Edgar Filing: Liberty All-Star Mid Cap Fund

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 23, 2005

1933 Act File No. 333-123502
1940 Act File No. 811-21733

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-2

[ X ] REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ X ] Pre-Effective Amendment No. 1
---
[ ] Post-Effective Amendment No.
---

and

[ X ] REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[ X ] Amendment No. 1
---

Liberty All-Star Mid-Cap Fund
(Exact Name of Registrant as Specified in Charter)

100 Federal Street
Boston Massachusetts 02111
(Address of Principal Executive Offices)

(800) 542-3863 (Registrant's Telephone
Number, including Area Code)

William R. Parmentier, Jr.
100 Federal Street
Boston Massachusetts 02111
(Name and Address of Agent for Service)

Copies of Communications to:

Clifford Alexander, Esq.
Kathy Kresch Ingber, Esq.
Kirkpatrick & Lockhart Nicholson Graham LLP
1800 Massachusetts Avenue, N.W.
2nd Floor
Washington, DC 20036-1800

Approximate Date of Proposed Public Offering:

As soon as practicable after the effective date of this Registration Statement

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

If any of the securities being registered on this form will be offered on a
delayed or continuous basis in reliance on Rule 415 under the Securities Act of
1933, other than securities offered in connection with a dividend reinvestment
plan, check the following box. [ ]

It is proposed that this filing will become effective (check appropriate box)

[ ] when declared effective pursuant to section 8(c).

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

--------------------------------------------------------------------------------------------------
Title of Securities Amount Being Proposed Proposed Amount of
Being Registered Registered (1) Maximum Maximum Registration
Offering Price Per Aggregate Fee (1) (2)
Unit Offering Price(1)
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Shares of 50,000 $20.00 $1,000,000.00 $117.70
Beneficial Interest
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) Previously paid.

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment that specifically states this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
dates as the Securities and Exchange Commission, acting pursuant to said Section
8(a), may determine.

- 2 -

SUBJECT TO COMPLETION, DATED , 2005

PROSPECTUS
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LOGO

LIBERTY ALL-STAR(R) MID-CAP FUND
SHARES OF BENEFICIAL INTEREST

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INVESTMENT OBJECTIVE AND STRATEGY. Liberty All-Star Mid-Cap Fund
("All-Star" or the "Fund") is a newly organized, multi-managed, diversified,
closed-end management investment company. The investment objective of All-Star
is to seek total investment return, primarily through long-term capital
appreciation and secondarily through current income. Under normal market
conditions, All-Star will seek its investment objective by investing primarily
in a diversified portfolio of mid-cap equity securities. All-Star cannot assure
you that it will achieve its investment objective.

All-Star will allocate its portfolio assets among a number of independent
investment management organizations, each having a different investment style
(each a "Portfolio Manager"). The Portfolio Managers will be recommended and
monitored by All-Star's fund manager, Banc of America Investment Advisors, Inc.,
formerly known as Liberty Asset Management Company ("BAIA" or the "Fund
Manager"), an indirect, wholly owned subsidiary of Bank of America Corporation,
utilizing processes that BAIA has employed on behalf of registered closed-end
fund clients since 1986. Under normal market conditions, BAIA expects to
allocate between 40% and 60% of All-Star's net assets to Portfolio Managers that
utilize a "growth" approach to investing and between 40% and 60% of All-Star's
net assets to Portfolio Managers that utilize a "value" approach to investing.

NO PRIOR TRADING HISTORY. BECAUSE ALL-STAR IS NEWLY ORGANIZED, ITS SHARES
HAVE NO HISTORY OF PUBLIC TRADING AND THERE HAS BEEN NO PUBLIC MARKET FOR THE
SHARES. SHARES OF CLOSED-END FUNDS FREQUENTLY TRADE AT PRICES BELOW THEIR NET
ASSET VALUE ("DISCOUNT"). THE RISK OF LOSS DUE TO THIS DISCOUNT MAY BE GREATER
FOR INVESTORS EXPECTING TO SELL THEIR SHARES IN A RELATIVELY SHORT PERIOD OF
TIME AFTER COMPLETION OF THE PUBLIC OFFERING. All-Star intends to apply to list
its shares on the New York Stock Exchange ("Exchange").
The shares will be traded under the symbol "ASM."

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INVESTING IN ALL-STAR'S SHARES INVOLVES RISKS THAT ARE DESCRIBED UNDER
"RISK FACTORS" BEGINNING ON PAGE OF THIS PROSPECTUS.

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PER SHARE TOTAL (1) TOTAL ASSUMING FULL
EXERCISE OF OVERALLOTMENT
OPTION
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Public Offering Price........ $20.00 $ $
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Sales Load .................. $0.90 $ $
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Proceeds to All-Star(1)(2)... $19.10 $ $

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(1) Total organizational expenses are estimated to be $ . Total expenses of
the offering are estimated to be $ , or $ assuming full exercise of the
over-allotment option, which represents $ , or $ per share, respectively.
The Fund Manager has agreed to pay All-Star's organizational expenses and
to reimburse All-Star's offering expenses to the extent that the aggregate
of All-Star's organizational and offering expenses exceed $0. per share.
(2) The underwriters have been granted an option, exercisable for 45 days from
the date of this Prospectus, to purchase up to an additional shares at the
public offering price, less the sales load, to cover over-allotments. If
such option is exercised, the total price to the public, total sales load
and total proceeds to All-Star, will be correspondingly increased as set
forth in the table above.

NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION ("SEC") NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

The underwriters expect to deliver the shares to purchasers on or about
, 2005.

Banc of America Securities LLC

, 2005.

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SEC IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.

PORTFOLIO MANAGERS. It is anticipated that All-Star's investment portfolio
initially will be allocated among the following investment management firms
(referred to as "Portfolio Managers"):

o Fiduciary Management, Inc.

o M.A. Weatherbie & Co., Inc.

o Mazama Capital Management, Inc.

o Sasco Capital, Inc.

o Schneider Capital Management Corporation

From time to time, Portfolio Managers may be removed or added.

All-Star's address is 100 Federal Street, Boston, Massachusetts 02110, and
its telephone number is 1-800-542-3863.

You should read this Prospectus, which contains important information
about All-Star that you should know before investing, and retain it for future
reference. A Statement of Additional Information dated , 2005, containing
additional information about All-Star, has been filed with the SEC and is
incorporated by reference in its entirety into this Prospectus. The table of
contents of the Statement of Additional Information appears on page of this
Prospectus. Investors may request a free copy of All-Star's Statement of
Additional Information, annual or semi-annual reports (when available),
additional information about All-Star, or make shareholder inquiries by calling
1-800-542-3863, writing to the address provided above, or accessing
www.all-starfunds.com. The SEC maintains an Internet website at
(http://www.sec.gov) that contains the Statement of Additional Information and
other information regarding All-Star.

The shares offered hereby do not represent a deposit obligation of, and
are not guaranteed or endorsed by Bank of America or any other bank or other
insured depository institution and are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other
governmental agency.

TABLE OF CONTENTS

PAGE
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Prospectus Summary.......................................................... 1

Summary of Fund Expenses....................................................16

The Fund....................................................................17

Use of Proceeds.............................................................18

The Multi-Manager Concept...................................................18

Investment Objective and Principal Investment Strategies....................23

Risk Factors................................................................27

Management of All-Star......................................................33

Net Asset Value.............................................................39

Distributions...............................................................40

Automatic Dividend Reinvestment and Cash Purchase Plan......................41

Closed-End Fund Structure ..................................................44

Description of Shares.......................................................45

Anti-Takeover Provisions of the Declaration of Trust: Super-Majority Vote
Requirement for Conversion to Open-End Status..........................45

Repurchase of Shares; Tender Offers; Conversion to Open-End Fund............46

Tax Matters.................................................................47

Underwriting................................................................49

Custodian and Transfer and Dividend Disbursing Agent........................52

Validity of the Shares......................................................53

Table of Contents of the Statement of Additional Information................54

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You should rely only on the information contained in or incorporated by
reference into this Prospectus. All-Star has not, and the underwriters have not,
authorized any other person to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it. All-Star is not, and the underwriters are not, making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. The
information appearing in this Prospectus is given as of the date of this
Prospectus. All-Star's business, financial condition, results of operations and
prospects may have changed since the date of this Prospectus.

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PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS SOME INFORMATION THAT IS DESCRIBED MORE FULLY
ELSEWHERE IN THIS PROSPECTUS. IT MAY NOT CONTAIN ALL OF THE INFORMATION THAT YOU
SHOULD CONSIDER BEFORE INVESTING IN THE SHARES OFFERED HEREBY. YOU SHOULD
CAREFULLY REVIEW THE MORE DETAILED INFORMATION CONTAINED IN THIS PROSPECTUS AND
IN THE STATEMENT OF ADDITIONAL INFORMATION ("SAI").

THE FUND..................... Liberty All-Star Mid-Cap Fund ("All-Star" or the
"Fund") is a newly organized, multi-managed,
diversified, closed-end management investment
company. All-Star will allocate its portfolio
assets among a number of independent investment
management organizations, each having a
different investment style (each, a "Portfolio
Manager"). The Portfolio Managers will be
recommended and monitored by All-Star's Fund
Manager, Banc of America Investment Advisors,
Inc., formerly known as Liberty Asset Management
Company ("BAIA" or the "Fund Manager"),
utilizing processes that BAIA has employed on
behalf of registered closed-end fund clients
since 1986. See "The Fund."
INVESTMENT OBJECTIVE
AND PRINCIPAL INVESTMENT
STRATEGIES .................. All-Star's investment objective is to seek total
investment return, primarily through long-term
capital appreciation and secondarily through
current income. Under normal market conditions,
All-Star will seek its investment objective by
investing primarily in a diversified portfolio
of mid-cap equity securities. Mid-cap equity
securities are securities of companies whose
market capitalizations are less than or equal to
the highest market capitalization of companies
included in the Russell Midcap(R) Index or the
Standard & Poor's MidCap 400 Index ("S&P MidCap
400") (whichever capitalization is greater) and
greater than or equal to the lowest market
capitalization of companies included in these
indices (whichever capitalization is lower).
These indices may be revised from time to time.

New investments will be made by reference to the
then-current index ranges at the time of
purchase. Thus, if a security that is in the
mid-cap range at the time of purchase becomes
large-cap, it will continue to be treated as
mid-cap for purposes of the Fund's policies.
However, if a small-cap security held in the
portfolio enters the mid-cap range at a later
time, such security shall be deemed to be a
mid-cap security at that time. See "Investment

Objective and Principal Investment Strategies"
and "Risk Factors."

All-Star will invest primarily in equity
securities, which will primarily be common stocks
but may also include preferred stocks, options on
preferred stock, securities convertible into
common stocks such as convertible bonds,
securities having common stock characteristics
such as rights and warrants to purchase equity
securities, and American Depositary Receipts
("ADRs"). All-Star may lend its portfolio
securities and engage in options and futures
strategies (see "Investment Objective and
Principal Investment Strategies" below). Under
normal market conditions, at least 80% of the
value of All-Star's net assets will be invested
in mid-cap equity securities.

Although All-Star will, under normal market
conditions, remain fully invested in equity
securities, up to 20% of the value of All-Star's
net assets may generally be invested in
short-term money market instruments. All-Star may
temporarily reduce its investments in equity
securities and invest without limit in short-term
money market instruments for defensive purposes
when BAIA or a Portfolio Manager (with respect to
the assets managed by that Portfolio Manager)
deem that market conditions are such that a more
conservative approach to investment is desirable.
Taking a temporary defensive position may prevent
All-Star from achieving its investment objective.

All-Star's policy of investing under normal
market conditions at least 80% of the value of
its net assets in mid-cap equity securities is
not fundamental and may be changed without a vote
of All-Star's outstanding shares. All-Star may
not change this policy unless it provides
shareholders with at least 60 days prior written
notice. For purposes of this policy, net assets
include any borrowings for investment purposes.
THE MULTI-MANAGER
CONCEPT...................... All-Star will allocate its portfolio assets
among a number of Portfolio Managers, each
having a different investment style. The
Portfolio Managers will be recommended and
monitored by BAIA, utilizing processes that BAIA
has employed on behalf of registered closed-end
fund clients since 1986. From time to time,
All-Star will rebalance the portfolio among the
Portfolio Managers to adjust to the desired
allocations.

In BAIA's opinion, the multi-manager concept
provides advantages over the use of a single
manager because of the following primary factors:

(i) most equity investment management firms
consistently employ a distinct investment style
that causes them to emphasize stocks with
particular characteristics;

(ii) because of changing investor preferences and
changing market conditions, any given investment
style will move into and out of market favor and
will result in better investment performance
under certain market conditions but less
successful performance under other conditions;

(iii) by allocating All-Star's portfolio among
Portfolio Managers employing different styles,
the impact of any one such style on investment
performance will be diluted, and the investment
performance of the total portfolio will be more
consistent and less volatile over the long term
than if a single style were employed throughout
the entire period; and

(iv) consistent performance at a given annual
rate of return over time produces a higher rate
of return for the long term than more volatile
performance having the same average annual rate
of return.

BAIA, based on the foregoing principles and on
its analysis and evaluation of information
regarding the personnel and investment styles and
performance of a universe of numerous
professional investment management firms, has
selected for appointment by All-Star a group of
Portfolio Managers representing a blending of
different investment styles that, in its opinion,
are appropriate to All-Star's investment
objective. Under normal market conditions, BAIA
expects to allocate between 40% and 60% of
All-Star's net assets to Portfolio Managers that
utilize a "growth" approach to investing, and
between 40% and 60% of All-Star's net assets to
Portfolio Managers that utilize a "value"
approach to investing. These allocations are
subject to change from time to time in the
discretion of BAIA. Initially, 60% of All-Star's
net assets will be managed by Portfolio Managers
that use a "value" approach to investing and 40%
of All-Star's net assets will be managed by
Portfolio Managers that use a "growth approach to
investing.

BAIA will continuously monitor the performance
and investment styles of All-Star's Portfolio
Managers and from time to time may recommend
changes of Portfolio Managers based on factors
such as changes in a Portfolio Manager's
investment style or a departure by a Portfolio
Manager from the investment style for which it
had been selected, a deterioration in a Portfolio
Manager's performance relative to that of other
investment management firms practicing a similar
style, or adverse changes in its ownership or
personnel. Portfolio Manager changes may also be
made to change the mix of investment styles
employed by the Portfolio Managers.

THE OFFERING................. All-Star is offering shares of
beneficial interest (the "shares") at an
offering price of $20.00 per share. The minimum
investment requirement is shares. The
shares are being offered by a group of
underwriters represented by Banc of America
Securities LLC. The underwriters have been
granted an option to purchase additional shares
to cover over-allotments. See "Underwriting."

FUND MANAGER................. All-Star has entered into a management agreement
with BAIA ("Fund Management Agreement") pursuant
to which BAIA is responsible for determining
All-Star's overall investment strategy and for
selecting, evaluating, monitoring and
rebalancing services amongst the Portfolio
Managers ("investment management services") as
described under "The Multi-Manager Concept."
Rebalancing involves reallocating the portfolio
among the Portfolio Managers so that the
combined weightings of the Portfolio Managers
remains consistent with BAIA's targeted
strategic allocation focus (growth vs. value)
and investment process.

Pursuant to the Fund Management Agreement, BAIA
is also responsible for the provision of
administrative services to All-Star, including
the provision of office space, shareholder and
broker-dealer communications, compensation of
officers of All-Star who are also officers or
employees of BAIA or its affiliates, and the
supervision of transfer agency, dividend
disbursing, custodial and other services provided
to All-Star. Certain of BAIA's administrative
responsibilities have been delegated to its
affiliate, Columbia Management Advisors, Inc.
("CMA").

The Fund Management Agreement provides that
All-Star will pay the Fund Manager a monthly fund
management fee at an annual rate of 1.00% of
All-Star's average weekly net assets and a
monthly administration fee at an annual rate of
0.20% of its average weekly net assets. Under
each current portfolio management agreement among
All-Star, BAIA and a Portfolio Manager (each, a
"Portfolio Management Agreement"), BAIA pays the
Portfolio Managers an aggregate monthly portfolio
management fee at an annual rate of 0.60% of its
average weekly net assets. Individual Portfolio
Managers may receive more or less compensation.

BAIA, organized in 1985, is an indirect, wholly
owned subsidiary of Bank of America
Corporation. As of June 30, 2005, BAIA managed
over $ billion in assets. See "Management
of All-Star."

PORTFOLIO MANAGERS........... All-Star will allocate its portfolio assets
among a number of independent investment
management organizations, each having a
different investment style, as selected by BAIA
from time to time. It is anticipated that
All-Star's investment portfolio initially will
be allocated among the following Portfolio
Managers:

o Fiduciary Management, Inc.

o M.A. Weatherbie & Co., Inc.

o Mazama Capital Management, Inc.

o Sasco Capital, Inc.

o Schneider Capital Management Corporation

See "Management of All-Star."

CUSTODIAN AND
TRANSFER AND DIVIDEND
DISBURSING AGENT............. State Street Bank and Trust Company will serve
as All-Star's custodian. EquiServe Trust
Company, N.A. will serve as All-Star's transfer
and dividend disbursing agent and registrar.
See "Custodian and Transfer and Dividend
Disbursing Agent."

AUTOMATIC DIVIDEND
REINVESTMENT AND CASH
PURCHASE PLAN................ All dividend and capital gain distributions to
shareholders will be automatically reinvested in
additional shares of All-Star, unless a

shareholder does not participate in the Plan.
Investors who hold shares through intermediaries
may receive distributions in cash or shares
depending on procedures of the intermediaries.
See "Automatic Dividend Reinvestment and Cash
Purchase Plan."

LISTING.................... All-Star intends to apply to list its shares on
the New York Stock Exchange ("Exchange").

SYMBOL....................... All-Star's Exchange symbol will be "ASM."

CLOSED-END FUND
DISCOUNTS.................... Shares of closed-end funds frequently trade at a
market price that is less than the value of the
net assets attributable to those shares. The
possibility that shares of All-Star will trade at
a discount from net asset value is a risk
separate and distinct from the risk that
All-Star's net asset value will decrease. The
risk of purchasing shares of a closed-end fund
that might trade at a discount is more pronounced
for investors who wish to sell their shares in a
relatively short period of time because, for
those investors, realization of a gain or loss on
their investments is likely to be more dependent
upon the existence of a premium or discount than
upon portfolio performance. See "Closed-End Fund
Structure" and "Repurchase of Shares; Tender
Offers; Conversion to Open-End Fund."

SPECIAL RISK CONSIDERATIONS.. The following summarizes some of the risks that
you should consider before purchasing All-Star
shares. A more detailed description of these and
other risks of investing in All-Star are
described under "Risk Factors" in this Prospectus
and under "Investment Objective and Policies" in
the SAI.

NO OPERATING HISTORY. All-Star is a newly
organized, multi-managed, diversified,
closed-end management investment company with no
history of operations.

INVESTMENT AND MARKET RISK. An investment in
All-Star's shares is subject to investment risk,
including the possible loss of the entire amount
that you invest. Your investment in the shares
represents an indirect investment in the
securities owned by All-Star, most of which are
anticipated to be traded on a national securities
exchange or in the over-the-counter markets. The
value of these securities, like other market
investments, may move up or down, sometimes
rapidly and unpredictably. Your shares at any
point in time may be worth less than your
original investment, even after taking into
account the reinvestment of dividends and other
distributions.

MARKET DISCOUNT RISK. Shares of closed-end
management investment companies such as All-Star
frequently trade at a discount from their net
asset value. This risk may be greater for
investors expecting to sell their shares of
All-Star soon after the completion of the public
offering. The shares of All-Star were designed
primarily for long-term investors, and investors
in All-Star shares should not view All-Star as a
vehicle for trading purposes. See "Closed-End
Fund Discounts" above.

COMMON STOCK RISK. All-Star is not limited in the
percentage of its assets that may be invested in
common stocks and other equity securities, and
therefore a risk of investing in the Fund is
equity risk. Equity risk is the risk that the
market value of securities held by All-Star will
fall due to general market or economic
conditions, perceptions regarding the industries
in which the issuers of securities held by
All-Star participate, and the particular
circumstances and performance of particular
companies whose securities All-Star holds. For
example: an adverse event, such as an unfavorable
earnings report, may depress the value of equity
securities of an issuer held by All-Star; the
price of common stock of an issuer may be
particularly sensitive to general movements in
the stock market; or a drop in the stock market
may depress the price of most or all of the
common stocks and other equity securities held by
All-Star. In addition, common stock of an issuer
in All-Star's portfolio may decline in price if
the issuer fails to make anticipated dividend
payments because, among other reasons, the issuer
of the security experiences a decline in its
financial condition. Common equity securities in
which All-Star will invest are structurally
subordinated to preferred stocks, bonds and other
debt instruments in a company's capital
structure, in terms of priority to corporate
income, and therefore will be subject to greater
dividend risk than preferred stocks or debt
instruments of such issuers. In addition, while
broad market measures of commons stocks have
historically generated higher average returns
than fixed income securities, common stocks have
also experienced significantly more volatility in
those returns.

PREFERRED SECURITIES RISK. Preferred equity
securities involve credit risk, which is the risk
that a preferred equity security will decline in
price, or fail to pay dividends when expected,
because the issuer experiences a decline in its

financial status. In addition to credit risk,
investment in preferred equity securities
involves certain other risks. Certain preferred
equity securities contain provisions that allow
an issuer under certain conditions to skip
distributions (in the case of "non-cumulative"
preferred equity securities) or defer
distributions (in the case of "cumulative"
preferred equity securities). Preferred equity
securities often contain provisions that allow
for redemption in the event of certain tax or
legal changes or at the issuers' call. In the
event of redemption, All-Star may not be able to
reinvest the proceeds at comparable rates of
return. Preferred equity securities typically do
not provide any voting rights, except in cases
when dividends are in arrears beyond a certain
time period, which varies by issue. Preferred
equity securities are subordinated to bonds and
other debt instruments in a company's capital
structure in terms of priority to corporate
income and liquidation payments, and therefore
will be subject to greater credit risk than those
debt instruments. Preferred equity securities may
be significantly less liquid than many other
securities, such as U.S. government securities,
corporate debt or common stock.

CONVERTIBLE SECURITY RISK. Convertible securities
generally offer lower interest or dividend yields
than non-convertible fixed-income securities of
similar credit quality because of the potential
for capital appreciation. The market values of
convertible securities tend to decline as
interest rates increase and, conversely, to
increase as interest rates decline. However, a
convertible security's market value also tends to
reflect the market price of the common stock of
the issuing company, particularly when the stock
price is greater than the convertible security's
conversion price. The conversion price is defined
as the predetermined price or exchange ratio at
which the convertible security can be converted
or exchanged for the underlying common stock. As
the market price of the underlying common stock
declines below the conversion price, the price of
the convertible security tends to be increasingly
influenced more by the yield of the convertible
security than by the market price of the
underlying common stock. Thus, it may not decline
in price to the same extent as the underlying
common stock, and convertible securities
generally have less potential for gain or loss
than common stocks. However, mandatory
convertible securities generally do not limit the
potential for loss to the same extent as
securities convertible at the option of the
holder. In the event of a liquidation of the
issuing company, holders of convertible

securities would be paid before that company's
common stockholders. Consequently, an issuer's
convertible securities generally entail less risk
than its common stock. However, convertible
securities fall below debt obligations of the
same issuer in order of preference or priority in
the event of a liquidation and are typically
unrated or rated lower than such debt
obligations. In addition, contingent payment
convertible securities allow the issuer to claim
deductions based on its nonconvertible cost of
debt, which generally will result in deductions
in excess of the actual cash payments made on the
securities (and accordingly, holders will
recognize income in amounts in excess of the cash
payments received). The convertible securities in
which the Fund invests may be rated below
investment grade. See "Risks of Below-Investment
Grade Quality Securities."

MID-CAP COMPANY RISK. All-Star will invest
primarily in equity securities of mid-cap
companies. Stocks of mid-sized companies may
trade less frequently, may trade in smaller
volumes and may fluctuate more sharply in price
than stocks of larger companies. Mid-cap
companies also carry additional risks because
their earnings and revenues tend to be less
predictable.

INTEREST RATE RISK. Interest rate risk is the
risk that fixed-income securities, and to a
lesser extent dividend-paying common stocks, will
decline in value because of changes in market
interest rates. When market interest rates rise,
the market value of such securities generally
will fall. Because All-Star may invest in certain
preferred stocks and fixed-income securities that
pay a fixed rate of return, the net asset value
and market price of All-Star's shares could
decline if the market interest rate applicable to
such investments were to rise.

CREDIT RISK. Credit risk is the risk that a
security in the Fund's portfolio will decline in
price or fail to make dividend or interest
payments when due because the issuer of the
security experiences a decline in its financial
status. Preferred and convertible securities are
typically subordinated to bonds and other debt
instruments in a company's capital structure, in
terms of priority to corporate income, and
therefore will be subject to greater credit risk
than those debt instruments.

RISKS OF BELOW-INVESTMENT GRADE QUALITY
SECURITIES. All-Star may invest in convertible
securities and debt securities that are rated
below-investment grade. Below-investment grade
quality debt securities are commonly referred to
as "junk bonds." Below-investment grade quality
securities are considered predominantly
speculative with respect to an issuer's capacity
to pay interest and repay principal and are
susceptible to default or decline in market value
due to real or perceived adverse economic and
business developments relating to the issuer or
the industry in general. The market value of
these securities tends to be volatile. Issuers of
below-investment grade quality debt securities
may be highly leveraged and may not have
available to them more traditional methods of
financing. Below-investment grade quality
securities are less liquid than investment grade
securities. There are fewer dealers in the market
for high-yield securities than for investment
grade securities. The prices quoted by different
dealers may vary significantly and the spread
between the bid and ask price is generally much
higher than for high-quality instruments. Under
adverse market or economic conditions, the
secondary market for high-yield securities may
contract further, independent of any specific
adverse changes in the condition of a particular
issuer, and these instruments may become
illiquid. As a result, the Fund could find it
more difficult to sell these securities or may be
able to sell the securities only at prices lower
than if such securities were widely traded.
Prices realized upon the sale of such lower-rated
or unrated securities under these circumstances
may be less than the prices used in calculating
the Fund's net asset value.

OPTIONS AND FUTURES STRATEGIES RISK. Options and
futures are financial contracts whose value
depends on or is derived from the value of an
underlying asset, reference rate or index (or
relationship between two indexes). All-Star may
use options and futures as a substitute for
taking a position in an underlying security or
other asset and/or as part of a strategy designed
to reduce exposure to other risks. All-Star's use
of options and futures involves risks different
from, and possibly greater than, the risks
associated with investing in securities and other
traditional investments. Options and futures are
subject to a number of risks described elsewhere
in this Prospectus, such as illiquid securities
risk, interest rate risk and credit risk. They
also involve the risk of mispricing or improper
valuation and the risk that changes in the value
of the options and futures may not correlate

perfectly with the underlying asset, rate or
index. If All-Star invests in options and
futures, it could lose more than the principal
amount invested. The use of options and futures
also may affect the amount, character and timing
of recognition for tax purposes of the gains and
losses All-Star realizes in connection therewith.
In addition, suitable options and futures
transactions may not be available in all
circumstances, and there can be no assurance that
All-Star will engage in these transactions to
reduce exposure to other risks when that would be
beneficial.

MANAGEMENT RISK. All-Star is subject to
management risk because it is an actively managed
investment portfolio. BAIA and the Portfolio
Managers will apply investment techniques and
risk analyses in selecting Portfolio Managers and
making investment decisions for All-Star, but
there can be no guarantee that these will produce
the desired results.

GROWTH STOCK RISK. Under normal market
conditions, BAIA will allocate between 40% and
60% of All-Star's net assets to Portfolio
Managers that utilize a "growth" approach to
investing. Over time, depending on market
conditions, this allocation may increase or
decrease. Growth stocks are stocks of companies
believed to have above-average potential for
growth in revenue and earnings. In certain market
conditions, prices of growth stocks may be more
sensitive to changes in current or expected
earnings than the prices of other stocks. Growth
stocks may not perform as well as value stocks or
the stock market in general.

VALUE STOCK RISK. Under normal market conditions,
BAIA will allocate between 40% and 60% of
All-Star's net assets to Portfolio Managers that
utilize a "value" approach to investing. Over
time, depending on market conditions, this
allocation may increase or decrease. Value stocks
are stocks of companies that may have experienced
adverse business or industry developments or may
be subject to special risks that have caused the
stocks to be out of favor and, in a Portfolio
Manager's opinion, undervalued. If the Portfolio
Manager's assessment of a company's prospects is
wrong, the price of the company's stock may fall
or may not approach the value the Portfolio
Manager has placed on it.

FOREIGN SECURITIES RISK. All-Star may invest up
to 25% of its net assets in securities of foreign
(non-U.S.) issuers. Investments in foreign
securities involve risks in addition to those of
investments in U.S. issuers. These risks include
political and economic risks, currency
fluctuations, higher transaction costs, less

liquidity and greater volatility, delayed
settlement, confiscatory taxation, withholding of
taxes and less stringent investor protection and
disclosure of standards in some foreign markets.
These risks can make investments in foreign
issuers more volatile and potentially less liquid
than investments in U.S. issuers.

TAX RISK. All-Star may invest in preferred
securities, convertible securities, or other
securities the federal income tax treatment of
the income from which may not be clear or may be
subject to recharacterization by the Internal
Revenue Service ("IRS").

The tax treatment of amounts All-Star designates
as "qualified dividend income" may be affected by
IRS interpretations of the Internal Revenue Code
of 1986, as amended (the "Code"), and future
changes in the Code and the regulations
thereunder. Moreover, unless legislative action
is taken, the favorable tax treatment of
qualified dividend income, as well as the 15%
maximum federal income tax rate on individuals'
net capital gain, will expire for taxable years
commencing after December 31, 2008. See "Tax
Matters." If All-Star has significant holdings in
securities that generate qualified dividend
income, its share price may be volatile while
Congress considers an extension of that favorable
tax treatment, depending on the anticipated
outcome of the legislation. There can be no
assurance as to what portion, if any, of
All-Star's distributions will constitute
qualified dividend income.

COUNTERPARTY RISK. All-Star may be subject to
credit risk with respect to the counterparties to
certain options, futures and repurchase
agreements entered into by All-Star. If a
counterparty becomes bankrupt or otherwise fails
to perform its obligations under a contract due
to financial difficulties, All-Star may
experience significant delays in obtaining any
recovery under the contract in a bankruptcy or
other reorganization proceeding. All-Star may
obtain only a limited recovery or may obtain no
recovery in such circumstances.

RIGHTS AND WARRANTS RISK. Rights and warrants are
subject to the same market risks as common
stocks, but are more volatile in price. Rights
and warrants do not carry the right to dividends
or voting rights with respect to their underlying
securities, and they do not represent any rights
in the assets of the issuer. An investment in
rights or warrants may be considered speculative.
In addition, the value of a right or warrant does
not necessarily change with the value of the

underlying security and a right or warrant ceases
to have value if it is not exercised prior to its
expiration date. The purchase of warrants or
rights involves the risk that All-Star could lose
the purchase value of a right or warrant if the
right to subscribe for additional shares is not
exercised prior to the rights' or warrants'
expiration. Also, the purchase of rights and
warrants involves the risk that the effective
price paid for the right or warrant added to the
subscription price of the related security may
exceed the value of the subscribed security's
market price such as when there is no movement in
the price of the underlying security.

ILLIQUID SECURITIES RISK. All-Star may invest up
to 15% of its net assets in securities that, at
the time of investment, are illiquid. Illiquid
securities are not readily marketable and may
include some restricted securities. Illiquid
securities involve the risk that the securities
will not be able to be sold at the time desired
by All-Star or at prices approximating the value
at which All-Star is carrying the securities on
its books. The market price of illiquid
securities generally is more volatile than that
of more liquid securities, which may adversely
affect the price that All-Star pays for or
recovers upon the sale of illiquid securities.
Illiquid securities are also more difficult to
value, and BAIA's judgment may play a greater
role in the valuation process.

MARKET DISRUPTION RISK. Certain events have a
disruptive effect on the securities markets, such
as terrorist attacks (including the terrorist
attacks in the United States on September 11,
2001), war and other geopolitical events.
All-Star cannot predict the effects of similar
events in the future on the U.S. economy.
Securities of mid-cap companies tend to be more
volatile than securities of larger companies so
that these events and any actions resulting from
them may have a greater impact on the prices and
volatility of securities of mid-cap companies
than on securities of larger companies.

