of scale for the benefit of Shareholders;
(5) potential fall-out benefits to ALPS Advisers and each Portfolio Manager from
their relationships with the Fund; and (6) other general information about ALPS
Advisers and each Portfolio Manager. The following is a summary of the Boards'
consideration and conclusions regarding these matters.
NATURE, EXTENT AND QUALITY OF THE SERVICES TO BE PROVIDED
37
The Board considered the nature, extent and quality of the services to be
provided by ALPS Advisers, including portfolio manager selection, evaluation and
monitoring, and the portfolio management services to be provided by each
Portfolio Manager, in light of the investment objective of the respective Fund.
The Board considered that, following the Transaction, the same senior investment
advisory personnel that currently provides advisory services to each Fund are
expected to continue to provide these services to each Fund as employees of ALPS
Advisers. In that regard, the Boards considered the long-term history of care
and conscientiousness in the management of each Fund provided by that personnel,
which would continue to be provided following the Transaction. The Boards also
considered each Portfolio Manager's demonstrated consistency in investment
approach. The Boards reviewed the background and experience of (1) the current
BAIA personnel to be employed by ALPS Advisers and to be responsible for
portfolio manager selection, evaluation and monitoring for each Fund and (2) the
Portfolio Manager personnel responsible for managing the portfolio of the
respective Fund. The Boards also considered the compliance records of ALPS and
each Portfolio Manager. Finally, the Boards also considered its and the Funds'
long association with the current BAIA personnel to be employed by ALPS
Advisers, the relationships those BAIA personnel maintain with the Portfolio
Managers, and the ability of those personnel to evaluate the services provide by
the Portfolio Managers.
The Boards concluded that the nature, extent and quality of the services
to be provided by ALPS Advisers and the respective Portfolio Managers to the
respective Funds were appropriate and consistent with the terms of the
respective New Agreements and that each Fund was likely to benefit from services
provided under the New Agreements. The Boards also concluded that the quality
of the services provided by the senior advisory personnel to be employed by ALPS
Advisers and by the Portfolio Managers had been consistent with or superior to
quality norms in the industry, and that ALPS Advisers and the respective
Portfolio Managers would have sufficient personnel, with the appropriate
education and experience, to serve each Fund effectively. The Boards also
concluded that the Portfolio Managers had demonstrated a continuing ability to
attract and retain well-qualified personnel, and that the structure of ALPS
Advisers' operations was sufficient to retain and properly motivate the Funds'
current senior advisory personnel who were to be employed by ALPS Advisers.
Finally, the Boards concluded that the financial condition of ALPS Advisers and
of each respective Portfolio Manager was sound.
INVESTMENT PERFORMANCE
The Boards reviewed the long-term and short-term investment performance of
each Fund and of other investment companies and other accounts managed by the
Portfolio Managers at the time of the annual renewal of the Fund's advisory
contracts. In that connection, the Boards also considered the long-term and
short-term investment performance of the existing senior investment advisory
personnel of BAIA who will continue to manage the Funds as ALPS employees, in
the absence of any investment performance data for ALPS Advisers. The
performance information previously provided demonstrated to the Boards a
generally consistent pattern of favorable long-term performance of each Fund.
COSTS OF THE SERVICES TO BE PROVIDED TO THE FUNDS AND THE PROJECTED
PROFITS TO BE REALIZED BY ALPS ADVISERS FROM ITS RELATIONSHIP WITH THE
FUNDS
38
The Boards reviewed the fees to be paid by each Fund to ALPS Advisers and
the fees to be paid by ALPS Advisers to the Portfolio Managers, noting that the
rates of fees to be paid under the New Agreements are the same fee rates the
Funds currently pay. In that regard, the Board noted that it had reviewed
comparative fee information at the time of the annual renewal of the Fund's
advisory contracts earlier in the year, including information about (1) the
rates of compensation paid to investment advisers, and overall expense ratios,
for funds comparable in size, character and investment strategy to the Funds and
(2) the fees charged by the Portfolio Managers to their other client accounts,
including institutional accounts. The Boards noted that currently ALPS Advisers
does not manage other accounts. The Boards also considered that the Portfolio
Managers would be paid by ALPS Advisers, not the Funds. Further, the Boards
also considered the differences in the level of services provided and the
differences in responsibility of the Portfolio Managers to each Fund and to
other accounts. The Boards also noted that each Fund's fee schedule has
breakpoints at which the advisory fee rate declines as the Fund's assets
increase above the breakpoint, and further noted that those schedules would
remain unchanged under the New Agreements. The Boards concluded that the
management fees payable by each Fund to ALPS Advisers and the fees payable by
ALPS Advisers to the Portfolio Managers were reasonable in relation to the
nature and quality of the services expected to be provided, taking into account
the fees charged by other advisers for managing comparable funds with similar
strategies and the fees the Portfolio Managers charge to other clients.
PROJECTED PROFITABILITY AND COSTS OF SERVICES TO ALPS ADVISERS
The Boards reviewed reports of the financial position of each of the
Portfolio Managers at the time of the annual renewal of the Fund's advisory
contracts, and in that regard noted that the rates of fees payable to the
Portfolio Managers under the New Agreements were unchanged from the current
agreements. The Boards considered the projected profitability of ALPS' overall
relationship with the Funds, which included fees payable to ALPS Advisers for
advisory services as well as fees payable to other ALPS affiliates for non-
advisory services, and concluded that the projected profitability of ALPS was
reasonable in relation to the services to be provided and to the costs of
providing services to each Fund. The Boards also considered the potential
"fall-out" benefits (including the receipt of research products and services
from unaffiliated brokers) that ALPS Advisers or the Portfolio Managers might
receive in connection with their association with the Funds, and acknowledged
each Portfolio Manager's well-established stand-alone management relationships
independent of each Fund and the regulatory risks each assumed in connection
with the management of each Fund.
EXTENT OF ECONOMIES OF SCALE AS THE FUNDS GROWS AND WHETHER FEE LEVELS
REFLECT ECONOMIES OF SCALE
The Boards reviewed the Fund's management fee schedules and the
breakpoints in the schedule and concluded that the fee schedules reflect certain
economies of scale that may be realized by ALPS Advisers as the assets of each
Fund increase.
Based on their evaluation, the Boards unanimously concluded that the terms
of the New Agreements are reasonable, fair and in the best interests of each
Fund and its Shareholders. The Boards believe that the New Agreements will
enable each Fund to continue to enjoy the high-quality investment management and
sub-advisory services it has received in the past from its Fund Manager and each
39
Portfolio Manager, at fee rates identical to the present rates, which the Boards
deem appropriate, reasonable and in the best interests of each Fund and its
Shareholders. The Board unanimously voted to approve and to recommend to the
Shareholders of each Fund that they approve the New Agreements.
SECTION 15(F) OF THE INVESTMENT COMPANY ACT
Section 15(f) of the Investment Company Act permits an investment adviser
of a registered investment company (or any affiliated persons of the investment
adviser) to receive any amount or benefit in connection with a sale of an
interest in the investment adviser, provided that two conditions are satisfied.
First, an "unfair burden" may not be imposed on the investment company as
a result of the sale of the interest, or any express or implied terms,
conditions or understandings applicable to the sale of the interest. The term
"unfair burden," as defined in the Investment Company Act, includes any
arrangement during the two-year period after the transaction whereby the
investment adviser (or predecessor or successor adviser), or any "interested
person" of the adviser (as defined in the Investment Company Act), receives or
is entitled to receive any compensation, directly or indirectly, from the
investment company or its security holders (other than fees for bona fide
investment advisory or other services), or from any person in connection with
the purchase or sale of securities or other property to, from or on behalf of
the investment company (other than ordinary fees for bona fide principal
underwriting services).
Second, during the three-year period after the transaction, at least 75%
of the members of the investment company's board of trustees/directors cannot be
"interested persons" (as defined in the Investment Company Act) of the
investment adviser or its predecessor.
Although the Transaction involves a sale of a portion of the business of
BAIA rather than the sale of an interest in BAIA, BAIA and ALPS Advisers intend
for the Transaction to come within the safe harbor provided by section 15(f).
The Boards have not been advised by BAIA, ALPS or ALPS Advisers of any
circumstances arising from the Transaction that might result in the imposition
of an "unfair burden" on any Fund. Moreover, ALPS Advisers has agreed that, for
two years after the consummation of the Transaction, ALPS Advisers will use
reasonable best efforts to refrain from imposing, or agreeing to impose, any
unfair burden on the Fund. At the present time, 100% of the Trustees/Directors
are classified as Disinterested Trustees/Directors and following the
Transaction, all but one of the Trustees/Directors will be classified as such.
ALPS Advisers has agreed to use its reasonable best efforts to ensure that at
least 75% of the Trustees/Directors are not "interested persons" (as defined in
the Investment Company Act) of ALPS Advisers or BAIA during the three-year
period after the completion of the Transaction.
INFORMATION ABOUT THE FUND MANAGER AND AFFILIATES
ALPS AND ITS AFFILIATES
ALPS, located at 1625 Broadway, Suite 2200, Denver, Colorado 80202, was
founded in 1985 as a provider of fund administration and fund distribution
services. Since then, ALPS has added additional services, including fund
40
accounting, transfer agency, shareholder services, active distribution, legal,
tax and compliance services. ALPS has four primary lines of business: Open-End
Fund Services, Closed-End Fund Services, Exchange-Traded Fund Services and the
Financial Investors Trust business. ALPS is headquartered in Denver, Colorado.
ALPS conducts its business through two wholly-owned subsidiaries: ALPS Fund
Services, a service company and SEC-registered transfer agent; and ALPS
Distributors, an NASD-registered broker-dealer, currently registered in all 50
states. ALPS' investment advisory business (including management of the Funds)
will be conducted through a third wholly-owned subsidiary, ALPS Advisers, which
will be registered as an investment adviser with the SEC. ALPS and its
affiliates provide fund administration services to funds with assets in excess
of $13 billion and distribution services to funds with assets of more than $120
billion.
In September 2005, ALPS completed a recapitalization sponsored by Lovell
Minnick Partners LLC ("LMP"). LMP is a financial services focused private
equity firm that controls and manages private equity partnerships with over $350
million in committed capital. LMP owns 79.96% of ALPS on a fully issued basis.
Information regarding the executive officers and directors of ALPS and the
10% beneficial owners is attached in Exhibit E.
BAIA AND ITS AFFILIATES
BAIA, 100 Federal Street, Boston, Massachusetts 02110, is a wholly-owned
subsidiary of Bank of America, N.A., which is an indirect subsidiary of Bank of
America Corporation. BAIA is an SEC-registered investment adviser that provides
investment advisory and certain administrative services to the Funds, other
closed-end funds and privately placed funds. BAIA also provides services for
investment advisory programs offered by certain of its affiliates.
BAIA has delegated certain of its administrative responsibilities under
the Existing Fund Management Agreements to its affiliate CMA, One Financial
Center, Boston, Massachusetts 02111, as the sub-administrator. CMA is also
responsible for providing pricing and bookkeeping services for the Funds under
the Existing Pricing Agreement.
Information regarding the principal executive officers, directors and
certain other officers of BAIA is attached in Exhibit F. Information regarding
the management and administration fees paid to BAIA, and the bookkeeping and
pricing fees paid to CMA during the Funds' most recently completed fiscal year
is also attached in Exhibit F. There were no other material payments by the
Funds to BAIA or any of its affiliates during that period.
INFORMATION ABOUT THE PORTFOLIO MANAGERS
EQUITY FUND PORTFOLIO MANAGERS
Information for each Equity Fund Portfolio Manager regarding its principal
executive officer, directors and certain other officers, 10% beneficial owners
and other funds managed including the management fees payable by those funds
having investment objectives similar to those of the Equity Fund is attached in
Exhibit G. Information regarding the advisory fees paid to each Equity Fund
41
Portfolio Manager during the Equity Fund's most recently completed fiscal year
is also attached in Exhibit G.
CHASE INVESTMENT COUNSEL CORPORATION ("Chase"), located at 300 Preston
Avenue, Suite 403, Charlottesville, VA 22902-5091 is an independent firm founded
in 1957. Chase is 100% owned by its investment professionals. As of December
31, 2005, Chase had approximately $5 billion in assets under management.
MATRIX ASSET ADVISERS, INC. ("Matrix"), located at 747 Third Avenue, New
York, NY 10017, is an independently owned firm founded in 1986 by David A. Katz
and John M. Gates. Mr. Katz serves as President and Chief Investment Officer of
Matrix and manages the portion of the Equity Fund's portfolio assets that is
assigned to Matrix. Prior to co-founding Matrix in 1986, Mr. Katz was with
Management Asset Corporation. Matrix is 100% employee-owned. As of December 31,
2005, Matrix had approximately $1.8 billion in assets under management.
PZENA INVESTMENT MANAGEMENT, LLC ("Pzena"), located at 120 West 45th
Street, New York, NY 10036, is an independently owned firm founded in 1995 by
Richard S. Pzena. Mr. Pzena serves as Managing Principal and Chief Investment
Officer of Pzena and, together with John Goetz (Managing Principal, Research)
and Antonio DeSpirito III (Managing Principal, Large Cap Value), manages the
portion of the Equity Fund's assets that is assigned to Pzena. Prior to founding
Pzena in 1995, Mr. Pzena was Director of U.S. Equity Investment and Chief
Research Officer for Sanford C. Bernstein & Company. Pzena is 75% owned by Pzena
employees and 25% owned by private investors, none of whom hold any voting
securities of the firm. As of December 31, 2005, Pzena had approximately $16.8
billion in assets under management.
SCHNEIDER CAPITAL MANAGEMENT CORPORATION ("Schneider"), located at 460
East Swedesford Road, Wayne, PA 19087, is an independently owned firm founded in
1996 by Arnold C. Schneider III. Mr. Schneider serves as President and Chief
Investment Officer of Schneider and manages that portion of the Equity Fund's
portfolio assigned to Schneider. Prior to founding Schneider, Mr. Schneider was
a Senior Vice President and Partner of the Wellington Management Company.
Schneider is 100% employee-owned. As of December 31, 2005, Schneider had
approximately $4.3 billion in assets under management.
TCW INVESTMENT MANAGEMENT COMPANY ("TCW"), located at 865 South Figueroa
Street, Los Angeles, CA 90017, was established in 1971. TCW Group's direct and
indirect subsidiaries, including TCW, provide a variety of trust, investment
management and investment advisory services. Societe Generale Asset Management,
S.A, a wholly-owned subsidiary of Societe Generale, owns 75% of the TCW Group
and is located at 92708 place de la Corpole, 92078 Paris, France. Societe
Generale is located at 29 Boulevard Haussman, 75009, Paris, France. The
employees, management and other shareholders of the TCW Group own the remaining
25% of the company. As of December 31, 2005, TCW and its affiliates had
approximately $125 billion in assets under management or committed to
management.