INFLATION RISK. Inflation risk is the risk that
the value of assets or income from investment
will be worth less in the future as inflation
decreases the value of money. As inflation
increases, the real value of the shares and
distributions can decline.

DEFLATION RISK. Deflation risk is the risk that
prices throughout the economy decline over time,
which may have an adverse effect on the market
valuation of companies, their assets and
revenues. In addition, deflation may have an
adverse effect on the creditworthiness of issuers
and may make issuer default more likely, which

may result in a decline in the value of
All-Star's portfolio.

DISTRIBUTIONS................ When All-Star's President determines that market
conditions are favorable and that other factors,
including its levels of net income and net
realized and unrealized capital gains are
appropriate, All-Star intends to implement a
distribution policy. Under that policy, All-Star
would pay distributions on its shares totaling
approximately 6% of its net asset value per year,
payable in semi-annual distributions of
approximately 3% of its net asset value at the
close of regular trading on the Exchange on the
Friday prior to each semi-annual declaration
date. THESE FIXED DISTRIBUTIONS, WHICH WILL NOT
NECESSARILY BE RELATED TO ALL-STAR'S NET
INVESTMENT INCOME OR NET REALIZED CAPITAL GAINS
OR LOSSES, WILL BE TAXABLE IN ANY TAXABLE YEAR,
UP TO THE AMOUNT OF ALL-STAR'S CURRENT AND
ACCUMULATED EARNINGS AND PROFITS, AS ORDINARY
DIVIDEND INCOME, QUALIFIED DIVIDEND INCOME
(TAXABLE AT A MAXIMUM 15% FEDERAL INCOME TAX RATE
FOR INDIVIDUALS), OR LONG-TERM CAPITAL GAIN TO
THE EXTENT THEY REFLECT SUCH INCOME OR GAIN
ALL-STAR EARNED FOR THAT YEAR. If, for any
taxable year, the total distributions made under
All-Star's distribution policy exceed its net
investment income and net realized capital gains,
the excess will be treated as a non-taxable
return of capital to each shareholder (up to the
amount of the shareholder's basis in his or her
shares) and thereafter as gain from the sale of
shares. The amount treated as a non-taxable
return of capital will reduce the shareholder's
adjusted basis in his or her shares, thereby
increasing his or her potential gain or reducing
his or her potential loss on the subsequent sale
of those shares. The Board reserves the right to
modify or terminate this distribution policy or
delay its implementation if it determines that
such modification, termination or delay is in the
best interest of shareholders after taking into
account all applicable factors.

All-Star may, in the discretion of its Board of
Trustees ("Board"), retain for reinvestment, and
not distribute, net long-term capital gain in
excess of net short-term capital loss ("net
capital gain") for any taxable year to the extent
that its net investment income and net realized
gains exceed the amount distributed for that year
under its distribution policy. Retained net
capital gain will be taxed to both All-Star and
the shareholders as long-term capital gains;
however, each shareholder will be able to claim a
proportionate share of the federal income tax
All-Star paid as a credit against his or her own

federal income tax liability and will be entitled
to increase the adjusted tax basis in his or her
shares by the difference between the amount taxed
and the credit. See "Distributions."

All-Star will pay its distributions to
shareholders in the form of either cash or newly
issued shares (plus cash in lieu of fractional
shares that would otherwise be issuable). In
order to receive distributions in additional
newly issued shares, a shareholder must
participate in All-Star's Automatic Dividend
Reinvestment and Cash Purchase Plan; each
shareholder holding shares through All Star's
transfer agent will automatically be a
participant therein. See "Automatic Dividend
Reinvestment and Cash Purchase Plan." Investors
that hold shares through a brokerage firm, bank
or other intermediary as the stockholder of
record may receive distributions in cash or newly
issued shares depending on the intermediary.
Investors should contact their intermediary for
more information.

Until All-Star adopts the distribution policy, it
will make distributions at least in amounts
sufficient to maintain its qualification for
treatment as a regulated investment company under
the Code. All-Star does not believe that this
will affect the Portfolio Managers' ability to
manage All-Star's assets pursuant to the
strategies discussed herein. See "Investment
Objective and Principal Investment Strategies."

All-Star and BAIA intend to apply to the
Securities and Exchange Commission ("SEC") for an
exemptive order to permit All-Star to distribute
capital gains as often as quarterly, in
accordance with the distribution policy. If the
exemptive relief is granted, All-Star intends to
make quarterly distributions (although the
aggregate annual distribution would remain at 6%
of All-Star's net assets). Although the SEC has
granted this type of exemptive relief in the
past, there can be no assurance that the SEC will
grant the requested exemptive order.

ANTI-TAKEOVER PROVISIONS..... All-Star's Declaration of Trust and By-Laws have
provisions (commonly referred to as
"anti-takeover provisions") that are intended to
have the effect of limiting the ability of other
entities or persons to acquire control of
All-Star, to cause it to engage in certain
transactions, or to modify its structure. For
instance, the affirmative vote of at least 75%
of All-Star's shares is required to authorize
All-Star's conversion from a closed-end to an
open-end investment company, unless such
conversion is recommended by the Board, in which
event such conversion would only require the

majority vote of All-Star's shareholders, as
defined in the Investment Company Act of 1940,
as amended (the "1940 Act"). A similar
shareholder vote is required to authorize a
merger, sale of a substantial part of the assets
or similar transactions with persons
beneficially owning 5% or more of All-Star's
shares, unless approved by the Board under
certain conditions. These provisions cannot be
amended without a similar super-majority vote.
In addition, the Board is divided into three
classes, each of which has a term of three years
and only one of which is elected at each annual
meeting of shareholders. See "Description of
Shares" and "Anti-Takeover Provisions of the
Declaration of Trust; Super-Majority Vote
Requirement for Conversion to Open-End Status."

DISPOSITION OF SHARES........ You will be free to dispose of your shares on
the Exchange or other markets on which the
shares may trade, but, because All-Star is a
closed-end fund, you do not have the right to
redeem your shares.

You should carefully consider your ability to assume the foregoing risks before
making an investment in the Fund. An investment in shares of the Fund is not
appropriate for all investors.

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

SUMMARY OF FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES

Sales Load (as a percentage of offering price) .......................4.5%

Expenses Borne by the Fund (as a percentage of offering price)(1) ...

Automatic Dividend Reinvestment and Cash Purchase Plan Fees (2) .....

ANNUAL EXPENSES (as a percentage of net assets attributable to shares of
beneficial interest)

Management Fees......................................................1.00%

Administrative Fees..................................................0.20%

Other Expenses (3)...................................................0.27%

Total Annual Expenses................................................1.47%

EXAMPLE: You would pay the following expenses on an investment (at net asset
value) of $1,000, assuming (i) total annual expenses of 1.47% of net assets
attributable to shares of All-Star and (ii) a 5% annual return and reinvestment
of all dividends and distributions at net asset value.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$15 $46 $80 $176

THE FIGURES IN THE EXAMPLE ARE INTENDED TO ILLUSTRATE THE EFFECT OF
ALL-STAR'S EXPENSES, BUT SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
RETURNS AND EXPENSES, WHICH MAY BE HIGHER OR LOWER THAN THOSE SHOWN. The Example
above assumes that the estimated "Other Expenses" are accurate and that all
distributions on the shares are reinvested at net asset value.

(2) A shareholder that directs the Plan Agent (defined below) to sell shares
held in an Automatic Dividend Reinvestment and Cash Purchase Plan account
will incur brokerage charges.

(3) "Other Expenses" shown under the "Annual Expenses" table are estimated
amounts for the current fiscal year (All-Star's first year of operations),
unless otherwise indicated, and assume that All-Star issues shares. If
All-Star issues fewer shares, all other things being equal, these expenses
would increase as a percentage of net assets.

The tables and Example above are intended to assist investors in
understanding the various costs and expenses that an investor will bear directly
and indirectly in purchasing and owning All-Star's shares. The "Shareholder
Transaction Expenses" table shows the expenses that an investor will incur when
buying shares of All-Star, whether in this offering, in the open market or
through All-Star's Automatic Dividend Reinvestment and Cash Purchase Plan. The
"Annual Expenses" table shows the costs and expenses, as a percentage of net
assets, associated with an investment in the shares.

THE FUND

All-Star is a newly organized, multi-managed, diversified, closed-end
management investment company. All-Star will allocate its portfolio assets among
a number of independent investment management organizations each having a
different investment style. All-Star is designed primarily for long-term
investment and not as a trading vehicle. All-Star was organized as a
Massachusetts business trust on March 22, 2005 and, as a newly organized entity,
has no operating history or history of public trading. All-Star's address is 100
Federal Street, Boston, Massachusetts 02110 and its telephone number is
1-800-542-3863.

USE OF PROCEEDS

The net proceeds of this offering will be approximately $ ($ if the underwriters
exercise the over-allotment option in full) after payment of the estimated
offering expenses. Total organizational expenses are estimated to be $ . Total
expenses of the offering are estimated to be $ , or $ assuming full exercise of
the over-allotment option, which represents $ or $ per share, respectively. The
Fund Manager has agreed to pay All-Star's organizational expenses and to
reimburse All-Star's offering expenses to the extent that the aggregate of
All-Star's organizational and offering expenses exceed $0. per share. The
proceeds of the offering will be invested by All-Star's Portfolio Managers in
portfolio securities in accordance with All-Star's investment objective and
strategies. It is currently anticipated that the aggregate net proceeds of the
offering will be invested within three months from the completion of the
offering. Pending such investment, it is anticipated that the proceeds will be
invested in short-term, high-quality money market instruments, including U.S.
Government Securities that may include shares of money market funds managed by
CMA or other affiliates of BAIA. Investments in shares of money market funds
will be made in compliance with applicable 1940 Act limitations.

THE MULTI-MANAGER CONCEPT

All-Star will allocate its portfolio assets among a number of Portfolio
Managers, each having a different investment style. The Portfolio Managers will
be recommended and monitored by BAIA, utilizing processes that BAIA has employed
on behalf of registered closed-end fund clients since 1986. From time to time,
All-Star will rebalance the portfolio among the Portfolio Managers to adjust to
the desired allocations.

In BAIA's opinion, the multi-manager concept provides advantages over the
use of a single manager because of the following primary factors:

(i) most equity investment management firms consistently employ a
distinct investment style which causes them to emphasize stocks with particular
characteristics;

(ii) because of changing investor preferences and market fluctuations,
any given investment style will move into and out of market favor and will
result in better investment performance under certain market conditions but less
successful performance under other conditions;

(iii) by allocating All-Star's portfolio among Portfolio Managers
employing different styles, the impact of any one such style on investment
performance will be diluted, and the investment performance of the total
portfolio will be more consistent and less volatile over the long term than if a
single style was employed throughout the entire period; and

(iv) consistent performance at a given annual rate of return over time
produces a higher rate of return for the long term than more volatile
performance having the same average annual rate of return.

BAIA continuously monitors the performance and investment styles of
All-Star's Portfolio Managers and from time to time recommends to the Board of
All-Star changes of Portfolio Managers based on factors such as changes in a
Portfolio Manager's investment style or a departure by a Portfolio Manager from
the investment style for which it had been selected, a deterioration in a
Portfolio Manager's performance relative to that of other investment management
firms practicing a similar style, or adverse changes in its ownership or
personnel. Portfolio Manager changes may also be made to change the mix of
investment styles employed by the Portfolio Managers.

Portfolio Manager changes, as well as the periodic rebalancings of
All-Star's portfolio among the Portfolio Managers and the need to raise cash for
its periodic distributions, may result in some portfolio turnover in excess of
what would otherwise be the case. Increased portfolio turnover could cause
All-Star to experience increased brokerage commission costs and may result in
greater realization of capital gains, which are taxable to shareholders when
distributed to them.

The Board, including a majority of the Independent Trustees, makes all
decisions to remove or add a Portfolio Manager. Shareholder approval is not
required in connection with the removal of a Portfolio Manager. However, both
Board and shareholder approval initially will be required for the Fund and BAIA
to hire a new Portfolio Manager. All-Star and BAIA intend to apply to the SEC
for an exemptive order that would permit All-Star and BAIA, with the approval of
the Board, to enter into a portfolio management agreement with a new or
additional Portfolio Manager in advance of shareholder approval on terms and
conditions substantially similar to All-Star's agreements with its other
Portfolio Managers. Such new agreement would be subject to approval by
shareholders at All-Star's next regularly scheduled annual shareholder meeting
following the date of the new or additional portfolio management agreement.
Although the SEC has granted this type of exemptive relief in the past, there
can be no assurance that the SEC will grant the requested exemptive order.

All-Star anticipates that it initially will have up to five Portfolio
Managers, each responsible for its portion of All-Star's assets as discussed
below. From time to time, the number of Portfolio Managers and/or allocations to
Portfolio Managers may change as circumstances change. For example, BAIA,
subject to the oversight of the Board, may determine to modify allocations among
existing Portfolio Managers, remove Portfolio Managers or add Portfolio
Managers. Under normal market conditions, BAIA expects to recommend to the Board
an allocation of between 40% and 60% of the Fund's net assets to Portfolio
Managers that utilize a "growth" approach to investing, and between 40% and 60%
of the Fund's net assets to Portfolio Managers that utilize a "value" approach
to investing. Initially, the Portfolio Managers will be:

GROWTH MANAGERS

M.A. WEATHERBIE & CO., INC. ("M.A. Weatherbie")

M.A. Weatherbie will invest its portion of All-Star's portfolio primarily
in companies with enduring competitive advantages and high, sustainable earnings
growth.

MAZAMA CAPITAL MANAGEMENT, INC. ("Mazama")

Mazama will invest its portion of All-Star's portfolio primarily in
companies that are gaining market share and are positioned to accelerate their
revenue and earnings growth rates.

VALUE MANAGERS

FIDUCIARY MANAGEMENT, INC. ("Fiduciary Management")

Fiduciary Management will invest its portion of All-Star's portfolio
primarily in companies with durable business franchises that are selling at a
discount to their intrinsic value.

SASCO CAPITAL, INC. ("Sasco")

Sasco will invest its portion of All-Star's portfolio primarily in
companies that are selling at large discounts to both their asset value and
future earning power.

SCHNEIDER CAPITAL MANAGEMENT CORPORATION ("Schneider")

Schneider will invest its portion of All-Star's portfolio primarily in
companies that are overlooked and undervalued where the firm expects a rebound
in earnings.

INVESTMENT PHILOSOPHY AND PROCESS OF EACH PORTFOLIO MANAGER

M.A. WEATHERBIE & CO., INC.

M.A. Weatherbie is a growth manager. Its investment philosophy is to own
smaller growth companies that can demonstrate both superior earnings growth and
high investment quality over time and which are reasonably priced relative to
their intrinsic value. M.A. Weatherbie refers to these companies as "foundation"
growth stocks, as they are expected to consistently meet or exceed expectations.

M.A. Weatherbie believes that All-Star should be positioned to take
advantage of pricing distortions that arise when growth companies temporarily
disappoint investors. M.A. Weatherbie will invest up to a third of its portion
of the Fund in "opportunity" growth stocks, i.e., companies where earnings have
been temporarily depressed and it believes that change is under way which will
re-accelerate earnings growth. M.A. Weatherbie believes that by focusing on
"opportunity" growth stocks in addition to "foundation" growth stocks, All-Star
will be positioned to capture earnings growth in two ways, adding incremental
value.

MAZAMA CAPITAL MANAGEMENT, INC.

Mazama is a growth manager. At the heart of Mazama's investment philosophy
is the belief that exceptional investment returns can be achieved by investing
in a diversified portfolio of quality companies that have made recent
investments in people, products, facilities and/or services and are now
positioned to outperform expectations. Buying these quality, timely companies at
a good valuation relative to their expected return on equity and
earning-per-share growth rates enhances the opportunity for attractive gains and
minimizes risk of downside price movements.

Mazama will manage its allocated portion of All-Star's portfolio using a
bottom-up approach to security selection. The firm utilizes a proprietary model
as the framework for security selection and portfolio construction decisions.
Mazama's security selection process begins by screening the universe of
companies found in the Russell 3000 Index looking for companies with attractive
growth characteristics and focusing on those with market capitalizations ranging
from $3 billion to $20 billion. Mazama employs a Proprietary Price Performance
model to identify a group of 300 to 400 companies that, in its judgment, may
represent attractive investment opportunities. Eighty or more of those companies
will be selected as investments appropriate for the portion of All-Star managed
by Mazama. The model takes into account both quantitative and qualitative
factors in order to identify companies that meet certain criteria. These factors
include: (i) the quality of management and key personnel, (ii) the company's
ability to meet or exceed earnings estimates, (iii) estimated return on equity
divided by a company's forward price-to-earnings ratio, and (iv) estimated
earnings growth divided by a company's forward price-to-earnings ratio.
Companies passing the initial screening are further analyzed by Mazama using
rigorous fundamental analysis.

Mazama's philosophy takes advantage of the market inefficiencies that
exist within the universe of mid-cap equity securities. These inefficiencies
include the fact that very few people have comprehensive, accurate information
on these companies. Mazama has the ability to capitalize on that lack of broadly
known information, because of the rigorous, fundamental research performed to
uncover that information.

FIDUCIARY MANAGEMENT, INC.

Fiduciary Management is a value manager. Fiduciary Management has been
managing money using the same investment philosophy and process for over 25
years. As a result, Fiduciary Management knows how portfolio companies have been
valued over many market cycles. Fiduciary Management seeks to purchase the
securities of durable companies at value prices in order to achieve superior
investment results over a three- to four-year time horizon.

To identify potential investments, Fiduciary Management runs a "screen"
for companies that are undervalued relative to their historical valuation or
their peer group. Fiduciary Management always analyzes the upside and downside
risk of any investment. Fiduciary Management believes that the price of a
security should be low enough that a client can profit - or simply avoid a loss.

Fiduciary Management focuses its fundamental research on three areas: (1)
the evaluation of a company's business model; (2) a financial analysis of the
company; and (3) an assessment of the company's management. Fiduciary
Management's financial analysis includes a thorough review of a company's Return
on Invested Capital ("ROIC"). The ROIC model helps Fiduciary Management cut
through the earnings "noise" to get a true picture of a company's performance
over time. Fiduciary Management also considers the company's business, whether
the stock is trading at a reasonable valuation and the ownership and control of
the company and its management team.

Companies that meet Fiduciary Management's investment criteria are
presented to the investment policy committee for consideration. The investment
policy committee is comprised of five senior investment professionals: Every
member of the committee has an equal vote. To be approved for investment, a
company must receive a unanimous vote of the investment committee. If one
committee member votes against the company, the company is placed on Fiduciary
Management's monitor list and a researcher is instructed to revisit any
outstanding questions.

A new company recommended for All-Star's portfolio will have an initial
position size ranging between 1% and 4%. The exact weighting will be dependent
on both its valuation (i.e., the level of the discount to the company's stock
price to its intrinsic value) and the liquidity of the stock.

SASCO CAPITAL, INC.

Sasco is a value manager. Sasco's investment philosophy stems from the
firm's belief that the best opportunities to add value come from identifying
undervalued investment ideas, undertaking independent research and adopting a
long term (3-year) investment view. Sasco's investment style is contrarian with
a value discipline. Sasco's portfolio managers are contrarian investors because
they look at underperforming, out-of-favor companies with "hidden jewels",
likely to restructure. They are value investors because they invest in companies
that are selling at large discounts to both their asset value and future earning
power. Sasco's research leads the firm to research and value individual business
segments where there is an opportunity for talented (and frequently new)
management to fix, rebuild and grow the company, unleashing higher earnings that
ultimately lead to higher stock prices. Sasco believes that out-of-favor
companies that have fundamentally underperformed represent a real pocket of
market inefficiency. These companies are frequently mispriced and offer
relatively low price risk because expectations are quite minimal.

SCHNEIDER CAPITAL MANAGEMENT CORPORATION

Schneider is a value manager. Schneider believes that disciplined deep
value investing, built on a solid-research driven foundation, delivers success
over time. Schneider concentrates its efforts on identifying new investment
ideas and identifying and anticipating dynamic positive market changes.

Schneider employs a five-point investment process based on new idea
generation, independent analysis, a ranking system, portfolio construction, and
a rigorous sell discipline. Utilizing a wide range of information sources,
Schneider focuses on identifying promising new investment opportunities.
Database screening is used on a limited basis, and high-priority companies are
sent to Schneider's analysts for in-depth investigation. Schneider's analysis of
investment opportunities includes the construction of comprehensive financial
models, the identification of drivers for positive change, contacting management
as necessary and developing objective earnings and valuation estimates. The
output of Schneider's analysis is a target price and expected return for each
company under consideration. Schneider determines a target price for current
holdings and ranks expected returns from high to low. New purchases must rank
above the median in appreciation potential to merit inclusion in the portfolio.

Schneider constructs a value portfolio with the intent that the best
companies will have a meaningful performance impact. However, Schneider also
employs a rigorous sell discipline to capitalize on success and minimize damage
from mistakes. Sales are most often triggered when a stock approaches its
pre-determined price target.

INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES

All-Star's investment objective is to seek total investment return,
primarily through long-term capital appreciation and secondarily through current
income. Under normal market conditions, All-Star will seek its investment
objective by investing primarily in a diversified portfolio of mid-cap equity
securities. Mid-cap equity securities are securities of companies whose market
capitalizations are less than or equal to the highest market capitalization of
companies included in the Russell Midcap(R) Index or the S&P MidCap 400
(whichever capitalization is greater) and greater than or equal to the lowest
market capitalization of companies included in these indices (whichever
capitalization is lower). As of July 1, 2005, the Russell Midcap(R) Index
included companies with capitalizations between approximately $[500] million and
$[36.9] billion, and the S&P MidCap 400 included companies with capitalizations
between approximately $[27] million and $[9.1] billion. The capitalization
ranges of indices such as the Russell Midcap(R) Index and the S&P MidCap 400
change from time to time. New investments will be made by reference to the
then-current index ranges at the time of purchase. Thus, if a security that is
in the mid-cap range becomes large-cap, it will continue to be treated as
mid-cap for purposes of the Fund's policies. However, if a small-cap security
held in the portfolio enters the mid-cap range at a later time, such security
shall be deemed to be a mid-cap security at that time.

All-Star will invest primarily in equity securities, which will primarily
be common stocks, but may also include preferred stocks, options on preferred
stocks, securities convertible into common stocks such as convertible bonds, and
securities having common stock characteristics such as rights and warrants to
purchase equity securities, and ADRs. All-Star may lend its portfolio securities
and engage in options and futures strategies (see "Investment Practices" below).
Under normal market conditions, at least 80% of the value of All-Star's net
assets will be invested in mid-cap equity securities. This policy is not
fundamental and may be changed without a vote of All-Star's outstanding shares;
provided that All-Star provides shareholders with at least 60 days prior written

notice. For purposes of this policy, net assets include any borrowings for
investment purposes.

Although All-Star will, under normal market conditions, remain fully
invested in equity securities, up to 20% of the value of All-Star's net assets
may generally be invested in short-term money market instruments, including
certificates of deposit (negotiable certificates issued against bank deposits),
other interest-bearing bank deposits such as savings and money market accounts,
and bankers' acceptances (short-term bank-guaranteed credit instruments used to
finance transactions in goods) of domestic branches of U.S. banks having assets
of not less than $1 billion, obligations issued or guaranteed by the U.S.
Government and its agencies and instrumentalities ("U.S. Government Securities")
commercial paper (unsecured short-term promissory notes issued by corporations)
rated not lower than A-1 by Standard & Poor's, a division of The McGraw Hill
Companies, Inc. ("Standard & Poor's") or Prime-1 by Moody's Investors Service,
Inc. ("Moody's"), short-term corporate debt securities rated not lower than AA
by Standard & Poor's or Aa by Moody's, and repurchase agreements with respect to
the foregoing. All-Star may temporarily reduce its investments in equity
securities and invest without limit in short-term money market instruments for
defensive purposes when BAIA or the Portfolio Managers deem that market
conditions are such that a more conservative approach to investment is
desirable. Taking a temporary defensive position may prevent All-Star from
achieving its objective.

All-Star may invest up to 25% of its net assets in securities of foreign
(non-U.S.) issuers including American Depository Receipts and Global Depository
Receipts.

INVESTMENT PRACTICES

The following describes the principal investment strategies in which one
or more of All-Star's Portfolio Managers may engage, each of which may involve
certain special risks.

LENDING OF PORTFOLIO SECURITIES

Consistent with applicable regulatory requirements, All-Star, in order to
generate additional income, may lend its portfolio securities (principally to
broker-dealers) where such loans are callable at any time and are continuously
secured by collateral (cash or U.S. Government Securities) not less than the
market value, determined daily, of the securities loaned. All-Star will receive
amounts equal to the interest on the securities loaned. It will also be paid for
having made the loan. Any cash collateral pursuant to these loans will be
invested in short-term money market instruments. All-Star could be subjected to
delays in recovering the loaned securities in the event of default or bankruptcy
of the borrower. All-Star will limit such lending to not more than 30% of the
value of All-Star's net assets.

REPURCHASE AGREEMENTS

All-Star may enter into repurchase agreements with banks or broker-dealer
firms whereby such institutions sell U.S. Government Securities or other
securities in which it may invest to All-Star and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. The resale price is
greater than the purchase price, reflecting an agreed upon interest rate which
is effective during the time between the purchase and resale and is not related
to the stated interest rate on the purchased securities. All-Star requires the

seller of the securities to maintain on deposit with All-Star's custodian bank
securities in an amount at all times equal to or in excess of the value of the
repurchase agreement. In the event that the seller of the security defaults on
its repurchase obligation or becomes bankrupt, All-Star could receive less than
the repurchase price on the sale of the securities to another party or could be
subjected to delays in selling the securities. Not more than 10% of All-Star's
net assets will be invested in repurchase agreements maturing in more than seven
days.

SECURITIES OF OTHER INVESTMENT COMPANIES

All-Star may invest in the securities of other investment companies,
including open-end mutual funds, closed-end funds, unit investment trusts,
private investment companies and offshore investment companies. All-Star may
also invest in investment companies that invest in the securities of mid-cap
companies. An investment in an investment company involves risks similar to
those of investing directly in the investment company's portfolio securities,
including the risk that the value of the portfolio securities may fluctuate in
accordance with changes in the financial condition of their issuers, the value
of stocks and other securities generally, and other market factors.

In addition, investing in other investment companies involves certain
other risks, costs, and expenses for All-Star. If All-Star invests in another
investment company, All-Star will be charged its proportionate share of the
advisory fees and other operating expenses of such investment company, which are
in addition to the advisory fees and other operational expenses charged to
All-Star. In addition, All-Star could incur a sales charge in connection with
purchasing an investment company security or a redemption fee upon the
redemption of such security. An investment in the shares of a closed-end
investment company may also involve the payment of a substantial premium over,
while sales of such shares may be made at a substantial discount from, the net
asset value of the issuers' portfolio securities. Investments in securities of
other investment companies will be made in compliance with applicable 1940 Act
limitations. To the extent that All-Star invests in the securities of other
investment companies, All-Star's shareholders will indirectly bear a pro rata
share of the investment company's expenses in addition to the expenses
associated with an investment in All-Star. All-Star may invest in investment
companies managed by CMA or other affiliates of BAIA.

EXCHANGE-TRADED FUNDS

All-Star may invest in exchange traded funds ("ETFs"). ETFs are ownership
interests in unit investment trusts, depositary receipts, and other pooled
investment vehicles that are traded on an exchange and that hold a portfolio of
securities or stocks (the "Underlying Securities"). The Underlying Securities
are typically selected to correspond to the stocks or other securities that
comprise a particular broad based, sector or international index, or that are
otherwise representative of a particular industry sector. An investment in an
ETF involves risks similar to investing directly in each of the Underlying
Securities, including the risk that the value of the Underlying Securities may
fluctuate in accordance with changes in the financial condition of their
issuers, the value of stocks and other securities generally, and other market
factors.

The performance of an ETF will be reduced by transaction and other
expenses, including fees paid by the ETF to service providers. Investors in ETFs
are eligible to receive their portion of dividends, if any, accumulated on the
securities held in the portfolio, less fees and expenses of the ETF. Typically,
ETFs are investment companies. However, the term is used in the industry in a
broad way to include securities issued by entities that are not investment
companies. To the extent an ETF is an investment company, the limitations
applicable to All-Star's ability to purchase securities issued by other
investment companies will apply.

OPTIONS AND FUTURES STRATEGIES

All-Star may seek to increase the current return of All-Star's portfolio
by writing covered call or put options with respect to the types of securities
in which All-Star is permitted to invest. Call options written by All-Star give
the purchaser the right for a stated period to buy the securities on which the
option was written from All-Star at a stated price; put options written by the
Fund give the purchaser the right for a stated period to sell the securities on
which the option was written to All-Star at a stated price. By writing a call
option, All-Star limits its opportunity to profit from any increase in the
market value of the underlying security above the exercise price of the option;
by writing a put option, All-Star assumes the risk that it may be required to
purchase the underlying security at a price in excess of its current market
value.

All-Star may purchase put options to protect its portfolio holdings in the
underlying security against a decline in market value. It may purchase call
options to hedge against an increase in the prices of portfolio securities that
it plans to purchase. By purchasing put or call options, All-Star, for the
premium paid, acquires the right (but not the obligation) to sell (in the case
of a put option) or purchase (in the case of a call option) the underlying
security at the option exercise price regardless of the then-current market
price.

All-Star may also seek to hedge against declines in the value of
securities owned by it or increases in the price of securities it plans to
purchase, or to gain or maintain market exposure, through the purchase of stock
index futures and related options. For example, All-Star may purchase stock
index futures and related options to enable a newly appointed Portfolio Manager
to gain immediate exposure to underlying securities markets pending the
investment of the portion of All-Star portfolio assigned to it. A stock index
future is an agreement in which one party agrees to deliver to the other an
amount of cash equal to a specific dollar amount times the difference between
the value of the specific stock index at the close of the last trading day of
the contract and the price at which the agreement is made.

Expenses and losses incurred as a result of the hedging strategies
described above will reduce All-Star's current return.

Transactions in options and futures contracts may not achieve the intended
goals of protecting portfolio holdings against market declines or gaining or
maintaining market exposure, as applicable, to the extent that there is an
imperfect correlation between the price movements of the options and futures
contracts and those of the securities to be hedged. In addition, if a Portfolio
Manager's prediction on stock market movements is inaccurate, All-Star may be
worse off than if it had not engaged in such options or futures transactions.
There is also no assurance that these strategies will be available at any time
or that a Portfolio Manager will determine to use them.

See the SAI for additional information concerning options and futures
transactions and the risk thereof.

RISK FACTORS

All-Star is a diversified, multi-managed closed-end management investment
company designed primarily as a long-term investment and not as a trading
vehicle. All-Star is not intended to be a complete investment program and there
can be no assurance that All-Star will achieve its investment objective. Your
shares at any point in time may be worth less than your original investment,
even after taking into account the reinvestment of dividends and distributions.

NO OPERATING HISTORY

All-Star is a newly organized, multi-managed, diversified, closed-end
management investment company with no history of operations.

INVESTMENT AND MARKET RISK

An investment in All-Star's shares is subject to investment risk,
including the possible loss of the entire amount that you invest. Your
investment in All-Star shares represents an indirect investment in the
securities owned by All-Star, most of which are anticipated to be traded on a
national securities exchange or in the over-the-counter markets. The value of
these securities, like other market investments, may move up or down, sometimes
rapidly and unpredictably. Your shares at any point in time may be worth less
than your original investment, even after taking into account the reinvestment
of dividends and other distributions.

MARKET DISCOUNT RISK

In addition, shares of closed-end management investment companies such as
All-Star frequently trade at a discount from their net asset value. This risk
may be greater for investors expecting to sell their shares of All-Star soon
after the completion of the public offering. The shares of All-Star were
designed primarily for long-term investors, and investors in All-Star shares
should not view All-Star as a vehicle for trading purposes.

COMMON STOCK RISK

All-Star is not limited in the percentage of its assets that may be
invested in common stocks and other equity securities, and therefore a risk of
investing in the Fund is equity risk. Equity risk is the risk that the market
value of securities held by All-Star will fall due to general market or economic
conditions, perceptions regarding the industries in which the issuers of
securities held by All-Star participate, and the particular circumstances and
performance of particular companies whose securities All-Star holds. For
example: an adverse event, such as an unfavorable earnings report, may depress
the value of equity securities of an issuer held by All-Star; the price of
common stock of an issuer may be particularly sensitive to general movements in

the stock market; or a drop in the stock market may depress the price of most or
all of the common stocks and other equity securities held by All-Star. In
addition, common stock of an issuer in All-Star's portfolio may decline in price
if the issuer fails to make anticipated dividend payments because, among other
reasons, the issuer of the security experiences a decline in its financial
condition. Common equity securities in which All-Star will invest are
structurally subordinated to preferred stocks, bonds and other debt instruments
in a company's capital structure, in terms of priority to corporate income, and
therefore will be subject to greater dividend risk than preferred stocks or debt
instruments of such issuers. In addition, while broad market measures of commons
stocks have historically generated higher average returns than fixed income
securities, common stocks have also experienced significantly more volatility in
those returns.

PREFERRED SECURITIES RISK

Preferred equity securities involve credit risk, which is the risk that a
preferred equity security will decline in price, or fail to pay dividends when
expected, because the issuer experiences a decline in its financial status. In
addition to credit risk, investment in preferred equity securities involves
certain other risks. Certain preferred equity securities contain provisions that
allow an issuer under certain conditions to skip distributions (in the case of
"non-cumulative" preferred equity securities) or defer distributions (in the
case of "cumulative" preferred equity securities). Preferred equity securities
often contain provisions that allow for redemption in the event of certain tax
or legal changes or at the issuers' call. In the event of redemption, All-Star
may not be able to reinvest the proceeds at comparable rates of return.
Preferred equity securities typically do not provide any voting rights, except
in cases when dividends are in arrears beyond a certain time period, which
varies by issue. Preferred equity securities are subordinated to bonds and other
debt instruments in a company's capital structure in terms of priority to
corporate income and liquidation payments, and therefore will be subject to
greater credit risk than those debt instruments. Preferred equity securities may
be significantly less liquid than many other securities, such as U.S. government
securities, corporate debt or common stock.

CONVERTIBLE SECURITY RISK

Convertible securities generally offer lower interest or dividend yields
than non-convertible fixed-income securities of similar credit quality because
of the potential for capital appreciation. The market values of convertible
securities tend to decline as interest rates increase and, conversely, to
increase as interest rates decline. However, a convertible security's market
value also tends to reflect the market price of the common stock of the issuing
company, particularly when the stock price is greater than the convertible
security's conversion price. The conversion price is defined as the
predetermined price or exchange ratio at which the convertible security can be
converted or exchanged for the underlying common stock. As the market price of
the underlying common stock declines below the conversion price, the price of
the convertible security tends to be increasingly influenced more by the yield
of the convertible security than by the market price of the underlying common
stock. Thus, it may not decline in price to the same extent as the underlying
common stock, and convertible securities generally have less potential for gain
or loss than common stocks. However, mandatory convertible securities (as
discussed below) generally do not limit the potential for loss to the same
extent as securities convertible at the option of the holder. In the event of a

liquidation of the issuing company, holders of convertible securities would be
paid before that company's common stockholders. Consequently, an issuer's
convertible securities generally entail less risk than its common stock.
However, convertible securities fall below debt obligations of the same issuer
in order of preference or priority in the event of a liquidation and are
typically unrated or rated lower than such debt obligations. In addition,
contingent payment convertible securities allow the issuer to claim deductions
based on its nonconvertible cost of debt, which generally will result in
deductions in excess of the actual cash payments made on the securities (and
accordingly, holders will recognize income in amounts in excess of the cash
payments received). The convertible securities in which the Fund invests may be
rated below investment grade. See "Risks of Investing in Below-Investment Grade
Quality Securities.

MID-CAP COMPANY RISK

All-Star will invest primarily in equity securities whose market
capitalization at the time of purchase is equal to or less than the stock with
the highest market capitalization in the index. Stocks of mid-sized companies
may trade less frequently, may trade in smaller volumes and may fluctuate more
sharply in price than stocks of larger companies. Mid-Cap companies also carry
additional risks because their earnings and revenues tend to be less
predictable.

INTEREST RATE RISK

Interest rate risk is the risk that fixed-income securities, and to a
lesser extent dividend-paying common stocks, will decline in value because of
changes in market interest rates. When market interest rates rise, the market
value of such securities generally will fall. Because All-Star may invest in
certain fixed-income securities that pay a fixed rate of return, the net asset
value and market price of All-Star's shares could decline if the market interest
rate applicable to such investments were to rise.

CREDIT RISK

Credit risk is the risk that a security in the Fund's portfolio will
decline in price or fail to make dividend or interest payments when due because
the issuer of the security experiences a decline in its financial status.
Preferred and convertible securities are typically subordinated to bonds and
other debt instruments in a company's capital structure, in terms of priority to
corporate income, and therefore will be subject to greater credit risk than
those debt instruments.

RISKS OF BELOW-INVESTMENT GRADE QUALITY SECURITIES

All-Star may invest in convertible securities and debt securities that are
rated below-investment grade. Below-investment grade quality debt securities are
commonly referred to as "junk bonds." Below-investment grade quality securities
are considered predominantly speculative with respect to an issuer's capacity to
pay interest and repay principal and are susceptible to default or decline in
market value due to real or perceived adverse economic and business developments
relating to the issuer or the industry in general. The market value of these
securities tends to be volatile. Issuers of below-investment grade quality debt
securities may be highly leveraged and may not have available to them more
traditional methods of financing. Below-investment grade quality securities are
less liquid than investment grade securities. There are fewer dealers in the

market for high-yield securities than for investment grade securities. The
prices quoted by different dealers may vary significantly and the spread between
the bid and ask price is generally much higher than for high-quality
instruments. Under adverse market or economic conditions, the secondary market
for high-yield securities may contract further, independent of any specific
adverse changes in the condition of a particular issuer, and these instruments
may become illiquid. As a result, the Fund could find it more difficult to sell
these securities or may be able to sell the securities only at prices lower than
if such securities were widely traded. Prices realized upon the sale of such
lower-rated or unrated securities under these circumstances may be less than the
prices used in calculating the Fund's net asset value.

OPTIONS AND FUTURES STRATEGIES RISK

Options and futures are financial contracts whose value depends on or is
derived from the value of an underlying asset, reference rate or index (or
relationship between two indexes). All-Star may use options and futures as a
substitute for taking a position in an underlying security or other asset and/or
as part of a strategy designed to reduce exposure to other risks. All-Star's use
of options and futures involves risks different from, and possibly greater than,
the risks associated with investing in securities and other traditional
investments. Options and futures are subject to a number of risks described
elsewhere in this Prospectus, such as illiquid securities risk, interest rate
risk and credit risk. They also involve the risk of mispricing or improper
valuation and the risk that changes in the value of the options and futures may
not correlate perfectly with the underlying asset, rate or index. If All-Star
invests in options and futures, it could lose more than the principal amount
invested. The use of options and futures also may affect the amount, character
and timing of recognition for tax purposes of the gains and losses All-Star
realizes in connection therewith. In addition, suitable options and futures
transactions may not be available in all circumstances, and there can be no
assurance that All-Star will engage in these transactions to reduce exposure to
other risks when that would be beneficial.

MANAGEMENT RISK

All-Star is subject to management risk because it is an actively managed
investment portfolio. BAIA and the Portfolio Managers will apply investment
techniques and risk analyses in selecting Portfolio Managers and making
investment decisions for All-Star, but there can be no guarantee that these will
produce the desired results.

GROWTH STOCK RISK

Under normal market conditions, BAIA will allocate between 40% and 60% of
All-Star's net assets to Portfolio Managers that utilize a "growth" approach to
investing. Over time, depending on market conditions, this allocation ma
increase or decrease. Growth stocks are stocks of companies believed to have
above-average potential for growth in revenue and earnings. Prices of growth
stocks may be more sensitive to changes in current or expected earnings than the
prices of other stocks. In certain market conditions, growth stocks may not
perform as well as value stocks or the stock market in general.

VALUE STOCK RISK

Under normal market conditions, BAIA will allocate between 40% and 60% of
All-Star's net assets to Portfolio Managers that utilize a "value" approach to
investing. Over time, depending on market conditions, this allocation may
increase or decrease. Value stocks are stocks of companies that may have
experienced adverse business or industry developments or may be subject to
special risks that have caused the stocks to be out of favor and, in a Portfolio
Manager's opinion, undervalued. If the Portfolio Manager's assessment of a
company's prospects is wrong, the price of the company's stock may fall or may
not approach the value the Portfolio Manager has placed on it.

FOREIGN SECURITIES RISK

Investments in foreign securities involve risks in addition to those of
investments in U.S. issuers. These risks include political and economic risks,
currency fluctuations, higher transaction costs, less liquidity and greater
volatility, delayed settlement, confiscatory taxation, withholding of taxes and
less stringent investor protection and disclosure of standards in some foreign
markets. These risks can make investments in foreign issuers more volatile and
potentially less liquid than investments in U.S. issuers.

TAX RISK

All-Star may invest in preferred securities, convertible securities, or
other securities the federal income tax treatment of the income from which may
not be clear or may be subject to recharacterization by the IRS.

The tax treatment of amounts All-Star designates as "qualified dividend
income" may be affected by IRS interpretations of the Code, and future changes
in the Code and the regulations thereunder. Moreover, unless legislative action
is taken, the favorable tax treatment of qualified dividend income, as well as
the 15% maximum federal income tax rate on individuals' net capital gain, will
expire for taxable years commencing after December 31, 2008. See "Tax Matters."
If All-Star has significant holdings in securities that generate qualified
dividend income, its share price may be volatile while Congress considers an
extension of that favorable tax treatment, depending on the anticipated outcome
of the legislation. There can be no assurance as to what portion, if any, of
All-Star's distributions will constitute qualified dividend income.

COUNTERPARTY RISK

All-Star may be subject to credit risk with respect to the counterparties
to certain options, futures and repurchase agreements entered into by All-Star.
If a counterparty becomes bankrupt or otherwise fails to perform its obligations
under a contract due to financial difficulties, All-Star may experience
significant delays in obtaining any recovery under the contract in a bankruptcy
or other reorganization proceeding. All-Star may obtain only a limited recovery
or may obtain no recovery in such circumstances.

RIGHTS AND WARRANTS RISK

Rights and warrants are subject to the same market risks as common stocks,
but are more volatile in price. Rights and warrants do not carry the right to
dividends or voting rights with respect to their underlying securities, and they
do not represent any rights in the assets of the issuer. An investment in rights
or warrants may be considered speculative. In addition, the value of a right or
warrant does not necessarily change with the value of the underlying security
and a right or warrant ceases to have value if it is not exercised prior to its
expiration date. The purchase of warrants or rights involves the risk that
All-Star could lose the purchase value of a right or warrant if the right to
subscribe for additional shares is not exercised prior to the rights' or
warrants' expiration. Also, the purchase of rights and warrants involves the
risk that the effective price paid for the right or warrant added to the
subscription price of the related security may exceed the value of the
subscribed security's market price such as when there is no movement in the
price of the underlying security.

ILLIQUID SECURITIES RISK

All-Star may invest up to 15% of its net assets in securities that, at the
time of investment, are illiquid. Illiquid securities are securities that are
not readily marketable and may include some restricted securities, which are
securities that may not be resold to the public without an effective
registration statement under the Securities Act of 1933 ("Securities Act") or,
if they are unregistered, may be sold only in a privately negotiated transaction
or pursuant to an exemption from registration. Illiquid securities involve the
risk that the securities will not be able to be sold at the time desired by
All-Star or at prices approximating the value at which the Fund is carrying the
securities on its books. The market price of illiquid securities generally is
more volatile than that of more liquid securities, which may adversely affect
the price that All-Star pays for or recovers upon the sale of illiquid
securities. Illiquid securities are also more difficult to value and BAIA's/the
Portfolio Managers' judgment may play a greater role in the valuation process.

MARKET DISRUPTION RISK

Certain events have a disruptive effect on the securities markets, such as
terrorist attacks (including the terrorist attacks in the United States on
September 11, 2001), war and other geopolitical events. All-Star cannot predict
the effects of similar events in the future on the U.S. economy. Securities of
mid-cap companies tend to be more volatile than securities of larger companies
so that these events and any actions resulting from them may have a greater
impact on the prices and volatility of securities of mid-cap companies than on
securities of larger companies.

INFLATION RISK

Inflation risk is the risk that the value of assets or income from
investment will be worth less in the future as inflation decreases the value of
money. As inflation increases, the real value of All-Star's shares and
distributions can decline.

DEFLATION RISK

Deflation risk is the risk that prices throughout the economy decline over
time, which may have an adverse effect on the market valuation of companies,
their assets and revenues. In addition, deflation may have an adverse effect on
the creditworthiness of issuers and may make issuer default more likely, which
may result in a decline in the value of All-Star's portfolio.

ANTI-TAKEOVER PROVISIONS

All-Star's Declaration of Trust and By-Laws have provisions (commonly
referred to as "anti-takeover provisions") which are intended to have the effect
of limiting the ability of other entities or persons to acquire control of
All-Star, to cause it to engage in certain transactions, or to modify its
structure. For instance, the affirmative vote of 75% of the shares of All-Star
is required to authorize All-Star's conversion from a closed-end to an open-end
investment company, unless such conversion is recommended by All-Star's Board,
in which event such conversion would only require the majority vote of
All-Star's shareholders, as defined in the 1940 Act. A similar shareholder vote
is required to authorize a merger, sale of a substantial part of the assets or
similar transactions with persons beneficially owning 5% or more of All-Star's
shares, unless approved by All-Star's Board under certain conditions. These
provisions cannot be amended without a similar super-majority vote. In addition,
All-Star's Board is divided into three classes, each of which has a term of
three years and only one of which is elected at each annual meeting of
shareholders. See "Description of Shares" and "Anti-Takeover Provisions of the
Declaration of Trust; Super-Majority Vote Requirement for Conversion to Open-End
Status."

MANAGEMENT OF ALL-STAR

TRUSTEES AND OFFICERS

The Board is responsible for the general oversight of All-Star's
operations, including the general oversight of BAIA's and the Portfolio
Managers' management of All-Star. The names and business addresses of the
Trustees and officers of All-Star and their principal occupations and other
affiliations during the past five years are set forth under "Trustees and
Officers" in the SAI.

BAIA

BAIA will serve as All-Star's Fund Manager. Subject to the general
supervision of the Board, BAIA will be responsible for determining All-Star's
overall investment strategy, including the allocation of All-Star's assets to
the Portfolio Managers. BAIA is an indirect, wholly owned subsidiary of Bank of
America Corporation. The principal executive offices of BAIA are located at 100
Federal Street, Boston, Massachusetts 02110. BAIA acts as the investment manager
to investment companies with aggregate assets of approximately as of June 30,
2005.

THE PORTFOLIO MANAGERS

The SAI contains additional information about the compensation and other
accounts managed by the individuals employed by each Portfolio Manager who are
responsible primarily for the day-to-day management of All-Star's investment
portfolio.

FIDUCIARY MANAGEMENT, INC.

Fiduciary Management, located at 100 East Wisconsin Ave., Suite 2200,
Milwaukee, Wisconsin 53202, was founded in 1980. Its two founding partners, Ted
D. Kellner and Donald S. Wilson, worked together for several years (1973-1980)
at a previous firm before founding Fiduciary Management in 1980. Fiduciary
Management has grown to 11 investment professionals and manages approximately $3
billion of assets for both institutional and high net worth individuals.
Fiduciary Management offers both equity and fixed-income management investment
strategies, which are rooted in fundamental research and follow a disciplined
value-oriented philosophy and process. Fiduciary Management is 100%
employee-owned. Ted Kellner owns a majority of the company.

An investment policy committee will manage the portion of the Fund
allocated to Fiduciary Management. All investment decisions will flow through
the committee, which is comprised of Ted D. Kellner, Donald S. Wilson, Patrick
J. English, Bladen J. Burns and John S. Brandser. Every member of the committee
has an equal vote. To be approved for investment, a company must receive a
unanimous vote of the investment committee. If one committee member votes
against the company, the company is placed on Fiduciary Management's monitor
list and a researcher is instructed to revisit any outstanding questions.

Ted D. Kellner, CFA, is Chairman, CEO and one of the co-founders of
Fiduciary Management. Mr. Kellner is primarily responsible for equity research
for a variety of industries and is involved in the client servicing of several
of the firm's institutional relationships. Mr. Kellner began his career as an
analyst for Brittingham, Inc. (1968-1972) and then served as a portfolio manager
at the Nicholas Company, Inc. (1973-1980). Mr. Kellner received a BBA degree
from the University of Wisconsin and is a member and Past President of the
Milwaukee Analysts Society. He has earned the right to use the CFA Institute
Chartered Financial Analyst designation.

Donald S. Wilson, CFA, is Vice Chairman, Chief Compliance Officer and one
of the co-founders of Fiduciary Management. In addition to his duties as the
Chief Compliance Officer, Mr. Wilson is involved in the fixed-income portfolios,
and in the client servicing of several of the firm's institutional
relationships. Mr. Wilson began his career as lending officer for the Northern
Trust Company (1967-1972) and then served as a portfolio manager at the Nicholas
Company, Inc. (1972-1980). Mr. Wilson received both a BA and MBA degree from
Northwestern University and he is a member of the Milwaukee Analysts Society. He
has earned the right to use the CFA Institute Chartered Financial Analyst
designation.

Patrick J. English, CFA, is President and Head of Equity Research of
Fiduciary Management. Mr. English joined Fiduciary Management in 1986 and serves
as the head of equity research. He is involved in coordinating the firm's
research process and he covers companies across a variety of industries. Mr.

English began his career as a research analyst with Dodge & Cox (1985-1986). Mr.
English received a BA degree from Stanford University and he is a member of the
Milwaukee Analysts Society. He has earned the right to use the CFA Institute
Chartered Financial Analyst designation.

Bladen J. Burns, CFA, is Senior Vice President of Fiduciary Management.
Mr. Burns joined Fiduciary Management in 2002 and is primarily responsible for
coordinating the marketing and client service efforts at Fiduciary Management.
He also works on special research projects. Mr. Burns began his career as an
Account Manager with Brown Brothers, Harriman (1992-1994) and then worked as a
Senior Analyst with the Wellesley Group Inc. (1994-1996). Most recently, he was
a Senior Vice President at Strong Capital Management, Inc. (1996-2002). Mr.
Burns received a BSBA degree from Boston University and he is a member of the
Milwaukee Analysts Society. He has earned the right to use the CFA Institute
Chartered Financial Analyst designation.

John S. Brandser, Senior Vice President and Chief Operating Officer,
joined Fiduciary Management in 1995. Mr. Brandser is primarily responsible for
managing the operations of the firm. In addition, he manages the fixed-income
portfolios for Fiduciary Management's clients. Prior to joining Fiduciary
Management, Mr. Brandser was a lending officer with Marshall & Illsley
Corporation (1985-1995). Mr. Brandser received a BA degree from the University
of Minnesota-Duluth.

M.A. WEATHERBIE & CO., INC.

M.A. Weatherbie is located at 265 Franklin Street, Boston, Massachusetts
02110. M.A. Weatherbie had approximately $2.2 billion under management as of
December 31, 2004.

Matthew A. Weatherbie, CFA is the person responsible for investing the
portion of the Fund allocated to M.A. Weatherbie. Mr. Weatherbie is the Chief
Investment Officer, President and Portfolio Manager of M.A. Weatherbie, which he
founded in December 1995. Mr. Weatherbie's prior experience as a portfolio
manager was at Putnam Investments from 1983-1995 where he managed the Putnam
Voyager Fund. Between 1973 and 1983, he was a securities analyst and then a
portfolio manager of MFS (Massachusetts Financial Services) Emerging Growth
Trust. He has earned the right to use the CFA Institute Chartered Financial
Analyst designation.

MAZAMA CAPITAL MANAGEMENT, INC.

Mazama is located at One Southwest Columbia Street, Suite 1500, Portland,
Oregon 97258. Mazama is the successor firm of Mazama Capital Management, LLC,
which was organized in 1997 in connection with the acquisition by such firm of
substantially all of the assets of Black & Company Asset Management, LLC, an
investment advisory firm founded in 1993. Mazama serves as an investment adviser
to certain pension and profit sharing plans, trusts, charitable organizations
and other institutional and private investors. Mazama specializes in small and
mid-cap growth equity portfolios. Mazama is an employee-owned firm. As of ,
Mazama managed $ .

The portion of All-Star's assets allocated to Mazama will be managed by an
Investment Team comprised of portfolio managers and research analysts. The
Investment Team is comprised of the following individuals:

Ronald A. Sauer, CEO/Chief Investment Officer/Senior Portfolio Manager.
Mr. Sauer is the founder of Mazama Capital Management, Inc. Prior to founding
Mazama in October 1997, Mr. Sauer was the President and Director of Research
from 1994 to 1997 of Black & Company, Inc., which he joined in 1983. Mr. Sauer
earned his BA Finance from the University of Oregon in 1980.

Stephen C. Brink, CFA, SVP/Portfolio Manager/Director of Research. Mr.
Brink is a co-founder of Mazama Capital Management. Prior to joining Mazama in
1997, he was the Chief Investment Officer from 1991 to 1997 of US Trust's
Pacific Northwest office, where he had been employed since 1984. Mr. Brink
earned his BS Business Administration from Oregon State University in 1977. He
has earned the right to use the CFA Institute Chartered Financial Analyst
designation.

Gretchen Novak, CFA, Associate Portfolio Manager, joined Mazama in 1999.
Mrs. Novak works out of the firm's New York research office and is responsible
for researching small & mid-cap growth consumer discretionary and consumer
staple companies. She also serves as an associate portfolio manager, supporting
Ron Sauer and Steve Brink. Formerly an Equity Analyst with Cramer Rosenthal
McGlynn, LLC, she specialized in small and mid-cap stocks with a focus on
consumer discretionary companies and secondary emphasis on consumer staples and
utility/energy service companies. Mrs. Novak earned her B.A. Business
Administration degree with concentration in finance from the University of
Washington in 1994, graduating cum laude and elected to Phi Beta Kappa and Beta
Gamma Sigma honor society. She has earned the right to use the CFA Institute
Chartered Financial Analyst designation.

Timothy P. Butler, Sector Portfolio Manager, joined Mazama in 1992. Mr.
Butler is an equity analyst concentrating on small & mid-cap growth financial
services and financial technology companies. Tim works closely with portfolio
manager Steve Brink in covering this sector. Mr. Butler worked most recently at
Pacific Crest Securities, where he was Senior Research Analyst specializing in
financial technology stocks. Mr. Butler completed his MBA at the University of
Texas in 1990, graduating cum laude, and earned a BA Business Administration
from Wichita State University in 1988, where he graduated summa cum laude and
was elected to the Beta Gamma Sigma honor society.

Michael D. Clulow, CFA, Sector Portfolio Manager. Mr. Clulow joined Mazama
in 2002. Mr. Clulow works out of the firm's New York research office,
specializing in research and analysis of small & mid-cap growth health care
companies, including biotech and emerging pharmaceutical companies. He has been
an investment analyst since 1995, most recently as Senior Analyst, Health care
IT & Pharmaceutical Outsourcing Sectors with UBS Warburg in New York, NY. Mr.
Clulow earned a BS in Finance at Miami University and an MBA with honors in
Finance and Economics at New York University's Leonard N. Stern School of
Business in 1996. He has earned the right to use the CFA Institute Chartered
Financial Analyst designation.

SASCO CAPITAL, INC.

Sasco is located at 10 Sasco Hill Road, Fairfield, CT 06824. Sasco is an
independent equity investment adviser incorporated in the State of Connecticut
in 1985 and registered with the SEC as an investment adviser in December 1985.
The firm is 100% employee owned and has no affiliations with any other
organization. The firm offers exclusively one product and has a 24-year record
of market performance. The founding principals of the firm have worked together
for over 24 years. Stability and continuity of the investment team and process
is a cornerstone of the firm's success. The firm has a diversified institutional
client base. Assets under management as of December 31, 2004 were $2.5 billion

Sasco's portfolio is managed on a team basis by Sasco's three Portfolio
Managers: Bruce D. Bottomley, Daniel L. Leary and Mark W. Helderman. Two out of
the three Portfolio Managers have to agree for a security to be purchased or
sold. Messrs. Bottomley and Leary are founders of the firm and prior to founding
Sasco both had worked as Senior Portfolio Managers at the IBM in-house pension
fund. Both Mr. Leary and Mr. Bottomley have extensive analytical experience
prior to their portfolio management experience. Mr. Leary worked as a Senior
Portfolio Analyst at GE Corporation and prior to that at Connecticut Mutual
Life. Mr. Leary has over 34 years of investment experience. He received his B.S.
degree from Boston College School of Management in 1971. Prior to IBM, Mr.
Bottomley, worked as a Senior Analyst at Manufacturers Hanover and prior to that
at the St. Paul Companies. Mr. Bottomley received his B.A. degree from Michigan
State University in 1970 and his MBA from the University of Chicago in 1972. Mr.
Bottomley has also earned the right to use the CFA Institute Chartered Financial
Analyst designation. Mr. Helderman joined Sasco Capital in 1997. He has over 19
years of investment experience. Prior to joining Sasco he was at McDonald &
Company Securities in Institutional Sales and prior to that at Roulston
Corporation. Mr. Helderman received his B.A. degree from the University of
Dayton, Ohio, in 1981.

SCHNEIDER CAPITAL MANAGEMENT CORPORATION

Schneider is located at 450 East Swedesford Road, Wayne, PA 19087.
Schneider, a registered investment adviser, was founded in 1996 by Arnold C.
Schneider III, CFA and is 100% employee-owned. Mr. Schneider may be deemed to be
a control person of Schneider by virtue of his aggregate ownership of more than
25% of the outstanding voting stock of Schneider. As of March 31, 2005,
Schneider managed approximately $4.0 billion in assets.

Mr. Schneider serves as President and Chief Investment Officer and manages
the portion of All-Star allocated to Schneider. Prior to founding Schneider, Mr.
Schneider was a Senior Vice President and Partner of the Wellington Management
Company. He has earned the right to use the CFA Institute Chartered Financial
Analyst designation. Mr. Schneider received a B.S. in Finance from the McIntire
School of Commerce of the University of Virginia.

THE FUND MANAGEMENT AGREEMENT AND THE PORTFOLIO MANAGEMENT AGREEMENTS

All-Star has a Fund Management Agreement with BAIA pursuant to which BAIA
provides the Portfolio Manager selection, evaluation, monitoring and rebalancing
services ("investment management services") described under "The Multi-Manager
Concept." Rebalancing involves reallocating the portfolio among the Portfolio
Managers so that the combined weightings of the Portfolio Managers remains

consistent with BAIA's targeted strategic allocation focus (growth vs. value)
and investment process. No single individual at BAIA is responsible for BAIA's
decisions with respect to the retention or replacement of the Portfolio
Managers.

BAIA is also responsible for the provision of administrative services to
All-Star, including the provision of office space, shareholder and broker-dealer
communications, compensation of officers of All-Star who are also officers or
employees of BAIA or its affiliates, and the supervision of transfer agency,
dividend disbursing, custodial and other services provided to All-Star. Certain
of BAIA's administrative responsibilities have been delegated to CMA.

Under All-Star's Portfolio Management Agreements with each of the
Portfolio Managers and BAIA, each Portfolio Manager has discretionary authority
(including for the selection of brokers and dealers for the execution of
All-Star's portfolio transactions) with respect to the portion of All-Star's
assets allocated to it by BAIA from time to time, subject to All-Star's
investment objective and policies, to the supervision and control of the Board,
and to instructions from BAIA. As described under the section entitled "The
Multi-Manager Concept," BAIA from time to time rebalances All-Star's investment
portfolio to adjust to the desired allocations. Although the Portfolio Managers'
activities are subject to general oversight by BAIA and the Board and officers
of All-Star, neither BAIA nor such Board and officers make day-to-day investment
decisions.

Although All-Star does not permit a Portfolio Manager to act or have a
broker-dealer affiliate act as broker for Fund portfolio transactions initiated
by it, All-Star's Portfolio Managers are permitted to place portfolio
transactions initiated by them with another Portfolio Manager or its
broker-dealer affiliate for execution on an agency basis, provided the
commission does not exceed the usual and customary broker's commission being
paid to other brokers for comparable transactions and is otherwise in accordance
with All-Star's procedures adopted under the 1940 Act.

Under All-Star's Fund Management Agreement with BAIA and its Portfolio
Management Agreements with the Portfolio Managers, All-Star pays BAIA a fund
management fee and an administrative fee, and BAIA in turn pays the fees of the
Portfolio Managers from the fund management fees paid to it. The Fund Management
Agreement provides that All-Star will pay the Fund Manager a monthly fund
management fee at an annual rate of 1.00% of All-Star's average weekly net
assets and a monthly administration fee at an annual rate of 0.20% of its
average weekly net assets. Under the Portfolio Management Agreements among
All-Star, BAIA and each Portfolio Manager BAIA pays the Portfolio Managers an
aggregate monthly portfolio management fee at an annual rate of 0.60% of its
average weekly net assets. The portfolio management fee rate paid to a
particular Portfolio Manager may differ from the aggregate fee.

Under All-Star's Pricing and Bookkeeping Agreement, CMA receives from
All-Star an annual fee paid monthly consisting of: (i) $25,000 plus 0.015% of
All-Star's net asset value for fund accounting services; (ii) $13,000 for
financial reporting; and a multi-manager fee of $3,000 for each Portfolio
Manager; provided that during any 12-month period, the aggregate amount of (i)

and (ii) shall not exceed $140,000. All-Star also pays additional fees for its
out-of-pocket expenses, including fees payable to third parties for pricing
services.

EXPENSES OF THE FUND

BAIA will (i) provide to All-Star the Portfolio Manager selection,
evaluation, monitoring and rebalancing services described herein, (ii) assume
responsibility for the administrative services described above, (iii) pay the
compensation of and furnish office space for the officers of All-Star who are
affiliated with BAIA, and (iv) pay the management fees of the Portfolio Managers
out of the fund management fee it receives from All-Star. All-Star will pay all
its expenses, other than those expressly assumed by BAIA. The expenses payable
by All-Star include, without limitation: management and administrative fees
payable to BAIA; pricing and bookkeeping fees payable to CMA; fees and expenses
of independent registered public accounting firm; fees for transfer agent and
registrar, dividend disbursing, custodian and portfolio recordkeeping services;
expenses in connection with the Automatic Dividend Reinvestment and Cash
Purchase Plan; expenses in connection with obtaining quotations for calculating
the value of All-Star's net assets; taxes (if any) and fees and expenses for
preparing All-Star's tax returns; brokerage fees and commissions; interest;
costs of trustee and shareholder meetings (including expenses of printing and
mailing proxy material therefor); expenses of printing and mailing reports to
shareholders; fees for filing reports with regulatory bodies and the maintenance
of All-Star's existence; membership dues for investment company industry trade
associations; legal fees; stock exchange listing fees and expenses; fees to
federal and state authorities for the registration of shares; fees and expenses
of Trustees who are not trustees, officers, employees or stockholders of BAIA or
its affiliates; insurance and fidelity bond premiums; and any extraordinary
expenses of a non-recurring nature.

Total organizational expenses are estimated to be $ . Total expenses of
the offering are estimated to be $ , or $ assuming full exercise of the
over-allotment option, which represents $ , or $ per share, respectively. The
Fund Manager has agreed to pay All-Star's organizational expenses and to
reimburse All-Star's offering expenses to the extent that the aggregate of
All-Star's organizational and offering expenses exceed $0. per share.

NET ASSET VALUE

All-Star will determine the net asset value of its shares as of the close
of regular session trading on the Exchange (normally 4:00 pm, Eastern time) on
each day on which there is a regular trading session on the Exchange. Net asset
value is computed by dividing the value of all of All-Star's assets (including
accrued interest and dividends), less all liabilities (including accrued
expenses and distributions declared but unpaid), by the total number of shares
outstanding. Expenses, including the fees payable to BAIA, are accrued daily.
Currently, the net asset values of shares of publicly traded closed-end
investment companies are published in Barron's, the Monday edition of The Wall
Street Journal and other publications.