GROWTH FUND PORTFOLIO MANAGERS
Information for each Growth Fund Portfolio Manager regarding its principal
executive officer, directors and certain other officers, 10% beneficial owners
and other funds managed including the management fees payable by those funds
42
having investment objectives similar to those of the Growth Fund is attached in
Exhibit H. Information regarding the advisory fees paid to each Growth Fund
Portfolio Manager during the Growth Fund's most recently completed fiscal year
is also attached in Exhibit H.
M.A. WEATHERBIE & CO., INC. ("Weatherbie"), located at 265 Franklin
Street, Boston, Massachusetts 02110, is a registered investment adviser founded
in 1995 by Matthew A. Weatherbie. Mr. Weatherbie is the principal executive
officer and serves as President of Weatherbie. In addition to Mr. Weatherbie
being the senior principal, there are five other principals, five research
analysts, a trader and a director of administration. Weatherbie is 100%
employee-owned and operated with a partnership philosophy. As of December 31,
2005, Weatherbie had approximately $2.1 billion in assets under management.
WILLIAM BLAIR & COMPANY, L.L.C. ("Blair"), located at 222 West Adams
Street, Chicago, Illinois 60606, is a registered investment adviser. Blair is
also an investment banker and broker-dealer firm registered under the Securities
Exchange Act of 1934. Blair was founded over 50 years ago by William McCormick
Blair and currently has more than 170 principals and approximately 850 employees
at offices in Chicago, San Francisco, London, Liechtenstein and Zurich. The
main office in Chicago houses all investment banking, research and investment
management services. As of December 31, 2005, Blair had approximately $33.6
billion in assets under management.
TCW INVESTMENT MANAGEMENT COMPANY. See disclosure for TCW above under
heading "Equity Fund Portfolio Managers."
PORTFOLIO TRANSACTIONS AND BROKERAGE
Each of the Funds' Portfolio Managers has discretion to select brokers and
dealers to execute portfolio transactions initiated by that Portfolio Manager
for the portion of a Fund's portfolio assets allocated to it, and to select the
markets in which such transactions are to be executed. The Portfolio Management
Agreements with the Funds provide, in substance, that in executing portfolio
transactions and selecting brokers or dealers, the primary responsibility of the
Portfolio Manager is to seek to obtain best net price and execution for the
Funds.
The Portfolio Managers are authorized to cause the Funds to pay a
commission to a broker or dealer who provides research products and services to
the Portfolio Manager for executing a portfolio transaction which is in excess
of the amount of commission another broker or dealer would have charged for
effecting the same 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 Existing Portfolio Management Agreements with the
Funds and BAIA, and the New Portfolio Management Agreements with the Funds and
ALPS Advisers, in selecting brokers or dealers to execute portfolio transactions
43
for the Funds, the Portfolio Managers are authorized to consider (and the Fund
Manager may request them to consider) brokers or dealers that provide to the
Fund Manager, directly or through third parties, research products or services
such as research reports; portfolio analyses; compilations of securities prices,
earnings, dividends and other data; computer software, and services of one or
more 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 the Fund Manager
include: performance and other qualitative and quantitative data relating to
investment managers in general and the Portfolio Managers in particular; data
relating to the historic performance of categories of securities associated with
particular investment styles; mutual fund portfolio and performance data; data
relating to portfolio manager changes by pension plan fiduciaries; and related
computer software, all of which are used by the Fund Manager 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.
The Fund Manager from time to time reaches understandings with each of the
Funds' Portfolio Managers as to the amounts of the Funds' 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 the
Fund Manager and the commissions to be charged to the Funds 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 Funds do not permit a Portfolio Manager to act or to 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 that the commission does not exceed
the usual and customary broker's commission being paid to other brokers for
comparable transactions and is otherwise in accordance with the Funds'
procedures adopted pursuant to Rule 17e-1 under the Investment Company Act.
On February 15, 2000, the SEC granted the Funds exemptive relief from the
requirements of Sections 10(f), 17(a) and 17(e) and Rule 17e-1 under the
Investment Company Act to permit (1) broker-dealers which are, or are affiliated
with, Portfolio Managers of the Funds to engage in principal transactions with,
and provide brokerage services to, portion(s) of the Funds advised by another
Portfolio Manager, and (2) the Funds 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 Funds. The Funds now rely on Rule 17a-10 under the
Investment Company Act instead of this exemptive relief.
For the most recently completed fiscal year, the aggregate amount of
commissions paid to any affiliated broker-dealer was $7,949 for the Equity Fund
and $2,605 for the Growth Fund. The percentage of each Fund's aggregate
brokerage commissions paid to an affiliated broker-dealer was 0.46% for the
Equity Fund and 1.2% for the Growth Fund.
44
INFORMATION ABOUT OTHER SERVICE PROVIDERS
INVESTMENT ADVISER AND ADMINISTRATOR
BAIA, 100 Federal Street, Boston, Massachusetts 02110, is the investment
adviser and administrator for each Fund. Certain of BAIA's administrative
responsibilities to the Funds have been delegated to its affiliate CMA, One
Financial Center, Boston, Massachusetts 02111.
Following the Transaction, ALPS Advisers, 1625 Broadway, Suite 2200,
Denver, Colorado 80202, will serve as investment adviser for each Fund. ALPS
Fund Services, 1625 Broadway, Suite 2200, Denver, Colorado 80202, will serve as
administrator to each Fund.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Financial statements for the Funds' fiscal year ended December 31, 2005
were audited by PricewaterhouseCoopers LLP ("PwC"). PwC serves as the
independent registered public accounting firm ("independent accountants") for
each Fund and provides audit services, audit-related services, tax services
and/or other services to the Funds, to BAIA and to affiliates of BAIA. The
Boards of Trustees/Directors of the Funds have selected PwC as the independent
accountants for the Funds for the fiscal year ending December 31, 2006.
Representatives of PwC are not expected to be present at the Meeting but have
been given the opportunity to make a statement if they so desire and will be
available should any matter arise requiring their presence.
PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
Each Fund's Audit Committee is required to pre-approve the engagement of
the Fund's independent accountants to provide audit and non-audit services to
the Fund and non-audit services to BAIA or any entity controlling, controlled by
or under common control with BAIA that provides ongoing services to the Fund
("BAIA Affiliates"), if the engagement relates directly to the operations or
financial reporting of the Fund, including the fees and other compensation to be
paid to the independent accountants.
The Funds' Audit Committees have adopted a Policy for Engagement of
Independent Accountants for Audit and Non-Audit Services ("Policy"). The Policy
sets forth the understanding of the Audit Committees regarding the engagement of
the Fund's independent accountants to provide: (i) audit and permissible audit-
related, tax and other services to the Funds; (ii) non-audit services to BAIA
and BAIA Affiliates, if the engagement relates directly to the operations or
financial reporting of a Fund; and (iii) other audit and non-audit services to
BAIA and BAIA Affiliates. Unless a type of service receives general pre-approval
under the Policy, it requires specific pre-approval by the Audit Committees if
it is to be provided by the independent accountants. Pre-approval of non-audit
services to the Funds, BAIA or BAIA Affiliates may be waived provided that the
"de minimis" requirements set forth in the SEC's rules relating to pre-approval
of non-audit services are met.
Under the Policy, the Audit Committees may delegate pre-approval authority
to any pre-designated member or members who are Disinterested
Trustees/Directors. The member(s) to whom such authority is delegated must
report, for informational purposes only, any pre-approval decisions to the Audit
Committee at its next regular meeting. The Audit Committee's responsibilities
45
with respect to the pre-approval of services performed by the independent
accountants may not be delegated to management.
The Policy requires the Fund Treasurer and/or Director of Board
Administration to submit to the Audit Committee, on an annual basis, a schedule
of the types of services that are subject to general pre-approval. The
schedule(s) provide a description of each type of service that is subject to
general pre-approval and, where possible, will provide estimated fee caps for
each instance of providing each service. The Audit Committees will review and
approve the types of services and review the projected fees for the next fiscal
year and may add to, or subtract from, the list of general pre-approved services
from time to time based on subsequent determinations. That approval acknowledges
that each Fund's Audit Committee is in agreement with the specific types of
services that the independent accountants will be permitted to perform.
FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The following table sets forth for each Fund the aggregate fees billed by
PwC for the Fund's last two fiscal years for professional services rendered for
(a) all audit and non-audit services provided directly to the Fund and (b) those
non-audit services provided to BAIA and BAIA Affiliates that relate directly to
the Fund's operations and financial reporting under the following captions:
(i) Audit Fees - fees related to the audit and review of the financial
statements included in annual reports and registration statements, and other
services that are normally provided in connection with statutory and regulatory
filings or engagements.
(ii) Audit-Related Fees - fees related to assurance and related services
that are reasonably related to the performance of the audit or review of
financial statements, but not reported under "Audit Fees," including accounting
consultations, agreed-upon procedure reports, attestation reports and comfort
letters.
(iii) Tax Fees - fees associated with tax compliance, tax advice and tax
planning, including services relating to the filing or amendment of federal,
state or local income tax returns, regulated investment company qualification
reviews, and reviews of calculations of required distributions to avoid excise
tax.
(iv) All Other Fees - fees for products and services provided to each
Fund by PwC other than those reported under "Audit Fees," "Audit-Related Fees"
and "Tax Fees." For each Fund's last two fiscal years, no fees were billed by
PwC that would be disclosed under the caption "All Other Fees" to either Fund or
to BAIA or any BAIA Affiliates.
During the Funds' fiscal years ended December 31, 2004 and 2005, no
services described under "Audit-Related Fees," "Tax Fees" or "All Other Fees"
were approved pursuant to the de minimis exception set forth in paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X. All of the audit fees, audit-
related fees and tax fees billed by PwC for the fiscal years ended December 31,
2004 and 2005 were pre-approved by each Fund's Audit Committee.
46
------------------------------------------------------------------------------------------------------------------------------------
FISCAL YEAR AUDIT FEES AUDIT-RELATED TAX FEES ALL
FEES OTHER
FEES
------------------------------------------------------------------------------------------------------------------------------------
Equity Fund 2004 $38,700 $4,000 $2,600 $0
2005 $36,400 $4,200 $4,600 $0
-----------------------------------------------------------------------------------------------------------------------------------
Growth Fund 2004 $24,700 $4,000 $2,600 $0
2005 $25,900 $4,200 $4,600 $0
-----------------------------------------------------------------------------------------------------------------------------------
BAIA & BAIA Affiliates (relating directly to the operating and financial 2004 $0 $0 $0 $0
reporting of the Equity Fund) ---------------------------------------------------
2005 $0 $0 $0 $0
---------------------------------------------------
BAIA & BAIA Affiliates (relating directly to the operating and financial 2004 $0 $0 $0 $0
reporting of the Growth Fund) ---------------------------------------------------
2005 $0 $0 $0 $0
----------------------------------------------------
The aggregate non-audit fees billed by PwC for the fiscal years ended
December 31, 2004 and 2005 for services rendered to: (a) the Equity Fund and
BAIA and BAIA Affiliates (providing ongoing services to the Equity Fund) were
$6,600 and $8,800, respectively; and (b) the Growth Fund and BAIA and BAIA
Affiliates (providing ongoing services to the Growth Fund) were $6,600 and
$8,800, respectively.
Each Fund's Audit Committee has determined that the provision by PwC of
non-audit services to BAIA and/or BAIA Affiliates that were not pre-approved by
the Committee (because such services did not relate directly to the operations
and financial reporting of the Fund) was compatible with maintaining the
independence of PwC as the Fund's independent accountants. All services provided
by PwC to a Fund, BAIA or a BAIA Affiliate for 2004 and 2005 that were required
to be pre-approved by the Audit Committee were pre-approved.
GENERAL INFORMATION
OWNERSHIP OF SHARES
As of the Record Date, there were [ ] outstanding shares of
beneficial interest of Equity Fund and [ ] outstanding
shares of common stock of Growth Fund. To the knowledge of the Funds, on the
Record Date for the Meeting, no Shareholder owned beneficially, as defined by
Rule 13d-3 under the Securities Exchange Act of 1934, more than 5% of the
outstanding shares of either Fund. As of August 31, 2006, the following persons
were known to own of record more than 5% of the outstanding securities of the
Funds:
---------------------------------------------------------------------------------
FUND NAME AND ADDRESS OF BENEFICIAL # OF SHARES OWNED % OF CLASS OF SHARES
OWNER OF RECORD OWNED
---------------------------------------------------------------------------------
Equity Fund CEDE & Co [145,916,967] [94.38%]
c/o Depository Trust Company
Box 20
New York, NY 10004
---------------------------------------------------------------------------------
47
---------------------------------------------------------------------------------
FUND NAME AND ADDRESS OF BENEFICIAL # OF SHARES OWNED % OF CLASS OF SHARES
OWNER OF RECORD OWNED
---------------------------------------------------------------------------------
Growth Fund CEDE & Co [24,764,325] [90.88%]
c/o Depository Trust Company
Box 20
New York, NY 10004
---------------------------------------------------------------------------------
Since the beginning of each Fund's most recently completed fiscal year, no
Trustee/Director or any Nominee has purchased or sold securities exceeding 1% of
the outstanding securities of any class of Bank of America, ALPS or their
subsidiaries.
As of December 31, 2005, no Disinterested Trustee/Director or Nominee or
any of their immediate family members owned beneficially or of record any class
of securities of Bank of America Corporation, BAIA, another investment adviser,
sub-adviser or portfolio manager of either of the Funds or any person
controlling, controlled by or under common control with any such entity (except
as noted in the next paragraph).
During the past five calendar years, Mr. Lowry has had a material interest
in a trust (approximately $4.2 million as of December 31, 2005), which owns
units of a limited partnership whose investments are managed by Weatherbie, a
Portfolio Manager of the Growth Fund, and whose general partner is Weatherbie
Limited Partnership. Mr. Benning also has had a material interest in that trust
(approximately $1.3 million as of December 31, 2005).
PAYMENT OF SOLICITATION EXPENSES
BAIA and ALPS Advisers will pay the expenses of the preparation, printing
and mailing of this Proxy Statement and its enclosures and of all solicitations.
The Altman Group, a proxy solicitation firm, has been engaged to assist in the
solicitation of proxies. The aggregate cost of retaining such proxy solicitation
firm is expected to be about $_______ plus expenses in connection with the
solicitation of proxies. BAIA and ALPS Advisers will reimburse brokerage firms
and others for their expenses in forwarding solicitation material to the
beneficial owners of shares.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board does not know of any matters to be presented at the Meeting
other than those described in this Proxy Statement. If other business should
properly come before the Meeting, the proxy holders will vote on it in
accordance with their best judgment for those shares they are authorized to
vote. However, any proposal submitted to a vote at the Meeting by anyone other
than the officers or Trustees/Directors of the Funds may be voted only in person
or by written proxy.
SUBMISSION OF CERTAIN SHAREHOLDER PROPOSALS
Under the SEC's proxy rules, 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 2007
Annual Meeting must be received by the Funds on or before November 20, 2006. The
48
fact that the Funds receive 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. You may submit Shareholder
proposals to the Secretary of the Funds, One Financial Center, Mail Stop MA5-
515-11-05, Boston, MA 02111-2621.