Portfolio securities are valued pursuant to valuation and pricing
procedures adopted by the Board. Generally, current market values on securities
for which market quotations are readily available are obtained from independent
pricing services or brokers. A security listed or traded on a national

securities exchange is generally valued at the last quoted sale price on the
security's principal exchange. If there is no trading on a security's principal
exchange on the valuation date, the last sale on the other exchanges is
generally used. If a security is traded principally on the Nasdaq Stock Market
Inc., the Nasdaq Official Closing Price is used to value the security. Fair
valuation may be used when market quotations are not readily available. When
determining whether market quotations are readily available, consideration is
given to various indicators of reliability and validity of a security's market
quotations, including trading frequency, market density and the occurrence of
significant events (i.e., events that affect the value of a portfolio security
and occur since closing prices were established but before the Fund's net asset
value has been determined). The Audit Committee of the Board receives periodic
reports pursuant to the Fund's valuation and pricing procedures.

DISTRIBUTIONS

When All-Star's President determines that market conditions are favorable
and that other factors, including All-Star's levels of net income and net
realized and unrealized capital gains are appropriate, it intends to implement a
distribution policy. Until that time, All-Star will distribute income and
capital gains in accordance with the 1940 Act and the Code. All-Star does not
believe that this will affect the ability of BAIA or the Portfolio Managers to
manage All-Star's assets pursuant to the strategies discussed herein. See
"Investment Objective and Principal Investment Strategies."

Under the distribution policy, All-Star would pay distributions on its
shares totaling approximately 6% of its net asset value per year, payable in
semi-annual distributions of approximately 3% of its net asset value at the
close of regular trading on the Exchange on the Friday prior to each semi-annual
declaration date. These fixed distributions, which will not necessarily be
related to All-Star's net investment income or net realized capital gains or
losses, will be taxable in any taxable year, up to the amount of All-Star's
current and accumulated earnings and profits, as ordinary dividend income,
qualified dividend income (taxable at a maximum 15% federal income tax rate for
individuals), or long-term capital gain to the extent they reflect such income
or gain All-Star earned for that year. If, for any taxable year, the total
distributions made under All-Star's distribution policy exceed its net
investment income and net realized capital gains, the excess will be treated as
a non-taxable return of capital to each shareholder (up to the amount of the
shareholder's basis in his or her shares) and thereafter as gain from the sale
of shares. The amount treated as a non-taxable return of capital will reduce the
shareholder's adjusted basis in his or her shares, thereby increasing his or her
potential gain or reducing his or her potential loss on the subsequent sale of
those shares. The Board reserves the right to modify, terminate or delay
implementation of, this distribution policy if it determines that such
modification, termination or delay is in the best interest of shareholders after
taking into account all applicable factors. In any given year, the Board may
decide to distribute more than 6% of All-Star's net assets is necessary for tax
purposes. Shareholders should read any written disclosure accompanying
distribution carefully and should not assume that the source of any distribution
from the Fund is net profit.

If All-Star's 6% distribution policy results in distributions in excess of
its net investment income and net realized capital gains, such distributions
will decrease its total assets and increase its expense ratio to a greater

extent than would have been the case without that policy. In addition, in order
to make distributions under that policy, All-Star may have to sell portfolio
securities at times when the particular investment styles of its Portfolio
Managers would dictate not doing so.

Subject to maintaining status as a RIC (as defined under "Tax Matters"
below), All-Star may, in the discretion of the Board, retain for reinvestment,
and not distribute, net income or capital gain for any taxable year to the
extent that its net investment income and net realized gains exceed the amount
required to be distributed for that year under its distribution policy. Retained
net capital gain will be taxed to both All-Star and the shareholders as
long-term capital gains; however, each shareholder will be able to claim a
proportionate share of the federal income tax All-Star paid as a credit against
his or her own federal income tax liability and will be entitled to increase the
adjusted tax basis in his or her shares by the difference between the amount
taxed and the credit.

All-Star will pay its distributions to shareholders in the form of either
cash or Fund shares. In order to receive distributions in additional Fund
shares, a shareholder must participate in All-Star's Automatic Dividend
Reinvestment and Cash Purchase Plan; each shareholder that holds shares through
All Star's transfer agent will automatically be a participant therein, unless
such shareholder opts out of the Plan. See "Automatic Dividend Reinvestment and
Cash Purchase Plan" and "Tax Matters." Shares may be newly issued or purchased
in the market depending on a variety of factors. Investors that hold shares
through a brokerage firm, bank or other intermediary as the stockholder of
record may receive distributions in cash or Fund shares depending on procedures
of the intermediary. Investors should contact their intermediary for more
information.

All-Star and BAIA intend to apply to the SEC for an exemptive order to
permit All-Star to distribute capital gains as often as quarterly, in accordance
with the distribution policy. Although the SEC has granted this type of
exemptive relief in the past, there can be no assurance that the SEC will grant
the requested exemptive order. As of the date of this Prospectus, the SEC has
stopped processing such exemptive applications. There can be no assurance when,
if at all, the SEC will begin reviewing such applications.

You should consult a tax adviser about state, local and foreign taxes on
your distributions from All-Star. Dividends from All-Star's net investment
income will generally be taxable as ordinary income to the extent of its current
and accumulated earnings and profits, and any distributions by All-Star of the
excess of its net realized short-term capital gain over net realized long-term
capital loss will be taxable as ordinary income. The capital gain dividends
distributed by All-Star to individual shareholders of qualified dividend income
and net capital gain will qualify for the maximum 15% U.S. federal income tax
rate. See "Tax Matters."

AUTOMATIC DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN

Each All-Star shareholder that holds its shares through All-Star's
transfer agent will automatically be a participant in its Automatic Dividend
Reinvestment and Cash Purchase Plan (referred to in this section as the "Plan"),
unless the shareholder specifically elects otherwise by writing to the agent for

participants in the Plan, or by calling 1-800-542-3863. Shareholders who want to
receive their distributions in cash should elect not to participate in the Plan.

Shareholders whose shares are held in the name of a brokerage firm, bank
or other nominee will be able to participate in the Plan only if their brokerage
firm, bank or nominee is able to do so on their behalf. Shareholders
participating in the Plan through a brokerage firm may not be able to transfer
their shares to another brokerage firm and continue to participate in the Plan.

Under the Plan, EquiServe, Inc. (the "Plan Agent") will open an account
for each shareholder under the Plan in the same name in which such shareholder's
shares are registered. Whenever the Fund declares a dividend or other
distribution, registered owners who do not participate in the Plan will receive
cash and participants in the Plan will receive the equivalent in Fund shares.
The Fund shares will be acquired by the Plan Agent for the participants'
accounts, depending upon the circumstances described below, either (i) through
receipt of additional authorized but unissued shares from the Fund ("newly
issued shares") or (ii) by purchase of outstanding Fund shares on the
open-market (i.e., on the Exchange or elsewhere) ("open-market purchases"). If a
registered owner of shares elects not to participate in the Plan, it will
receive all dividends in cash paid by check mailed directly to it (or, if the
shares are held in street or other nominee name, then to such nominee) by
EquiServe, as dividend disbursing agent.

If, on the payment date for any dividend or distribution, the market value
per Fund share is greater than the net asset value per Fund share (such
condition being referred to herein as "market premium"), the Plan Agent will
invest the dividend or distribution amount in newly issued shares, including
fractional shares, on behalf of the participants. The number of newly issued
shares to be credited to each participant's account will be determined by
dividing the dollar amount of the dividend by the net asset value per Fund share
on the payment date; provided that, if the net asset value per Fund share is
less than 95% of the market price per Fund share on the payment date, the dollar
amount of the dividend will be divided by 95% of the market price per Fund share
on the payment date.

If, on the payment date for any dividend or distribution, the net asset
value per Fund share is greater than the market value per Fund share (such
condition being referred to herein as "market discount"), the Plan Agent will
reinvest the dividend or distribution amount in Fund shares acquired on behalf
of the participants in open-market purchases.

"Market value per Fund share" for these purposes will be the last sales
price on the Exchange on the applicable payment date or, if there are no sales
on that day, the mean between the closing bid and closing asked quotations for
that date.

In the event that Fund declares a distribution or a dividend payable in
cash, the Plan Agent will apply the amount payable on shares of each Plan
participant (less his or her pro rata share of brokerage commissions) to the
purchase on the open-market for his or her account. Such purchases will be made
on or shortly after the payment date for such distribution or dividend, and in
no event more than 30 days after such date except where temporary curtailment or
suspension of purchases is necessary to comply with applicable law. If the
market value per Fund share equals or exceeds Fund's net asset value, the Plan
Agent may cease purchasing shares and issue the remaining shares at net asset
value. In such an event, the number of shares received by participants will be
based on the weighted average of prices paid for shares purchased in the open
market and the price at which Fund issued the remaining shares.

Participants in the Plan have the option of making additional cash
payments on a monthly basis for investment in shares of the Fund purchased on
the open market. Barring suspension of trading, these voluntary cash payments
will be invested on or about the fifteenth day of each month, and voluntary
payments should be sent so as to be received by the Plan Agent no later than one
business day before the next investment date. A participant may withdraw a
voluntary cash payment by written notice received by the Plan Agent at least 48
hours before such payment is to be invested.

The Plan Agent maintains all shareholder accounts in the Plan and
furnishes written confirmations of all transactions in the account, including
information needed by shareholders for tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in the name of the
participant, and each shareholder's proxy will include those shares purchased or
received pursuant to the Plan.

In the case of shareholders such as banks, brokers or nominees that hold
shares for others who are the beneficial owners, the Plan Agent will administer
the Plan on the basis of the number of shares certified from time to time by the
record shareholder as representing the total amount registered in the record
shareholder's name and held for the account of beneficial owners who participate
in the Plan.

There is no charge to participants for reinvesting distributions pursuant
to the Plan. The Plan Agent's fees are paid by the Fund. There are no brokerage
charges with respect to shares issued directly by the Fund as a result of
dividends or other distributions declared payable in shares or in cash. However,
each participant bears a PRO RATA share of brokerage commissions incurred with
respect to the Plan Agent's open-market purchases in connection with the Plan.

With respect to purchases resulting from voluntary cash payments to the
Plan Agent by Plan participants for investment in additional Fund shares, the
Plan Agent will charge $ for each such purchase for a participant, plus a PRO
RATA share of the brokerage commissions on all such voluntary purchases by Plan
participants for such [month]. Brokerage charges for purchasing small amounts of

shares for individual accounts through the Plan are expected to be less than the
usual brokerage charges for such transactions, as the Plan Agent will be
purchasing shares for all participants in blocks and prorating the lower
commission thus attainable.

Shareholders may terminate their participation in the Plan by written
notice to the Plan Agent. Such termination will be effective immediately if
received not less than days prior to the record date for a dividend or other
distribution; otherwise it will be effective on the first business day after the
payment date of such dividend or other distribution. On termination,
participants may either have a confirmation for the Fund shares in their Plan
accounts delivered to them or have the Plan Agent sell such shares in the open
market and deliver the proceeds, less a $ fee plus brokerage commissions, to the
participant.

Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan.

Investors may obtain additional information about the Plan by calling the
Plan Agent at 1-800-542-3863. The Plan Agent's offices are located at .

CLOSED-END FUND STRUCTURE

All-Star is a newly organized, multi-managed, diversified, closed-end
management investment company (commonly referred to as a closed-end fund) with
no history of public trading. Closed-end funds differ from open-end management
investment companies (which are generally referred to as mutual funds) in that
closed-end funds generally list their shares for trading on a stock exchange and
do not redeem their shares at the request of the stockholder. This means that if
you wish to sell your shares of a closed-end fund you must trade them on the
market like any other stock at the prevailing market price at that time. In a
mutual fund, if the stockholder wishes to sell shares of the fund, the mutual
fund will redeem or buy back the shares at "net asset value." Also, mutual funds
generally offer new shares on a continuous basis to new investors, and
closed-end funds generally do not. The continuous inflows and outflows of assets
in a mutual fund can make it more difficult to manage the fund's investments. By
comparison, closed-end funds are generally able to stay more fully invested in
securities that are consistent with their investment objective and also have
greater flexibility to make certain types of investments and to use certain
investment strategies, such as leverage and investments in illiquid securities.

Shares of closed-end funds frequently trade at a discount to their net
asset value. If the shares were to trade at a substantial discount to net asset
value for an extended period of time, the Board may consider the repurchase of
its shares on the open market or in private transactions, the making of a tender
offer for such shares, or the conversion of All-Star to an open-end management
investment company. All-Star cannot assure you that its Board will decide to
take or propose any of these actions, or that share repurchases or tender offers
will actually reduce market discount. The conversion of All-Star to an open-end
mutual fund would require stockholder approval. If All-Star converted to an
open-end management investment company, its shares would no longer be listed on
the Exchange.

DESCRIPTION OF SHARES

All-Star's capitalization consists of an unlimited number of shares of
beneficial interest without par value. Each share represents an equal
proportionate beneficial interest in All-Star and, when issued and outstanding,
the shares will be fully paid and non-assessable. Shareholders would be entitled
to share pro rata in the net assets of All-Star available for distribution to
shareholders upon liquidation of All-Star.

Shareholders are entitled to one vote for each share held. All-Star's
shares do not have cumulative voting rights, which means that the holders of
more than 50% of the shares of All-Star voting for the election of Trustees can
elect all of the Trustees standing for election, and, in such event, the holders
of the remaining shares will not be able to elect any of such Trustees.

All-Star is a "Massachusetts business trust." Under Massachusetts law,
shareholders of such a trust may, under certain circumstances, be held
personally liable as partners for its obligations. However, All-Star's
Declaration of Trust contains an express disclaimer of shareholder liability for
the acts or obligations of All-Star and provides for indemnification and
reimbursement of expenses out of All-Star's property for any shareholder held
personally liable for the obligations of All-Star. Thus, the risk of a
shareholder incurring financial loss on account of an All-Star liability is
limited to circumstances in which both inadequate insurance existed and All-Star
itself was unable to meet its obligations from the liquidation of its portfolio
investments.

As of the date of this Prospectus, ____________ holds all the outstanding
shares of All-Star.

ANTI-TAKEOVER PROVISIONS OF THE DECLARATION OF TRUST;
SUPER-MAJORITY VOTE REQUIREMENT FOR
CONVERSION TO OPEN-END STATUS

All-Star's Declaration of Trust contains provisions (commonly referred to
as "anti-takeover" provisions) which are intended to have the effect of limiting
the ability of other entities or persons to acquire control of All-Star, to
cause it to engage in certain transactions or to modify its structure. The Board
is divided into three classes, each having a term of three years. On the date of
the annual meeting of shareholders (or special meeting in lieu thereof) in each
year the term of one class expires. This provision could delay for up to three
years the replacement of a majority of the Board. See "Trustees and Officers."
The affirmative vote or consent of the holders of 75% of the shares will be
required to authorize All-Star's conversion from a closed-end to an open-end
investment company unless such conversion is recommended by All-Star's Board, in
which event such a conversion would only require the majority vote of All-Star's
shareholders (as defined under "Investment Objective and Strategies" above).

In addition, the affirmative vote of the holders of 75% of All-Star's
shares will be required generally to authorize any of the following
transactions:

(i) All-Star's merger or consolidation with or into any other
corporation;

(ii) the issuance of any securities of All-Star to any person or
entity for cash;

(iii) the sale, lease or exchange of all or any substantial part of
All-Star's assets to any entity or person (except assets having an
aggregate fair market value of less than $1,000,000); or

(iv) the sale, lease or exchange to All-Star in exchange for
securities of All-Star of any assets of any entity or person (except
assets having an aggregate fair market value of less than $1,000,000)

if such corporation, person or entity is directly, or indirectly through
affiliates, the beneficial owner of 5% or more of the outstanding shares of
All-Star. (A 66-2/3% vote would otherwise be required for a merger or
consolidation or a sale, lease or exchange of all or substantially all of
All-Star's assets unless recommended by the Board, in which case only a majority
vote would be required). However, such 75% vote or consent will not be required
with respect to the foregoing transactions where the Board under certain
conditions approves the transaction. However, depending upon the transaction, a
different shareholder vote may nevertheless be required under Massachusetts law.

The foregoing super-majority vote requirements may not be amended except
with a similar super-majority vote of shareholders.

The Board also believes that the super-majority vote requirement for
conversion to an open-end investment company is in the best interest of All-Star
and its shareholders because it will allow All-Star to continue to benefit from
the advantages of its closed-end structure until such time that, based on
relevant factors including the then-current relationship of the market price of
All-Star's shares to their net asset value, the Board determines to recommend to
shareholders All-Star's conversion to an open-end investment company.

REPURCHASE OF SHARES; TENDER OFFERS;
CONVERSION TO OPEN-END

All-Star is a closed-end management investment company and as such its
shareholders will not have the right to cause All-Star to redeem their shares.
Instead, the shares will trade in the open market at a price that will be a
function of several factors, including dividend levels (which are in turn
affected by expenses), net asset value, call protection, dividend stability,
portfolio credit quality, relative demand for and supply of such shares in the
market, general market and economic conditions and other factors. Shares of a
closed-end management investment company may frequently trade at prices lower
than net asset value. The Board will regularly monitor the relationship between
the market price and net asset value of the shares. If the shares were to trade
at a substantial discount to net asset value for an extended period of time, the
Board may consider the repurchase of its shares on the open market or in private
transactions, the making of a tender offer for such shares, or the conversion of
All-Star to an open-end management investment company. All-Star cannot assure
you that its Board will decide to take or propose any of these actions, or that
share repurchases or tender offers will actually reduce market discount.

If All-Star converted to an open-end management investment company, it
would no longer be listed on the Exchange. In contrast to a closed-end
management investment company, shareholders of an open-end management investment

company may require the company to redeem their shares at any time (except in
certain circumstances as authorized by or under the 1940 Act) at their net asset
value, less any redemption charge that is in effect at the time of redemption.

Before deciding whether to take any action to convert All-Star to an
open-end management investment company, the Board would consider all relevant
factors, including the extent and duration of the discount, the liquidity of
All-Star's portfolio, the impact of any action that might be taken on All-Star
or its shareholders, and market considerations. Based on these considerations,
even if All-Star's shares should trade at a discount, the Board may determine
that, in the interest of All-Star and its shareholders, no action should be
taken.

TAX MATTERS

The following is a brief summary of the material federal tax
considerations affecting the purchase, ownership and disposition of shares of
All-Star and does not purport to be complete or to deal with all aspects of
federal taxation that may be relevant to shareholders in light of their
particular circumstances. The discussion is based on the Code, Treasury
regulations, court decisions, published positions of the IRS and other
applicable authorities, all as in effect on the date hereof and all of which are
subject to change or differing interpretations (possibly with retroactive
effect), and is limited to U.S. persons who hold All-Star shares as capital
assets for federal income tax purposes (generally, assets held for investment).
This summary does not address all of the federal income tax consequences that
may be relevant to a particular shareholder or to shareholders who may be
subject to special treatment under the federal income tax law. No ruling has
been or will be obtained from the IRS regarding any matter relating to the
shares. No assurance can be given that the IRS would not assert a position
contrary to any of the tax consequences described below. We have provided more
detailed information regarding the federal tax consequences of investing in
All-Star in the SAI. Prospective investors should consult their own tax advisers
as to the federal income tax consequences of the purchase, ownership and
disposition of the Shares, as well as the effects of state, local and non-U.S.
tax laws.

All-Star will elect to be, and intends to qualify each taxable year for
treatment as, a regulated investment company under the Code ("RIC"). If All-Star
so qualifies, it will be relieved of federal income tax on its net investment
income and net realized capital gains that it distributes to its shareholders.
(See "Distributions" regarding All-Star's authority to retain and pay taxes on,
and not distribute, net capital gain.)

All-Star will be subject to a nondeductible 4% federal excise tax to the
extent it fails to distribute (or be deemed to have distributed) by the end of
any calendar year an amount at least equal to the sum of (i) 98% of its ordinary
income for such year plus (ii) 98% of its capital gain net income (which is the
excess of its realized capital gains over its realized capital losses) for the
one-year period ending on October 31 of such year, after reduction by any
available capital loss carryforwards, plus (iii) 100% of any undistributed
ordinary income and capital gain net income from the prior year on which
All-Star paid no federal income tax. All-Star also expects to make sufficient
annual distributions to avoid being subject to that excise tax.

Under current law, if All-Star qualifies as a RIC for federal tax purposes
for a taxable year, it should not be liable for any income, corporate excise or
franchise tax in the Commonwealth of Massachusetts for that year.

If All-Star failed to qualify for treatment as a RIC for any taxable year,
it would be taxed as an ordinary corporation on the full amount of its taxable
income for that year without being able to deduct the distributions it makes to
its shareholders. In addition, the shareholders would treat all those
distributions, including distributions of net capital gain, as dividends to the
extent of All-Star's earnings and profits, taxable as ordinary income (except
that, for individual shareholders, the part thereof that is qualified dividend
income (as described below) would be taxable at the rate for net capital gain --
a maximum of 15%); those dividends would be eligible for the dividends-received
deduction available to corporations under certain circumstances. Furthermore,
All-Star could be required to recognize unrealized gains, pay substantial taxes
and interest and make substantial distributions before requalifying for
treatment as a RIC.

Distributions by All-Star from its net investment income and net realized
capital gains are subject to taxation whether received by shareholders in cash
or in additional shares of All-Star. Shareholders receiving a dividend or other
distribution in the form of newly issued shares will be treated for federal
income tax purposes as receiving a distribution in an amount equal to the fair
market value, determined as of the distribution date, of those shares. Those
shareholders will have a cost basis in each such newly issued share equal to its
fair market value on the distribution date. Certain distributions declared in
October, November or December of any year and paid in the following January will
be taxed to shareholders as if received on December 31 of that year, to the
extent they do not exceed All-Star's accumulated earnings and profits. The
taxability of distributions in excess thereof will be determined in the year
paid. In addition, certain other distributions made after the close of
All-Star's taxable year may be "spilled-back" and treated as paid by All-Star
(except for purposes of the Excise Tax) during that year. In that case,
shareholders will be taxed as having received those distributions in the taxable
year in which they were actually paid.

Dividends All-Star pays to shareholders from its investment company
taxable income (generally consisting of net investment income, the excess of net
short-term capital gain over net long-term capital loss and net gains and losses
from certain foreign currency transactions, if any, all determined without
regard to any deduction for dividends paid) are taxable as ordinary income,
except that dividends attributable to its qualified dividend income (I.E.,
dividends it receives on stock of most domestic and certain foreign corporations
with respect to which it satisfies certain holding period, debt-financing and
other restrictions), that generally are subject to federal income tax for
individual shareholders who satisfy those restrictions with respect to their
All-Star shares at the rate for net capital gain -- a maximum of 15%. A portion
of All-Star's dividends -- not exceeding the aggregate dividends it receives
from domestic corporations only -- also may be eligible for the
dividends-received deduction allowed to corporations, subject to similar holding
period, debt-financing and other restrictions. However, dividends a corporate
shareholder deducts pursuant to the dividends-received deduction are subject
indirectly to the federal alternative minimum tax. There can be no assurance as
to what portion, if any, of All-Star's distributions will constitute qualified
dividend income or be eligible for the dividends-received deduction.

Distributions to a shareholder from net capital gain are taxable as
long-term capital gains, at a maximum federal income tax rate of 15% for an
individual, regardless of how long the shareholder has held the shares, and are
not eligible for the dividends-received deduction. The foregoing special rules
relating to "qualified dividend income," as well as the 15% maximum federal
income tax rate on individuals' net capital gain, generally apply only through
the last taxable year beginning before January 1, 2009.

The benefits to individual shareholders of the reduced tax rates
applicable to qualified dividend income and net capital gain may be impacted by
the application of the alternative minimum tax.

If a shareholder holds shares of All-Star for six months or less, any loss
on the sale of the shares will be treated as a long-term, instead of a
short-term, capital loss to the extent of any capital gain distributions the
shareholder received with respect to the shares. In addition, if a shareholder
purchases All-Star shares (whether pursuant to the Automatic Dividend
Reinvestment and Cash Purchase Plan or otherwise) within 30 days before or after
selling other All-Star shares at a loss, all or part of that loss will not be
deductible and instead will increase the basis in the newly purchased shares.
Investors also should be aware that the price of All-Star shares at any time may
reflect the amount of a forthcoming dividend or capital gain distribution, so if
they purchase All-Star shares shortly before the record date for that
distribution, they will pay full price for the shares and receive some part of
the price back as a taxable distribution even though it represents in part a
return of invested capital.

All-Star must withhold and remit to the U.S. Treasury 28% of reportable
dividend and capital gain distributions otherwise payable to individuals and
certain other non-corporate All-Star shareholders for whom a taxpayer
identification number and certain required certificates are not on file with
All-Star or who, to All-Star's knowledge, have furnished an incorrect number
("back-up withholding"). In addition, All-Star is required to withhold at that
rate from distributions otherwise payable to any such shareholder who does not
certify to All-Star that the shareholder is not subject to back-up withholding
due to notification by the IRS that the shareholder has underreported interest
or dividend income. Backup withholding is not an additional tax. Any amounts
withheld under the backup withholding rules from distributions to a shareholder
may be credited against such shareholder's federal income tax liability, if any,
or refunded, provided that the required information is furnished to the IRS.

Information concerning the federal income tax status of All-Star dividends
and other distributions is mailed to shareholders annually.

Distributions and the transactions referred to above may be subject to
state and local income taxes, and the treatment thereof may differ from the
federal income tax treatment discussed herein. Shareholders are advised to
consult with their tax advisers concerning the application of state and local
taxes.

UNDERWRITING

All-Star is offering the shares of beneficial interest described in this
Prospectus through a number of underwriters. Banc of America Securities LLC is
the representative of the underwriters. All-Star has entered into a firm

commitment underwriting agreement with the representative. Subject to the terms
and conditions of the underwriting agreement, All-Star has agreed to sell to the
underwriters, and each underwriter has agreed to purchase, the number of shares
of common stock listed next to its name in the following table.

UNDERWRITER NUMBER OF SHARES
----------- ----------------

Banc of America Securities LLC........................

......................................................

...................................................... ----------------

Total........................................... ================

The underwriting agreement is subject to a number of terms and conditions
and provides that the underwriters must buy all of the shares if they buy any of
them. The underwriters will sell the shares to the public when and if the
underwriters buy the shares from All-Star.

The underwriters initially will offer the shares to the public at the
price specified on the cover page of this Prospectus. The underwriters may allow
a concession of not more than $ per share to selected dealers. The underwriters
may also allow, and those dealers may re-allow, a concession of not more than $
per share to some other dealers. If all the shares are not sold at the public
offering price, the underwriters may change the public offering price and the
other selling terms. The shares are offered subject to a number of conditions,
including:

o receipt and acceptance of the shares by the underwriters; and

o the underwriters' right to reject orders in whole or in part.

OVER-ALLOTMENT OPTION. All-Star has granted the underwriters an
over-allotment option to buy up to additional shares at the same price per share
as they are paying for the shares shown in the table above. These additional
shares would cover sales of shares by the underwriters which exceed the total
number of shares shown in the table above. The underwriters may exercise this
option at any time within 45 days after the date of this Prospectus. To the
extent that the underwriters exercise this option, each underwriter will
purchase additional shares from us in approximately the same proportion as it
purchased the shares shown in the table above. If purchased, the additional
shares will be sold by the underwriters on the same terms as those on which the
other shares are sold. All-Star will pay the expenses associated with the
exercise of this option.

DISCOUNT AND COMMISSIONS. The following table shows the per share and
total underwriting discounts and commissions to be paid to the underwriters by
All-Star. These amounts are shown assuming no exercise and full exercise of the
underwriters' option to purchase additional shares.

All-Star estimates that the expenses of the offering to be paid by it, not
including underwriting discounts and commissions, will be approximately $ .

PAID BY ALL-STAR
---------------------------------
NO EXERCISE FULL EXERCISE
----------- -------------

Per Share $ $
Total $ $

LISTING. All-Star intends to apply to list its shares on the New York
Stock Exchange, under the symbol "ASM." In order to meet one of the requirements
for listing our common stock on the New York Stock Exchange, the underwriters
have undertaken to sell 100 or more shares of our common stock to a minimum of
2,000 beneficial holders.

STABILIZATION. In connection with this offering, the underwriters may
engage in activities that stabilize, maintain or otherwise affect the price of
All-Star's shares including:

o stabilizing transactions;

o short sales;

o syndicate covering transactions;

o imposition of penalty bids; and

o purchases to cover positions created by short sales.

Stabilizing transactions consist of bids or purchases made for the purpose
of preventing or retarding a decline in the market price of our common stock
while this offering is in progress. Stabilizing transactions may include making
short sales of our common stock, which involves the sale by the underwriters of
a greater number of shares of common stock than they are required to purchase in
this offering, and purchasing shares of common stock from All-Star or on the
open market to cover positions created by short sales. Short sales may be
"covered" shorts, which are short positions in an amount not greater than the
underwriters' over-allotment option referred to above, or may be "naked" shorts,
which are short positions in excess of that amount. Syndicate covering
transactions involve purchases of our shares in the open market after the
distribution has been completed in order to cover syndicate short positions.

The underwriters may close out any covered short position either by
exercising their over-allotment option, in whole or in part, or by purchasing
shares in the open market. In making this determination, the underwriters will
consider, among other things, the price of shares available for purchase in the
open market compared to the price at which the underwriters may purchases shares
through the over-allotment option.

A naked short position is more likely to be created if the underwriters
are concerned that there may be downward pressure on the price of the common
stock in the open market that could adversely affect investors who purchased in

this offering. To the extent that the underwriters create a naked short
position, they will purchase shares in the open market to cover the position.

The representative also may impose a penalty bid on underwriters and
dealers participating in the offering. This means that the representative may
reclaim from any syndicate members or other dealers participating in the
offering the selling concession on shares sold by it and purchased by the
representative in stabilizing or short covering transactions.

These activities may have the effect of raising or maintaining the market
price of All-Star's shares or preventing or retarding a decline in the market
price of the shares. As a result of these activities, the price of the shares
may be higher than the price that otherwise might exist in the open market. If
the underwriters commence the activities, they may discontinue them at any time.
The underwriters may carry out these transactions on the Exchange, in the
over-the-counter market or otherwise.

LOCK-UP AGREEMENTS. All-Star has entered into a lock-up agreement with the
underwriters. Under this agreement, subject to exceptions, All-Star may not
issue any new shares (other than pursuant to the Plan) or publicly announce the
intention to do any of the foregoing, without the prior written consent of for a
period of 180 days from the date of this Prospectus. This consent may be given
at any time without public notice. In addition, during this 180 day period,
All-Star has also agreed not to file any registration statement for any shares
without the prior written consent of .

INDEMNIFICATION. All-Star, BAIA and each Portfolio Manager will indemnify
the underwriters against some liabilities, including liabilities under the
Securities Act of 1933. If such parties are unable to provide this
indemnification, they will contribute to payments the underwriters may be
required to make in respect of those liabilities.

ONLINE OFFERING. A Prospectus in electronic format may be made available
on the web sites maintained by one or more of the underwriters participating in
this offering. Other than the Prospectus in electronic format, the information
on any such web site, or accessible through any such web site, is not part of
the Prospectus. The representatives may agree to allocate a number of shares to
underwriters for sale to their online brokerage account holders. Internet
distributions will be allocated by the underwriters that will make internet
distributions on the same basis as other allocations. In addition, shares may be
sold by the underwriters to securities dealers who resell shares to online
brokerage account holders.

CONFLICTS/AFFILIATES. The underwriters and their affiliates have provided,
and may in the future provide, various investment banking, commercial banking
and other financial services to BAIA, the Portfolio Managers or All-Star for
which services they have received, and may in the future receive, customary
fees. In addition, BAIA is an indirect, wholly owned subsidiary of Bank of
America Corporation.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

State Street Bank and Trust Company, will serve as All-Star's custodian.
EquiServe Trust Company, N.A. will serve as All-Star's transfer and dividend
disbursing agent and registrar.

VALIDITY OF THE SHARES

Certain legal matters in connection with the shares offered in this
Prospectus have been passed upon by Kirkpatrick & Lockhart Nicholson Graham LLP,
Washington, DC, for All-Star and by Skadden, Arps, Slate, Meagher & Flom LLP for
the underwriters.

TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL INFORMATION

PAGE

Investment Objective and Policies....................................2

Investment Restrictions..............................................12

Investment Advisory and Other Services...............................14

Proxy Voting.........................................................16

Trustees and Officers................................................16

Portfolio Security Transactions......................................28

Taxes................................................................30

Principal Shareholders...............................................34

Financial Statements.................................................35

Appendix A-Proxy Voting Guidelines...................................36

_____________ Shares

[Issuer Logo]

Liberty All-Star Mid-Cap Fund

Shares of Beneficial Interest

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

Prospectus

, 2005

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

UNTIL , 2005, ALL DEALERS THAT BUY, SELL OR TRADE ALL-STAR'S SHARES MAY BE
REQUIRED TO DELIVER A PROSPECTUS, REGARDLESS OF WHETHER THEY ARE PARTICIPATING
IN THE OFFERING. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

================================================================================

SUBJECT TO COMPLETION
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION DATED , 2005

LIBERTY ALL-STAR MID-CAP FUND
STATEMENT OF ADDITIONAL INFORMATION

, 2005

Liberty All-Star Mid-Cap Fund ("All-Star") is a newly organized, multi-managed,
diversified closed-end management investment company. This Statement of
Additional Information ("SAI") is not a prospectus and should be read in
conjunction with the Prospectus of All-Star dated , 2005. A copy of the
Prospectus may be obtained, without charge, by contacting Banc of America
Investment Advisors, Inc., formerly known as Liberty Asset Management Company
("Advisor"), in writing at 100 Federal Street, Boston, Massachusetts 02110 or by
telephone at 1-800-542-3863.

TABLE OF CONTENTS PAGE
----------------- ----

Investment Objective and Policies 2

Investment Restrictions 12

Investment Advisory and Other Services 14

Proxy Voting 16

Trustees and Officers 16

Portfolio Security Transactions 28

Taxes 30

Principal Shareholders 34

Financial Statements 35

Appendix A-Proxy Voting Guidelines 36

NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION ("SEC") NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS SAI IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

THE INFORMATION IN THIS SAI IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL
THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SEC IS
EFFECTIVE. THIS SAI IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.

INVESTMENT OBJECTIVE AND POLICIES

A description of the investment objective of All-Star and the principal
types of securities in which it may invest is contained in the Prospectus under
"Investment Objective and Principal Investment Strategies." What follows is
additional information regarding securities in which All-Star may invest and
investment practices in which it may engage, and additional risks relating
thereto.

Bank Obligations
----------------

Bank obligations in which All-Star may invest include certificates of
deposit, bankers' acceptances, and fixed time deposits. Certificates of deposit
are negotiable certificates issued against funds deposited in a commercial bank
for a definite period of time and earning a specified return. Bankers'
acceptances are negotiable drafts or bills of exchange, normally drawn by an
importer or exporter to pay for specific merchandise, which are "accepted" by a
bank, meaning, in effect, that the bank unconditionally agrees to pay the face
value of the instrument on maturity. Fixed time deposits are bank obligations
payable at a stated maturity date and bearing interest at a fixed rate. Fixed
time deposits may be withdrawn on demand by the investor but may be subject to
early withdrawal penalties, which vary depending upon market conditions and on
the right to transfer a beneficial interest in a fixed time deposit to a third
party, although there is no market for such deposits.

Bank obligations include foreign bank obligations, including Eurodollar
and Yankee obligations. Eurodollar bank obligations are dollar certificates of
deposits and time deposits issued outside the U.S. capital markets by foreign
branches of U.S. banks and by foreign banks. Yankee obligations are
dollar-denominated obligations issued in the U.S. capital markets by foreign
banks. Foreign bank obligations are subject to the same risks that pertain to
domestic issues, notably credit risk and interest rate risk. Additionally,
foreign bank obligations are subject to many of the same risks as investments in
foreign securities (see "Foreign Equity Securities" below). Obligations of
foreign banks involve somewhat different investment risks than those affecting
obligations of U.S. banks, including the possibilities that their liquidity
could be impaired because of future political and economic developments of the
foreign bank's country, that their obligations may be less marketable than
comparable obligations of U.S. banks, that a foreign jurisdiction might impose
withholding taxes on interest income payable on those obligations, that foreign
deposits may be seized or nationalized, that foreign governmental restrictions
such as exchange controls may be adopted, which might adversely affect the
payment of principal and interest on those obligations and that the selection of
those obligations may be more difficult because there may be less publicly
available information concerning foreign banks or the accounting, auditing and
financial reporting standards, practices and requirements applicable to foreign
banks may differ from those applicable to U.S. banks. Foreign banks are not
generally subject to examination by any U.S. Government agency or
instrumentality.

Commercial Paper
----------------

A1 and Prime 1 are the highest commercial paper ratings issued by
Standard & Poors, a division of The McGraw-Hill Companies, Inc. ("S&P") and
Moody's Investors Service, Inc. ("Moody's"), respectively. Commercial paper
rated A1 by S&P has the following characteristics: (1) liquidity ratios are

- 2 -

adequate to meet cash requirements; (2) long-term senior debt is rated A or
better; (3) the issuer has access to at least two additional channels of
borrowing; (4) basic earnings and cash flow have an upward trend with an
allowance made for unusual circumstances; (5) typically, the issuer's industry
is well established and the issuer has a strong position within the industry;
and (6) the reliability and quality of management are unquestioned.

Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of 10 years; (7) financial strength of a parent company and the
relationships that exist with the issuer; and (8) recognition by the management
of obligations that may be present or may arise as a result of public interest
questions and preparation to meet such obligations.

Government Securities
---------------------

Government securities may be either direct obligations of the U.S.
Treasury or may be the obligations of an agency or instrumentality of the United
States.

TREASURY OBLIGATIONS. The U.S. Treasury issues a variety of marketable
securities that are direct obligations of the U.S. Government. These securities
fall into three categories - bills, notes, and bonds - distinguished primarily
by their maturity at time of issuance. Treasury bills have maturities of one
year or less at the time of issuance, while Treasury notes currently have
maturities of one to 10 years. Treasury bonds can be issued with any maturity of
more than 10 years.

OBLIGATIONS OF AGENCIES AND INSTRUMENTALITIES. Agencies and
instrumentalities of the U.S. Government are created to fill specific
governmental roles. Their activities are primarily financed through securities
whose issuance has been authorized by Congress. Agencies and instrumentalities
include the Export Import Bank, Federal Housing Administration, Government
National Mortgage Association, Tennessee Valley Authority, Banks for
Cooperatives, Farmers Home Administration, Federal Home Loan Banks, Federal
Intermediate Credit Banks, Federal Land Banks, Federal National Mortgage
Association, Federal Home Loan Mortgage Corp., U.S. Postal System, and Federal
Finance Bank. Although obligations of "agencies" and "instrumentalities" are not
direct obligations of the U.S. Treasury, payment of the interest or principal on
these obligations is generally backed directly or indirectly by the U.S.
Government. This support can range from backing by the full faith and credit of
the United States or U.S. Treasury guarantees to the backing solely of the
issuing instrumentality itself.

Foreign Equity Securities
-------------------------

Foreign equity securities include common stock and preferred stock,
including securities convertible into equity securities, issued by foreign
companies, American Depositary Receipts ("ADRs") and Global Depositary Receipts
("GDRs"). In determining whether a company is foreign, the Advisor will consider
various factors, including where the company is headquartered, where the
company's principal operations are located, where the company's revenues are
derived, where the principal trading market is located and the country in which

- 3 -

the company was legally organized. The weight given to each of these factors
will vary depending upon the circumstances.

Foreign equity securities, which are generally denominated in foreign
currencies, involve risks not typically associated with investing in domestic
securities. Foreign securities may be subject to foreign taxes that would reduce
their effective yield. Certain foreign governments levy withholding taxes
against dividend and interest income. Although in some countries a portion of
these taxes is recoverable, the unrecovered portion of any foreign withholding
taxes would reduce the income All-Star receives from its foreign investments.

Foreign investments involve other risks, including possible political
or economic instability of the country of the issuer, the difficulty of
predicting international trade patterns, and the possibility of currency
exchange controls. Foreign securities may also be subject to greater
fluctuations in price than domestic securities. There may be less publicly
available information about a foreign company than about a domestic company.
Foreign companies generally are not subject to uniform accounting, auditing, and
financial reporting standards comparable to those of domestic companies.

There is generally less government regulation of stock exchanges,
brokers, and listed companies abroad than in the United States. In addition,
with respect to certain foreign countries, there is a possibility of the
adoption of a policy to withhold (or increase existing withholding) tax on
dividends at the source, or of expropriation, nationalization, confiscatory
taxation, or diplomatic developments that could affect investments in those
countries. Finally, in the event of default on a foreign debt obligation, it may
be more difficult for All-Star to obtain or enforce a judgment against the
issuers of the obligation. All-Star will normally execute its portfolio
securities transactions on the principal stock exchange on which the security is
traded.

The considerations noted above regarding the risk of investing in
foreign securities are generally more significant for investments in emerging or
developing countries, such as countries in Eastern Europe, Latin America, South
America or Southeast Asia. These countries may have relatively unstable
governments and securities markets in which only a small number of securities
trade. Markets of developing or emerging countries may generally be more
volatile than markets of developed countries. Investment in these markets may
involve significantly greater risks, as well as the potential for greater gains.

ADRs in registered form are dollar-denominated securities designed for
use in the U.S. securities markets. ADRs are sponsored and issued by domestic
banks and represent and may be converted into underlying foreign securities
deposited with the domestic bank or a correspondent bank. ADRs do not eliminate
the risks inherent in investing in the securities of foreign issuers. By
investing in ADRs rather than directly in the foreign security, however,
All-Star may avoid currency risks during the settlement period for either
purchases or sales. There is a large, liquid market in the United States for
most ADRs. GDRs are receipts representing an arrangement with a major foreign
bank similar to that for ADRs. GDRs are not necessarily denominated in the
currency of the underlying security. While ADRs and GDRs will generally be
considered foreign securities for purposes of calculation of any investment
limitation placed on All-Star's exposure to foreign securities, these
securities, along with the securities of foreign companies traded on the NASDAQ

- 4 -

Stock Market will not be subject to any of the restrictions placed on All-Star's
ability to invest in emerging market securities.

Additional costs may be incurred in connection with All-Star's foreign
investments. Foreign brokerage commissions are generally higher than those in
the United States. Expenses may also be incurred on currency conversions when
All-Star moves investments from one country to another. Increased custodian
costs as well as administrative difficulties may be experienced in connection
with maintaining assets in foreign jurisdictions.

Foreign Fixed Income Securities
-------------------------------

Foreign fixed income securities include debt securities of foreign
corporate issuers, certain foreign bank obligations (see "Bank Obligations"),
obligations of foreign governments or their subdivisions, agencies and
instrumentalities, and obligations of supranational entities such as the World
Bank, the European Investment Bank, and the Asian Development Bank. Any of these
securities may be denominated in foreign currency or U.S. dollars, or may be
traded in U.S. dollars in the United States although the underlying security is
usually denominated in a foreign currency.

The risk of investing in foreign fixed income securities is the same as
the risks of investing in foreign equity securities. Additionally, investment in
sovereign debt (debt issued by governments and their agencies and
instrumentality) can involve a high degree of risk. The governmental entity that
controls the repayment of sovereign debt may not be available or willing to
repay the principal and/or interest when due in accordance with the terms of the
debt. A governmental entity's willingness or ability to repay principal and
interest due in a timely manner may be affected by, among other factors, its
cash flow situation, the extent of its foreign reserves, the availability of
sufficient foreign exchange on the date a payment is due, the relative size of
the debt service burden to the economy as a whole, the governmental entity's
policy toward the International Monetary Fund, and the political constraints to
which a governmental entity may be subject. Governmental entities may also
depend on expected disbursements from foreign governments, multilateral agencies
and others to reduce principal and interest arrearages on their debt. The
commitment on the part of these governments, agencies and others to make such
disbursements may be conditioned on a governmental entity's implementation of
economic reforms and/or economic performance and the timely service of such
debtor's obligations. Failure to implement such reforms, achieve such levels of
economic performance or repay principal or interest when due may result in the
cancellation of such third parties' commitments to lend funds to the
governmental entity, which may further impair such debtor's ability or
willingness to service its debts in a timely manner. Consequently, governmental
entities may default on their sovereign debt. Holders of sovereign debt
(including All-Star) may be requested to participate in the rescheduling of such
debt and to the extent further loans to governmental entities. There is no
bankruptcy proceeding by which sovereign debt on which governmental entities
have defaulted may be collected in whole or in part.

Currency Contracts
------------------

The value of All-Star's investments in foreign securities will
fluctuate as a result of changes in the exchange rates between the U.S. dollar
and the currencies in which the foreign securities or bank deposits held by
All-Star are denominated. To reduce or limit exposure to changes in currency
exchange rates (referred to as "hedging") All-Star may enter into forward
currency exchange contracts that, in effect, lock in a rate of exchange during

- 5 -

the period of the forward contracts. Forward contracts are usually entered into
with currency traders, are not traded on securities exchanges, and usually have
a term of less than one year, but can be renewed. A default on a forward
contract would deprive All-Star of unrealized profits or force All-Star to cover
its commitments for purchase or sale of currency, if any, at the market price.
All-Star will enter into forward contracts only for hedging purposes and not for
speculation. If required by the Investment Company Act of 1940, as amended (the
"1940 Act"), or the SEC, All-Star may "cover" its commitment under forward
contracts by segregating cash or liquid securities with All-Star's custodian in
an amount not less than the current value of its total assets committed to the
consummation of the contracts. Under normal market conditions, no more than 25
percent of All-Star's assets may be committed to the consummation of currency
exchange contracts.

All-Star may also purchase or sell foreign currencies on a "spot"
(cash) basis or on a forward basis to lock in the U.S. dollar value of a
transaction at the exchange rate or rates then prevailing. All-Star will use
this hedging technique in an attempt to insulate itself against possible losses
resulting from a change in the relationship between the U.S. dollar and the
relevant foreign currency during the period between the date a security is
purchased or sold and the date on which payment is made or received.

Hedging against adverse changes in exchange rates will not eliminate
fluctuation in the prices of All-Star's portfolio securities or prevent loss if
the prices of those securities decline. In addition, the use of forward
contracts may limit potential gains from an appreciation in the U.S. dollar
value of a foreign currency. Forecasting short-term currency market movements is
very difficult, and there is no assurance that short-term hedging strategies
used by All-Star will be successful.

Repurchase Agreements
---------------------

All-Star may invest in repurchase agreements, which are agreements by
which All-Star purchases a security and simultaneously commits to resell that
security to the seller (a commercial bank or securities dealer) at a stated
price within a number of days (usually not more than seven) from the date of
purchase. The resale price reflects the purchase price plus a rate of interest
that is unrelated to the coupon rate or maturity of the purchased security.
Repurchase agreements may be considered loans by All-Star collateralized by the
underlying security. The obligation of the seller to pay the stated price is in
effect secured by the underlying security. The seller will be required to
maintain the value of the collateral underlying any repurchase agreement at a
level at least equal to the price of the repurchase agreement. In the case of
default by the seller, All-Star could incur a loss. In the event of a bankruptcy
proceeding commenced against the seller, All-Star may incur costs and delays in
realizing upon the collateral. All-Star will enter into repurchase agreements
only with those banks or securities dealers that are deemed creditworthy
pursuant to criteria adopted by the Advisor. There is no limit on the portion of
All-Star's assets that may be invested in repurchase agreements with maturities
of seven days or less.

Borrowing
---------

All-Star may borrow from banks for temporary administrative purposes.
This borrowing may be unsecured. Provisions of the 1940 Act require All-Star to
maintain continuous asset coverage (that is, total assets including borrowings,

- 6 -

less liabilities exclusive of borrowings) of 300 percent of the amount borrowed,
with an exception for borrowings not in excess of 5 percent of All-Star's total
assets made for temporary administrative purposes. Any borrowings for temporary
administrative purposes in excess of 5 percent of All-Star's total assets are
subject to continuous asset coverage. If the 300 percent asset coverage declines
as a result of market fluctuations or other reasons, All-Star may be required to
sell some of its portfolio holdings within three days to reduce the debt and
restore the 300 percent asset coverage. Notwithstanding the above, All-Star may
not borrow in excess of 5 percent of its assets at any time. All-Star also may
enter into certain transactions, including reverse repurchase agreements,
mortgage dollar rolls, and sale-buybacks, that can be viewed as constituting a
form of borrowing or financing transaction by All-Star. To the extent All-Star
covers its commitment under such transactions (or economically similar
transaction) by the segregation of assets determined in accordance with
procedures adopted by its Board of Trustees ("Board"), equal in value to the
amount of All-Star's commitment to repurchase, such an agreement will not be
considered a "senior security" by All-Star and therefore will not be subject to
the 300 percent asset coverage requirement otherwise applicable to borrowings by
All-Star. Borrowing will tend to exaggerate the effect on net asset value of any
increase or decrease in the market value of All-Star's portfolio. Money borrowed
will be subject to interest costs that may or may not be recovered by
appreciation of the securities purchased. All-Star also may be required to
maintain minimum average balances in connection with such borrowing or to pay a
commitment or other fee to maintain a line of credit; either of these
requirements would increase the cost of borrowing over the stated interest rate.

Illiquid Securities
-------------------

Illiquid securities are securities that may not be sold or disposed of
in the ordinary course of business within seven days at approximately the price
used to determine All-Star's net asset value. Under current interpretations of
the Staff of the SEC, the following instruments in which All-Star may invest
will be considered illiquid: (1) repurchase agreements maturing in more than
seven days; (2) restricted securities (securities whose public resale is subject
to legal restrictions, except as described in the following paragraph); (3)
options, with respect to specific securities, not traded on a national
securities exchange that are not readily marketable; and (4) any other
securities in which All-Star may invest that are not readily marketable.

Notwithstanding the restrictions applicable to investments in illiquid
securities, All-Star may purchase without limit certain restricted securities
that can be resold to qualifying institutions pursuant to a regulatory exemption
under Rule 144A ("Rule 144A securities"). If a dealer or institutional trading
market exists for Rule 144A securities, such securities are deemed to be liquid
and thus exempt from All-Star's liquidity restrictions.

Under the supervision of the Board, the Advisor determines the
liquidity of All-Star's portfolio securities, including Rule 144A securities,
and, through reports from the Advisor, the Board monitors trading activity in
these securities. In reaching liquidity decisions, the Advisor will consider,
among other things, the following factors: (1) the frequency of trades and
quotes for the security; (2) the number of dealers willing to purchase or sell
the security and the number of other potential purchasers; (3) dealer
undertakings to make a market in the security; and (4) the nature of the
security and the marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers, and the procedures for the transfer).
If institutional trading in Rule 144A securities declines, All-Star's liquidity

- 7 -

could be adversely affected to the extent it is invested in such securities.

Preferred Stock
---------------

All-Star may invest in preferred stock. Unlike interest payments on
debt securities, dividends on preferred stock are generally payable at the
discretion of the issuer's board of directors. Preferred shareholders may have
certain rights if dividends are not paid but generally have no legal recourse
against the issuer. Shareholders may suffer a loss of value if dividends are not
paid. The market prices of preferred stocks are generally more sensitive to
changes in the issuer's creditworthiness than are the prices of debt securities.

Convertible Securities and Warrants
-----------------------------------

Convertible debentures are interest-bearing debt securities, typically
unsecured, that represent an obligation of the issuer providing the owner with
claims to the issuer's earnings and assets before common and preferred stock
owners, generally on par with unsecured creditors. If unsecured, claims of
convertible debenture owners would be inferior to claims of secured debt
holders. Convertible preferred stocks are securities that represent an ownership
interest in a corporation providing the owner with claims to the corporation's
earnings and assets before common stock owners, but after bond owners.
Investments by All-Star in convertible debentures or convertible preferred stock
would be a substitute for an investment in the common stock into which the
debentures or preferred stock are convertible if available in quantities
necessary to satisfy All-Star's investment needs (for example, in the case of a
new issuance of convertible securities) or where, because of financial market
conditions, the conversion price of the convertible security is comparable to
the price of the underlying common stock, in which case a preferred position
with respect to the corporation's earnings and assets may be preferable to
holding common stock.

Warrants are options to buy a stated number of underlying securities at
a specified price any time during the life of the warrants. The securities
underlying these warrants will be the same types of securities that All-Star
will invest in to achieve its investment objective of capital appreciation. The
purchaser of a warrant expects the market price of the underlying security will
exceed the purchase price of the warrant plus the exercise price of the warrant,
thus resulting in a profit. If the market price never exceeds the purchase price
plus the exercise price of the warrant before the expiration date of the
warrant, the purchaser will suffer a loss equal to the purchase price of the
warrant.

Investments in Small and Unseasoned Companies
---------------------------------------------

An unseasoned company is an entity with a limited operating history.
Unseasoned and small companies may have unprofitable operating histories,
limited financial resources, and inexperienced management. In addition, they
often face competition from larger or more established firms that have greater
resources. Securities of small and unseasoned companies are frequently traded in
the over-the-counter market or on regional exchanges where low trading volumes
may result in erratic or abrupt price movements. To dispose of these securities,
All-Star may need to sell them over an extended period or below the original
purchase price. Investments by All-Star in these small or unseasoned companies
may be regarded as speculative.

- 8 -

Zero-Coupon and Pay-in-Kind Securities
--------------------------------------

A zero-coupon security has no cash coupon payments. Instead, the issuer
sells the security at a substantial discount from its maturity value. The
interest equivalent received by the investor from holding this security to
maturity is the difference between the maturity value and the purchase price.
Pay-in-kind securities are securities that pay interest in either cash or
additional securities, at the issuer's option, for a specified period. The price
of pay-in-kind securities is expected to reflect the market value of the
underlying accrued interest since the last payment. Zero-coupon and pay-in-kind
securities are more volatile than cash pay securities. All-Star accrues income
on these securities prior to the receipt of cash payments. All-Star intends to
distribute substantially all of its income to its shareholders to qualify for
pass-through treatment under the tax laws and may, therefore, need to use its
cash reserves to satisfy distribution requirements.

Options and Futures Strategies
------------------------------

The effective use of options and future strategies is dependent, among
other things, on All-Star's ability to terminate options and futures positions
at times when it or its Portfolio Managers deem it desirable to do so. Although
All-Star will not enter into an option or futures position unless it believes
that a liquid secondary market exists for such option or future, there is no
assurance that All-Star will be able to effect closing transactions at any
particular time or at an acceptable price. All-Star generally expects that its
options and futures transactions will be conducted on recognized securities
exchanges. In certain instances, however, All-Star may purchase and sell options
in the over-the-counter market. All-Star's ability to terminate option positions
established in the over-the-counter market may be more limited than in the case
of exchange-traded options and may also involve the risk that securities dealers
participating in such transactions would fail to meet their obligations to
All-Star. All-Star may not purchase or sell future contracts and related options
if immediately thereafter the sum of the amount of initial margin deposits on
All-Star's existing futures and premiums paid for such related options would
exceed 5% of the market value of All-Star's net assets. Such limitation,
however, will not limit All-Star's loss on such contracts and options, which is
potentially unlimited.

Writing Covered Put and Call Options on Securities
--------------------------------------------------

All-Star may write covered call options and covered put options on
optionable securities of the types in which it is permitted to invest from
time-to-time as its Portfolio Managers determine is appropriate in seeking to
attain its objective. Call options written by All-Star give the holder the right
to buy the underlying securities from All-Star at a stated exercise price; put
options give the holder the right to sell the underlying security to All-Star at
a stated price.

All-Star may write only covered options, which means that, so long as
All-Star is obligated as the writer of a call option, it will own the underlying
securities subject to the option (or comparable securities satisfying the cover
requirements of securities exchanges). In the case of put options, All-Star will
maintain in a separate account cash or short-term U.S. Government Securities
with a value equal to or greater than the exercise price of the underlying
securities. All-Star may also write combinations or covered puts and calls on
the same underlying security.

- 9 -

All-Star will receive a premium from writing a put or call option,
which will increase All-Star's return if the option expires unexcercised or is
closed out at a profit. The amount of the premium will reflect, among other
things, the relationship of the market price of the underlying security to the
exercise price of the option, the term of the option and the volatility of the
market price of the underlying security. By writing a call option, All-Star
limits its opportunity to profit from any increase in the market value of the
underlying security above the exercise price of the option. By writing a put
option, All-Star assumes the risk that it may be required to purchase the
underlying security for an exercise price higher than its then current market
value, resulting in a potential capital loss if the purchase price exceeds the
market value plus the amount of the premium received, unless the security
subsequently appreciates in value.

All-Star may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it purchases
an option having the same terms as the option written. All-Star will realize a
profit or loss from such transaction if the cost of such transaction is less or
more than the premium received from the writing of the option. In the case of a
put option, any loss so incurred may be partially or entirely offset by the
premium received from a simultaneous or subsequent sale of a different put
option. Because increases in the market price of a call option will generally
reflect increases in the market price of the underlying security, any loss
resulting from the repurchase of a call option is likely to be offset in whole
or in part by unrealized appreciation of the underlying security owned by
All-Star.

Writing covered put and call options is not expected to be a principal
strategy of All-Star.

Purchasing Put and Call Options on Securities
---------------------------------------------

All-Star may purchase put options to protect its portfolio holdings in
an underlying security against a decline in market value. Such hedge protection
is provided during the use of the put options since All-Star, as holder of the
put option, is able to sell the underlying security at the put exercise price
regardless of any decline in the underlying security's market price. In order
for a put option to be profitable, the market price of the underlying security
must decline sufficiently below the exercise price to cover the premium and
transaction costs. By using put options in this manner, All-Star will reduce any
profit it might otherwise have realized in its underlying security by the
premium paid for the put option and by transaction costs.

All-Star may also purchase call options to hedge against an increase in
prices of securities that it wants ultimately to buy. Such hedge protection is
provided during the life of the call option since All-Star, as holder of the
call option, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs. By using call options in this manner, All-Star will reduce
any profit it might have realized had it bought the underlying security at the
time it purchased the call option by the premium paid for the call option and by
transaction costs.

Purchase and Sale of Options and Futures on Stock Indices
---------------------------------------------------------

All-Star may purchase and sell options on stock indices and stock index
futures as a hedge against movements in the equity markets.

- 10 -

Options on stock indices are similar to options on specific securities
except that, rather than the right to take or make delivery of the specific
security at a specified price, an option on a stock index gives the holder the
right to receive, upon exercise of the option, an amount of cash if the closing
level of that stock index is greater than, in the case of a call, or less than,
in the case of a put, the exercise price of the option. This amount of cash is
equal to the difference between the closing price of the index and the exercise
price of the option expressed in dollars times a specified multiple. The writer
of the option is obligated, in return for the premium received, to make delivery
of this amount. Unlike options on specific securities, all settlements of
options on stock indices are in cash and gain or loss depends on general
movements in the stocks included in the index rather than price movements in
particular stocks.

A stock index futures contract is an agreement in which one party
agrees to deliver to the other an amount of cash equal to a specific dollar
amount times the difference between the value of a specific stock index at the
close of the last trading day of the contract and the price at which the
agreement is made. No physical delivery of securities is made.

If a Portfolio Manager of All-Star expects general stock market prices
to rise, it might purchase a call option on a stock index or a futures contract
on that index as a hedge against an increase in prices of particular equity
securities it wants ultimately to buy. If in fact the stock index does rise, the
price of the particular equity securities intended to be purchased may also
increase, but that increase would be offset in part by the increase in the value
of All-Star's index option or futures contract resulting from the increase in
the index. If, on the other hand, the Portfolio Manager expects general stock
market prices to decline, it might purchase a put option or sell a futures
contract on the index. If that index does in fact decline, the value of some or
all of the equity securities in All-Star's portfolio may also be expected to
decline, but that decrease would be offset in part by the increase in the value
of All-Star's position in such put option or future. All-Star may purchase call
options on a stock index or a futures contracts on that index to enable a newly
appointed Portfolio Manager to gain immediate exposure to the underlying
securities market pending the investment in individual securities of the portion
of All-Star's portfolio assigned to it.

In connection with transactions in stock index options, futures and
related options, All-Star will be required to deposit as "initial margin" an
amount of cash and short-term U.S. Government Securities equal to from 5% to 8%
of the contract amount. Thereafter, subsequent payments (referred to as
"variation margin") are made to and from the broker to reflect changes in the
value of the futures contract.

Options on Stock Index Futures Contracts
----------------------------------------

All-Star may purchase and write call and put options on stock index
futures contracts. All-Star may use such options on futures contracts in
connection with its hedging strategies in lieu of purchasing and writing options
directly on the underlying securities or stock indices or purchasing and selling
the underlying futures. For example, All-Star may purchase put options or write
call options on stock index futures, rather than selling futures contracts, in
anticipation of a decline in general stock market prices, or purchase call
options or write put options on stock index futures, rather than purchasing such
futures, to hedge against possible increases in the price of equity securities
which All-Star intends to purchase.

- 11 -

Risk Factors in Options and Futures Transactions
------------------------------------------------

The effective use of options and futures strategies is dependent, among
other things, on All-Star's ability to terminate options and futures positions
at times when its Portfolio Managers deem it desirable to do so. Although
All-Star will not enter into an option or futures position unless its Portfolio
Managers believe that a liquid secondary market exists for such option or
future, there is no assurance that All-Star will be able to effect closing
transactions at any particular time or at an acceptable price. All-Star
generally expects that its option and futures transactions will be conducted on
recognized securities exchanges. In certain instances, however, All-Star may
purchase and sell options in the over-the-counter market. All-Star's ability to
terminate option positions established in the over-the-counter market may be
more limited than in the case of exchange-traded options and may also involve
the risk that securities dealers participating in such transactions would fail
to meet their obligations to All-Star.

The use of options and futures involves the risk of imperfect
correlation between movements in options and future prices and movements in the
price of securities that are the subject of the hedge. Such correlation,
particularly with respect to options on stock indices and stock index futures,
is imperfect, and such risk increases as the composition of All-Star's portfolio
diverges from the composition of the relevant index. The successful use of these
strategies also depends on the ability of the Portfolio Manager to correctly
forecast interest rate or general stock market price movements.

Regulatory Matters
------------------

All-Star will conduct its purchases and sales of futures contracts and
writing of related options transactions in accordance with the rules,
regulations and any exemptions promulgated by the Commodity Futures Trading
Commission ("CFTC") and the SEC with respect to such transactions. All-Star's
use of futures and options strategies also may be limited by tax considerations.
See "Taxes."

INVESTMENT RESTRICTIONS

Unless otherwise indicated, any investment policy or limitation that
involves a maximum percentage of securities or assets will not be considered
exceeded unless the percentage limitation is exceeded immediately after, and
because of, a transaction by All-Star.

Fundamental Investment Restrictions.
------------------------------------

The following investment restrictions have been adopted for All-Star as
fundamental policies and may be changed only by a majority vote (as defined
under "Investment Objective, Policies and Risks" in the Prospectus) of
All-Star's outstanding shares.

All-Star may not:

1) COMMODITIES. Purchase or sell physical commodities; except
that All-Star may purchase and sell foreign currency, futures
contracts, options, forward contracts, swaps, caps, floors,
collars and other financial instruments.

- 12 -

2) INDUSTRY CONCENTRATION. Concentrate investments in any
industry. However, All-Star may (a) invest up to 25 percent of
the value of the total assets in any one industry and (b)
invest for temporary defensive purposes up to 100 percent of
the value of the total assets in securities issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities.

3) REAL ESTATE. Purchase or sell real estate or any interest
therein, except that All-Star may invest in securities issued
or guaranteed by corporate or governmental entities secured by
real estate or interests therein, such as mortgage
pass-throughs and collateralized mortgage obligations, or
issued by companies that invest in real estate or interests
therein.

4) LENDING. Lend any security or make any other loan, except to
the fullest extent permitted under the 1940 Act or under any
exemptive order granted under the 1940 Act, and provided that
All-Star may (a) purchase debt obligations consistent with its
investment objectives and policies and (b) enter into
repurchase agreements.

5) UNDERWRITING. Underwrite securities of other issuers, except
that All-Star may acquire portfolio securities under
circumstances where, if the securities are later publicly
offered or sold by All-Star, it might be deemed to be an
underwriter for purposes of the Securities Act of 1933.