Shareholders who wish to make a proposal at a Fund's 2007 Annual Meeting
that will not be included in the Funds' proxy materials must notify the Fund on
or before February 3, 2007. If a Shareholder who wishes to submit a proposal
fails to timely notify the Fund, the proxies solicited for the meeting will have
discretionary authority to vote on the Shareholder's proposal if it is properly
brought before the meeting. If a Shareholder makes a timely notification, the
proxies may still exercise discretionary voting authority under circumstances
consistent with the SEC's proxy rules.
SHAREHOLDER REPORTS
EACH FUND HAS PREVIOUSLY SENT ITS MOST RECENT ANNUAL REPORT DATED DECEMBER
31, 2005 AND SEMI-ANNUAL REPORT DATED JUNE 30, 2006 TO ITS SHAREHOLDERS. YOU MAY
OBTAIN A COPY OF EITHER REPORT, FREE OF CHARGE, BY WRITING TO THE FUNDS C/O BANC
OF AMERICA INVESTMENT ADVISORS, INC. AT 100 FEDERAL STREET, BOSTON,
MASSACHUSETTS 02110, OR BY CALLING 1-800-241-1850.
VOTING INFORMATION
VOTING RIGHTS
Only Shareholders of record of a Fund on the Record Date may vote.
Shareholders of record on the Record Date are entitled to be present and to vote
at the Meeting. Each share or fractional share is entitled to one vote or
fraction thereof. Each Fund's Shareholders will vote separately on each
proposal with respect to that Fund. If you are a Shareholder of more than one
Fund, you will be voting on each proposal separately with respect to each Fund
in which you hold shares.
Each proxy solicited by the Boards of Trustees/Directors which is properly
executed and returned in time to be voted at the Meeting will be voted at the
Meeting in accordance with the instructions on the proxy. If no instructions
are marked on the proxy card(s), the proxy will be voted FOR each proposal. Any
proxy may be revoked at any time prior to its use by written notification
received by the Funds' Secretary, by the execution and delivery of a later-dated
proxy, or by attending the Meeting and voting in person. Any letter of
revocation or later-dated proxy must be received by the Funds prior to the
Meeting and must indicate your name and account number to be effective. Proxies
voted by telephone or Internet may be revoked at any time before they are voted
at the Meeting in the same manner that proxies voted by mail may be revoked.
The Funds expect that broker-dealer firms holding shares of the Funds in
"street name" for the benefit of their customers and clients will request the
instructions of such customers and clients on how to vote their shares on each
proposal at the Meeting. The Funds understand that, under the rules of the
NYSE, such broker-dealers may grant authority to the proxies designated by the
Funds to vote on Proposal 4 for the Funds if no instructions have been received
prior to the date specified in the broker-dealer firm's request for voting
49
instructions. Certain broker-dealer firms may exercise discretion over shares
held in their name for which no instructions are received by voting such shares
in the same proportion as they have voted shares for which they have received
instructions.
For Proposals 2 and 3, the Funds understand that the NYSE has taken the
position that broker-dealers that are members of the NYSE and that have not
received instructions from a customer prior to the date specified in the broker-
dealer firms' request for voting instructions may not vote such customer's
shares on a new investment advisory contract. Therefore, NYSE broker-dealers
that have not received customer instructions will not be permitted to vote
customer shares with respect to Proposal 2 regarding the New Fund Management
Agreements or Proposal 3 regarding the New Portfolio Management Agreements. A
signed proxy card or other authorization by a beneficial owner of Fund shares
that does not specify how the beneficial owner's shares are to be voted on a
proposal may be deemed to be an instruction to vote such shares in favor of the
applicable proposal.
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, which is the case for the election of
Trustees of the Equity Fund, 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. However, if a proposal must be approved by a percentage of shares
present at the Meeting and entitled to be cast, which is the case for the
election of Directors of the Growth Fund, the effect of an abstention or broker
non-vote will be the same as votes against the proposal because an absolute
percentage of affirmative votes is required, regardless of the number of votes
cast, and neither an abstention nor a broker non-vote is an affirmative vote.
"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 the shares; and (iii) the broker
or nominee does not have discretionary voting power on a particular matter.
QUORUM; ADJOURNMENT
For each Fund, a majority of the shares outstanding on the Record Date and
entitled to vote, present and in person or represented by proxy, constitutes a
quorum for the transaction of business by the Shareholders of that Fund at the
Meeting. In the event a quorum is present at the Meeting, but sufficient votes
to approve a proposal have not been received or in the discretion of such
persons, 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 (including abstentions and
broker non-votes) in person or by proxy. If a quorum is present, the persons
named as proxies will vote those proxies that 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. In the
event of an adjournment, no notice is required other than, in the case of the
Growth Fund, an announcement at the meeting at which adjournment is taken.
50
VOTE REQUIRED
The election of the Trustees of the Equity Fund is by a plurality of the
shares voting at the Meeting. Since three Trustees of the Equity Fund are to be
elected, the three persons who receive the highest number of votes cast at the
Meeting will be elected. The election of the Directors of the Growth Fund is by
a majority vote of the shares represented in person or by proxy at the Meeting
and entitled to vote. Since three Directors of the Growth Fund are to be
elected, the three Directors who receive a majority of the votes entitled to be
cast at the Meeting will be elected. The new Trustees/Directors elected by
Shareholders will not take office until the Closing.
Shareholders of each Fund must separately approve the New Fund Management
Agreement and each New Portfolio Management Agreement for such Fund. Approval
of each of Proposal 2, 3 and 4 by a Fund will require the affirmative vote of a
"majority of the outstanding voting securities" of the Fund as defined in the
Investment Company Act. This means the lesser of (1) 67% or more of the shares
of the Fund present at the Meeting if more than 50% of the outstanding shares of
the Fund are present in person or represented by proxy, or (2) more than 50% of
the outstanding shares of the Fund.
If the Shareholders of a Fund approve the New Fund Management Agreement
and the New Portfolio Management Agreements for such Fund, their effectiveness
is conditioned upon the Closing, which in turn is conditioned on the
satisfaction or waiver of certain conditions set forth in the agreement related
to the Transaction including, among other things, that the Funds obtain
Shareholder approval to enter into the New Agreements and BAIA and ALPS Advisers
obtain any necessary regulatory approvals. If the conditions noted in the prior
sentence are not met, the Existing Fund Management Agreement and the Existing
Portfolio Management Agreements will remain in effect. For each Fund, Proposal
3 is subject to the approval of Proposal 2. If the proposals described in this
Proxy Statement are approved by Shareholders of a Fund, they will not become
effective until the Closing.
51
To assure the presence of a quorum at the Meeting, please promptly execute
and return the enclosed proxy. A self-addressed, postage-paid envelope is
enclosed for your convenience. Alternatively, you may vote by telephone or
through the Internet at the number or website address printed on the enclosed
proxy card(s).
By order of the Board of Trustees of the Equity Fund
and the Board of Directors of the Growth Fund
James R. Bordewick, Jr.
Secretary of the Funds
___________, 2006
52
EXHIBIT A
FORM OF FUND MANAGEMENT AGREEMENT
FUND MANAGEMENT AGREEMENT dated _________, 2006, between [________], a business
trust organized under the laws of the Commonwealth of Massachusetts (the
"Trust"), and ALPS Advisers, Inc., a corporation organized under the laws of the
State of Colorado ("Manager").
WHEREAS the Trust will operate as a closed-end investment company registered
under the Investment Company Act of 1940 ("Investment Company Act") for the
purpose of investing and reinvesting its assets in securities pursuant to the
investment objectives, policies and restrictions set forth in its Declaration of
Trust and By-Laws, as amended from time to time, and its registration statement
on Form N-2 under the Investment Company Act and the Securities Act of 1933 (the
"Registration Statement"), all as heretofore amended and supplemented; and the
Trust desires to avail itself of the services, information, advice, assistance
and facilities of the Manager and to have the Manager provide or perform for it
various administrative, management and other services; and
WHEREAS the Manager is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), and desires to provide
services to the Trust in consideration of and on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, the Trust and the Manager agree as follows:
1. EMPLOYMENT OF THE MANAGER. The Trust hereby employs the Manager to manage
the investment and reinvestment of the Trust's assets in the manner set forth in
Section 2(A) of this Agreement and to provide the other services set forth in
Section 2 of this Agreement, subject to the direction of the Board of Trustees
and the officers of the Trust, for the period, in the manner, and on the terms
hereinafter set forth. The Manager hereby accepts such employment and agrees
during such period to render the services and to assume the obligations herein
set forth. The Manager shall for all purposes herein be deemed to be an
independent contractor and shall, except as expressly provided or authorized
(whether herein or otherwise), have no authority to act for or represent the
Trust in any way or otherwise be deemed an agent of the Trust.
2. OBLIGATION OF AND SERVICES TO BE PROVIDED BY THE MANAGER. The Manager
undertakes to provide the services hereinafter set forth and to assume the
following obligations:
A. Investment Management Services.
(1) The Manager shall have overall supervisory responsibility for the general
management and investment of the Trust's assets and securities portfolio
subject to and in accordance with the investment objectives, policies and
restrictions of the Trust, and any directions which the Trust's Trustees may
issue to the Manager from time to time.
(2) The Manager shall provide overall investment programs and strategies for the
Trust, shall revise such programs as necessary and shall monitor and report
periodically to the Trustees concerning the implementation of the programs.
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(3) The Trust and the Manager intend to appoint one or more persons or companies
("Portfolio Managers"), each such Portfolio Manager to have full investment
discretion and to make all determinations with respect to the investment and
reinvestment of the portion of the Trust's assets assigned to that Portfolio
Manager and the purchase and sale of portfolio securities with those assets,
all within the Trust's investment objectives, policies and restrictions, and
the Trust will take such steps as may be necessary to implement such
appointments. The Manager shall not be responsible or liable for the
investment merits of any decision by a Portfolio Manager to purchase, hold
or sell a security for the portfolio of the Trust. The Manager shall advise
the Trustees of the Trust which Portfolio Managers the Manager believes are
best suited to invest the assets of the Trust; shall monitor and evaluate
the investment performance of each Portfolio Manager employed by the Trust;
shall allocate and reallocate the portion of the Trust's assets to be
managed by each Portfolio Manager; shall recommend changes of or additional
Portfolio Managers when deemed appropriate by the Manager; shall coordinate
and monitor the investment activities of the Portfolio Managers to ensure
compliance with the Trust's investment objectives, policies and restrictions
and applicable laws, including the Investment Company Act and the Internal
Revenue Code of 1986, as amended; shall have full investment discretion to
make all determinations with respect to the investment of the Trust's assets
not then managed by a Portfolio Manager; and shall implement procedures
reasonably designed to ensure that the Portfolio Managers comply with the
Trust's investment objectives, policies and restrictions.
(4) The Manager shall render regular reports to the Trust, at regular meetings
of the Trustees, of, among other things, the decisions that it has made with
respect to the allocation of the Trust's assets among Portfolio Managers.
(5) The Manager shall comply - and to the extent the Manager takes or is
required to take action on behalf of the Trust hereunder shall cause the
Trust to comply - with all applicable requirements of the Investment Company
Act and other applicable laws, rules, regulations, orders and codes of
ethics, as well as all investment objectives, policies, restrictions and
procedures adopted by the Trust and the Trust's registration statement on
Form N-2, Declaration of Trust and By-laws.
B. Provision of Information Necessary for Preparation of Securities
Registration Statements, Amendments and Other Materials.
The Manager will make available and provide financial, accounting and
statistical information concerning the Manager required by the Trust in the
preparation of registration statements, reports and other documents required by
Federal and state securities laws, and such other information as the Trust may
reasonably request for use in the preparation of such documents or of other
materials necessary or helpful for the distribution of the Trust's shares.
C. Other Obligations and Services.
(l) The Manager will make available its officers and employees to the Trustees
and officers of the Trust for consultation and discussions regarding the
administration and management of the Trust and its investment activities.
(2) The Manager will adopt a written code of ethics complying with the
requirements of Rule 204A-1 under the Advisers Act and of Rule 17j-1 under
the Investment Company Act, and will provide the Trust with a copy of the
code of ethics and evidence of its adoption. Within forty-five (45) days of
the end of the last calendar quarter of each year while this Agreement is in
effect, or at any other time required by the Board of Trustees, the
President or a Vice President or other officer of the Manager shall certify
to the Trust that the Manager has complied with the requirements of Rule
17j-1 during the previous year and that there has been no violation of the
Manager's 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 Trust, the Manager shall permit the Trust, its employees or
its agents to examine the reports required to be made by the Manager by Rule
17j-1(c)(2)(ii).
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(3) The Manager will maintain and implement compliance policies and procedures
that are reasonably designed to ensure its compliance with Rule 206(4)-7 of
the Advisers Act and to prevent violations of the Federal Securities Laws
(as defined in Rule 38a-1 under the Investment Company Act). The Manager
also will provide the Trust's Chief Compliance Officer with periodic reports
regarding the Manager's compliance with the Federal Securities Laws and the
Manager's compliance policies and procedures, which may include, from time
to time, a copy and/or summary of such compliance policies and procedures,
and a report of the annual review determining the effectiveness of such
compliance policies and procedures.
(4) The Manager (or upon written request of the Manager, one or more Portfolio
Managers) will vote all proxies solicited by or with respect to the issuers
of securities in which assets of the Trust may be invested from time to time
in accordance with such policies as shall be determined by the Manager, and
reviewed and approved by the Board of Trustees.
3. EXECUTION AND ALLOCATION OF PORTFOLIO BROKERAGE COMMISSIONS. The Portfolio
Managers, subject to and in accordance with any directions the Trust may issue
from time to time, shall place, in the name of the Trust, orders for the
execution of the Trust's portfolio transactions. When placing such orders, the
obligation of each Portfolio Manager shall be as provided in the applicable
Portfolio Management Agreement. The Manager will oversee the placement of orders
by Portfolio Managers in accordance with their respective Portfolio Management
Agreements and will render regular reports to the Trust of the total brokerage
business placed on behalf of the Trust by the Portfolio Managers and the manner
in which such brokerage business has been allocated.
The Trust hereby agrees that any entity or person associated with the Manager
that is a member of a national securities exchange is authorized to effect any
transaction on such exchange for the account of the Trust to the extent and as
permitted by Section 11(a)(1)(H) of the Securities Exchange Act of 1934, as
amended ("1934 Act").
Subject to the appropriate policies and procedures approved by the Board of
Trustees, the Manager may, to the extent authorized by Section 28(e) of the 1934
Act, cause the Trust to pay a broker or dealer that provides brokerage or
research services to the Manager, the Portfolio Manager or the Trust an amount
of commission for effecting a Trust transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Manager determines, in good faith, that such amount of
commission is reasonable in relationship to the value of such brokerage or
research services provided in terms of that particular transaction or the
Manager's overall responsibilities to the Trust or its other investment advisory
clients. To the extent authorized by said Section 28(e) and the Board of
Trustees, the Manager shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of
such action.