6) BORROWING. Borrow money except to the extent permitted by the
1940 Act or otherwise permitted by regulatory authority having
jurisdiction from time to time or under any exemptive order
granted under the 1940 Act.

7) SENIOR SECURITIES. Issue senior securities, except as
permitted under the 1940 Act.

8) INVESTMENTS IN ANY ONE ISSUER. Purchase securities of any one
issuer if the purchase, at the time thereof, would cause more
than 5% of the value of the total assets of All-Star at market
value to be invested in the securities of that issuer or cause
All-Star to hold more than 10% of an issuer's outstanding
voting securities (other than obligations of the U.S.
Government and its agencies and instrumentalities or
securities of another regulated investment company), with
respect to 75% of the assets of All-Star.

Non-Fundamental Investment Restrictions.
----------------------------------------

The following is a list of non-fundamental investment restrictions
applicable to All-Star. These restrictions can be changed by the Board without
shareholder approval.

1) All-Star may not purchase or otherwise acquire any security
if, as a result, more than 15% of its net assets would be
invested in securities that are illiquid.

2) Under normal circumstances, All-Star will invest at least 80%
of its net assets plus the amount of any borrowings for
investment purposes, in mid-cap equity securities (as
described below).

- 13 -

3) All-Star will not invest more than 25% of its net assets in
securities issued by foreign (non-U.S.) issuers.

Other Information Regarding Investment Restrictions.
----------------------------------------------------

Currently, under the 1940 Act, All-Star generally is not permitted to
borrow money in excess of 33 1/3% of All-Star's total assets (including the
amount borrowed) minus liabilities (other than the amount borrowed), except that
All-Star may borrow up to an additional 5% of its total assets for temporary
purposes.

Currently, under the 1940 Act, All-Star generally is not permitted to
lend any security or make any other loan if, as a result, more than 33 1/3% of
All-Star's total assets would be lent to other parties.

Equity securities include, without limitation, common stocks,
securities convertible into common stocks, including convertible bonds and
preferred stocks, and securities having common stock characteristics, such as
rights and warrants to purchase equity securities. All-Star will not change its
restriction regarding investment in equity securities unless All-Star provides
shareholders with prior written notice.

Mid-cap securities are deemed to be securities of companies whose market
capitalizations are less than or equal to the highest market capitalization of
companies included in the Russell Midcap(R) Index or the S&P 400 MidCap Index
(whichever capitalization is greater) and greater than or equal to the lowest
market capitalization of companies included in these indices (whichever
capitalization is lower). New investments will be made by reference to the
then-current index ranges at the time of purchase. Thus, if a security that is
in the mid-cap range at the time of purchase becomes large-cap, it will continue
to be treated as mid-cap for purposes of the Fund's policies. However, if a
small-cap security held in the portfolio enters the mid-cap range at a later
time, such security shall be deemed to be a mid-cap security at that time.
All-Star may not change its restriction regarding investment in mid-cap
securities unless All-Star provides shareholders with the notice required by
Rule 35d-1 under the 1940 Act, as it may be amended or interpreted by the SEC
from time to time.

INVESTMENT ADVISORY AND OTHER SERVICES

As stated under "Management of All-Star" in the Prospectus, Banc of
America Investment Advisors, Inc., formerly known as Liberty Asset Management
Company ("BAIA" or the "Advisor") performs the investment management services
and is responsible for the administrative services described therein. BAIA, 100
Federal Street, Boston, MA 02110, is All-Star's manager. BAIA is a wholly owned
subsidiary of Bank of America, N.A., which is a wholly owned subsidiary of Bank
of America Corporation, a U.S. financial holding company. Bank of America
Corporation is located at 100 N. Tryon Street, Charlotte, North Carolina 28255.
As indicated under "Trustees and Officers" below, all of All-Star's officers are
officers of BAIA, Columbia Management Advisors, Inc. ("CMA") or other affiliates
of BAIA.

Reference is made to "Management of All-Star - The Portfolio Managers"
in the Prospectus for the names of the controlling persons of All-Star's
Portfolio Managers and the names of the individual(s) at each Portfolio Manager
primarily responsible for the management of the portion of All-Star's portfolio
assigned to it. None of such Portfolio Managers has any affiliation with BAIA or

- 14 -

(except as Portfolio Manager) with All-Star. Portfolio Managers may advise other
funds advised by BAIA from time to time.

As described under "Management of All-Star" in the Prospectus, All-Star
pays BAIA a fund management fee for its investment management services (from
which BAIA pays the Portfolio Managers' fee), and an administrative fee for its
administrative services.

All-Star's Fund Management Agreement and Portfolio Management Agreements
will continue in effect until , 2007 and will continue in effect thereafter so
long as such continuance is specifically approved annually by (a) the Board or
(b) the majority vote of All-Star's outstanding shares (as defined under
"Investment Objective and Principal Investment Strategies" in the Prospectus),
provided that, in either event, the continuance is also approved by a majority
of the Trustees who are not "interested persons" (as defined in the 1940 Act) of
All-Star (the "Disinterested Trustees"), BAIA or the Portfolio Managers by a
vote cast in person at a meeting called for the purpose of voting on such
approval. The Fund Management Agreement may be terminated on 60 days written
notice by either party, and the Portfolio Management Agreements may be
terminated on 30 days' notice to the Portfolio Manager by BAIA or All-Star and
90 days' notice to BAIA or All-Star by the Portfolio Manager, and any such
agreements will terminate automatically if assigned.

All-Star and BAIA have adopted Codes of Ethics pursuant to the
requirements of the 1940 Act. These Codes of Ethics permit personnel subject to
the Codes to invest in securities, including securities that may be purchased or
held by All-Star. Copies of these Codes of Ethics can be reviewed and copied at
the SEC's Public Reference Room in Washington, D.C. Information on the operation
of the Public Reference Room may be obtained by calling the SEC at
1-202-942-8090. The Codes of Ethics are also available on the EDGAR database on
the SEC's Internet site at www.sec.gov, or may be obtained, after paying a
duplicating fee, by electronic request at publicinfo@sec.gov, or by writing the
SEC's Public Reference Section, Washington, D.C. 20549-0102.

Custodian; Pricing and Bookkeeping Agent
----------------------------------------

State Street Bank and Trust Company (the "Custodian"), 225 Franklin
Street, Boston, MA 02110 is the custodian of the portfolio securities and cash
of All-Star. As such, the Custodian holds All-Star's portfolio securities and
cash in separate accounts on All-Star's behalf and receives and delivers
portfolio securities and cash in connection with portfolio transactions
initiated by All-Star's Portfolio Managers, collects income due on the portfolio
securities and disburses funds in connection with the payment of distributions
and expenses.

CMA, an affiliate of BAIA, is responsible for providing pricing and
bookkeeping services for All-Star under a pricing and bookeeping agreement.
Under a separate agreement, CMA has delegated certain of those functions to
State Street Bank and Trust Company.

Independent Registered Public Accounting Firm
---------------------------------------------

PricewaterhouseCoopers LLP, 125 High Street, Boston, Massachusetts
02110, are the independent registered public accounting firm of All-Star. The
independent registered public accounting firm audits and reports on the annual
financial statements and provides tax return preparation services and assistance

- 15 -

and consultation in connection with the review of various SEC filings.

PROXY VOTING

All-Star has delegated to BAIA (and not the Portfolio Managers) the
responsibility to vote proxies relating to portfolio securities held by
All-Star. In deciding to delegate this responsibility, the Board reviewed and
approved the policies and procedures adopted by BAIA. These include the
procedures that BAIA follows when a vote presents a conflict between the
interests of BAIA or its affiliates and the interests of BAIA's clients,
including All-Star. The policies and procedures are those of CMA.

The proxy voting guidelines and procedures applicable to All-Star are
included in this Statement of Additional Information as Appendix A. Information
regarding how All-Star voted proxies relating to portfolio securities during the
12-month period ending June 30, 2006 will be available without charge, upon
request, by calling 1-800- 542-3863 and on the SEC website at
http://www.sec.gov.

TRUSTEES AND OFFICERS

The names, addresses and ages of the Trustees and principal officers of
All-Star, the year each was first elected or appointed to office, their term of
office, their principal business occupations during at least the last five
years, the number of portfolios overseen by each Trustee in the fund complex and
other directorships they hold are shown below.

NAME/AGE AND LENGTH OF PRINCIPAL OCCUPATION(S) NUMBER OF OTHER
ADDRESS (1) SERVICE DURING PAST FIVE YEARS PORTFOLIOS DIRECTORSHIPS HELD
----------- AND ---------------------- IN FUND ------------------
TERM OF COMPLEX
OFFICE OVERSEEN BY
------ TRUSTEE (2)
-----------

DISINTERESTED
TRUSTEES
John A. Benning Trustee Retired since December, 1999; 2 TT International USA
(Age 71) since Senior Vice President, General (investment company);
2005; Term Counsel and Secretary, Liberty
expires Financial Companies, Inc. (July,
2008 1985 to December, 1999); Vice
President, Secretary and Director,
Liberty Asset Management Company
(August, 1985 to December, 1999)

Richard W. Lowry Trustee Private investor since August, 1987 120 None
Chairman since (formerly Chairman and Chief
(Age 69) 2005; Term Executive Officer, U.S. Plywood
expires Corporation (building products
2007 manufacturer))

John J. Neuhauser Trustee Academic Vice President and Dean of 120 Saucony, Inc. (athletic
(Age 62) since Faculties since August, 1999, footwear)
2005; Term Boston College (formerly Dean,

- 16 -

expires Boston College School of
2006 Management from September,
1977 to September, 1999)

INTERESTED TRUSTEE
William E. Mayer Trustee Managing Partner, Park Avenue 120 Lee Enterprises (print
(Age 65)(3) since Equity Partners (private equity) media); WR Hambrecht +
2005; Term since February, 1999 Co.
expires (financial service
2008 provider)
and Premier
(healthcare); Readers
Digest (publisher)
------------

(1) All the Trustees are members of the Audit Committee except for Mr. Mayer.
The address of each Trustee is 100 Federal Street, Boston, MA 02110.

(2) At _________, 2005, Messrs. Lowry, Mayer and Neuhauser also served as
trustees of the Columbia Management Group family of funds (Columbia Funds)
which consisted of [__] open-end and 8 closed-end management investment
company portfolios. The portfolios overseen by these Trustees include the
Liberty Funds and Columbia Funds. "Fund Complex" includes the Liberty Funds,
Columbia Funds, Nations Funds and Galaxy Funds.

(3) "Interested person" of All-Star, as defined in the 1940 Act, because of his
affiliation with WR Hambrecht + Co., a registered broker-dealer.

PRINCIPAL OFFICERS

Each person listed below serves as an officer of All-Star.

POSITION WITH FUND AND YEAR
FIRST ELECTED OR APPOINTED TO PRINCIPAL OCCUPATION(S)
NAME/AGE AND ADDRESS(1) OFFICE DURING PAST FIVE YEARS
----------------------- ------ ----------------------

William R. Parmentier, Jr. President and Chief Executive President and Chief Executive Officer of the
(Age 52) Officer since 2005 Liberty All-Star Funds since April, 1999; Chief
Investment Officer - External Managers of BAIA
since July, 1998 and Director since April,
2004.

Mark T. Haley, CFA Vice President since 2005 Vice President - Investments of the Liberty
(Age 40) All-Star Funds since April, 1999, Vice
President - Investments of BAIA since January,
1999.

Fred H. Wofford Vice President since 2005 Vice President - Operations of the Liberty
(Age 49) All-Star Funds since June, 2003; Director of
Funds Operations of BAIA since March, 2003;
(formerly Director of Investment Compliance,
Deutsche Asset Management from February, 1999 to
March, 2003; Manager of Fund Administration,
BankBoston 1784 Funds from November, 1995 to
February, 1999).

Mary Joan Hoene Senior Vice President and Senior Vice President and Chief Compliance
(Age 55) Chief Compliance Officer Officer of the Columbia Funds, the Galaxy
since 2005 Funds, Nations Funds and of the Liberty
All-Star Funds since August, 2004 and the BACAP

- 17 -

POSITION WITH FUND AND YEAR
FIRST ELECTED OR APPOINTED TO PRINCIPAL OCCUPATION(S)
NAME/AGE AND ADDRESS(1) OFFICE DURING PAST FIVE YEARS
----------------------- ------ ----------------------

Registered Hedge Funds and Columbia Management
Multi-Strategy Hedge Fund since October, 2004;
(formerly, Partner, Carter, Ledyard & Milburn
LLP from January, 2001 to August, 2004;
Counsel, Carter, Ledyard & Milburn LLP from
November, 1999 to December, 2000; Vice
President and Counsel, Equitable Life Assurance
Society of the United States from April, 1998
to November, 1999).

J. Kevin Connaughton Treasurer since 2005 Treasurer of the Columbia Funds and Liberty
(Age 40) All-Star Funds since December, 2000; Vice
President of Columbia Management Advisors since
April, 2003; (formerly, President of the
Columbia Funds from February, 2004 to October,
2004; Chief Accounting Officer and Controller of
the Liberty Funds and of the Liberty All-Star
Funds from February, 1998 to October, 2000);
Treasurer of the Galaxy Funds since September,
2002; (formerly, Treasurer from December, 2002
to December, 2004 and President from February,
2004 to December, 2004 of Columbia Management
Multi-Strategy Hedge Fund, LLC; Vice President
of Colonial Management Associates, Inc. from
February, 1998 to October, 2000).

Michael G. Clarke Chief Accounting Officer Chief Accounting Officer of the Columbia Funds
(Age 35) since 2005 and of the Liberty All-Star Funds since October,
2004; (formerly, Controller of the Columbia
Funds and of the Liberty All-Star Funds from
May, 2004 to October, 2004; Assistant Treasurer
from June, 2002 to May, 2004; Vice President,
Product Strategy & Development of the Liberty
Funds Group from February, 2001 to June, 2002;
Assistant Treasurer of the Liberty Funds and of
the Liberty All-Star Funds from August, 1999 to
February, 2001; Audit Manager Deloitte & Touche
LLP from May, 1997 to August, 1999).

Jeffery R. Coleman Controller since 2005 Controller of the Columbia Funds and Liberty
(Age 35) All-Star Funds since October, 2004; (formerly,
Vice President of CDC IXIS Asset Management
Services, Inc. and Deputy Treasurer of the CDC
Nvest Funds and Loomis Sayles Funds from
February, 2003 to September, 2004; Assistant
Vice President of CDC IXIS Asset Management
Services, Inc.. and Assistant Treasurer of the
CDC Nvest Funds from August, 2000 to February,
2003; Tax Manager of PFPC Inc. from November,

- 18 -

POSITION WITH FUND AND YEAR
FIRST ELECTED OR APPOINTED TO PRINCIPAL OCCUPATION(S)
NAME/AGE AND ADDRESS(1) OFFICE DURING PAST FIVE YEARS
----------------------- ------ ----------------------

1996 to August, 2000).

David A. Rozenson Secretary Secretary of the Liberty All-Star Funds since
(Age 50) since 2005 December, 2003; Associate General Council of
Bank of America Corporation since April, 2004;
Senior Counsel, Fleet Boston Financial
Corporation from January, 1996 to April 2004;
Associate General Counsel, Columbia Management
Group from November, 2002 to 2004.

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

(1) The address of each officer is One Financial Center, Boston, MA 02111-2621.

Messrs. Connaughton, Clarke and Coleman and Ms. Hoene hold the same
offices with the Columbia Funds which consist of [96] open-end funds and [8]
closed-end management investment company portfolios. Ms. Hoene also holds the
same office with the Galaxy Funds which consist of [13] open-end management
investment company portfolios and Nations Funds which consist of [63] open-end
and [1] closed-end managment investment company portfolios. Each officer of
All-Star serves at the pleasure of the Board.

The term of office of each Trustee will expire on the final adjournment
of the Annual Meeting (or special meeting in lieu thereof) in the year specified
in the table above. All-Star's officers are elected each year by the Board at
the first meeting of the Board held after the annual meeting of shareholders.
Each Fund officer holds office until the meeting of the Board following the next
annual meeting of shareholders, until his or her successor is duly elected by
the Board and qualified, or his or her removal, resignation or death.

Role of the Board
-----------------

The Board is responsible for the overall management and supervision of
All-Star's affairs and for protecting the interests of the shareholders. The
Board will meet periodically throughout the year to oversee All-Star's
activities, review contractual arrangements with service providers for All-Star
and review All-Star's performance.

- 19 -

Audit Committee
---------------

All-Star has an Audit Committee comprised of only "Independent
Trustees/Directors" (as defined in the New York Stock Exchange ("NYSE") Listing
Standards) of All-Star, who are also not "interested persons" (as defined in the
1940 Act) of All-Star. Its members include John A. Benning, Richard W. Lowry and
John J. Neuhauser. Each member of the Audit Committee must be financially
literate and at least one member must have prior accounting experience or
related financial management expertise. The Board has determined, in accordance
with NYSE Listing Standards, that each member of the Audit Committee is
financially literate and has prior accounting experience or related financial
management expertise.

The principal functions of the Audit Committee are to assist Board
oversight of: (1) the integrity of All-Star's financial statements, (2)
All-Star's compliance with legal and regulatory requirements, (3) the
independent registered public accounting firm ("independent accountants")
qualifications and independence, (4) the performance of the Advisor's internal
audit function, and (5) the independent accountants. The 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 All-Star.

Share Ownership
---------------

The Trustees do not own All-Star shares as of the date of this SAI. The
following table shows the dollar range of equity securities beneficially owned
by each Trustee as of December 31, 2004 in all funds overseen by the Trustees in
the family of investment companies.

Aggregate Dollar Range of Equity
Securities Owned in All Funds
Overseen by Trustee in Family
Name of Disinterested Trustee of Investment Companies(2)
----------------------------- --------------------------

John A. Benning.................... Over $100,000
Richard W. Lowry(1)................ Over $100,000
John J. Neuhauser(1)............... Over $100,000
INTERESTED TRUSTEES
William E. Mayer(1)................ $50,001 - $100,000

------------
(1) Trustee also serves as a trustee/director of Columbia Fund Complex.
(2) Securities valued as of December 31, 2004.

As of December 31, 2004, none of the Disinterested Trustees nor any of
their immediate family members owned beneficially or of record any class of
securities of Bank of America Corporation, BAIA or Portfolio Manager of All-Star
or any person controlling, controlled by or under common control with any such
entity (except as noted in the next paragraph).

During the calendar years ended December 31, 2004 and December 31,
2003, Mr. Lowry had a material interest in a trust (approximately $3,912,000 as
of December 31, 2004) which owns units of a limited partnership whose
investments are managed by M.A. Weatherbie & Co., Inc., a Portfolio Manager of

- 20 -

All-Star, and whose general partner is Weatherbie Limited Partnership. Mr.
Benning also had a material interest in that trust (approximately $1,191,055 as
of December 31, 2004).

During the calendar years ended December 31, 2004 and December 31,
2003, none of the Disinterested Trustees nor any of their immediate family
members had any direct or indirect material interest in any transaction or
series of similar transactions with (i) a fund managed by BAIA, a Portfolio
Manager or a person controlling, controlled by or under common control with BAIA
or a Portfolio Manager; (ii) BAIA or a portfolio manager; (iii) any person
controlling, controlled by or under common control with BAIA or a portfolio
manager; or (iv) an officer of any of the above.

During the calendar years ended December 31, 2004 and December 31,
2003, none of the Disinterested Trustees nor any of their immediate family
members had any direct or indirect relationship with (i) a fund managed by BAIA,
a Portfolio Manager or a person controlling, controlled by or under common
control with BAIA or a Portfolio Manager; (ii) BAIA or a Portfolio Manager;
(iii) a person controlling, controlled by or under common control with BAIA or a
Portfolio Manager; or (iv) an officer of any of the above.

During the calendar years ended December 31, 2004 and December 31,
2003, no officer of BAIA, a Portfolio Manager or any person controlling,
controlled by or under common control with BAIA or a Portfolio Manager served on
the board of directors of a company where the Disinterested Trustees or any of
his immediate family members served as an officer.

Board Consideration in Approving the Investment Advisory Contracts
------------------------------------------------------------------

At its meeting on May 9, 2005, the Board, including all of the
Independent Trustees, approved the Fund Management Agreement between All-Star
and BAIA and the five separate Portfolio Management Agreements, each among
All-Star, BAIA and a Portfolio Manager (each, an "Agreement"). Prior to the
Board action, the Independent Trustees met to consider management's
recommendations as to approval of each Agreement. As part of the process to
consider these matters, legal counsel to the Independent Trustees requested
certain information from BAIA and each Portfolio Manager. In response to this
request, the Independent Trustees received extensive reports from BAIA and each
Portfolio Manager that addressed specific factors designed to inform the Board's
consideration of these and other relevant issues. Counsel also provided the
Independent Trustees and the Board with a memorandum detailing their
responsibilities pertaining to the approval of each Agreement. Based on its
evaluation of all material factors, the Board concluded that the terms of each
Agreement were reasonable and fair and that the approval of each Agreement was
in the best interests of All-Star and its shareholders.

In voting to approve each Agreement, the Board did not identify any
single factor as all-important or controlling. The following summary does not
detail all the matters considered by the Board, but provides a summary of the
material matters it considered. The Board considered whether the Agreement would
be in the best interests of All-Star and its shareholders, an evaluation based
on: (1) the nature, extent and quality of the services to be provided under each
Agreement; (2) the investment performance of other funds and accounts managed by
BAIA and each Portfolio Manager; (3) the costs of the services to be provided
and profits realized by BAIA and the Portfolio Managers from the relationship
with All-Star and with respect to other funds and accounts managed by the
parties; and (4) the extent to which economies of scale would be realized as
All-Star grows and whether fee levels will reflect economies of scale for the

- 21 -

benefit of All-Star's shareholders; as well as other relevant considerations
such as the management fees and expense ratios of All-Star; potential fall-out
benefits to BAIA and each Portfolio Manager from its relationship with All-Star;
and other general information about BAIA and each Portfolio Manager. The
following is a summary of the Board's discussion and views regarding these
factors.

Nature, Extent and Quality of the Services Provided
---------------------------------------------------

The Trustees considered the nature, extent and quality of the portfolio
manager selection, evaluation and monitoring services to be provided by BAIA,
and the portfolio management services to be provided by each Portfolio Manager.
In connection with its review, the Board considered BAIA's long-term history of
care and conscientiousness in the management of the Liberty All-Star Equity Fund
("Equity Fund") and the Liberty All-Star Growth Fund ("Growth Fund") and the
administrative services provided to the Equity Fund and the Growth Fund by BAIA
and its affiliates. The Board also considered each Portfolio Manager's
demonstrated consistency in investment approach and depth. It reviewed the
background and experience of the personnel at BAIA responsible for portfolio
manager selection, evaluation and monitoring for All-Star and the Portfolio
Manager personnel responsible for managing All-Star's portfolio. The Board also
considered BAIA's and each Portfolio Manager's compliance record.

Investment Performance
----------------------

The Board recognized that because All-Star has no performance history,
there would be no Fund performance for the Board to review in considering
whether to approve the Agreements. However, the Board reviewed the information
provided concerning the long-term and short-term investment performance of the
Equity Fund and the Growth Fund, the portions of those Funds managed by
Schneider and Weatherbie, respectively, and other mutual funds and accounts
managed by the Portfolio Managers. The performance information provided
demonstrated to the Trustees a generally consistent pattern of favorable
long-term performance for shareholders of the Equity Fund and the Growth Fund
and clients of the Portfolio Managers.

Costs of the Services Provided to All-Star and the Profits to Be Realized by
----------------------------------------------------------------------------
BAIA from the Relationship with All-Star
----------------------------------------

COSTS OF SERVICES TO ALL-STAR: FEES AND EXPENSES. The Board reviewed
information provided by BAIA about the rates of compensation paid to investment
advisers, and overall expense ratios, for funds comparable in size, character
and investment strategy to All-Star. The Board also compared All-Star's
management fees to the fees charged by BAIA and the Portfolio Managers to their
other accounts, including fees for institutional accounts. The Board considered
that the Portfolio Managers were paid by BAIA, not All-Star. The Board also
considered the differences in the level of services provided and the differences
in responsibility of BAIA and the Portfolio Managers to All-Star and to other
accounts. The Board considered that, while All-Star's management fee structure
does not provide for a reduction of payments, the management fees appeared fair
and reasonable in relation to the anticipated asset size of All-Star and the
management fees charged by comparable closed-end funds. The Board noted that
All-Star's management fees were slightly higher than the management fees paid by

- 22 -

the Equity Fund and the Growth Fund due to the anticipated higher costs
associated with the management of a mid-cap securities portfolio.

PROFITABILITY AND COSTS OF SERVICES TO BAIA AND THE PORTFOLIO MANAGERS.
The Board reviewed reports of BAIA's and each Portfolio Manager's financial
position. The Board recognized that, because All-Star is new, BAIA and the
Portfolio Managers did not have information concerning their profitability in
connection with the provision of services to All-Star. However, the Board
reviewed the profitability of BAIA and its affiliates with respect to fees
received from the Equity Fund and the Growth Fund as well as PRO FORMA
profitability estimates for All-Star. The Board determined that the
profitability of BAIA was reasonable in comparison with the costs of providing
fund management services to the Equity Fund, the Growth Fund and All-Star. The
Trustees also considered the potential "fall-out" benefits (including the
receipt of research from unaffiliated brokers) that BAIA or the Portfolio
Managers might receive in connection with their association with All-Star, and
acknowledged BAIA's and each Portfolio Manager's well-established stand-alone
management relationships independent of All-Star and the regulatory risks each
assumed in connection with the management of All-Star.

Extent of Economies of Scale as All-Star Grows and Whether Fee Levels
---------------------------------------------------------------------
Reflect Economies of Scale
--------------------------

The Trustees considered whether there would be economies of scale with
respect to the selection, evaluation and monitoring of Portfolio Managers and
other services by BAIA and the management of Fund assets by each Portfolio
Manager. The Board recognized that shareholders would realize efficiencies with
respect to their investment from the outset due to organizational efficiencies
involved with BAIA's well-established processes for the selection, evaluation
and monitoring of Portfolio Managers. The Board also noted that while All-Star's
management fee structure does not provide for a reduction of the effective fee
rate as asset levels increase, there are potential economies of scale if
All-Star's assets grow significantly. Because closed-end funds do not
continuously offer shares, their assets are not expected to grow rapidly after
All-Star's initial offerings. The Board indicated it would monitor All-Star's
fees in light of asset growth. The Board noted that BAIA's commitment to pay
All-Star's organizational expenses and to reimburse All-Star's offering expenses
to the extent that the aggregate of All-Star's organizational and offering
expenses exceed $0. per share would benefit All-Star and its shareholders.

The Board also considered its long association with BAIA and BAIA's
relationships with the Portfolio Managers and their personnel, and the Board's
familiarity with their culture to evaluate the services to be provided. The
Board will meet at least four times per year in order to oversee the operations
of All-Star. At such meetings, BAIA and the Portfolio Managers will submit
and/or make presentations and discuss performance, compliance and other relevant
issues.

General
-------

The Board will be divided into three classes, each of which has a term
of three years expiring with the annual meeting of shareholders in the third
year of the term. All-Star holds annual meetings of shareholders to vote on,
among other things, the election or re-election of the Trustees whose terms are
expiring with that meeting. The terms of Mr. Neuhauser expires in 2006, Mr.
Lowry expires in 2007 and Messrs. Benning and Mayer expire in 2008. All-Star's
Trustees are also Trustees/Directors of Liberty All-Star Growth Fund, Inc. and

- 23 -

Liberty All-Star Equity Fund, other closed-end multi-managed funds managed by
BAIA.

Trustee Compensation
--------------------

The following table shows, for the year ended December 31, 2004, the
compensation received from All-Star by the Trustees, and the aggregate
compensation paid to the Trustees for service on the Board of the Equity Fund
and the Growth Fund. All-Star has no bonus, profit sharing or retirement plans.

Compensation Table
------------------

Estimated
Aggregate Pension or
Compensation Retirement Benefits Estimated Annual
From Accrued as Part of Benefits Upon Total Compensation
Name of Trustee All-Star(1) Fund Expenses Retirement from the Fund Complex
--------------- ----------- ------------------- ---------- ---------------------

John A. Benning $5,018 $0 $0 $25,200
Richard W. Lowry $6,986 $0 $0 $175,900
William W. Mayer $5,018 $0 $0 $190,900
John J. Neuhauser $5,674 $0 $0 $193,109

(1) Since All-Star has not completed its first fiscal year, compensation is
estimated based upon payments to be made by All-Star during the current fiscal
year ending December 31, 2005.

PORTFOLIO MANAGERS

FIDUCIARY MANAGEMENT, INC. ("FIDUCIARY MANAGEMENT")

OTHER ACCOUNTS. The portion of All-Star allocated to Fiduciary
Management will be managed by the firm's investment policy committee, consisting
of Ted D. Kellner, Donald S. Wilson, Patrick J. English, Bladen J. Burns and
John S. Brandser. The table below provides information regarding the other
accounts managed by the investment policy committee as of December 31, 2004:

Type of Account Number of Total Assets Number of Accounts Assets Managed for
--------------- Accounts Managed Managed for which which Advisory Fee is
Managed ------- Advisory Fee is Performance-Based
------- Performance-Based -----------------
-----------------

Investment Policy
Committee
Registered Investment
Companies 2 $450,000,000 None None
Other pooled investment
vehicle 0 None None None
Other accounts 321 $1,428,900,000 None None

- 24 -

COMPENSATION STRUCTURE. Each investment professional is compensated
with a fixed base salary that is based on his or her experince level. Each
investment professional also receives an incentive bonus that is determined
based upon his or her contribution to the team and the firm's performance. The
amount of the bonus is subjective and is determined by the firm's senior
partners. Each investment professional is reviewed bi-annually. The firm makes
an annual contribution for each investment professional to the firm's retirement
and profit sharing plan. The retirement plan contribution is 25% of an
individual's compensation, however, it is capped at $42,000 per person, per
annum. In addition, investment professionals are given the opportunity to become
equity owners in the firm. All compensation is pre-tax. There is no difference
between the method used to determine compensation with respect to All-Star and
the other accounts managed by the Investment Policy Committee.

M.A. WEATHERBIE & CO., INC. ("M.A. WEATHERBIE")

Other Accounts. The portion of All-Star allocated to M.A. Weatherbie
will be managed by Matthew A. Weatherbie. The table below provides information
regarding the other accounts managed by Matthew A. Weatherbie as of December 31,
2004:

Number of Accounts
Number of Managed for which Assets Managed for
Accounts Total Assets Advisory Fee is which Advisory Fee is
Type of Account Managed Managed Performance-Based Performance-Based
--------------- ------- ------- ----------------- -----------------

Registered Investment
Companies 2 $ 240,000,000 None None
Other pooled investment
vehicle 1 $ 89,000,000 1 $89,000,000
Other accounts 90 $1,964,000,000 None none

COMPENSATION STRUCTURE. As the sole owner of M.A. Weatherbie, Matthew
A. Weatherbie's compensation is directly related to the overall profitability of
M.A. Weatherbie. Mr. Weatherbie receives a fixed base salary, profit sharing
(pre-tax/deferred compensation) and earnings from the company, if any, at year
end under the rules of SubChapter S. All compensation is pre-tax. There is no
difference between the method used to determine compensation with respect to
All-Star and the other accounts managed by Mr. Weatherbie.

MAZAMA CAPITAL MANAGEMENT, INC. ("MAZAMA")

OTHER ACCOUNTS. The portion of All-Star allocated to Mazama will be
managed by an Investment Team comprised of portfolio managers and research
analysts, including Ronald A. Sauer, Stephen C. Brink, Gretchen M. Novak,
Timothy P. Butler and Michael D. Clulow. The table below provides information
regarding the other accounts managed by the Investment Team as of December 31,
2004:

- 25 -

Investment Team
Registered Investment
Companies 10 $1,220,000,000 0 0
Other pooled investment
vehicle 6 $ 190,000,000 0 0
Other accounts 64 $4,230,000,000 1 $104,000,000

COMPENSATION STRUCTURE. Mazama's compensation structure is designed to
attract and retain highly skilled investment professionals. The compensation is
structured to maximize performance and keep the interests of each member of our
portfolio management team aligned with those of our clients.