4. EXPENSES OF THE TRUST. It is understood that the Trust will pay all its
expenses other than those expressly assumed by the Manager, which expenses
payable by the Trust shall include:
A. Fees of the Manager;
B. Expenses of all audits by independent public accountants;
C. Expenses of administrator, transfer agent, pricing services, bookkeeping
services, registrar, dividend disbursing agent and shareholder record
keeping services (including reasonable fees and expenses payable to the
Manager, or an affiliate of the Manager, for such services);
D. Expenses of custodial services;
E. Expenses of obtaining quotations for calculating the value of the Trust's
net assets;
F. Salaries and other compensation of any of its executive officers and
employees who are not officers, directors, stockholders or employees of the
Manager or any of its affiliates;
A-3
G. Taxes levied against the Trust and the expenses of preparing tax returns and
reports;
H. Brokerage fees and commissions in connection with the purchase and sale of
portfolio securities for the Trust;
I. Expenses associated with any offering (subject to any written agreement by
the Manager or an affiliate of the Manager to reimburse any portion of such
expenses);
J. Costs, including the interest expense, of borrowing money;
K. Costs and/or fees incident to Trustee and shareholder meetings of the Trust,
the preparation and mailings of proxy material, prospectuses and reports of
the Trust to its shareholders, the filing of reports with regulatory bodies,
the maintenance of the Trust's legal existence, membership dues and fees of
investment company industry trade associations, the listing (and maintenance
of such listing) of the Trust's shares on stock exchanges, and the
registration of shares with Federal and state securities authorities;
L. Legal fees and expenses (including reasonable fees for legal services
rendered by the Manager or its affiliates), including the legal fees related
to the registration and continued qualification of the Trust's shares for
sale;
M. Costs of printing stock certificates representing shares of the Trust, if
any;
N. Trustees' fees and expenses of Trustees who are not directors, officers,
employees or stockholders of the Manager or any of its affiliates;
O. Fees for the fidelity bond required by Section 17(g) of the Investment
Company Act, or other insurance premiums; and
P. Fees payable to Federal and state authorities in connection with the
registration of the Trust's shares.
Q. Nonrecurring and extraordinary expenses, such as indemnification payments or
damages awarded in litigation or settlements made.
5. ACTIVITIES AND AFFILIATES OF THE MANAGER.
A. The services of the Manager to the Trust hereunder are not to be deemed
exclusive, and the Manager and any of its affiliates shall be free to render
similar services to others. The Manager shall use the same skill and care in
the management of the Trust's assets as it uses in the administration of
other accounts to which it provides asset management, consulting and
portfolio manager selection services, but shall not be obligated to give the
Trust more favorable or preferential treatment vis-a-vis its other clients.
B. Subject to, and in accordance with, the Declaration of Trust and By-Laws of
the Trust and to Section 10(a) of the Investment Company Act, it is
understood that Trustees, officers, agents and shareholders of the Trust are
or may be interested in the Manager or its affiliates as directors,
officers, agents or stockholders of the Manager or its affiliates; that
directors, officers, agents and stockholders of the Manager or its
affiliates are or may be interested in the Trust as Trustees, officers,
agents, shareholders or otherwise; that the Manager or its affiliates may be
interested in the Trust as shareholders or otherwise; and that the effect of
any such interests shall be governed by said Declaration of Trust, By-Laws
and the Investment Company Act.
6. FEES FOR SERVICES: COMPENSATION OF MANAGER AND PORTFOLIO MANAGERS. The
compensation of the Manager for its services under this Agreement shall be
calculated and paid by the Trust in accordance with the attached Exhibit A. The
Manager will compensate the Portfolio Managers as provided in the Portfolio
Management Agreement entered into with the Portfolio Managers from time to time.
A-4
7. LIABILITIES OF THE MANAGER.
A. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of obligations or duties hereunder on the part of the
Manager, the Manager shall not be subject to liability to the Trust or to
any shareholder of the Trust for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
B. No provision of this Agreement shall be construed to protect any Trustee or
officer of the Trust, or the Manager, from liability in violation of
Sections 17(h) and (i) of the Investment Company Act.
8. RENEWAL AND TERMINATION.
A. This Agreement shall continue in effect until ________, 2008, and shall
continue from year to year thereafter provided such continuance is
specifically approved at least annually by (i) the Trust's Board of Trustees
or (ii) a vote of a majority of the outstanding voting securities of the
Trust (as defined in the Investment Company Act), provided that in either
event the continuance is also approved by a majority of the Board of
Trustees who are not "interested persons" (as defined in the Investment
Company Act) of any party to this Agreement ("Independent Trustees"), by
vote cast in person at a meeting called for the purpose of voting on such
approval. The aforesaid requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed in a manner
consistent with the Investment Company Act and the Rules and Regulations
thereunder.
B. This Agreement:
(a) may at any time be terminated without the payment of any penalty either by
vote of the Trustees of the Trust, including a majority of the Independent
Trustees, or by vote of a majority of the outstanding voting securities of
the Trust, on sixty (60) days' written notice to the Manager;
(b) shall immediately terminate in the event of its assignment (as that term is
defined in the Investment Company Act); and
(c) may be terminated by the Manager on sixty (60) days' written notice to the
Trust.
C. Any notice under this Agreement shall be given in writing addressed and
delivered or mailed postpaid, to the other party to this Agreement at its
principal place of business.
9. NO PERSONAL LIABILITY. Reference is hereby made to the Declaration of Trust
dated August 20, 1986 establishing the Trust, a copy of which has been filed
with the Secretary of the Commonwealth of Massachusetts and elsewhere as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The name [________] refers to the Board of Trustees under said
Declaration of Trust, and not to the Trustees personally, and no Trustee,
shareholder, officer, agent or employee of the Trust shall be held to any
personal liability hereunder or in connection with the affairs of the Trust, but
only the trust estate under said Declaration of Trust is liable under this
Agreement. Without limiting the generality of the foregoing, neither the Manager
nor any of its officers, directors, shareholders or employees shall, under any
circumstances, have recourse or cause or willingly permit recourse to be had
directly or indirectly to any personal, statutory, or other liability of any
shareholder, Trustee, officer, agent or employee of the Trust or of any
successor of the Trust, whether such liability now exists or is hereafter
incurred for claims against the trust estate, but shall look for payment solely
to said trust estate, or the assets of such successor of the Trust.
A-5
10. USE OF NAME. The Trust may use the name "Liberty All-Star," "All-Star," or
a similar name only for so long as this Agreement or any extension, renewal or
amendment hereof remains in effect, including any similar agreement with any
organization which shall have succeeded to the Manager's business as investment
adviser. If this Agreement is no longer in effect, the Trust (to the extent it
lawfully can) will cease to use such name or any other name indicating that it
is advised by or otherwise connected with the Manager. The Trust acknowledges
that the Manager may grant the non-exclusive right to use the name "Liberty All-
Star" or "All-Star" to any other corporation or entity, including but not
limited to any investment company of which the Manager or any subsidiary or
affiliate thereof or any successor to the business or any thereof shall be an
investment adviser.
11. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
12. GOVERNING LAW. To the extent that state law has not been preempted by the
provisions of any law of the United States heretofore or hereafter enacted, as
the same may be amended from time to time, this Agreement shall be administered,
construed and enforced according to the laws of the Commonwealth of
Massachusetts.
13. INTERPRETATION. Nothing herein contained shall be deemed to require the
Trust to take any action contrary to this Agreement and its Declaration of Trust
or By-Laws, or any applicable statutory or regulatory requirements to which it
is subject or by which it is bound, or to relieve or deprive the Trustees of
their responsibility for and control of the conduct of the affairs of the Trust.
14. ENTIRE AGREEMENT. This Agreement contains the entire understanding and
agreement of the parties.
15. HEADINGS. The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
16. FORCE MAJEURE. The Manager shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including but not
limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Manager shall take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto.
17. RECORDS. The records relating to the services provided under this Agreement
shall be the property of the Trust and shall be under its control; however, the
Trust shall furnish to the Manager such records and permit it to retain such
records (either in original or in duplicate form) as it shall reasonably require
in order to carry out its duties. In the event of the termination of this
Agreement, such records shall promptly be returned to the Trust by the Manager
free from any claim or retention of rights therein, provided that the Manager
may retain copies of any such records that are required by law. The Manager
shall keep confidential any information obtained in connection with its duties
hereunder and disclose such information only if the Trust has authorized such
disclosure or if such disclosure is expressly required or lawfully requested by
applicable Federal or state regulatory authorities.
A-6
IN WITNESS WHEREOF, the parties hereto have caused this Fund Management
Agreement to be executed, as of the day and year first written above.
[__________]
By: ______________________________
Name:
Title:
ALPS ADVISERS, INC.
By: ______________________________
Name:
Title:
A-7
FORM OF EXHIBIT A FOR LIBERTY ALL-STAR EQUITY FUND
MANAGER FEE
For the investment management services provided to the Trust pursuant to Section
2(A) of this Agreement, the Trust will pay to the Manager, on or before the 10th
day of each calendar month, a fee calculated and accrued daily and payable
monthly by the Fund for the previous calendar month at the annual rate of: 0.80%
of the first $400 million of average daily net assets; 0.72% of average daily
net assets exceeding $400 million up to and including $800 million; 0.648% of
average daily net assets exceeding $800 million up to and including $1.2
billion; and 0.584% of average daily net assets exceeding $1.2 billion.
Pursuant to Section 6 of this Agreement, the Manager will pay to each Portfolio
Manager, on or before the 10th day of each calendar month, a fee calculated and
accrued daily and payable monthly by the Manager for the previous calendar month
at the annual rate of: 0.40% of the amount obtained by multiplying the Portfolio
Manager's Percentage (as hereinafter defined) times the Average Total Fund Net
Assets (as hereinafter defined) up to $400 million; 0.36% of the amount obtained
by multiplying the Portfolio Manager's Percentage times the Average Total Fund
Net Assets exceeding $400 million up to and including $800 million; 0.324% of
the amount obtained by multiplying the Portfolio Manager's Percentage times the
Average Total Fund Net Assets exceeding $800 million up to and including $1.2
billion; and 0.292% of the amount obtained by multiplying the Portfolio
Manager's Percentage times the Average Total Fund Net Assets exceeding $1.2
billion.
"Portfolio Manager's Percentage" means the percentage obtained by dividing (i)
the average daily net asset values of the portion of the portfolio assets of the
Trust assigned to that Portfolio Manager during the preceding calendar month by
(ii) the Average Total Fund Net Assets.
"Average Total Fund Net Assets" means the average daily net asset values of the
Trust as a whole during the preceding calendar month.
The fees shall be pro rated for any month during which this Agreement is in
effect for only a portion of the month.
A-8
FORM OF EXHIBIT A FOR LIBERTY ALL-STAR GROWTH FUND, INC.
MANAGER FEE
(A) For the investment management services provided to the Fund pursuant to
Section 2(A) of this Agreement, the Fund will pay to the Manager, on or before
the 10th day of each calendar month, a fee calculated and accrued daily and
payable monthly by the Fund for the previous calendar month at the annual rate
of
0.80% of the average daily net assets of the Fund up to and including
$300 million; and
0.72% of the average daily net assets of the Fund exceeding $300 million.
(B) Pursuant to Section 6 of this Agreement, the Manager will pay to each
Portfolio Manager, on or before the 10th day of each calendar month, a fee
calculated and accrued daily and payable monthly by the Manager for the previous
calendar month at the annual rate of
0.40% of the Portfolio Manager's Percentage (as defined below) of the
average daily net assets of the Fund up to and including $300 million; and
0.36% of the Portfolio Manager's Percentage of the average daily net
assets of the Fund exceeding $300 million.
Each monthly payment set forth above shall be based on the average daily net
assets of the Fund during such previous calendar month. The fee for the period
from the date this Agreement becomes effective to the end of the calendar month
will be prorated according to the proportion that such period bears to the full
monthly period. Upon any termination of this Agreement before the end of a
calendar month, the fee for the part of that calendar month during which this
Agreement was in effect shall be prorated according to the proportion that such
period bears to the full monthly period and will be payable upon the date of
termination of this Agreement. For the purpose of determining fees payable to
the Manager, the value of the Fund's net assets will be computed at the times
and in the manner specified in the Fund's Registration Statement under the
Investment Company Act as from time to time in effect.
"Portfolio Manager's Percentage" means the percentage obtained by dividing the
average daily net assets of that portion of the Fund's assets assigned to that
Portfolio Manager by the total of the Fund's average daily net assets.
A-9
EXHIBIT B
EXISTING FUND MANAGEMENT AGREEMENTS
------------------------------------------------------------------------------------------------------------------------------------
NAME OF FUND LAST SUBMISSION OF ADVISORY FEE RATE DATE OF EXISTING DESCRIPTION OF
EXISTING FUND SCHEDULE (AS A % FUND MANAGEMENT BOARD ACTION
MANAGEMENT OF AVERAGE WEEKLY AGREEMENT REGARDING EXISTING
AGREEMENT FOR NET ASSETS) FUND MANAGEMENT
SHAREHOLDER AGREEMENT SINCE
APPROVAL AND BEGINNING OF THE
REASON FOR FUNDS' LAST FISCAL
SUBMISSION YEAR
------------------------------------------------------------------------------------------------------------------------------------
Liberty All-Star September 26, 2001 0.80% of the first November 1, 2001 On May 10, 2006,
Equity Fund (shareholders $400 million; 0.72% the Trustees
approved Existing of assets over $400 approved the
Fund Management million; 0.648% of renewal of the
Agreement after assets over $800 Existing Fund
termination of the million; 0.584% of Management
prior agreement due assets over $1.2 Agreement
to sale of the adviser billion
to Fleet National
Bank)
------------------------------------------------------------------------------------------------------------------------------------
Liberty All-Star September 26, 2001 0.80% of the first November 1, 2001 On May 10, 2006,
Growth Fund, Inc. (shareholders $300 million; 0.72% the Directors
approved Existing of assets over $300 approved the
Fund Management million renewal of the
Agreement after Existing Fund
termination of the Management
prior agreement due Agreement
to sale of the adviser
to Fleet National
Bank)
------------------------------------------------------------------------------------------------------------------------------------
B-1
EXHIBIT C
FORM OF PORTFOLIO MANAGEMENT AGREEMENT
______________, 2006
Re: PORTFOLIO MANAGEMENT AGREEMENT
------------------------------
Ladies and Gentlemen:
[__________] (the "Fund") is a diversified closed-end investment company
registered under the Investment Company Act of 1940, as amended (the "Act"), and
is subject to the rules and regulations promulgated thereunder.
ALPS Advisers, Inc. (the "Fund Manager") evaluates and recommends portfolio
managers for the assets of the Fund, and the Fund Manager or an affiliate of the
Fund Manager is responsible for the day-to-day Fund administration of the Fund.