Each member of the Investment Team receives a base salary representing
20-30% of cash compensation and a performance based incentive representing
70-80% of cash compensation. The base salary is fixed, but may change at times
based on employee performance. The performance based incentive compensation is
based on the portfolio management fees received by Mazama for all accounts under
management. The Investment Team manages the portfolios in aggregate terms,
focusing on the overall strategy, which is then implemented at the portfolio
level. In other words, the Investment Team does not distinguish between
different accounts within each investment style/strategy with respect to
compensation. Instead, they are compensated based on overall fees received by
the firm. Compensation is not affected by the difference, if any, between
pre-tax and post-tax returns. This incentive compensation structure keeps each
member of the team focused on the relative performance of the aggregate
portfolio versus its benchmark. Cash compensation increases as assets under
management increase, whether by appreciation or by attracting new clients, both
of which are accomplished by achieving higher than average excess returns.
Excess returns are measured as the difference between our portfolio returns and
those of the Russell 3000 Growth Index.

Mazama offers its employees a 401(k) plan after 6 months of employment
with the firm and makes annual contributions to the plan on behalf of all
eligible employees. Equity incentives have been a significant part of Mazama's
compensation plan since the firm's inception. In total, including founding
equity, our Investment Team represents over 70% of the equity of the firm on a
fully diluted basis. Every member of the Investment Team is either a direct
equity owner or an option holder or both. There is no difference between the
method used to determine compensation with respect to All-Star and the other
accounts managed by the Investment Team.

SCHNEIDER CAPITAL MANAGEMENT CORPORATION ("SCHNEIDER")

OTHER ACCOUNTS. The portion of All-Star allocated to Schneider will be
managed by Arnold C. Schneider III. The table below provides information about
the other accounts managed by Mr. Schneider as of December 31, 2004:

- 26 -

Registered Investment
Companies 8 $ 778,000,000 None None
Other pooled investment
vehicle 7 $ 505,000,000 None None
Other accounts 40 $2,415,000,000 None None

COMPENSATION STRUCTURE. Mr. Schneider receives a fixed base salary and
a bonus that is based upon the overall profitability of the firm. He also
receives deferred compensation and a contribution is made annually into a
retirement plan. All compensation is pre-tax. There is no difference between the
method used to determine compensation with respect to All-Star and the other
accounts managed by Mr. Schneider.

SASCO CAPITAL INC. ("SASCO")

OTHER ACCOUNTS. The portion of All-Star allocated to Sasco will be
managed on a team basis by Sasco's three portfolio managers: Bruce D. Bottomley,
Daniel L. Leary and Mark W. Helderman. The table below provides information
about the other accounts managed by the team as of December 31, 2004:

Registered Investment
Companies 1 $31,000,000 None None
Other pooled investment
vehicle 0 None None None
Other accounts 22 $2,467,000,000 1 over $___________

COMPENSATION STRUCTURE. Sasco is independently owned by its employees.
All key investment professionals' compensation is directly tied to the
profitability of the firm since each have direct stock ownership, or an
ownership profit interest in the firm. Each receives a fixed base salary plus
bonus, or profit distribution, based on individual contribution and
profitability of the firm. Bonuses can and have exceeded 100% of base salary.
Profits, after all expenses, are distributed and not retained in the business.
Sasco has an Employee Target Benefit Plan for all of its employees, including
the portfolio managers. The Plan is administered by an independent actuarial
firm. All compensation is pre-tax. There is no difference between the method
used to determine compensation with respect to All-Star and the other accounts
managed by the portfolio managers.

Description of Certain Material Conflicts of Interest
-----------------------------------------------------

Material conflicts of interest may arise when an individual with
day-to-day management responsibilities for All-Star also manages other funds or
accounts. (Information regarding other funds, pooled investment vehicles and

- 27 -

accounts managed by All-Star's Portfolio Managers is set forth in tables above.)
These potential material conflicts of interest include the following conflicts:

ALLOCATION OF LIMITED INVESTMENT OPPORTUNITIES. From time to time an
investment opportunity that is suitable for multiple funds and/or accounts may
be limited. In such circumstances the opportunity will have to be allocated
among the funds and/or accounts managed by a portfolio manager, decreasing
All-Star's ability to participate in the investment opportunity.

TIME AND FOCUS. A portfolio manager who manages several funds and/or
accounts may not devote equal time and attention to all of these funds and/or
accounts. This may adversely affect the portfolio manager's performance with
respect to the funds and/or accounts to which he or she devotes less time.

BROKER-DEALER SELECTION. Some broker-dealers provide portfolio managers
with brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934), which may result in higher
brokerage fees. (See "Portfolio Security Transactions" below.) These services
may benefit certain funds or account more than others. Although the payment of
commissions is subject to the requirement that a portfolio manager determines in
good faith that the commissions are reasonable in relation to he value of the
brokerage and research services provided to the fund, a portfolio manager's
decision as to the selection of brokers and dealers could yield disproportionate
costs and benefits among the funds and/or accounts that he or she manages.

COMPENSATION DIFFERENCES. To the extent a fund or account compensates a
portfolio manager (either directly or indirectly by paying the portfolio
manager's firm) more than other funds or accounts, the portfolio manager might
have an economic incentive for certain funds or accounts to succeed more than
others. This may be the case where an advisory fee is greater, where a fund or
account pays a performance-based fee or where the portfolio manager or his or
her firm has an interest in the fund or account.

ADDITIONAL BUSINESS. BAIA, the Portfolio Managers or their affiliates
may provide more service for some funds or accounts than for others. For
example, an affiliate may provide distribution, recordkeeping or administration
services for one fund but not for others. This may result in a portfolio manager
benefiting, either directly or indirectly, from some funds over others.

Each of the Portfolio Managers has trade allocation and other policies
and procedures that it believes are reasonably designed to address these and
other conflicts of interest.

PORTFOLIO SECURITY TRANSACTIONS

Each of All-Star's Portfolio Managers has discretion to select brokers and
dealers to execute portfolio transactions initiated by the Portfolio Manager for
the portion of All-Star's portfolio assets allocated to it, and to select the
markets in which such transactions are to be executed. The Portfolio Management
Agreements with All-Star provide, in substance, that, except as provided in the
following paragraph, 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 All-Star. It is expected that securities
will ordinarily be purchased in the primary markets, and that, in assessing the
best net price and execution available to All-Star, the Portfolio Manager will
consider all factors it deems relevant, including the breadth of the market in

- 28 -

the security, the price of the security, the financial condition and execution
capability of the broker or dealer and the reasonableness of the commission, if
any, for the specific transaction and on a continuing basis. Recognizing these
factors, All-Star may pay a brokerage commission in excess of that which another
broker or dealer may have charged for effecting the same transaction.

The Portfolio Management Agreements also provide that BAIA has the
right to request that transactions giving rise to brokerage commissions, in
amounts to be agreed upon from time to time between BAIA and the Portfolio
Manager, be executed by brokers and dealers (to be agreed upon from time to time
between BAIA and the Portfolio Manager) which provide, directly or through third
parties, research products and services to BAIA or to All-Star. The commissions
paid on such transactions may exceed the amount of commissions another broker
would have charged for effecting that transaction. Research products and
services made available to BAIA through brokers and dealers executing
transactions for All-Star involving brokerage commissions include performance,
portfolio characteristics, investment style 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, performance and fee and expense data; data relating to portfolio
manager changes by pension plan fiduciaries; quotation equipment; and related
computer hardware and software, all of which are used by BAIA in connection with
its selection and monitoring of portfolio managers (including the Portfolio
Managers) for All-Star and other multi-managed clients of BAIA, the assembly of
a mix of investment styles appropriate to the investment objective of All-Star
or such other clients, and the determination of overall portfolio strategies.

BAIA from time to time reaches understandings with each of the
Portfolio Managers as to the amount of the All-Star 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 BAIA
and the commissions to be charged to All-Star in connection therewith. These
amounts may differ among the Portfolio Managers based on the nature of the
markets for the types of securities managed by them and other factors.

These research products and services are used by BAIA in connection
with its management of All-Star, Liberty All-Star Equity Fund, and Liberty
All-Star Growth Fund, Inc., and may be used for other multi-managed clients of
BAIA to the extent permitted by applicable law, regardless of the source of the
brokerage commissions. In instances where BAIA receives from broker-dealers
products or services which are used both for research purposes and for
administrative or other non-research purposes, BAIA makes a good faith effort to
determine the relative proportions of such products or services which may be
considered as investment research, based primarily on anticipated usage, and
pays for the costs attributable to the non-research usage in cash.

The Portfolio Managers are authorized to cause All-Star to pay a
commission to a broker or dealer who provides research products and services to
the Portfolio Manager for executing a portfolio transaction which is in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction. The Portfolio Managers must determine in good faith,
however, that such commission was reasonable in relation to the value of the
research products and services provided to them, viewed in terms of that
particular transaction or in terms of all the client accounts (including
All-Star) over which the Portfolio Manager exercises investment discretion. It
is possible that certain of the services received by a Portfolio Manager

- 29 -

attributable to a particular transaction will primarily benefit one or more
other accounts for which investment discretion is exercised by the Portfolio
Manager.

Although All-Star does not permit a Portfolio Manager to act or have an
affiliate act as broker for Fund portfolio transactions initiated by it, the
Portfolio Managers are permitted to place Fund portfolio transactions initiated
by them with another Portfolio Manager or its broker-dealer affiliate for
execution on an agency basis, provided the commission does not exceed the usual
and customary broker's commission being paid to other brokers for comparable
transactions and is otherwise in compliance with Rule 17e-1 under the 1940 Act.

TAXES

The following discussion of federal income tax matters, which is based
on the advice of Kirkpatrick & Lockhart Nicholson Graham LLP (counsel to
All-Star), together with the discussion thereof in the "Tax Matters" section of
the Prospectus, is a brief summary of the material federal income tax
consequences with respect to the purchase, ownership, and disposition of shares
of beneficial interest in All-Star ("Shares") and does not purport to be
complete or to deal with all aspects of federal taxation that may be relevant to
shareholders in light of their particular circumstances. The discussion is based
on the Internal Revenue Code of 1986, as amended ("Code"), Treasury regulations,
court decisions, published positions of the Internal Revenue Service ("IRS"),
and other applicable authorities, all as in effect on the date hereof and all of
which are subject to change or differing interpretations (possibly with
retroactive effect), and is limited to U.S. persons who hold Shares as capital
assets for federal income tax purposes (generally, assets held for investment).
This summary does not address all of the federal income tax consequences that
may be relevant to a particular shareholder or to shareholders who may be
subject to special treatment under the federal income tax law. No ruling has
been or will be obtained from the IRS regarding any matter relating to the
Shares. No assurance can be given that the IRS would not assert a position
contrary to any of the tax consequences described below. Prospective investors
should consult their own tax advisers as to the federal income tax consequences
of the purchase, ownership, and disposition of the Shares, as well as the
effects of state, local, and non-U.S. tax laws.

All-Star will elect to be, and intends to qualify for treatment each
taxble year as, a regulated investment company under the Code ("RIC").
Accordingly, All-Star intends to satisfy certain requirements relating to
sources of its income and diversification of its assets and to distribute, in
accordance with the Code's timing requirements, substantially all of its
investment company taxable income (generally, the sum of net investment income,
the excess of net short-term capital gain over net long-term capital loss, and
net gains from certain foreign currency transactions, if any, all determined
without regard to any deduction for dividends paid) and net capital gain (I.E.,
the excess of net long-term capital gain over net short-term capital loss),
after reduction by any available capital loss carryforwards ("Distribution
Requirement"), so as to maintain RIC status and to avoid paying any federal
income tax or the 4% excise tax mentioned in the "Tax Matters" section of the
Prospectus ("Excise Tax"). If All-Star qualifies as a RIC and satisfies the
Distribution Requirement, it will not be subject to federal income tax on income
and gains that its pays to its shareholders in the form of dividends or capital
gain distributions.

Dividends and other distributions on Shares are generally subject to
federal income tax, as described in the Prospectus, to the extent they do not

- 30 -

exceed All-Star's current and accumulated earnings and profits, even though
those distributions may economically represent a return of a particular
shareholder's investment. Those distributions are likely to occur with respect
to Shares purchased when All-Star's net asset value reflects gains that are
either unrealized, or realized but not yet distributed. Those realized gains may
be required to be distributed even when All-Star's net asset value also reflects
unrealized losses. Certain distributions declared in October, November, or
December of any year and paid in the following January will be taxed to
shareholders as if received on December 31 of that year, to the extent they do
not exceed All-Star's accumulated earnings and profits. The taxability of
distributions in excess thereof will be determined in the year paid. In
addition, certain other distributions made after the close of All-Star's taxable
year may be "spilled back" and treated as paid by All-Star (except for purposes
of the Excise Tax) during that year. In that case, shareholders will be treated
as having received those distributions in the taxable year in which they were
actually paid.

If the aggregate qualified dividend income (as described in the "Tax
Matters" section of the Prospectus) All-Star earns during any taxable year
equals 95% or more of its gross income (excluding net capital gain), then all of
its dividends, other than properly designated capital gain dividends, will be
eligible to be treated as qualified dividend income by its shareholders.

Dividends and interest All-Star receives, and gains it realizes, on
foreign securities may be subject to income, withholding, or other taxes foreign
countries and U.S. possessions impose that would reduce the yield and/or total
return on its investments. Tax conventions between certain countries and the
United States may reduce or eliminate foreign taxes, however, and many foreign
countries do not impose taxes on capital gains in respect of investments by
foreign investors.

All-Star may invest in the stock of "passive foreign investment
companies" ("PFICs"). A PFIC is any foreign corporation (with certain
exceptions) that, in general, meets either of the following tests: (1) at least
75% of its gross income for the taxable year is passive or (2) an average of at
least 50% of its assets produce, or are held for the production of, passive
income. Under certain circumstances, All-Star will be subject to federal income
tax on a portion of any "excess distribution" it receives on the stock of a PFIC
or of any gain on its disposition of that stock (collectively "PFIC income"),
plus interest thereon, even if All-Star distributes the PFIC income as a
dividend to its shareholders. The balance of the PFIC income will be included in
All-Star's investment company taxable income and, accordingly, will not be
taxable to it to the extent it distributes that income to its shareholders.
Distributions thereof will not be eligible for the 15% maximum federal income
tax rate on individuals' qualified dividend income.

If All-Star invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, All-Star would be required to include in income each
taxable year its PRO RATA share of the QEF's annual ordinary earnings and net
capital gain -- which All-Star likely would have to distribute to satisfy the
Distribution Requirement and avoid imposition of the Excise Tax -- even if the
QEF did not distribute those earnings and gain to All-Star. In most instances it
will be very difficult, if not impossible, to make this election because some of
the information required to do so may not be easily obtainable.

All-Star may elect to "mark to market" any stock in a PFIC it owns at
the end of its taxable year. "Marking-to-market," in this context, means
including in ordinary income each taxable year the excess, if any, of the fair

- 31 -

market value of the stock over All-Star's adjusted basis therein (including
mark-to-market gain for each prior year for which an election was in effect) as
of the end of that year. Pursuant to the election, All-Star also may deduct (as
an ordinary, not capital, loss) the excess, if any, of its adjusted basis in
PFIC stock over the fair market value thereof as of the taxable year-end, but
only to the extent of any net mark-to-market gains with respect to that stock
All-Star included in income for prior taxable years under the election.
All-Star's adjusted basis in each PFIC's stock subject to the election would be
adjusted to reflect the amounts of income included and deductions taken
thereunder.

Investors should be aware that All-Star may not be able, at the time it
acquires a foreign corporation's shares, to ascertain whether the corporation is
a PFIC and that a foreign corporation may become a PFIC after All-Star acquires
shares therein. While All-Star generally will seek to avoid investing in PFIC
shares to avoid the tax consequences described above, there are no guarantees
that it will be able to do so and it reserves the right to make such investments
as a matter of its investment policy.

The use of hedging strategies, such as writing (selling) and purchasing
options and futures contracts and entering into forward contracts, involves
complex rules that will determine for income tax purposes the amount, character,
and timing of recognition of the gains and losses All-Star realizes in
connection therewith. Gain from the disposition of foreign currencies (except
certain gains therefrom that may be excluded by future regulations), and gains
from options, futures and forward contracts All-Star derives with respect to its
business of investing in securities or foreign currencies, will be treated as
qualifying income under the source-of-income requirement that applies to RICs.
All-Star will monitor its transactions, make appropriate tax elections, and make
appropriate entries in its books and records when it acquires any foreign
currency, option, futures contract, forward contract, or hedged investment to
mitigate the effect of these rules, prevent its disqualification as a RIC, and
minimize the imposition of federal income tax and Excise Tax.

Some futures contracts (other than "securities futures contracts," as
defined in Code section 1234B(c)), foreign currency contracts with respect to
which a Code section 988(a)(1)(B) election is made, and "nonequity" options
(I.E., certain listed options, such as those on a "broad-based" securities
index) in which All-Star may invest may be subject to Code section 1256
(collectively "section 1256 contracts"). Any section 1256 contracts All-Star
holds at the end of its taxable year generally must be "marked-to-market" (that
is, treated as having been sold at that time for their fair market value) for
federal income tax purposes, with the result that unrealized gains or losses
will be treated as though they were realized. Sixty percent of any net gain or
loss recognized on these deemed sales, and 60% of any net realized gain or loss
from any actual sales of section 1256 contracts, will be treated as long-term
capital gain or loss, and the balance will be treated as short-term capital gain
or loss. These rules may operate to increase the amount that All-Star must
distribute to satisfy the Distribution Requirement (I.E., with respect to the
portion treated as short-term capital gain), which will be taxable to its
shareholders as ordinary income, and to increase the net capital gain it
recognizes, without in either case increasing the cash available to it. All-Star
may elect not to have the foregoing rules apply to any "mixed straddle" (that
is, a straddle, which All-Star clearly identifies in accordance with applicable
regulations, at least one (but not all) of the positions of which are section
1256 contracts), although doing so may have the effect of increasing the
relative proportion of net short-term capital gain (taxable as ordinary income)

- 32 -

and thus increasing the amount of dividends it must distribute. Section 1256
contracts also are marked-to-market for purposes of the Excise Tax.

Under Code section 988, gains or losses (1) from the disposition of
foreign currencies, (2) except in certain circumstances, from options, futures,
and forward contracts on foreign currencies (and on financial instruments
involving foreign currencies) and from notional principal contracts (E.G.,
swaps, caps, floors, and collars) involving payments denominated in foreign
currencies, (3) on the disposition of each foreign-currency-denominated debt
security that are attributable to fluctuations in the value of the foreign
currency between the dates of acquisition and disposition of the security, and
(4) that are attributable to exchange rate fluctuations between the time
All-Star accrues interest, dividends, or other receivables or expenses or other
liabilities denominated in a foreign currency and the time it actually collects
the receivables or pays the liabilities generally will be treated as ordinary
income or loss. These gains or losses will increase or decrease the amount of
All-Star's investment company taxable income to be distributed to its
shareholders as ordinary income, rather than affecting the amount of its net
capital gain. If All-Star's section 988 losses exceed other investment company
taxable income during a taxable year, it would not be able to distribute any
dividends, and any distributions made during that year before the losses were
realized would be recharacterized as a return of capital to shareholders, rather
than as a dividend, thereby reducing each shareholder's basis in his or her
All-Star shares. Although All-Star values its assets daily in terms of U.S.
dollars, it does not intend to convert its holdings of foreign currencies into
U.S. dollars on a daily basis. All-Star will do so from time to time, incurring
the costs of currency conversion.

Code section 1092 (dealing with straddles) also may affect the taxation
of certain hedging instruments in which All-Star may invest. That section
defines a "straddle" as offsetting positions with respect to actively traded
personal property; for these purposes, options, futures, and forward contracts
are positions in personal property. Under that section, any loss from the
disposition of a position in a straddle generally may be deducted only to the
extent the loss exceeds the unrealized gain on the offsetting position(s) of the
straddle. In addition, these rules may postpone the recognition of loss that
otherwise would be recognized under the mark-to-market rules discussed above.
The regulations under section 1092 also provide certain "wash sale" rules, which
apply to a transaction where a position is sold at a loss and a new offsetting
position is acquired within a prescribed period, and "short sale" rules
applicable to straddles. If All-Star makes certain elections, the amount,
character, and timing of recognition of gains and losses from the affected
straddle positions would be determined under rules that vary according to the
elections made. Because only a few of the regulations implementing the straddle
rules have been promulgated, the tax consequences to All-Star of straddle
transactions are not entirely clear.

When a covered call option written (sold) by All-Star expires, it will
realize a short-term capital gain equal to the amount of the premium it received
for writing the option. When All-Star terminates its obligations under such an
option by entering into a closing transaction, it will realize a short-term
capital gain (or loss), depending on whether the cost of the closing transaction
is less (or more) than the premium it received when it wrote the option. When a
covered call option written by All-Star is exercised, it will be treated as
having sold the underlying security, producing long-term or short-term capital
gain or loss, depending on the holding period of the underlying security and
whether the sum of the option price received on the exercise plus the premium
received when it wrote the option is more or less than the underlying security's
basis.

- 33 -

If All-Star has an "appreciated financial position" -- generally, an
interest (including an interest through an option, futures or forward contract,
or short sale) with respect to any stock, debt instrument (other than "straight
debt"), or partnership interest the fair market value of which exceeds its
adjusted basis -- and enters into a "constructive sale" of the position, it will
be treated as having made an actual sale thereof, with the result that it will
recognize gain at that time. A constructive sale generally consists of a short
sale, an offsetting notional principal contract, or a futures or forward
contract All-Star or a related person enters into with respect to the same or
substantially identical property. In addition, if the appreciated financial
position is itself a short sale or such a contract, acquisition of the
underlying property or substantially identical property will be deemed a
constructive sale. The foregoing will not apply, however, to any transaction
during any taxable year that otherwise would be treated as a constructive sale
if the transaction is closed within 30 days after the end of that year and
All-Star holds the appreciated financial position unhedged for 60 days after
that closing (I.E., at no time during that 60-day period is All-Star's risk of
loss regarding that position reduced by reason of certain specified transactions
with respect to substantially identical or related property, such as having an
option to sell, being contractually obligated to sell, making a short sale, or
granting an option to buy substantially identical stock or securities).

All-Star may acquire zero coupon or other securities issued with
original issue discount ("OID"). As a holder of those securities, All-Star must
include in its gross income the OID that accrues on them during the taxable
year, even if it receives no corresponding payment on them during the year.
Similarly, All-Star must include in its gross income securities it receives as
"interest" on payment-in-kind securities. Because All-Star annually must
distribute substantially all of its investment company taxable income, including
any accrued OID and other non-cash income, to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax, it may be required in a
particular year to distribute as a dividend an amount that is greater than the
total amount of cash it actually receives. Those distributions will be made from
All-Star's cash assets or from the proceeds of sales of its portfolio
securities, if necessary. All-Star may realize capital gains or losses from
those sales, which would increase or decrease its investment company taxable
income and/or net capital gain.

PRINCIPAL SHAREHOLDERS

As of , 2005, all officers and Trustees of All-Star as a group owned
less than 1% of All-Star's outstanding shares.

As of , 2005, the following persons owned of record the number of
shares noted below, representing the indicated percentage of All-Star's
outstanding equity securities as of such date. To the knowledge of All-Star, no
other person owned of record or beneficially 5% or more of All-Star's
outstanding equity securities on such date.

Shareholder Number of Shares Percentage of All-Star's
----------- ---------------- outstanding shares
------------------
100%

- 34 -

FINANCIAL STATEMENTS

PricewaterhouseCoopers LLP, are the independent registered public
accounting firm for All-Star. PricewaterhouseCoopers LLP provides audit and tax
return review services and assistance and consultation in connection with the
review of various SEC filings.

- 35 -

APPENDIX A
PROXY VOTING GUIDELINES

^ OVERVIEW:

CMA's policy is based upon its fiduciary obligation to act in its clients' best
interest. Citing this obligation, the SEC has adopted rules pursuant to the
Investment Advisers Act of 1940 and Investment Company Act of 1940 with respect
to proxy voting.

^ PROCEDURE:

I. ACCOUNT POLICIES

Except as otherwise directed by the client, CMA shall vote as follows:

SEPARATELY MANAGED ACCOUNTS

CMA shall vote proxies on securities held in its separately managed accounts.

COLUMBIA TRUST COMPANY (CTC) TRUST POOLS

CMA shall vote proxies on securities held in the trust pools.

CMG FAMILY FUNDS/CMA FUND TRUST

CMA shall vote proxies on securities held in the Funds, including multi-managed
and subadvised Funds.

COLUMBIA PRIVATE PORTFOLIO

CMA shall vote proxies on securities held in its separately managed accounts.

ALTERNATIVE INVESTMENT GROUP

CMA's clients may invest in securities ("Alternative Investments") issued by
alternative investment vehicles (i.e. hedge funds, private equity funds, and
other alternative investment pools) that are structured as private limited
partnerships ("LPs"), limited liability companies ("LLCs"), or offshore
corporations. Generally, CMA's Alternative Investment Group ("AIG") is the
platform through which CMA provides advisory services relating to Alternative
Investments.

The voting rights of Alternative Investments generally are rights of contract
set forth in the limited liability company or limited partnership agreement, in
the case of LLCs and LPs, or Memorandum and Articles of Association or By-laws,
in the case of offshore corporations. Also, as privately placed securities,
Alternative Investments generally are not subject to the regulatory scheme
applicable to public companies. Consequently, in most cases, proxies are not
solicited regarding Alternative Investment vehicles. Instead, consents may be
solicited from members, limited partners or shareholders.

Because of the unique characteristics of Alternative Investments, CMA has a
tailored process for voting Alternative Investment proxies and consents.

Process

AIG will vote all Alternative Investment proxies and consents in accordance with
this Policy. The committee voting AIG proxies consists of AIG senior management,
investment and operations professionals. Conflicts of interest are to be
monitored and resolved as set forth in this Policy.

II. PROXY COMMITTEE

CMA shall establish a Proxy Committee whose standing members shall include the
head of core equity, head of value, head of growth, head of income strategies,
head of equity research and head of fixed income research. Each standing member

- 37 -

may designate a senior portfolio manager or a senior analyst officer to act as a
substitute in a given matter on their behalf.

The Proxy Committee's functions shall include, in part,

(a) direction of the vote on proposals where there has been a
recommendation to the Committee, pursuant to Section IV. (B) not to
vote according to the predetermined Voting Guidelines stated in Section
IV (A) or on proposals which require special, individual consideration
in accordance with Section IV (C) ,

(b) review at least annually of this Proxy Voting Policy and Procedure
to ensure consistency with internal policies, client disclosures and
regulatory requirements,

(c) review at least annually of existing Voting Guidelines and need for
development of additional Voting Guidelines to assist in the review of
proxy proposals; and

(d) development and modification of Voting Procedures, as stated in
Section V, as it deems appropriate or necessary.

The Proxy Committee shall establish a charter, which shall set forth the
Committee's purpose, membership and operation. The Committee's charter shall be
consistent, in all material respects, with this policy and procedure.

III. Conflicts of Interest

With Other Bank of America Businesses
-------------------------------------

Bank of America Corporation ("BAC", the ultimate corporate parent of CMA, Bank
of America, N.A. and all of their numerous affiliates) owns, operates and has
interests in many lines of business that may create or give rise to the
appearance of a conflict of interest between BAC or its affiliates and those of
Firm-advised clients. For example, the commercial and investment banking
business lines may have interests with respect to issuers of voting securities
that could appear to or even actually conflict with CMA's duty, in the proxy
voting process, to act in the best economic interest of its clients.

Within CMA
----------

Conflicts of interest may also arise from the business activities of CMA. For
example, CMA might manage (or be seeking to manage) the assets of a benefit plan
for an issuer. CMA may also be presented with an actual or apparent conflict of
interest where proxies of securities issued by BAC or the Nations Funds, for
which CMA serves as investment adviser, are to be voted for a client's account.

Management of Conflicts
-----------------------

CMA's policy is to always vote proxies in the best interest of its clients, as a
whole, without regard to its own self-interest or that of its affiliates. BAC as
well as CMA has various compliance policies and procedures in place in order to
address any material conflicts of interest that might arise in this context.

1. BAC's enterprise-wide Code of Ethics specifically prohibits the
flow of certain business-related information between associates on
the commercial and/or investment banking side of the corporation
and associates charged with trust or (as in the case of BACAP
associates) non-trust fiduciary responsibilities, including
investment decision-making and proxy voting.

2. In addition, BAC has adopted "Global Policies and Procedures
Regarding Information Walls and Inside Information." Pursuant to
these policies and procedures, "information barriers" have been
established between various BAC business lines designed to prohibit
the passage of certain information across those barriers.

3. Within CMA, CMA's Code of Ethics affirmatively requires that
associates of CMA act in a manner whereby no actual or apparent
conflict of interest may be seen as arising between the associate's
interests and those of CMA's Clients.

4. By assuming his or her responsibilities pursuant to this Policy,
each member of the Proxy Committee and any CMA or BAC associate

- 38 -

advising or acting under the supervision or oversight of the Proxy
Committee undertakes:

o To disclose to the chairperson of the Proxy Committee and the
chairperson to the head of CMG Compliance any actual or apparent
personal material conflicts of interest which he or she may have
(e.g., by way of substantial ownership of securities,
relationships with nominees for directorship, members of an
issuer's or dissident's management or otherwise) in determining
whether or how CMA shall vote proxies. In the event the
chairperson of the Proxy Committee has a conflict of interest
regarding a given matter, he or she shall abstain from
participating in the Committee's determination of whether and/or
hot to vote in the matter; and

o To refrain from taking into consideration, in the decision as to
whether or how CMA shall vote proxies:

o The existence of any current or prospective material business
relationship between CMA, BAC or any of their affiliates, on
one hand, and any party (or its affiliates) that is soliciting
or is otherwise interested in the proxies to be voted, on the
other hand; and/or

o Any direct, indirect or perceived influence or attempt to
influence such action which the member views as being
inconsistent with the purpose or provisions of this Policy or
the Code of Ethics of CMA or BAC.

Where a material conflict of interest is determined to have arisen in the proxy
voting process that may not be adequately mitigated by voting in accordance with
the predetermined Voting Guidelines, CMA's policy is to invoke one or more of
the following conflict management procedures:

1. Convene the Proxy Committee for the purpose of voting the affected
proxies in a manner that is free of the conflict.

2. Causing the proxies to be voted in accordance with the
recommendations of a qualified, independent third party, which may
include CMA's proxy voting agent.

3. In unusual cases, with the Client's consent and upon ample notice,
forwarding the proxies to CMA's clients so that they may vote the
proxies directly.

IV. VOTING GUIDELINES

In general, proposals which are designed to either dissuade or preclude the
acquisition and/or merger of one corporate entity by/with another, or which have
the effect of diluting the value of the existing shares outstanding, or reducing
shareholders' power over any company actions will be rejected.

A. THE PROXY COMMITTEE HAS ADOPTED THE FOLLOWING GUIDELINES FOR VOTING PROXIES:

1. Matters Relating to the Board of Directors/Corporate Governance
---------------------------------------------------------------

CMA generally will vote FOR:

o Proposals for the election of directors or for an increase or
decrease in the number of directors provided that no more than
one-third of the Board of Directors would, presently or at any time
during the previous three-year period, be from management.

However, CMA generally will WITHHOLD votes for one or more director
nominees if:

(i) the board as proposed to be constituted would have more
than one-third of directors from management; or

- 39 -

(ii) the board does not have audit, nominating, and compensation
committees composed solely of directors who qualify as
being regarded as "independent" as defined by applicable
regulatory and listing standards; or

(iii) the nominee, as a member of the audit committee, permitted
the company to incur excessive non-audit fees (as defined
below regarding other business matters -- ratification of
the appointment of auditors); or

(iv) a director serves on more than six public company boards;
or

(v) the CEO serves on more than two public company boards other
than his or her own board.

On a CASE-BY-CASE basis, CMA may WITHHOLD votes for a director nominee
who has failed to observe good corporate governance practices or,
through specific corporate action or inaction (e.g. failing to
implement policies for which a majority of shareholders has previously
cast votes in favor), has demonstrated a disregard for the interests of
shareholders.

o Proposals requesting that the board audit, compensation and/or
nominating committee be composed solely of independent directors.
The Audit Committee must satisfy the independence and experience
requirements established by the Securities and Exchange Commission
("SEC") and the New York Stock Exchange, or appropriate local
requirements for foreign securities. At least one member of the
Audit Committee must qualify as a "financial expert" as defined by
SEC rules.

o Proposals to declassify a board, absent special circumstances that
would indicate that shareholder interests are better served by a
classified board structure.