1. EMPLOYMENT AS A PORTFOLIO MANAGER. The Fund, being duly authorized,
hereby employs ________ ("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. The Portfolio Manager will be an independent contractor and will have no
authority to act for or represent the Fund or the Fund Manager in any way or
otherwise be deemed to be an agent of the Fund or the Fund Manager except as
expressly authorized in this Agreement or in another writing by the Fund Manager
and the Portfolio Manager. The Portfolio Manager's responsibilities for
providing portfolio management services to the Fund shall be limited to the
Portfolio Manager Account.
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.
A. In providing portfolio management services to the Portfolio Manager
Account, the Portfolio Manager shall be subject to the Fund's Declaration
of Trust and By-Laws, as amended from time to time, investment objectives,
policies and restrictions of the Fund as set forth in its Prospectus and
Statement of Additional Information, as the same may be modified from time
to time (together, the "Prospectus"), the investment objectives, policies
and restrictions of the Fund as determined from time to time by the Board
of Trustees, and the investment and other restrictions set forth in the Act
and the rules and regulations thereunder, to the supervision and control of
the Board of Trustees 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 that would cause the
Portfolio Manager Account, treated as a separate fund, to be out of
compliance with any of such restrictions or policies. The Portfolio Manager
shall not consult with any other portfolio manager of the Fund concerning
transactions for the Fund in securities or other assets.
B. As part of the services it will provide hereunder, the Portfolio
Manager will:
(i) formulate and implement a continuous investment program for
the Portfolio Manager Account;
(ii) take whatever steps are necessary to implement the investment
program for the Portfolio Manager Account by arranging for
the purchase and sale of securities and other investments;
(iii) keep the Fund Manager and the Board of Trustees of the Fund
fully informed in writing on an ongoing basis, as agreed by
the Fund Manager and the Portfolio Manager, of all material
facts concerning the investment and reinvestment of the
assets in the Portfolio Manager Account, the Portfolio
C-1
Manager and its key investment personnel and operations; make
regular and periodic special written reports of such
additional information concerning the same as may reasonably
be requested from time to time by the Fund Manager or the
Trustees of the Fund; attend meetings with the Fund Manager
and/or Trustees, as reasonably requested, to discuss the
foregoing and such other matters as may be requested by the
Fund Manager or Trustees;
(iv) in accordance with procedures and methods established by the
Trustees of the Fund, which may be amended from time to time,
provide assistance in determining the fair value of all
securities and other investments/assets in the Portfolio
Manager Account, as necessary, and use reasonable efforts to
arrange for the provision of valuation information or a
price(s) from a party(ies) independent of the Portfolio
Manager for each security or other investment/asset in the
Portfolio Manager Account for which market prices are not
readily available; and
(v) cooperate with and provide reasonable assistance to the Fund
Manager, the Fund's administrator, custodian, transfer agent
and pricing agents and all other agents and representatives
of the Fund and the Fund Manager; keep all such persons fully
informed as to such matters as they may reasonably deem
necessary to the performance of their obligations to the Fund
and the Fund Manager; provide prompt responses to reasonable
requests made by such persons; and maintain any appropriate
interfaces with each so as to promote the efficient exchange
of information.
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. Notwithstanding any other
provision of this Agreement, the Portfolio Manager shall not be responsible
under paragraph A above with respect to transactions executed through any
such broker or dealer.
C-2
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 Manager will vote 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 in accordance with such policies as
shall be determined by the Fund Manager, and reviewed and approved by the Board
of Trustees. Upon the written request of the Fund Manager, the Portfolio Manager
will vote 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 in accordance with such policies as shall be determined by the Fund
Manager, and reviewed and approved by the Board of Trustees.
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, 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, 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, co-investment 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 reasonably 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, the
Fund 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.
C-3
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 will deliver to the Portfolio Manager a true and complete
copy of its then current Prospectus as effective from time to time and such
other documents governing the investment of the Portfolio Manager Account
and such other information as is 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, as amended ("Advisers Act") and will continue to be
so registered for as long as this Agreement remains in effect.
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 and
regulations thereunder, the records required to be so kept by an investment
adviser of the Fund in accordance with applicable law, including without
limitation those 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 has adopted a written code of ethics complying with the
requirements of Rule 204A-1 under the Advisers Act and Rule 17j-1 under the
Act and will provide the Fund Manager and the Board of Trustees with a copy
of its code of ethics and evidence of its adoption. Within 45 days of the
end of each year while this Agreement is in effect, or at any other time
requested by the Fund Manager, an officer, director or general partner of
the Portfolio Manager shall certify to the Fund that the Portfolio Manager
has complied with the requirements of Rule 17j-1 and Rule 204A-1 during the
previous year and that there has been no material violation of its code of
ethics or, if such a violation has occurred, that appropriate action was
taken in response to such violation. It will promptly notify the Fund
Manager of any material change to its code of ethics or material violation
of its code of ethics.
D. Upon request, the Portfolio Manager will promptly supply the Fund
with any information concerning the Portfolio Manager and its stockholders,
partners, employees and affiliates that the Fund may reasonably request in
connection with the preparation of its registration statement (as amended
from time to time), prospectus and statement of additional information (as
supplemented and modified from time to time), proxy material, reports and
other documents required to be filed under the Act, the Securities Act of
1933, or other applicable securities laws.
E. Reference is hereby made to the Declaration of Trust dated August
20, 1986 establishing the Fund, a copy of which has been filed with the
Secretary of the Commonwealth of Massachusetts and elsewhere as required by
law, and to any and all amendments thereto so filed or hereafter filed. The
name [_______] refers to the Board of Trustees under said Declaration of
Trust, as Trustees and not to the Trustees personally, and no Trustee,
shareholder, officer, agent or employee of the Fund shall be held to any
personal liability hereunder or in connection with the affairs of the Fund,
but only the trust estate under said Declaration of Trust is liable under
this Agreement. Without limiting the generality of the foregoing, neither
the Portfolio Manager nor any of its officers, directors, partners,
shareholders, agents or employees shall, under any circumstances, have
recourse or cause or willingly permit recourse to be had directly or
indirectly to any personal, statutory, or other liability of any
shareholder, Trustee, officer, agent or employee of the Fund or of any
successor of the Fund, whether such liability now exists or is hereafter
incurred for claims against the trust estate, but shall look for payment
solely to said trust estate, or the assets of such successor of the Fund.
F. The Portfolio Manager shall maintain and implement compliance
procedures that are reasonably designed to ensure its compliance with Rule
206(4)-7 of the Advisers Act and to prevent violations of the Federal
Securities Laws (as defined in Rule 38a-1 under the Act).
C-4
G. The Portfolio Manager will: (i) on the cover page of each Form 13F
that the Portfolio Manager files with the Securities and Exchange
Commission (the "SEC"), check the "13F Combination Report" box and on the
Form 13F Summary Page identify "ALPS Advisers, Inc." as another manager for
which the Portfolio Manager is filing the Form 13F report; (ii) within 60
days after the end of each calendar year, provide the Fund Manager with a
certification that the Portfolio Manager's Form 13F was filed with the SEC
on a timely basis and included all of the securities required to be
reported by the SEC; (iii) within 60 days after the end of each calendar
year, provide to the Fund Manager a copy of each Form 13F, or amendment to
a Form 13F filed by it during the prior four quarters; and (iv) promptly
notify the Fund Manager in the event the Portfolio Manager determines that
it has failed to comply with Section 13(f) in a material respect, or
receives a comment letter from the SEC raising a question with respect to
compliance.
H. The Portfolio Manager has adopted written compliance policies and
procedures reasonably designed to prevent violations of the Advisers Act
and the rules promulgated thereunder and the Portfolio Manager agrees to
provide: (a) from time to time, a copy and/or summary of such compliance
policies and procedures and an accompanying certification certifying that
the Portfolio Manager's compliance policies and procedures comply with the
Advisers Act; (b) a report of the annual review determining the adequacy
and effectiveness of the Portfolio Manager's compliance policies and
procedures; and (c) the name of the Portfolio Manager's Chief Compliance
Officer to act as a liaison for compliance matters that may arise between
the Fund and the Portfolio Manager.
I. The Portfolio Manager will notify the Fund and the Fund Manager of
any assignment of this Agreement or change of control of the Portfolio
Manager, as applicable, and any changes in the key personnel who are either
the portfolio manager(s) of the Portfolio Manager Account or senior
management of the Portfolio Manager, in each case prior to or promptly
after, such change. The Portfolio Manager agrees to bear all reasonable
expenses of the Fund, if any, arising out of an assignment or change in
control.
J. The Portfolio Manager agrees to maintain an appropriate level of
errors and omissions or professional liability insurance coverage.
14. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement among the Portfolio Manager, the Fund Manager and the Fund,
which amendment, other than amendments to Schedules A, B and C, is subject to
the approval of the Board of Trustees and the shareholders of the Fund as and to
the extent required by the Act, the rules thereunder or exemptive relief granted
by the SEC, provided that Schedules A and B may be amended by the Fund Manager
without the written agreement of the Fund or the Portfolio Manager.
15. EFFECTIVE DATE; TERM. This Agreement shall become effective on the
date first above written, provided that this Agreement shall not take effect
unless it has first been approved: (1) by a vote of a majority of the Trustees
who are not "interested persons" (as defined in the Act) of any party to this
Agreement ("Independent Trustees"), cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by vote of "a majority of the
outstanding voting securities" (as defined in the Act) of the Fund. This
Agreement shall continue until December , 2008, and from year to year thereafter
provided such continuance is specifically approved at least annually by (i) the
Fund's Board of Trustees or (ii) a vote of a majority of the outstanding voting
securities of the Fund, provided that in either event such continuance is also
approved by a majority of the Independent Trustees, by vote cast in person at a
meeting called for the purpose of voting on such approval. If the SEC issues an
order to the Fund and the Fund Manager for an exemption from Section 15(a) of
the Act, then, in accordance with the application of the Fund and the Fund
Manager, the continuance of this Agreement after initial approval by the
Trustees as set forth above, shall be subject to approval by a majority of the
outstanding voting securities of the Fund at the regularly scheduled annual
meeting of the Fund's shareholders next following the date of this Agreement.
16. TERMINATION. This Agreement may be terminated at any time 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.
C-5
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; COUNTERPARTS. 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. This Agreement may be executed
in counterparts, each of which will be deemed an original and all of which
together will be deemed to be one and the same agreement.
19. USE OF NAME. The Portfolio Manager agrees and acknowledges that the
Fund Manager is the sole owner of the names and marks "Liberty All-Star" and
"All-Star", and that all use of any designation comprised in whole or in part
of these names and marks shall inure to the benefit of the Fund Manager. Except
as used to identify the Fund to third parties as a client, the use by the
Portfolio Manager on its own behalf of such marks in any advertisement or sales
literature or other materials promoting the Portfolio Manager shall be with the
prior written consent of the Fund Manager. The Portfolio Manager shall not,
without the consent of the Fund Manager, make representations regarding the Fund
or the Fund Manager in any disclosure document, advertisement or sales
literature or other materials promoting the Portfolio Manager. Consent by the
Fund Manager shall not be unreasonably withheld. Upon termination of this
Agreement for any reason, the Portfolio Manager shall cease any and all use of
these marks as soon as reasonably practicable.
[______________]
By: ________________________________________
Name:
Title:
ALPS ADVISERS, INC.
By: ________________________________________
Name:
Title:
ACCEPTED:
PORTFOLIO MANAGER NAME
By: ________________________________________
Name:
Title:
SCHEDULES: A. Operational Procedures For Portfolio Transactions
B. Record Keeping Requirements
C. Fee Schedule
C-6
PORTFOLIO MANAGEMENT AGREEMENT
FORM OF SCHEDULE B
RECORDS TO BE MAINTAINED BY THE PORTFOLIO MANAGER
-------------------------------------------------
1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all other
portfolio purchases and sales, given by the Portfolio Manager on behalf of
the Fund for, or in connection with, the purchase or sale of securities,
whether executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modifications or
cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the Fund.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within ten
(10) days after the end of the quarter, showing specifically the basis or
bases upon which the allocation of orders for the purchase and sale of
portfolio securities to named brokers or dealers was effected, and the
division of brokerage commissions or other compensation on such purchase
and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers or dealers.
(ii) The supplying of services or benefits by brokers or dealers to:
(a) The Fund;
(b) The Fund Manager;
(c) The Portfolio Manager; and
(d) Any person other than the foregoing.
(iii) Any other consideration other than the technical qualifications
of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made available.
C. Shall describe in detail the application of any general or specific
formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions or
other compensation.
D. The name of the person responsible for making the determination of
such allocation and such division of brokerage commissions or other
compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is made by
a committee or group, a record shall be kept of the names of its members
who participate in the authorization. There shall be retained as part of
this record: any memorandum, recommendation or instruction supporting or
C-7
authorizing the purchase or sale of portfolio securities and such other
information as is appropriate to support the authorization.1
4. (Rule 31a-1(f)) Such accounts, books and other documents as are required to
be maintained by registered investment advisers by rule adopted under
Section 204 of the Investment Advisers Act of 1940, to the extent such
records are necessary or appropriate to record the Portfolio Manager's
transactions with the Fund.
__________
1 Such information might include: the current Form 10-K, annual and quarterly
reports, press releases, reports by analysts and from brokerage firms
(including their recommendation: i.e., buy, sell, hold) or any internal
reports or portfolio manager reviews.
C-8
FORM OF SCHEDULE C FOR LIBERTY ALL-STAR EQUITY FUND
PORTFOLIO MANAGER FEE
For services provided to the Portfolio Manager Account, the Fund Manager
will pay to the Portfolio Manager, on or before the 10th day of each calendar
month, a fee calculated and accrued daily and payable monthly by the Fund
Manager for the previous calendar month at the annual rate of: 0.40% of the
amount obtained by multiplying the Portfolio Manager's Percentage (as
hereinafter defined) times the Average Total Fund Net Assets (as hereinafter
defined) up to $400 million; 0.36% of the amount obtained by multiplying the
Portfolio Manager's Percentage times the Average Total Fund Net Assets exceeding
$400 million up to and including $800 million; 0.324% of the amount obtained by
multiplying the Portfolio Manager's Percentage times the Average Total Fund Net
Assets exceeding $800 million up to and including $1.2 billion; 0.292% of the
amount obtained by multiplying the Portfolio Manager's Percentage times the
Average Total Fund Net Assets exceeding $1.2 billion.
"Portfolio Manager's Percentage" means the percentage obtained by dividing
(i) the average daily net asset values of the Portfolio Manager Account during
the preceding calendar month, by (ii) the Average Total Fund Net Assets.
"Average Total Fund Net Assets" means the average daily net asset values of
the Fund as a whole during the preceding calendar month.
The fee shall be pro-rated for any month during which this Agreement is in
effect for only a portion of the month.
C-9
FORM OF SCHEDULE C FOR LIBERTY ALL-STAR GROWTH FUND, INC.
PORTFOLIO MANAGER FEE
For services provided to the Portfolio Manager Account, the Fund Manager
will pay to the Portfolio Manager, on or before the 10th day of each calendar
month, a fee calculated and accrued daily and payable monthly by the Fund
Manager for the previous calendar month at the annual rate of
(1) 0 .40% of the Portfolio Manager's Percentage (as defined below) of the
average daily net assets of the Fund up to and including $300 million;
and
(2) 0.36% of the Portfolio Manager's Percentage of the average daily net
assets of the Fund exceeding $300 million.
Each monthly payment set forth above shall be based on the average daily
net assets during such previous calendar month. The fee for the period from the
date this Agreement becomes effective to the end of the calendar month in which
such effective date occurs will be prorated according to the proportion that
such period bears to the full monthly period. Upon any termination of this
Agreement before the end of a calendar month, the fee for the part of that
calendar month during which this Agreement was in effect shall be prorated
according to the proportion that such period bears to the full monthly 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 daily net assets in the Portfolio Manager Account by the Fund's
average daily net assets.
C-10
EXHIBIT D
EXISTING PORTFOLIO MANAGEMENT AGREEMENTS
-----------------------------------------------------------------------------------------------------------------------
NAME OF PORTFOLIO LAST SUBMISSION OF ADVISORY FEE RATE DATE OF EXISTING DESCRIPTION OF
MANAGER EXISTING PORTFOLIO SCHEDULE (AS A % PORTFOLIO BOARD ACTION
MANAGEMENT OF AVERAGE WEEKLY MANAGEMENT REGARDING EXISTING
AGREEMENT FOR NET ASSETS) AGREEMENT PORTFOLIO
SHAREHOLDER MANAGEMENT
APPROVAL AND AGREEMENT SINCE
REASON FOR SUBMISSION BEGINNING OF THE
FUNDS'LAST FISCAL
YEAR
-----------------------------------------------------------------------------------------------------------------------
LIBERTY ALL-STAR EQUITY FUND
-----------------------------------------------------------------------------------------------------------------------
Chase Investment Existing Agreement 0.40% of the portion Existing Agreement On May 10, 2006,
Counsel Corporation not yet approved by of the Fund's assets not yet approved by the Trustees
shareholders managed by the shareholders approved the
pursuant to an Portfolio Manager of pursuant to an Existing Portfolio
exemptive order the first $400 exemptive order Management
million; 0.36% of Agreement
assets over $400
million; 0.324% of
assets over $800
million; 0.292% of
assets over $1.2
billion
-----------------------------------------------------------------------------------------------------------------------
Matrix Asset April 30, 2004 0.40% of the portion February 17, 2004 On May 10, 2006,
Advisers, Inc. (shareholders of the Fund's assets the Trustees
approved the managed by the approved the
Existing Portfolio Portfolio Manager of renewal of the
Management Agreement the first $400 Existing Portfolio
after the prior million; 0.36% of Management
subadviser was assets over $400 Agreement
replaced) million; 0.324% of
assets over $800
million; 0.292% of
assets over $1.2
billion
-----------------------------------------------------------------------------------------------------------------------
Pzena Investment April 30, 2004 0.40% of the portion October 15, 2003 On May 10, 2006,
Management, LLC (shareholders of the Fund's assets the Trustees
approved the managed by the approved the
Existing Portfolio Portfolio Manager of renewal of the
Management Agreement the first $400 Existing Portfolio
after the prior million; 0.36% of Management
subadviser was assets over $400 Agreement
replaced) million; 0.324% of
assets over $800
million; 0.292% of
assets over $1.2
billion
-----------------------------------------------------------------------------------------------------------------------
D-1
-----------------------------------------------------------------------------------------------------------------------
NAME OF PORTFOLIO LAST SUBMISSION OF ADVISORY FEE RATE DATE OF EXISTING DESCRIPTION OF
MANAGER EXISTING PORTFOLIO SCHEDULE (AS A % PORTFOLIO BOARD ACTION
MANAGEMENT OF AVERAGE WEEKLY MANAGEMENT REGARDING EXISTING
AGREEMENT FOR NET ASSETS) AGREEMENT PORTFOLIO
SHAREHOLDER MANAGEMENT
APPROVAL AND AGREEMENT SINCE
REASON FOR SUBMISSION BEGINNING OF THE
FUNDS'LAST FISCAL
YEAR
-----------------------------------------------------------------------------------------------------------------------
Schneider Capital April 30, 2002 0.40% of the portion March 1, 2002 On May 10, 2006,
Management Corporation (shareholders of the Fund's assets the Trustees
approved the managed by the approved the
Existing Portfolio Portfolio Manager of renewal of the
Management the first $400 Existing Portfolio
Agreement after the million; 0.36% of Management
prior subadviser was assets over $400 Agreement
replaced) million; 0.324% of
assets over $800
million; 0.292% of
assets over $1.2
billion
-----------------------------------------------------------------------------------------------------------------------
TCW Investment April 30, 2002 0.40% of the portion November 1, 2001 On May 10, 2006,
Management (shareholders of the Fund's assets the Trustees
Company approved the managed by the approved the
Existing Portfolio Portfolio Manager of renewal of the
Management the first $400 Existing Portfolio
Agreement after million; 0.36% of Management
termination of the assets over $400 Agreement
prior agreement due million; 0.324% of
to sale of the assets over $800
subadviser to million; 0.292% of
Societe Generale assets over $1.2
Asset Management, billion
S.A.)
-----------------------------------------------------------------------------------------------------------------------
D-2
-----------------------------------------------------------------------------------------------------------------------
NAME OF PORTFOLIO LAST SUBMISSION OF ADVISORY FEE RATE DATE OF EXISTING DESCRIPTION OF
MANAGER EXISTING PORTFOLIO SCHEDULE (AS A % PORTFOLIO BOARD ACTION
MANAGEMENT OF AVERAGE WEEKLY MANAGEMENT REGARDING EXISTING
AGREEMENT FOR NET ASSETS) AGREEMENT PORTFOLIO
SHAREHOLDER MANAGEMENT
APPROVAL AND AGREEMENT SINCE
REASON FOR SUBMISSION BEGINNING OF THE
FUNDS'LAST FISCAL
YEAR
-----------------------------------------------------------------------------------------------------------------------
LIBERTY ALL-STAR GROWTH FUND, INC.
-----------------------------------------------------------------------------------------------------------------------
TCW Investment April 30, 2002 0.40% of the portion November 1, 2001 On May 10,
Management Company (shareholders of the Fund's assets 2006, the
approved the managed by the Directors
Existing Portfolio Portfolio Manager of approved the
Management the first $300 renewal of
Agreement after million; 0.36% of the Existing
termination of the assets over $300 Portfolio
prior agreement due million. Management
to sale of the Agreement
subadviser to
Societe Generale
Asset Management, S.A.)
-----------------------------------------------------------------------------------------------------------------------
M.A. Weatherbie September 26, 2001 0.40% of the portion November 1, 2001 On May 10, 2006, the
& Co., Inc. (shareholders of the Fund's assets Directors approved
approved the Existing managed by the the renewal of the
Portfolio Management Portfolio Manager of Existing Portfolio
Agreement after the first $300 Management Agreement
termination of the million; 0.36% of
prior agreement due assets over $300
to sale of the million.
adviser to Fleet
National Bank)
-----------------------------------------------------------------------------------------------------------------------
William Blair & September 26, 2001 0.40% of the portion November 1, 2001 On May 10, 2006, the
Company, L.L.C. (shareholders of the Fund's assets Directors approved
approved the Existing managed by the the renewal of the
Portfolio Management Portfolio Manager of Existing Portfolio
Agreement after the first $300 Management Agreement
termination of the million; 0.36% of
prior agreement due assets over $300
to sale of the million.
adviser to Fleet
National Bank)
-----------------------------------------------------------------------------------------------------------------------
D-3
EXHIBIT E
ALPS ADVISERS
The following are the principal executive officers and directors of ALPS
Advisers:
--------------------------------------------------------------------------------
NAME AND ADDRESS(1) POSITION WITH ALPS ADVISERS PRINCIPAL OCCUPATION
--------------------------------------------------------------------------------
Edmund J. Burke President and Director
--------------------------------------------------------------------------------
Thomas A. Carter Managing Director
--------------------------------------------------------------------------------
Jeremy O. May Managing Director
--------------------------------------------------------------------------------
Bradley J. Swenson Chief Compliance Officer
--------------------------------------------------------------------------------
W. Robert Alexander Director
--------------------------------------------------------------------------------
(1) The address of each officer and director is 1625 Broadway, Suite 2200,
Denver, Colorado 80202.
E-1
EXHIBIT F
BAIA
The following are the principal executive officers and directors of BAIA as
of August 31, 2006:
------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS POSITION WITH BAIA PRINCIPAL OCCUPATION
------------------------------------------------------------------------------------------------------------------
Daniel S. McNamara President, Director (chief executive Managing Director, Investment
100 Federal Street officer) Products Group, Bank of America
Boston, MA 02110
------------------------------------------------------------------------------------------------------------------
Lawrence R. Morgenthal Executive Vice President, Director Managing Director, Alternative
40 West 57th Street Investment Group, Bank of America
New York, NY 10019
------------------------------------------------------------------------------------------------------------------
Michael S. Podracky Senior Vice President, Director Managing Director, Business
100 Federal Street Development and Management,
Boston, MA 02110 Investment Products Group,
Bank of America
------------------------------------------------------------------------------------------------------------------
John R. Bahnken Senior Executive Vice President President Global Wealth & Group,
100 Federal Street Investment Management Products
Boston, MA 02110 Bank of America
------------------------------------------------------------------------------------------------------------------
J. Reed Murphy Executive Vice President Managing Director, Consulting
100 Federal Street Services Group, Bank of America
Boston, MA 02110
------------------------------------------------------------------------------------------------------------------
C. Brooks Englehardt Executive Vice President Managing Director, Regional
40 West 57th Street Investment Consultants, Bank of America
New York, NY 10019
------------------------------------------------------------------------------------------------------------------
Kevin L. O'Shea Executive Vice President Managing Director, Retirement
100 Federal Street Solutions Group, Bank of America
Boston, MA 02110
------------------------------------------------------------------------------------------------------------------
Alpesh Rathod Chief Compliance Officer Senior Compliance Manager
40 West 57th Street
New York, NY 10019
------------------------------------------------------------------------------------------------------------------
William R. Parmentier, Jr. Senior Vice President President, Liberty All-Star Funds
100 Federal Street
Boston, MA 02110
------------------------------------------------------------------------------------------------------------------
The following shows the amounts paid to BAIA and its affiliates by the
Funds during the last fiscal year:
--------------------------------------------------------------------------------------------------------------------
MANAGEMENT FEES (AFTER ADMINISTRATION FEES BOOKKEEPING AND PRICING
WAIVERS AND FEES
REIMBURSEMENTS, IF ANY)
--------------------------------------------------------------------------------------------------------------------
EQUITY FUND $ 9,339,478.45 $ 2,334,674.46 $ 202,910.54
--------------------------------------------------------------------------------------------------------------------
GROWTH FUND $ 1,246,393.14 $ 311,487.87 $ 42,682.51
--------------------------------------------------------------------------------------------------------------------
F-1
EXHIBIT G
EQUITY FUND PORTFOLIO MANAGERS
CHASE INVESTMENT COUNSEL CORPORATION ("CHASE")
------------------------------------
PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS
The following are the principal executive officers and directors of Chase:
-------------------------------------------------------------------------------
NAME AND ADDRESS(1) POSITION WITH CHASE PRINCIPAL OCCUPATION
-------------------------------------------------------------------------------
Derwood S. Chase, Jr. President, Director and Chief Same
Investment Officer
-------------------------------------------------------------------------------
David B. Scott Senior Vice President, Director Same
and Senior Portfolio Manager
-------------------------------------------------------------------------------
Peter W. Tuz Vice President, Portfolio Manager Same
and Senior Security Analyst
-------------------------------------------------------------------------------
Peter C. Wood Vice President, Portfolio Manager Same
and Senior Security Analyst
-------------------------------------------------------------------------------
Brian J. Lazorishak Vice President, Portfolio Manager Same
and Quantitative Analyst
-------------------------------------------------------------------------------
Teresa R. Poole Senior Vice President-Client Same
Relations and Chief Compliance
Officer
-------------------------------------------------------------------------------
Eugene R. Hack, Jr. Vice President-Administration & Same
Business Development
-------------------------------------------------------------------------------
Jennifer L. King Vice President-Operations Same
-------------------------------------------------------------------------------
Frank P. Wilton Director Retired.
-------------------------------------------------------------------------------
Stansfield Turner Director Retired
-------------------------------------------------------------------------------
James B. Hoover Director Principal, SB Hoover &
Co.
-------------------------------------------------------------------------------
Stuart F. Chase Director Private investor
-------------------------------------------------------------------------------
Gordan M. Marchand Director Principal., Sustainable
Growth Advisers
-------------------------------------------------------------------------------
Stephen D. Gresham Director Exec VP and Chief Sales
& Marketing Officer,
Phoenix Investment
Partners' Private
Client Group
-------------------------------------------------------------------------------
Edwin T. Burton Director Visiting Professor of
Economics at the
University of Virginia.
-------------------------------------------------------------------------------
(1) The address of each officer and director is 300 Preston Avenue, Suite 403,
Charlottesville, Virginia 22902-5091.
G-1
BENEFICIAL OWNERS
The following are the 10% or more beneficial owners of voting shares of
Chase:
-------------------------------------------------------------------------------
NAME AND ADDRESS(1) POSITION WITH CHASE OWNERSHIP PERCENTAGE
-------------------------------------------------------------------------------
Derwood S. Chase, Jr. President, Director and Chief 65.1%
Investment Officer
-------------------------------------------------------------------------------
David B. Scott Senior Vice President, Director and 13.9%
Senior Portfolio Manager
-------------------------------------------------------------------------------
(1) The address of each officer and director is 300 Preston Avenue, Suite 403,
Charlottesville, Virginia 22902-5091.
OTHER FUNDS MANAGED
In addition to the management services provided by Chase to the Equity
Fund, Chase also provides management services to other investment companies.
Information with respect to the assets of and management fees payable to Chase
by those funds having investment objectives similar to those of the Equity Fund
is set forth below:
---------------------------------------------------------------------------------------------
NAME OF FUND TOTAL NET ASSETS ANNUAL MANAGEMENT FEE AS A WAIVERS, REDUCTIONS OR
AT JULY 31, 2006 % OF AVERAGE DAILY NET ASSETS AGREEMENTS TO WAIVE OR
(IN MILLIONS) REDUCE MANAGEMENT FEE
---------------------------------------------------------------------------------------------
Chase Growth Fund $635.6 1.00% None
---------------------------------------------------------------------------------------------
ADVISORY FEES
No advisory fees were paid to Chase during the last fiscal year since it
became a Portfolio Manager on June 1, 2006.