CMA generally will vote FOR:

o Proposals to create or eliminate positions or titles for senior
management. CMA generally prefers that the role of Chairman of the
Board and CEO be held by different persons unless there are
compelling reasons to vote AGAINST a proposal to separate these
positions, such as the existence of a counter-balancing governance
structure that includes at least the following elements in addition
to applicable listing standards:
o Established governance standards and guidelines.
o Full board composed of not less than two-thirds "independent"
directors, as defined by applicable regulatory and listing
standards.
o Compensation, as well as audit and nominating (or corporate
governance) committees composed entirely of independent
directors.
o A designated or rotating presiding independent director
appointed by and from the independent directors with the
authority and responsibility to call and preside at regularly
and, as necessary, specially scheduled meetings of the
independent directors to be conducted, unless the
participating independent directors otherwise wish, in
executive session with no members of management present.
o Disclosed processes for communicating with any individual
director, the presiding independent director (or,
alternatively, all of the independent directors, as a group)
and the entire board of directors, as a group.
o The pertinent class of the Company's voting securities has
out-performed, on a three-year basis, both an appropriate
peer group and benchmark index, as indicated in the
performance summary table of the Company's proxy materials.
This requirement shall not apply if there has been a change
in the Chairman/CEO position within the three-year period.

o Proposals that grant or restore shareholder ability to remove
directors with or without cause.

o Proposals to permit shareholders to elect directors to fill board
vacancies.

o Proposals that encourage directors to own a minimum amount of
company stock.

o Proposals to provide or to restore shareholder appraisal rights.

- 40 -

o Proposals to adopt cumulative voting.

o Proposals for the company to adopt confidential voting.

CMA will vote on a CASE-BY-CASE basis in contested elections of directors.

CMA will vote on a CASE-BY-CASE basis on board-approved proposals relating to
corporate governance (including director and officer liability and indemnity
provisions; proxy contest advance notice and expense reimbursement provisions)

CMA generally will vote AGAINST:

o Proposals to classify boards, absent special circumstances
indicating that shareholder interests would be better served by a
classified board structure.

o Proposals that give management the ability to alter the size of the
board without shareholder approval.

o Proposals that provide directors may be removed only by
supermajority vote.

o Proposals to eliminate cumulative voting.

o Proposals which allow more than one vote per share in the election
of directors.

o Proposals that provide that only continuing directors may elect
replacements to fill board vacancies.

o Proposals that mandate a minimum amount of company stock that
directors must own.

o Proposals to limit the tenure of non-management directors.

2. Compensation
------------

CMA generally will vote FOR management sponsored compensation plans (such as
bonus plans, incentive plans, stock option plans, pension and retirement
benefits, stock purchase plans, or thrift plans) if they are consistent with
industry and country standards. However, CMA generally is opposed to
compensation plans that substantially dilute ownership interest in a company,
provide participants with excessive awards, or have objectionable structural
features. Specifically, for equity-based plans, if the proposed number of shares
authorized for option programs (excluding authorized shares for expired options)
exceeds an average of 10% of the currently outstanding shares over the previous
three years or an average of 3% over the previous three years for directors
only, the proposal should be referred to the Proxy Committee. The Committee will
then consider the circumstances surrounding the issue and vote in the best
interest of CMA's clients. CMA requires management to provide substantial
justification for the repricing of options.

CMA generally will vote FOR:

o Proposals requiring executive severance arrangements be submitted
for shareholder ratification.

o Proposals asking a company to expense stock options.

o Proposals to put option repricings to a shareholder vote.

o Employee stock purchase plans that have the following features: (i)
the shares purchased under the plan are acquired for no less than
85% of their market value, (ii) the offering period under the plan
is 27 months or less, and (iii) dilution is 10% or less.

- 41 -

CMA generally will vote AGAINST:

o Stock option plans that permit issuance of options with an exercise
price below the stock's current market price, or that permit
replacing or repricing of out-of-the money options.

o Proposals to authorize the replacement or repricing of out-of-the
money options.

CMA will vote on a CASE-BY-CASE basis proposals regarding approval of specific
executive severance arrangements.

3. Capitalization
--------------

CMA generally will vote FOR:

o Proposals to increase the authorized shares for stock dividends,
stock splits (and reverse stock splits) or general issuance, unless
proposed as an anti-takeover measure or the proposal increases the
authorization by more than 50% without a clear need presented by
the company. Proposals for reverse stock splits should include an
overall reduction in authorization.

o Proposals for the elimination of authorized but unissued shares or
retirement of those shares purchased for sinking fund or treasury
stock.

o Proposals to institute/renew open market share repurchase plans in
which all shareholders may participate on equal terms.

o Proposals to reduce or change the par value of common stock
provided the number of shares is also changed in order to keep the
capital unchanged.

4. Mergers, Restructurings and Other Transactions
----------------------------------------------

CMA will review, on a CASE-BY-CASE basis, business transactions such as mergers,
acquisitions, reorganizations, liquidations, spinoffs, buyouts and sale of all
or substantially all of a company's assets.

5. Anti-Takeover Measures
----------------------

CMA generally will vote AGAINST proposals intended largely to avoid acquisition
prior to the occurrence of an actual event or to discourage acquisition by
creating a cost constraint. With respect to the following measures, CMA
generally will vote as follows:

Poison Pills

o CMA votes FOR shareholder proposals that ask a company to submit
its poison pill for shareholder ratification.

o CMA generally votes FOR shareholder proposals to eliminate a poison
pill.

o CMA generally votes AGAINST management proposals to ratify a poison
pill.

Greenmail

o CMA will vote FOR proposals to adopt anti-greenmail charter or
bylaw amendments or to otherwise restrict a company's ability to
make greenmail payments.

Supermajority vote

o CMA will vote AGAINST board-approved proposals to adopt
anti-takeover measures such as supermajority voting provisions,
issuance of blank check preferred stock, the creation of a separate
class of stock with disparate voting rights and charter amendments
adopting control share acquisition provisions.

- 42 -

Control Share Acquisition Provisions

o CMA will vote FOR proposals to opt out of control share acquisition
statutes.

6. Other Business Matters
----------------------

CMA generally will vote FOR:

o Proposals to approve routine business matters such as changing the
company's name and procedural matters relating to the shareholder
meeting such as approving the minutes of a prior meeting.

o Proposals to ratify the appointment of auditors, unless any of the
following apply in which case CMA will generally vote AGAINST the
proposal:

o Credible reason exists to question:

o The auditor's independence, as determined by applicable
regulatory requirements.
o The accuracy or reliability of the auditor's opinion as to
the company's financial position.

o Fees paid to the auditor or its affiliates for "non-audit"
services were excessive, i.e., in excess of the total fees paid
for "audit," "audit-related" and "tax compliance" and/or "tax
return preparation" services, as disclosed in the company's
proxy materials.

o Proposals to change the date, time or location of the company's
annual meeting of shareholders.

o Bylaw or charter changes that are of a housekeeping nature (updates
or corrections).

o Proposals to approve the annual reports and accounts provided the
certifications required by the Sarbanes Oxley Act of 2002 have been
provided. .

CMA generally will vote AGAINST:

o Proposals to eliminate the right of shareholders to act by written
consent or call special meetings.

o Proposals providing management with authority to adjourn an annual
or special shareholder meeting absent compelling reasons, or to
adopt, amend or repeal bylaws without shareholder approval, or to
vote unmarked proxies in favor of management.

CMA will vote AGAINST:

o Authorization to transact other unidentified substantive (as
opposed to procedural) business at a meeting.

CMA will vote on a CASE-BY-CASE basis:

o Proposals to change the location of the company's state of
incorporation. CMA considers whether financial benefits (e.g.,
reduced fees or taxes) likely to accrue to the company as a result
of a reincorporation or other change of domicile outweigh any
accompanying material diminution of shareholder rights.

o Proposals on whether and how to vote on "bundled" or otherwise
conditioned proposals, depending on the overall economic effects
upon shareholders.

CMA generally will ABSTAIN from voting on shareholder proposals predominantly
involving social, socio-economic, environmental, political or other similar
matters on the basis that their impact on share value can rarely be anticipated
with any high degree of confidence. CMA may, on a CASE-BY-CASE basis, vote:

- 43 -

o FOR proposals seeking inquiry and reporting with respect to, rather
than cessation or affirmative implementation of, specific policies
where the pertinent issue warrants separate communication to
shareholders; and

o FOR or AGAINST the latter sort of proposal in light of the relative
benefits and detriments (e.g. distraction, costs, other burdens) to
share value which may be expected to flow from passage of the
proposal.

7. Investment Company Matters
--------------------------

Proxies will generally be voted FOR board-approved proposals, except as follows:

o CMA will vote on a CASE-BY-CASE basis regarding the following
matters:

o Contested elections of directors.

o Approval of investment advisory and/or distribution agreements.

o Approval of distribution plans.

o Issuance of preferred stock.

o Conversion of the company from closed-end to open-end form.

o Changes in the "fundamental policies" of the company.

o Change in the state or form of organization of the company.

o Mergers, acquisitions, reorganizations, liquidations or sales
of all or substantially all of the assets of the company

CMA will generally vote IN ACCORDANCE WITH THE RECOMMENDATION OF THE COMPANY'S
BOARD OF DIRECTORS on all shareholder proposals, except as follows:

o CMA will vote on a CASE-BY-CASE basis regarding the following
matters:

o Proposals to terminate or to submit investment advisory and/or
distribution agreements for competitive bidding.

o Conversion of the company from closed-end to open-end form.

8. Alternative Investment Group ("AIG") Matters
--------------------------------------------

The AIG Proxy Sub-Committee generally will vote in accordance with the
guidelines set forth in this policy. With respect to matters that are not
addressed by the guidelines, the AIG Proxy Sub-Committee will vote each such
matter on a CASE-BY-CASE basis.

B. ABILITY TO VOTE PROXIES OTHER THAN AS PROVIDED IN A ABOVE.

A Portfolio Manager, sub-adviser or other party involved with a client's account
may conclude that the best interest of the firm's client, as defined above,
requires that a proxy be voted in a manner that differs from the predetermined
proxy Voting Guidelines stated in Section IV A. In this situation, he or she
shall request that the Proxy Committee consider voting the proxy other than
according such Guidelines. If any person, group,or entity requests the Proxy
Committee (or any of its members) vote a proxy other than according to the
predetermined Voting Guidelines, that person shall furnish to the Proxy

- 44 -

Committee a written explanation of the reasons for the request and a description
of the person's, group's, or entity's relationship, if any, with the parties
proposing and/or opposing the matter's adoption.

C. PROPOSALS REQUIRING SPECIAL CONSIDERATION

The following proposals require special, individual consideration. The Proxy
Committee will determine how proxies related to all such proposals will be
voted.

1. NEW PROPOSALS. For each new type of proposal that is expected to
be proposed to shareholders of multiple companies, the Proxy
Committee will develop a Voting Guideline which will be
incorporated into this Policy.

2. ACCOUNTS ADHERING TO TAFT HARTLEY PRINCIPLES. All proposals for
these accounts shall be voted according to the Taft Hartley
Guidelines developed by Institutional Shareholder Services, Inc.
("ISS").

3. ACCOUNTS ADHERING TO SOCIALLY RESPONSIBLE PRINCIPLES. All
proposals for these accounts shall be voted according to the
Socially Responsible Guidelines developed by ISS or as specified by
the client.

4. PROXIES OF INTERNATIONAL ISSUERS WHICH BLOCK SECURITIES SALES
BETWEEN THE TIME A SHAREHOLDER SUBMITS A PROXY AND THE VOTE.
Proposals for these securities shall be voted only on the specific
instruction of the Proxy Committee and to the extent practicable in
accordance with the Voting Guidelines set forth in this Policy.

5. PROXIES OF INVESTMENT COMPANY SHARES. Proposals on issues other
than those specified in Section IV A.

6. EXECUTIVE/DIRECTOR COMPENSATION. Except as provided in Section
IV A, proposals relating to compensation of any executive or
director will be voted as recommended by ISS or as otherwise
directed by the Proxy Committee.

7. PRE-EMPTIVE RIGHTS. Proposals to create or eliminate pre-emptive
rights. In evaluating proposals the Proxy Committee will consider
the size of the company and the nature of its shareholder base.

V. VOTING PROCEDURES

The Proxy Committee has developed the following procedures to aid the voting of
proxies according to the Voting Guidelines set forth in Section IV above. The
Proxy Committee may revise these procedures from time to time, as it deems
necessary or appropriate to effect the purposes of this Policy.

o CMA shall use an independent, third-party vendor (currently
Institutional Shareholder Services ("ISS")), to implement its proxy
voting process as CMAs proxy voting agent. This retention is
subject to CMA continuously assessing the vendor's independence
from CMA and its affiliates, and the vendor's ability to perform
its responsibilities (and, especially, its responsibility to vote
client proxies in accordance with CMA's proxy voting guidelines)
free of any actual, potential or apparent material conflicts of
interests that may arise between the interests of the vendor, its
affiliates, the vendor's other clients and the owners, officers or
employees of any such firm, on the one hand, and CMA's clients, on
the other hand. As means of performing this assessment, CMA will
require various reports and notices from the vendor, as well as
periodic audits of the vendor's voting record and other due
diligence.

o ISS shall provide proxy analysis and record keeping services in
addition to voting proxies on behalf of CMA in accordance with this
Policy.

o On a daily basis CMA shall send to ISS a holdings file detailing
each equity holding held in all accounts over which CMA has voting
authority. Information regarding equity holdings for international
portfolio shall be sent weekly.

o ISS shall receive proxy material information from Proxy Edge or the
custodian bank for the account. This shall include issues to be
voted upon, together with a breakdown of holdings for CMA accounts.
ISS shall then reconcile information it receives from CMA with that
it has received from Proxy Edge and custodian banks. Any

- 45 -

discrepancies shall be promptly noted and resolved by ISS, with
notice to CMA.

o Whenever a vote is solicited, ISS shall execute the vote according
to CMA's Voting Guidelines previously delivered by CMA to ISS as
set forth in Section IV.

o If ISS is not sure how to vote a particular proxy, then ISS
will issue a request for voting instructions to CMA over a
secure website. CMA personnel shall check this website
regularly. The request shall be accompanied by a recommended
vote. The recommended vote shall be based upon CMA's
understanding of the Voting Guidelines previously delivered to
ISS. CMA shall promptly provide ISS with any amendments or
modifications to the Voting Guidelines if necessary. CMA shall
return a final instruction to vote to ISS, which ISS shall
record with Proxy Edge or the custodian bank as our agent.

o ISS shall have procedures in place to ensure that a vote is cast on
every security holding maintained by CMA on which a vote is
solicited unless otherwise directed by the Proxy Committee. On a
yearly basis, or as required by our clients CMA shall receive a
report from ISS detailing CMA's voting for the previous period.

o Each time that ISS shall send CMA a request to vote the request
shall be accompanied by the recommended vote determined in
accordance with CMA's Voting Guidelines. ISS shall vote as
indicated in the request unless the client has reserved discretion,
the Proxy Committee determines that the best interest of clients
requires another vote or the proposal is a matter as to which the
Proxy Committee affords special, individual consideration under
Section IV C. In such situations ISS shall vote based on the
direction of the client or the Proxy Committee, as the case may be.
The interests of CMA's Taft Hartley or "Socially Responsible"
clients may impact a proposal that normally should be voted in a
certain way. ISS shall inform CMA of all proposals having impact on
its Taft Hartley and or "Socially Responsible" clients. The Proxy
Voting Committee shall be consulted before a vote is placed in
cases where Taft Hartley or Socially Responsible issues are
presented.

VI. Availability of Proxy Policy and Voting Record

A summary disclosure regarding the provisions of this Policy is available in
CMA's Form ADV. Upon receipt of a Client's request for more information, CMA
will provide to the Client a copy of this Policy and/or how CMA voted proxies
for the Client pursuant to this Policy for up to a one-year period.

TESTING AND MONITORING: NOT APPLICABLE

PERTINENT REGULATION/ COMPLIANCE:

CROSS REFERENCES:

- 46 -

PART C -- OTHER INFORMATION

ITEM 25. FINANCIAL STATEMENTS AND EXHIBITS

1. Financial Statements:

Report of Independent Auditors.

Statement of Assets and Liabilities.

2. Exhibits:

a. Declaration of Trust (1)

b. By-Laws (1)

c. Voting Trust Agreement - Not applicable

d. Articles V, VI, VIII and IX of the Declaration of Trust and
Articles III, IX, XI, XII and XIII of the By-Laws

e. Dividend Reinvestment Plan (to be filed)

f. Rights of Holders of Long-Term Debt - Not applicable

g. (1) Form of Fund Management Agreement (filed herewith)

(2) Form of Portfolio Management Agreement (filed herewith)

h. (1) Form of Underwriting Agreement (to be filed)

(2) Master Agreement among Underwriters (to be filed)

(3) Dealer Agreement (to be filed)

i. Bonus, Profit Sharing, Pension Contracts (None)

j. Form of Custodian Agreement (filed herewith)

k. (1) Form of Transfer Agency and Service Agreement (to be
filed)

(2) Form of Pricing and Bookkeeping Agreement (filed
herewith)

l. Opinion and Consent of Counsel (to be filed)

m. Consent to Service of Process - Not applicable

n. Consent of Independent Auditors (to be filed)

o. Omitted Financial Statements (None)

p. Letter of Investment Intent (to be filed)

q. Model Retirement Plan - Not applicable

r. Code of Ethics

(1) Code of Ethics of Liberty All-Star Mid-Cap Fund (to be
filed)

(2) Code of Ethics of Banc of America Investment Advisors,
Inc. formerly known as Liberty Asset Management Company
(filed herewith)

(3) Code of Ethics of Fiduciary Management, Inc. (filed
herewith)

(4) Code of Ethics of Mazama Capital Management, Inc. (filed
herewith)

(5) Code of Ethics of M A. Weatherbie & Co., Inc. (filed
herewith)

(6) Code of Ethics of Schneider Capital Management
Corporation (filed herewith)

(7) Code of Ethics of Sasco Capital, Inc. (filed herewith)

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

1 Incorporated by reference to Registrant's Initial Registration Statement on
Form N-2 filed on March 22, 2005 (File Nos. 333-123502 and 811-21733) SEC
Accession No. 0000898432-05-000262.

ITEM 26. MARKETING ARRANGEMENTS

(To be provided by amendment)

ITEM 27. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the expenses to be incurred in connection
with the offering described in this Registration Statement:

Securities and Exchange Commission Fees............... $ [ ]
New York Stock Exchange Listing Fees.................. [ ]
NASD, Inc. Fees .................................... [ ]
Federal Taxes .................................... [ ]
State Taxes and Fees.................................. [ ]
Printing and Engraving Expenses....................... [ ]
Legal Fees .................................... [ ]
Trustee Fees .................................... [ ]
Accounting Expenses................................... [ ]
Miscellaneous Expenses................................ [ ]

Total .................................... $ [ ]
==============

ITEM 28. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

(To be provided by amendment)

C-2

ITEM 29. NUMBER OF HOLDERS OF SECURITIES

Number of Record Stockholders as of
Title of Class June [ ], 2005
-------------- -----------------

Shares of beneficial interest, no par value None

ITEM 30. INDEMNIFICATION

Provisions of Article V of the Declaration of Trust states:

SECTION 5.1 NO PERSONAL LIABILITY OF SHAREHOLDERS, TRUSTEES, ETC. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust. All Persons dealing or contracting with the Trustees as such or with the
Trust or having any claim against the Trust shall have recourse only to the
Trust for the payment of their claims or for the payment or satisfaction of
claims, obligations or liabilities arising our of such dealings or contracts. No
Trustee, officer, employee or agent of the Trust whether past, present or
future, shall be subject to any personal liability whatsoever to any Person,
other than the Trust or its Shareholders, in connection with Trust Property or
the affairs of the Trust, save only that arising from bad faith, willful
misfeasance, gross negligence or reckless disregard for his duty to such Person;
and all such Persons shall look solely to the Trust Property for satisfaction of
claims of any nature arising in connection with the affairs of the Trust. If any
Shareholder, Trustee, officer, employee, or agent as such, of the Trust, is made
a party to any suit or proceeding to enforce any such liability, he shall not,
on account thereof, be held to any personal liability. The Trust shall indemnify
and hold each Shareholder harmless from and against all claims and liabilities
to which such Shareholder may become subject by reason of his being or having
been a Shareholder, and shall reimburse such Shareholder for all legal and other
expenses reasonable incurred by him in connection with any such claim or
liability. The rights accruing to a Shareholder under this Section 5.1 shall not
exclude any other right to which such Shareholder may be lawfully entitled, nor
shall anything herein contained restrict the right of the Trust to indemnify or
reimburse a Shareholder in any appropriate situation even though not
specifically provided herein.

SECTION 5.2 NON-LIABILITY OF TRUSTEE, ETC. No Trustee, officer, employee
or agent of the Trust shall be liable to the Trust, its Shareholders, or to any
Shareholder, Trustee, officer, employee, or agent thereof for any action or
failure to act (including without limitation the failure to compel in any way
any former or acting Trustee to redress any breach of trust) except for his own
bad faith, willful misfeasance, gross negligence or reckless disregard of his
duties involved in the conduct of his office.

SECTION 5.3 MANDATORY INDEMNIFICATION. (a) Subject to the exceptions and
limitations contained in paragraph (b) below:

(i) every person who is or has been a Trustee or officer of the
Trust shall be indemnified by the Trust to the fullest extent permitted by law
against all liability and against all expenses reasonable incurred or paid by
him in connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been a Trustee
or officer and against amounts paid or incurred by him in the settlement
thereof;

C-3

(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal,
administrative or other, including appeals), actual or threatened; and the words
"liability" and "expenses" shall include, without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.

(b) No indemnification shall be provided hereunder to a Trustee or
officer:

(i) against any liability to the Trust or the Shareholders by
reason of a final adjudication by the court or other body before which the
proceeding was brought that he engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office:

(ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the reasonable belief
that his action was in the best interest of the Trust

(iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in paragraph (b)(i) or (b)(ii)
resulting in a payment by a Trustee or officer, unless there has been either a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office by the court or other body approving the
settlement or other disposition or a reasonable determination, based upon a
review of readily available facts (as opposed to a full trial-type inquiry) that
he did not engage in such conduct:

(A) by vote of a majority of the Disinterested Trustees acting on
the matter (provided that a majority of the Disinterested Trustees then in
office act on the matter); or

(B) by written opinion of independent legal counsel.

(c) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Trustee or officer may now or hereafter be entitled,
shall continue as to a Person who has ceased to be such Trustee or officer and
shall inure to the benefit of the heirs, executors, administrators, and assigns
of such Person. Noting contained herein shall affect any rights to
indemnification to which personnel of the Trust other than Trustees and officers
may be entitled by contract or otherwise under law.

(d) Expenses of preparation and presentation of a defense to any claim,
action, suit, or proceeding of the character described in paragraph (a) of this
Section 5.3 shall be advanced by the Trust prior to final disposition thereof
upon receipt of an undertaking by or on behalf of the recipient to repay such
amount if it is ultimately determined that he is not entitled to indemnification
under this Section 5.3, provided that either

(i) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising out of
any such advances; or

C-4

(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act on
the matter) or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.

As used in this Section 5.3, a "Disinterested Trustee" is one (i) who is
not an "Interested Person" of the Trust (including anyone who has been exempted
from being an "Interested Person" by any rule, regulation or order of the
Commission, and (ii) against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or had been pending.

SECTION 5.4 NO BOND REQUIRED OF TRUSTEES. No Trustee shall be obligated
to give any bond or other security for the performance of any of his duties
hereunder.

SECTION 5.5 NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS, ETC.
No purchaser, lender, transfer agent or other Person dealing with the Trustees
or any officer, employee or agent of the Trust shall be bound to make any
inquiry concerning the validity of any transaction purporting to be made by the
Trustees or by said officer, employee or agent or be liable for the application
of money or property paid, loaned, or delivered to or on the order of the
Trustees or of said officer, employee or agent. Every obligation, contract,
instrument, certificate, Share, other security of the Trust or undertaking, and
every other act or thing whatsoever executed in connection with the Trust shall
be conclusively presumed to have been executed or done by the executors thereof
only in their capacity as Trustees under the Declaration or in their capacity as
officers, employees or agents of the Trust. Every written obligation, contract,
instrument, certificate, Share, other security of the Trust or undertaking made
or issued by the Trustees shall recite that the same is executed or made by them
not individually, but as Trustees under the Declaration, and that the
obligations of the Trust under any such instrument are not binding upon any of
the Trustees or Shareholders, individually, but bind only the trust estate, and
may contain any further recital which they or he may deem appropriate, but the
omission of such recital shall not operate to bind the Trustees or Shareholders
individually. The Trustees shall at all times maintain insurance for the
protection of the Trust Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem adequate to cover
possible tort liability, and such other insurance as the Trustees in their sole
judgment shall deem advisable.

SECTION 5.6 RELIANCE ON EXPERTS, ETC. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon any opinion of counsel, or upon reports made to the trust by
any of its officers or employees selected dealers, accountants, appraisers or
other experts or consultants selected with reasonable care by the Trustees,
officers or employees of the Trust, regardless of whether such counsel or expert
may also be a Trustee.

Provisions of Section 7 of the Fund Management Agreement states:

C-5

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.

ITEM 31. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

Banc of America Investment Advisors, Inc. formerly known as Liberty Asset
Management Company, the Registrant's Fund Manager, was organized on August 16,
1985 and is primarily engaged in the corporate administration of and the
provision of its multi-management services for the Registrant, Liberty All-Star
Equity Fund, and Liberty All-Star Growth Fund, other multi-managed closed-end
investment companies. It also provides its multi-management services to Liberty
All-Star Equity Fund, Variable Series, a multi-managed open-end investment
company which serves as an investment vehicle for variable annuity contracts
issued by affiliated insurance companies.

Information regarding the business of Liberty Asset Management Company and
its officers and directors is set forth in the Prospectus and in the Statement
of Additional Information and its Form ADV dated April 29, 2005 File No. 801-
26296, filed with the Securities and Exchange Commission and is incorporated
herein by reference.

ITEM 32. LOCATION OF ACCOUNTS AND RECORDS

All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940, as amended ("1940 Act"),
and the rules promulgated thereunder with respect to the Registrant are
maintained at its principal executive offices at 100 Federal Street, Boston,
MA 02111. Certain records, including records relating to Registrant's
shareholders and the physical possession of its securities, may be maintained
pursuant to Rule 31a-3 at the main office of Registrant's transfer agent or
custodian.

ITEM 33. MANAGEMENT SERVICES

None.

ITEM 34. UNDERTAKINGS

1. The Registrant hereby undertakes to suspend the offering of its
shares until it amends its Prospectus if:

(1) subsequent to the effective date of this Registration
Statement, the net asset value per share declines more than 10% from its
net asset value per share as of the effective date of the Registration
Statement; or

C-6

(2) the net asset value increases to an amount greater than its
net proceeds as stated in the Prospectus.

2. N/A

3. N/A

4. N/A

5. The Registrant hereby undertakes that:

(1) For purposes of determining any liability under the 1933 Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant under Rule 497(h) under the 1933 Act
shall be deemed to be part of this Registration Statement as of the time
it was declared effective; and

(2) For the purposes of determining any liability under the 1933
Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial BONA fide offering thereof.

6. The Registrant hereby undertakes to send by first class mail or
other means designed to ensure equally prompt delivery, within two
business days of receipt of a written or oral request, its Statement of
Additional Information.

C-7

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Washington, District of Columbia, on the 22nd day of June, 2005.

LIBERTY ALL-STAR MID-CAP FUND

By: /S/ WILLIAM R. PARMENTIER JR.*
--------------------------------
Name: William R. Parmentier Jr.
Title: President and Chief
Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/S/ WILLIAM R. PARMENTIER JR.* President and Chief June 22, 2005
------------------------------- Executive Officer
William R. Parmentier Jr.

/S/ MICHAEL G. CLARKE* Chief Accounting Officer June 22, 2005
------------------------------
Michael G. Clarke

/S/ J. KEVIN CONNAUGHTON * Treasurer and Principal June 22, 2005
------------------------------ Financial Officer
J. Kevin Connaughton

/S/ JOHN J. NEUHAUSER* Trustee June 22, 2005
------------------------------
John J. Neuhauser

/S/ RICHARD W. LOWRY* Chairman and Trustee June 22, 2005
------------------------
Richard W. Lowry

/S/ JOHN A. BENNING* Trustee June 22, 2005
------------------------------
John A. Benning

SIGNATURE TITLE DATE
--------- ----- ----

/S/ WILLIAM E. MAYER* Trustee June 22, 2005
------------------------
William E. Mayer

* Signed by Kathy Kresch Ingber pursuant to Powers of Attorney filed herewith.

POWER OF ATTORNEY

That the undersigned officers and trustees of Liberty All-Star Mid-Cap
Fund (the "Fund"), hereby nominate, constitute and appoint each of Clifford J.
Alexander, Kathy Kresch Ingber, Cameron S. Avery, J. Kevin Connaughton, Ryan C.
Larrenaga, David A. Rozenson, William R. Parmentier, Jr. and Stacy H. Winick,
each of them singly, with full power to act without the other, his/her true and
lawful attorney-in-fact and agent, with full power of substitution and
re-substitution, for him/her and on his/her behalf, and in his/her name and in
his/her capacity as officer/trustee of the Fund, to make, execute and sign any
and all amendments to the Fund's registration statement on Form N-2, and to file
with the Securities and Exchange Commission, and any other regulatory authority
having jurisdiction over the offer and sale of the shares of capital stock of
the Fund, any such amendment, and any and all supplements thereto or to any
prospectus or statement of additional information forming a part thereof, and
any and all exhibits and other documents requisite in connection therewith,
granting unto said attorneys-in-fact, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in and about the premises as fully to all intents and purposes as the
undersigned might or could do. The undersigned officers and directors hereby
ratify and confirm all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the undersigned officers and
directors have hereunto set their hands and seals in the City of Boston,
Commonwealth of Massachusetts, on the dates indicated.

/S/ JOHN A. BENNING Trustee MAY 23, 2005
------------------------------ ------------
John A. Benning Date

/S/ RICHARD W. LOWRY Trustee MAY 23, 2005
------------------------------ ------------
Richard W. Lowry Date

/S/ WILLIAM E. MAYER Trustee MAY 23, 2005
------------------------------ ------------
William E. Mayer Date

/S/ JOHN J. NEUHAUSER Trustee MAY 23, 2005
------------------------------ ------------
John J. Neuhauser Date

/S/ WILLIAM R. PARMENTIER, JR. President and MAY 13, 2005
------------------------------- Chief Executive Officer ------------
William R. Parmentier, Jr. Date

/S/ J. KEVIN CONNAUGHTON Treasurer and MAY 13, 2005
------------------------------ Principal Financial ------------
J. Kevin Connaughton Officer Date

/S/ MICHAEL G. CLARKE Chief Accounting Officer MAY 13, 2005
------------------------------ ------------
Michael G. Clarke Date

/S/ JEFFREY R. COLEMAN Controller MAY 13, 2005
------------------------ ------------
Jeffrey R. Coleman Date

/S/ DAVID A. ROZENSON Secretary MAY 16, 2005
------------------------ ------------
David A. Rozenson Date

LIBERTY ALL-STAR MID-CAP FUND

EXHIBIT INDEX

EXHIBIT DOCUMENT DESCRIPTION
------- --------------------

g. (1) Form of Fund Management Agreement

g. (2) Form of Portfolio Management Agreement

j. Form of Custodian Agreement

k. (2) Form of Pricing and Bookkeeping Agreement

r. (2) Code of Ethics of Banc of America Investment Advisors,
Inc. formerly known as Liberty Asset Management Company

r. (3) Code of Ethics of Fiduciary Management, Inc.

r. (4) Code of Ethics of Mazama Capital Management, Inc.

r. (5) Code of Ethics of M. A. Weatherbie & Co., Inc.

r. (6) Code of Ethics of Schneider Capital Management

r. (7) Code of Ethics of Sasco Capital, Inc.