G-2
MATRIX ASSET ADVISERS, INC. ("MATRIX")
---------------------------
PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS
The following are the principal executive officers and directors of Matrix:
--------------------------------------------------------------------------------
NAME AND ADDRESS(1) POSITION WITH MATRIX PRINCIPAL OCCUPATION
--------------------------------------------------------------------------------
David A. Katz President and Chief President and Chief Investment
Investment Officer Officer of Matrix and Chairman
of Investment Committee
--------------------------------------------------------------------------------
Douglas S. Altabef Senior Managing Director Senior Managing Director and
Investment Committee Member
--------------------------------------------------------------------------------
Lon F. Birnholz Managing Director Managing Director and
Investment Committee Member
--------------------------------------------------------------------------------
Steven G. Roukis Managing Director Managing Director, Senior
Portfolio Manager and
Investment Committee Member
--------------------------------------------------------------------------------
Jordan F. Posner Managing Director Managing Director, Senior
Portfolio Manager and
Investment Committee Member
--------------------------------------------------------------------------------
(1) The address of each officer and director is 747 Third Avenue, New York, NY
10017.
BENEFICIAL OWNERS
The following are the 10% or more beneficial owners of voting shares of
Matrix:
-------------------------------------------------------------------------------
NAME AND ADDRESS(1) POSITION WITH MATRIX OWNERSHIP PERCENTAGE
-------------------------------------------------------------------------------
David A. Katz President and Chief Investment 58%
Officer
-------------------------------------------------------------------------------
Douglas S. Altabef Senior Managing Director 25%
-------------------------------------------------------------------------------
(1) The address of each officer and director is 747 Third Avenue, New York, NY
10017.
G-3
OTHER FUNDS MANAGED
In addition to the management services provided by Matrix to the Equity
Fund, Matrix also provides management services to other investment companies.
Information with respect to the assets of and management fees payable to Matrix
by those funds having investment objectives similar to those of the Equity Fund
is set forth below:
---------------------------------------------------------------------------------------------------------------------
NAME OF FUND TOTAL NET ASSETS ANNUAL MANAGEMENT FEE AS A WAIVERS, REDUCTIONS OR
AT JUNE 30, 2006 % OF AVERAGE DAILY NET ASSETS AGREEMENTS TO WAIVE OR
(IN MILLIONS) REDUCE MANAGEMENT FEE
---------------------------------------------------------------------------------------------------------------------
Matrix Advisors Value [$160.5] 1.00% (Annual Management Fee Total fund expenses are
Fund, Inc. was 0.67% for the fiscal contractually capped at 1.10%
year ended June 30, 2006 of the Fund's average daily
net of fee waiver) net assets (reimbursed by
Matrix). For the fiscal year
ended June 30, 2006, total
fund expenses were 1.10%
(net), 1.32% (gross) (with
Matrix voluntarily reimbursing
expenses in excess of 0.99%)
---------------------------------------------------------------------------------------------------------------------
ADVISORY FEES
The following shows the amounts paid to Matrix by BAIA during the last
fiscal year:
--------------------------------------------------
ADVISORY FEES
--------------------------------------------------
EQUITY FUND $897,263
--------------------------------------------------
G-4
PZENA INVESTMENT MANAGEMENT, LLC ("PZENA")
--------------------------------
PRINCIPAL EXECUTIVE OFFICERS AND MANAGERS
The following are the principal executive officers and managers of Pzena:
-----------------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS(1) POSITION WITH PZENA PRINCIPAL OCCUPATION
-----------------------------------------------------------------------------------------------------------------------------------
Richard S. Pzena Managing Principal, CEO, Co-Chief Investment Officer Managing Principal, CEO, Co-Chief Investment Officer
-----------------------------------------------------------------------------------------------------------------------------------
John P. Goetz Managing Principal, Co-Chief Investment Officer Managing Principal, Co-Chief Investment Officer
-----------------------------------------------------------------------------------------------------------------------------------
A. Rama Krishna, CFA Managing Principal, Portfolio Manager Managing Principal, Portfolio Manager
-----------------------------------------------------------------------------------------------------------------------------------
William L. Lipsey Managing Principal, Marketing & Client Services Managing Principal, Marketing & Client Services
-----------------------------------------------------------------------------------------------------------------------------------
Amelia Jones Managing Principal, Operations & Administration Managing Principal, Operations & Administration
-----------------------------------------------------------------------------------------------------------------------------------
(1) The address of each officer and manager is 120 West 45th Street, 20th Floor, New York, NY 10036.
BENEFICIAL OWNERS
The following are the 10% or more beneficial owners of voting shares of
Pzena:
--------------------------------------------------------------------------------
NAME AND ADDRESS(1) POSITION WITH MATRIX OWNERSHIP PERCENTAGE
--------------------------------------------------------------------------------
Richard S. Pzena Managing Principal, CEO, Co-Chief 38.6%
Investment Officer
--------------------------------------------------------------------------------
(1) The address of the officer is 120 West 45th Street, 20th Floor, New York, NY
10036.
G-5
OTHER FUNDS MANAGED
In addition to the management services provided by Pzena to the Equity
Fund, Pzena also provides sub-advisory services to other investment companies.
Information with respect to the assets of and sub-advisory fees payable to Pzena
by those funds having investment objectives similar to those of the Equity Fund
is set forth below:
--------------------------------------------------------------------------------------------------------------------
NAME OF FUND TOTAL NET ASSETS ANNUAL SUB-ADVISORY FEE AS A WAIVERS, REDUCTIONS OR
AT ______, 2006 % OF AVERAGE DAILY NET ASSETS AGREEMENTS TO WAIVE OR
(IN MILLIONS) REDUCE SUB-ADVISORY FEE
--------------------------------------------------------------------------------------------------------------------
[John Hancock Classic [The adviser (not the fund) pays None
Value Fund] Pzena quarterly, in arrears,
after the end of each quarter, a
(open-end investment fee equal on an annual basis to
company) the following percentages of the
Fund's average daily net assets:
0.4250% for the first $500
million; 0.3825% in excess of
$500 million up to $1 billion;
0.3400% in excess of $1 billion
up to $1.5 billion; 0.2975% in
excess of $1.5 billion up to $2
billion; and 0.2550% in excess
of $2 billion.]
--------------------------------------------------------------------------------------------------------------------
ADVISORY FEES
The following shows the amounts paid to Pzena by BAIA during the last
fiscal year:
--------------------------------------------------
ADVISORY FEES
--------------------------------------------------
EQUITY FUND $993,870
--------------------------------------------------
G-6
SCHNEIDER CAPITAL MANAGEMENT CORPORATION ("SCHNEIDER")
----------------------------------------
PRINCIPAL EXECUTIVE OFFICER AND DIRECTOR
The following is the principal executive officer and director of Schneider:
------------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS POSITION WITH SCHNEIDER PRINCIPAL OCCUPATION
------------------------------------------------------------------------------------------------------------------------------
Arnold C. Schneider III Sole Director, President and Chief President and Chief Investment Officer of Schneider
460 East Swedesford Road Investment Officer
Wayne, PA 19087
------------------------------------------------------------------------------------------------------------------------------
Steven J. Fellin Secretary and Treasurer Chief Operating Officer & Financial Officer,
[_______] Chief Compliance Office of Schneider
------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL OWNERS
The following are the 10% or more beneficial owners of voting shares of
Schneider:
--------------------------------------------------------------------------------
NAME AND ADDRESS POSITION WITH SCHNEIDER OWNERSHIP PERCENTAGE
--------------------------------------------------------------------------------
Arnold C. Schneider III President and Chief Investment 75% or more
460 East Swedesford Road Officer
Wayne, PA 19087
--------------------------------------------------------------------------------
OTHER FUNDS MANAGED
In addition to the management services provided by Schneider to the Equity
Fund, Schneider also provides sub-advisory services to other investment
companies. Information with respect to the assets of and sub-advisory fees
payable to Schneider by those funds having investment objectives similar to
those of the Equity Fund is set forth below:
------------------------------------------------------------------------------------------------------------
NAME OF FUND TOTAL NET ASSETS AT ANNUAL MANAGEMENT FEE AS A WAIVERS, REDUCTIONS OR
JUNE 30, 2006 % OF AVERAGE DAILY NET ASSETS AGREEMENTS TO WAIVE OR
(IN MILLIONS) REDUCE MANAGEMENT FEE
------------------------------------------------------------------------------------------------------------
Schneider Value Fund $107 0.70% Yes
------------------------------------------------------------------------------------------------------------
Russell Funds: $478 combined Sliding scale; 0.35% average No
Sovereign - US Equity annual fee during 2Q2006
Pool
Russell Group of Funds -
Russell US Equity Fund
Russell Investment
Company - Diversified
Equity Fund
Russell Investment
Company - Equity I Fund
------------------------------------------------------------------------------------------------------------
G-7
ADVISORY FEES
The following shows the amounts paid to Schneider by BAIA during the last
fiscal year:
--------------------------------------------------
ADVISORY FEES
--------------------------------------------------
EQUITY FUND $938,739
--------------------------------------------------
G-8
TCW INVESTMENT MANAGEMENT COMPANY ("TCW")
---------------------------------
PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS
The following are the principal executive officers and directors of TCW:
----------------------------------------------------------------------------------------------------
NAME AND ADDRESS(1) POSITION WITH TCW PRINCIPAL OCCUPATION
----------------------------------------------------------------------------------------------------
Alvin R. Albe, Jr. President, Chief Executive Officer Mr. Albe is an Executive Vice
and a Director President of The TCW Group,
Inc., Trust Company of the
West and TCW Asset Management
Company (TAMCO). He is also a
Director of Trust Company of
the West and TAMCO.
----------------------------------------------------------------------------------------------------
Robert D. Beyer Chairman and a Director Mr. Beyer is Chief Executive
Officer and a Director of The
TCW Group, Inc. and an
Executive Vice President of
TAMCO. Mr. Beyer is also
President and a Director of
Trust Company of the West and
a Director of TAMCO.
----------------------------------------------------------------------------------------------------
Michael E. Cahill Group Managing Director, Secretary Mr. Cahill is General Counsel,
and General Counsel Group Managing Director and
Secretary of The TCW Group,
Inc., Trust Company of the
West and TAMCO. Mr. Cahill is
also a Director of TAMCO.
----------------------------------------------------------------------------------------------------
David S. DeVito, CPA Managing Director and Chief Mr. DeVito is a Managing
Financial Officer Director and Chief Financial
Officer of The TCW Group,
Inc., Trust Company of the
West and TAMCO. Mr. DeVito is
also a Director of TAMCO.
----------------------------------------------------------------------------------------------------
Jeffrey E. Gundlach Group Managing Director, Chief Mr. Gundlach is Chief
Investment Officer and a Director Investment Officer and a
Director of The TCW Group,
Inc. Mr. Gundlach is also
President, Chief Investment
Officer and a Director of
TAMCO and Group Managing
Director, Chief Investment
Officer and a Director of
Trust Company of the West.
----------------------------------------------------------------------------------------------------
Hilary G. D. Lord Managing Director and Chief Ms. Lord is a Managing
Compliance Officer Director and Chief Compliance
Officer of The TCW Group,
Inc., Trust Company of the
West and TAMCO.
----------------------------------------------------------------------------------------------------
G-9
----------------------------------------------------------------------------------------------------
William C. Sonneborn Vice Chairman and a Director Mr. Sonneborn is President,
Chief Operating Officer and a
Director of The TCW Group,
Inc.; Executive Vice
President, Chief Operating
Officer and Director of Trust
Company of the West; and Vice
Chairman of TAMCO.
----------------------------------------------------------------------------------------------------
Marc I. Stern Vice Chairman and a Director Mr. Stern is a Vice Chairman
of The TCW Group, Inc., Trust
Company of the West and TAMCO.
----------------------------------------------------------------------------------------------------
(1) The address of each officer and director is 865 South Figueroa Street, Los Angeles, CA 90017.
OTHER FUNDS MANAGED
In addition to the management services provided by TCW to the Equity Fund,
TCW also provides sub-advisory services to other investment companies.
Information with respect to the assets of and sub-advisory fees payable to TCW
by those funds having investment objectives similar to those of the Equity Fund
is set forth below:
---------------------------------------------------------------------------------------------------------------------
NAME OF FUND TOTAL NET ASSETS AT ANNUAL MANAGEMENT FEE AS A WAIVERS, REDUCTIONS OR
JUNE 30, 2006 % OF AVERAGE DAILY NET ASSETS AGREEMENTS TO WAIVE OR
(IN MILLIONS) REDUCE MANAGEMENT FEE
---------------------------------------------------------------------------------------------------------------------
Asset Mark Large Cap $155.1 0.45%
Growth Fund
---------------------------------------------------------------------------------------------------------------------
AXA Enterprise $3.7 0.50% (Under the fund's management
Multimanager Funds Trust agreement, the fund pays TCW a fee
at the annual rate of 0.50% of the
first $100 million of the average
daily net assets and 0.40%
thereafter)
---------------------------------------------------------------------------------------------------------------------
AXA Premier VIP Trust $125.6 0.50% (Under the fund's management
agreement, the fund pays TCW a fee
at the annual rate of 0.50% of the
first $100 million of the average
daily net assets and 0.40%
thereafter)
---------------------------------------------------------------------------------------------------------------------
Consulting Group Capital $359.3 0.40% (Under the fund's management
Markets Fund Large agreement, the fund pays TCW a fee
Capitalization Growth at the annual rate of 0.40% of the
Investments first $500 million of the average
daily net assets and 0.35%
thereafter.)
---------------------------------------------------------------------------------------------------------------------
G-10
---------------------------------------------------------------------------------------------------------------------
EQ Advisors Trust TCW $267.0 0.40% (Under the fund's management
Equity Portfolio agreement, the fund pays TCW a fee
at the annual rate of 0.40% of the
first $1 billion of the average
daily net assets of the fund and
0.30% in excess of $1 billion.)
---------------------------------------------------------------------------------------------------------------------
AXA Enterprise Equity $124.3 0.40% (Under the fund's management
Fund agreement, the fund pays TCW a fee
at the annual rate of 0.40% of the
first $100 million of the average
daily net assets of the fund and
0.30% in excess of $100 million)
---------------------------------------------------------------------------------------------------------------------
GuideStone Funds $281.7 0.55% on first $100 million
0.45% on next $150 million
0.40% thereafter
---------------------------------------------------------------------------------------------------------------------
Masters Select Investment Funded July 1, 2006 0.60% of allocated assets
Trust - Focused
Opportunities Fund
---------------------------------------------------------------------------------------------------------------------
Masters Select Investment $167.9 0.65% on first $75 million of
Trust - Select Equity Fund allocated assets, 0.60% thereafter
---------------------------------------------------------------------------------------------------------------------
TCW Funds, Inc. Select $3,921.8 0.75%
Equities Fund
---------------------------------------------------------------------------------------------------------------------
ADVISORY FEES
The following shows the amounts paid to TCW by BAIA during the last fiscal
year:
--------------------------------------------------
ADVISORY FEES
--------------------------------------------------
EQUITY FUND $922,563
--------------------------------------------------
G-11
EXHIBIT H
GROWTH FUND PORTFOLIO MANAGERS
M.A. WEATHERBIE & CO., INC. ("WEATHERBIE")
---------------------------
PRINCIPAL EXECUTIVE OFFICERS AND TRUSTEES
The following are the principal executive officers and trustees of
Weatherbie:
--------------------------------------------------------------------------------
NAME AND ADDRESS(1) POSITION WITH WEATHERBIE PRINCIPAL OCCUPATION
--------------------------------------------------------------------------------
Matthew A. Weatherbie Principal Executive Officer and President and Chief
President Investment Officer
of Weatherbie
--------------------------------------------------------------------------------
(1) The address of each officer and trustee is 265 Franklin Street, Boston,
Massachusetts 02110.
BENEFICIAL OWNERS
The following are the 10% or more beneficial owners of voting shares of
Weatherbie:
--------------------------------------------------------------------------------
NAME AND ADDRESS(1) POSITION WITH WEATHERBIE OWNERSHIP PERCENTAGE
--------------------------------------------------------------------------------
Matthew A. Weatherbie Principal Executive Officer and 75% or more
President
--------------------------------------------------------------------------------
(1) The address of each officer and trustee is 265 Franklin Street, Boston,
Massachusetts 02110.
OTHER FUNDS MANAGED
As of the date of proxy statement, Weatherbie did not manage any other
funds having investment objectives similar to those of the Growth Fund.
ADVISORY FEES
The following shows the amounts paid to Weatherbie by BAIA during the last
fiscal year:
--------------------------------------------------
ADVISORY FEES
--------------------------------------------------
GROWTH FUND $225,328
--------------------------------------------------
H-1
WILLIAM BLAIR & COMPANY, L.L.C. ("BLAIR")
-------------------------------
PRINCIPAL EXECUTIVE OFFICERS AND TRUSTEES
The following are the principal executive officers and trustees of Blair:
----------------------------------------------------------------------------------------------------------
NAME AND ADDRESS(1) POSITION WITH BLAIR PRINCIPAL OCCUPATION
----------------------------------------------------------------------------------------------------------
Frederick Conrad Fischer Chairman of the Board of Trustees Principal, William Blair &
Company, L.L.C.
----------------------------------------------------------------------------------------------------------
Theodore A. Bosler Trustee Retired Principal and Vice President,
Lincoln Capital Management Company
----------------------------------------------------------------------------------------------------------
Ann P. McDermott Trustee Director and Trustee
Profit and not-for-profit
organizations
----------------------------------------------------------------------------------------------------------
Donald J. Reaves Trustee Vice President for Administration
and Chief Financial Officer,
University of Chicago
----------------------------------------------------------------------------------------------------------
Donald L. Seeley Trustee Adjunct Lecturer and Director,
University of Arizona Department
of Finance
----------------------------------------------------------------------------------------------------------
John B. Schwemm Trustee Retired Chairman and CEO,
R.R. Donnelley & Sons Company
----------------------------------------------------------------------------------------------------------
Michelle R. Seitz Trustee Principal, William Blair &
Company, L.L.C.
----------------------------------------------------------------------------------------------------------
Robert E. Wood Trustee Retired Executive Vice President,
Morgan Stanley Dean Witter
----------------------------------------------------------------------------------------------------------
Marco Hanig Officer Chicago Scores
President
----------------------------------------------------------------------------------------------------------
Karl W. Brewer Officer N/A
Senior Vice President
----------------------------------------------------------------------------------------------------------
Harvey H. Bundy III Officer N/A
Senior Vice President
----------------------------------------------------------------------------------------------------------
Mark A. Fuller, III Officer Partner, Fulsen Howney Partners
Senior Vice President
----------------------------------------------------------------------------------------------------------
James W. Golan Officer N/A
Senior Vice President
----------------------------------------------------------------------------------------------------------
H-2
----------------------------------------------------------------------------------------------------------
W. George Greig Officer N/A
Senior Vice President
----------------------------------------------------------------------------------------------------------
Michael A. Jancosek Officer N/A
Senior Vice President
----------------------------------------------------------------------------------------------------------
John F. Jostrand Officer N/A
Senior Vice President
----------------------------------------------------------------------------------------------------------
James S. Kaplan Officer N/A
Senior Vice President
----------------------------------------------------------------------------------------------------------
Robert C. Lanphier, IV Officer Chairman, AG. Med, Inc.
Senior Vice President
----------------------------------------------------------------------------------------------------------
Todd M. McClone Officer N/A
Senior Vice President
----------------------------------------------------------------------------------------------------------
David S. Mitchell Officer N/A
Senior Vice President
----------------------------------------------------------------------------------------------------------
Gregory J. Pusinelli Officer N/A
Senior Vice President
----------------------------------------------------------------------------------------------------------
David P. Ricci Officer
Senior Vice President
----------------------------------------------------------------------------------------------------------
Norbert W. Truderung Officer N/A
Senior Vice President
----------------------------------------------------------------------------------------------------------
Jeffery A. Urbina Officer N/A
Senior Vice President
----------------------------------------------------------------------------------------------------------
Christopher T. Vincent Officer Uhlich Children's Home
Senior Vice President
----------------------------------------------------------------------------------------------------------
David C. Fording Officer N/A
Vice President
----------------------------------------------------------------------------------------------------------
Chad M. Kilmer Officer N/A
Vice President
----------------------------------------------------------------------------------------------------------
Mark T. Leslie Officer N/A
Vice President
----------------------------------------------------------------------------------------------------------
H-3
----------------------------------------------------------------------------------------------------------
Colin J. Williams Officer N/A
Vice President
----------------------------------------------------------------------------------------------------------
Terence M. Sullivan Officer N/A
Vice President
----------------------------------------------------------------------------------------------------------
Colette M. Garavalia Officer N/A
Secretary
----------------------------------------------------------------------------------------------------------
(1) The address of each officer and trustee is 222 West Adams Street, Chicago, Illinois 60606.
OTHER FUNDS MANAGED
In addition to the management services provided by Blair to the Growth
Fund, Blair also provides management services to other investment companies.
Information with respect to the assets of and management fees payable to Blair
by those funds having investment objectives similar to those of the Growth Fund
is set forth below:
-----------------------------------------------------------------------------------------------------------
NAME OF FUND TOTAL NET ASSETS ANNUAL MANAGEMENT FEE AS A % OF WAIVERS, REDUCTIONS OR
AT JUNE 30, 2006 AVERAGE DAILY NET ASSETS AGREEMENTS TO WAIVE OR
(IN MILLIONS) REDUCE MANAGEMENT FEE
-----------------------------------------------------------------------------------------------------------
William Blair $18.2 Class I shares: 1.00% N/A
Large Cap Growth
Fund Class N shares: 1.25%
-----------------------------------------------------------------------------------------------------------
Vanguard Large $1,800.0 N/A
Cap Growth Fund
-----------------------------------------------------------------------------------------------------------
ADVISORY FEES
The following shows the amounts paid to Blair by BAIA during the last
fiscal year:
--------------------------------------------------
ADVISORY FEES
--------------------------------------------------
GROWTH FUND $203,911
--------------------------------------------------
H-4
TCW INVESTMENT MANAGEMENT COMPANY.
----------------------------------
See disclosure for TCW in Exhibit G "Equity Fund Portfolio Managers."
OTHER FUNDS MANAGED
As of the date of proxy statement, TCW did not manage any other funds
having investment objectives similar to those of the Growth Fund.
ADVISORY FEES
The following shows the amounts paid to TCW by BAIA during the last fiscal
year:
--------------------------------------------------
ADVISORY FEES
--------------------------------------------------
GROWTH FUND $193,957
--------------------------------------------------
H-5
[ALL STAR EQUITY FUND] [BAR CODE]
[PLUS SYMBOL]
000000000.000 ext
000000000.000 ext
[BAR CODE] MR A SAMPLE 000000000.000 ext
DESIGNATION (IF ANY) 000000000.000 ext
ADD 1 000000000.000 ext
ADD 2 000000000.000 ext
ADD 3 000000000.000 ext
ADD 4
ADD 5
ADD 6 C 1234567890 J N T
[BAR CODE] [BAR CODE]
================================================================================
SPECIAL MEETING PROXY CARD
================================================================================
A ELECTION OF TRUSTEES.
1. To elect three new Trustees of the Fund (Item 1 of Notice).
FOR WITHHOLD
01 - [_________] [ ] [ ]
02 - George R. Gaspari [ ] [ ]
03 - Edmund J. Burke [ ] [ ]
B PROPOSAL TO APPROVE A NEW FUND MANAGEMENT AGREEMENT.
2. To approve a new Fund Management Agreement between the Fund and ALPS
Advisers, Inc. to become effective upon completion of the Transaction
described in the Proxy Statement (Item 2 of Notice).
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
C PROPOSAL TO APPROVE NEW PORTFOLIO MANAGEMENT AGREEMENTS.
3. To approve new Portfolio Management Agreements for the Fund with ALPS
Advisers, Inc. and each of the current Portfolio Managers listed below
to become effective upon completion of the Transaction described in this
Proxy Statement (Item 3 of Notice).
FOR AGAINST ABSTAIN
01 - Chase Investment Counsel [ ] [ ] [ ]
Corporation
FOR AGAINST ABSTAIN
02 - Matrix Asset Advisers, Inc. [ ] [ ] [ ]
FOR AGAINST ABSTAIN
03 - Pzena Investment Management, LLC [ ] [ ] [ ]
FOR AGAINST ABSTAIN
04 - Schneider Capital Management [ ] [ ] [ ]
Corporation
FOR AGAINST ABSTAIN
05 - TCW Investment Management Company [ ] [ ] [ ]
D PROPOSAL REGARDING SHAREHOLDER APPROVAL OF PORTFOLIO MANAGEMENT
AGREEMENTS.
4. To approve a policy to permit the Fund and ALPS Advisers, Inc. to enter
into Portfolio Management Agreements in advance of Shareholder approval
(Item 4 of Notice).
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
E OTHER MATTERS.
5. In their discretion, upon such other business as may properly come
before the Meeting and any adjournments thereof.
Please mark box at right with an X if an address [ ]
change has been noted below.
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
F AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR
YOUR INSTRUCTIONS TO BE EXECUTED.
Please sign exactly as your name(s) appear(s) above. Corporate proxies
should be signed by an authorized officer.
Signature 1 - Please keep Signature 2 - Please keep
signature within the box signature within the box Date (mm/dd/yyyy)
------------------------ ------------------------ -----------------
------------------------ ------------------------ -----------------
1 UPX COY [PLUS SYMBOL]
001CD40001 00INED
- 2 -
================================================================================
PROXY - LIBERTY ALL-STAR EQUITY FUND
================================================================================
PROXY SOLICITED BY THE BOARD OF TRUSTEES OF LIBERTY ALL-STAR EQUITY FUND
PROXY FOR 2006 SPECIAL MEETING OF SHAREHOLDERS
The undersigned, revoking previous proxies, hereby appoints James R.
Bordewick, Jr., Mark T. Haley, Ryan C. Larrenaga 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 Equity Fund (the "Fund") which the
undersigned is entitled to vote at the Fund's 2006 Special Meeting of
Shareholders to be held in the America Room, 2nd Floor, 100 Federal Street,
Boston, Massachusetts on [_____], 2006 at [____] 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 on the reverse side, each of which is
described in the proxy statement for the Meeting, receipt of which is
acknowledged by your execution of this proxy.
SAID PROXIES WILL VOTE THIS PROXY AS DIRECTED, OR IF NO DIRECTION IS
INDICATED, FOR ALL PROPOSALS.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
PLEASE DO NOT STAPLE OR MUTILATE CARD.
- 3 -
[ALL STAR GROWTH FUND, INC.] [BAR CODE]
[PLUS SYMBOL]
000000000.000 ext
000000000.000 ext
[BAR CODE] MR A SAMPLE 000000000.000 ext
DESIGNATION (IF ANY) 000000000.000 ext
ADD 1 000000000.000 ext
ADD 2 000000000.000 ext
ADD 3 000000000.000 ext
ADD 4
ADD 5
ADD 6 C 1234567890 J N T
[BAR CODE] [BAR CODE]
================================================================================
Special Meeting Proxy Card
================================================================================
A ELECTION OF DIRECTORS.
1. To elect three new Directors of the Fund (Item 1 of Notice).
FOR WITHHOLD
01 - [_________] [ ] [ ]
02 - George R. Gaspari [ ] [ ]
03 - Edmund J. Burke [ ] [ ]
B PROPOSAL TO APPROVE A NEW FUND MANAGEMENT AGREEMENT.
2. To approve a new Fund Management Agreement between the Fund and ALPS
Advisers, Inc. to become effective upon completion of the Transaction
described in the Proxy Statement (Item 2 of Notice).
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
C PROPOSAL TO APPROVE NEW PORTFOLIO MANAGEMENT AGREEMENTS.
3. To approve new Portfolio Management Agreements for the Fund with ALPS
Advisers, Inc. and each of the current Portfolio Managers listed below
to become effective upon completion of the Transaction described in this
Proxy Statement (Item 3 of Notice).
FOR AGAINST ABSTAIN
01 - TCW Investment Management Company [ ] [ ] [ ]
FOR AGAINST ABSTAIN
02 - M.A. Weatherbie & Co., Inc. [ ] [ ] [ ]
FOR AGAINST ABSTAIN
03 - William Blair & Company, L.L.C. [ ] [ ] [ ]
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D PROPOSAL REGARDING SHAREHOLDER APPROVAL OF PORTFOLIO MANAGEMENT
AGREEMENTS.
4. To approve a policy to permit the Fund and ALPS Advisers, Inc. to enter
into Portfolio Management Agreements in advance of Shareholder approval
(Item 4 of Notice).
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
E OTHER MATTERS.
5. In their discretion, upon such other business as may properly come
before the Meeting and any adjournments thereof.
Please mark box at right with an X if an address [ ]
change has been noted below.
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F AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR
YOUR INSTRUCTIONS TO BE EXECUTED.
Please sign exactly as your name(s) appear(s) above. Corporate proxies
should be signed by an authorized officer.
Signature 1 - Please keep Signature 2 - Please keep
signature within the box signature within the box Date (mm/dd/yyyy)
------------------------ ------------------------ -----------------
------------------------ ------------------------ -----------------
1 UPX COY [PLUS SYMBOL]
001CD40001 00INED
- 5 -
================================================================================
PROXY - LIBERTY ALL-STAR GROWTH FUND, INC.
================================================================================
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF LIBERTY ALL-STAR GROWTH FUND,
INC.
PROXY FOR 2006 SPECIAL MEETING OF SHAREHOLDERS
The undersigned, revoking previous proxies, hereby appoints James R.
Bordewick, Jr., Mark T. Haley, Ryan C. Larrenaga 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 Fund's 2006 Special Meeting of
Shareholders to be held in the America Room, 2nd Floor, 100 Federal Street,
Boston, Massachusetts on [_____], 2006 at [____] 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 on the reverse side, each of which is
described in the proxy statement for the Meeting, receipt of which is
acknowledged by your execution of this proxy.
SAID PROXIES WILL VOTE THIS PROXY AS DIRECTED, OR IF NO DIRECTION IS
INDICATED, FOR ALL PROPOSALS.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
PLEASE DO NOT STAPLE OR MUTILATE CARD.
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