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LIBERTY ALL-STAR GROWTH & INCOME FUND Semiannual Report
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June 30, 2000
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President's Message
Dear Shareholder:
Liberty Funds is a diverse family of mutual funds representing a wide selection
of investment styles and specialized money management. At Liberty Funds, our
goal is to help you reach for financial freedom -- however you define it.
Liberty All-Star Growth & Income Fund is managed by Liberty Asset Management
Company (LAMCO). LAMCO uses a disciplined strategy with specific selection
criteria to bring an institutional money management approach to the individual
investor.
LAMCO has built their business around selecting and monitoring some of the most
respected investment managers in the industry. They choose their managers by
following a disciplined approach that seeks to produce consistent returns over
time.
They apply qualitative and quantitative analysis when selecting managers for
Liberty All-Star Growth & Income Fund. They meet the managers face-to-face. They
compare track records. They look at those who focus on a particular style. They
make sure they're a fit with their other managers. And once they're on board,
they keep a close eye on their performance.
The following report will provide you with more information on the Fund's
performance during the period. For more information about the Fund, contact your
financial advisor or visit us on the Internet at www.libertyfunds.com. As
always, we thank you for investing in Liberty All-Star Growth & Income Fund.
Sincerely,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
August 10, 2000
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Not FDIC May Lose Value
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Insured No Bank Guarantee
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Because economic and market conditions change frequently, there can be no
assurance that the trends described in this report will continue or come to
pass.
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Portfolio Managers' Report
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U.S. EQUITY MARKETS EXPERIENCE DRAMATIC VOLATILITY
U.S. equity markets experienced wide swings in performance as investors shifted
their focus from technology companies with high valuations to companies with
more reasonable valuations and demonstrated earnings. As a result, portfolio
managers focusing on the value style of investment management outperformed
growth portfolio managers during the months of March, April and May.
Growth stocks experienced a broad correction beginning in March 2000 with the
technology-heavy NASDAQ Composite Index declining over 30% from March 1 to May
31. Aggressive growth portfolio managers focusing on smaller technology and
Internet companies experienced even larger declines.
The net asset value of Liberty All-Star Growth & Income Fund's Class A shares
increased from $11.15 on December 31, 1999 to $11.66 on June 30, 2000. The
Fund's Class A shares had a total return of 4.57% during this period without a
sales charge. The Fund outperformed the Standard and Poor's 500 (S&P 500) Index,
a broad-based benchmark of stock market performance, which returned -0.46%
during the six-month period. The Fund's allocation to three portfolio managers
who practice the value style of investment management helped performance during
the March to May time period.
In addition, TCW Investment Management Company, our newest portfolio manager,
has performed exceptionally well. Glen E. Bickerstaff, managing director, U.S.
Equities at TCW, serves as a portfolio manager to the Fund. Mr. Bickerstaff and
his investment team practice a growth equity investment style which they apply
to their portion of the Fund's assets. Please refer to the manager interview on
page 3 for a more detailed description of TCW and Mr. Bickerstaff 's investment
philosophy.
Since 1986, LAMCO has followed a disciplined investment strategy to bring
institutional money managers to the individual investor. We have built our
business around selecting and monitoring some of the most respected investment
managers in the industry and we remain committed to providing investors with
access to a level of professional money management once reserved for only the
largest institutional investors.
/s/ William R. Parmentier /s/ Christopher S. Carabell
William R. Parmentier and Christopher S. Carabell are responsible for the
management of the Portfolio. Mr. Parmentier is the president and chief
investment officer of LAMCO. Mr. Carabell is a senior vice president of LAMCO.
An investment in the Fund offers significant long-term growth potential, but
also involves certain risks. The Fund may be affected by stock market
fluctuations that occur in response to economic and business developments.
CURRENT MANAGEMENT TEAM AND THEIR INVESTMENT STYLES
WESTWOOD MANAGEMENT CORPORATION 20%
GROWTH Invest in companies selling at reasonable valuations based on the firm's
earnings projections, which are not yet reflected in consensus estimates.
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TCW INVESTMENT MANAGEMENT COMPANY 20%
GROWTH Invest in companies that have superior sales growth, leading market
share, and high profit margins.
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BOSTON PARTNERS ASSET MANAGEMENT, L.P. 20%
Value Invest in companies with low price-to-earnings and price-to-book ratios
where a catalyst for positive change has been identified.
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J.P. MORGAN INVESTMENT INC. 20%
Value Invest in companies diversified across all sectors that are undervalued
relative to their projected growth rates.
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OPCAP ADVISORS 20%
(an Oppenheimer Capital subsidiary)
Value Invest in companies that exhibit the ability to generate excess cash flow
while earning high returns on invested capital.
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[PIE CHART]
The allocations among the portfolio managers may change over time due to market
action and other factors.
1
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PERFORMANCE INFORMATION
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NET ASSET VALUE PER SHARE AS OF 6/30/00
<TABLE>
<CAPTION>
<S> <C>
Class A $11.66
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Class B $11.55
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Class C $11.55
-------------------------------
Class Z $11.70
-------------------------------
</TABLE>
TOP TEN HOLDINGS AS OF 6/30/00
<TABLE>
<CAPTION>
<S> <C>
Intel Corp 2.65%
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Computer Associates Int'l Inc. 2.13%
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Citigroup Inc 1.86%
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Cisco System Inc 1.71%
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Pharmacia Corporation 1.65%
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Dell Computer Corporation 1.60%
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Siebel Systems Inc. 1.58%
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SBC Communications Inc 1.57%
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Avon Products Inc 1.49%
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Freddie Mac 1.34%
</TABLE>
Holdings are calculated as a percentage of net assets. Because the Fund is
actively managed, there can be no guarantee the Fund will maintain these
holdings in the future.
TOP FIVE SECTOR BREAKDOWNS 6/30/00
<TABLE>
<CAPTION>
<S> <C>
Technology 22.6%
Financial 20.5%
Consumer Staples 12.1%
Health Care 9.1%
Capital Goods 8.1%
</TABLE>
Sector breakdowns are calculated as a percentage of net assets. Because the Fund
is actively managed, there can be no guarantee the Fund will continue to
maintain the same sector breakdowns in the future.
Industry sectors in the following financial statements are based upon the
standard industrial classifications (SIC) as published by the U.S. Office of
Management and Budget. The sector classifications used on this page are based
upon the Advisors' defined criteria as used in the investment process.
PERFORMANCE INFORMATION -- AVERAGE ANNUAL TOTAL RETURNS AS OF 6/30/00
<TABLE>
<CAPTION>
Share Class A B C Z
Inception Date 3/1/99 3/1/99 3/1/99 3/1/99
-----------------------------------------------------------------------------------------------------------------------------------
w/o sales with sales w/o sales with sales w/o sales with sales w/o sales
charge charge charge charge charge charge charge
<S> <C> <C> <C> <C> <C> <C> <C>
6 Months (cumulative) 4.57 -1.44 4.15 -0.85 4.24 3.24 4.74
1 Year 4.39 -1.62 3.59 -1.41 3.59 2.59 4.65
Life 12.23 7.34 11.43 8.52 11.43 11.43 12.51
</TABLE>
Past performance cannot predict future results. Returns and value of an
investment will vary resulting in a gain or a loss on sale. All results shown
assume reinvestment of distributions. The "with sales charge" returns include
the maximum 5.75% sales charge for Class A shares, the appropriate Class B
contingent deferred sales charge for the holding period after purchase as
follows: through first year - 5%, second year - 4%, third year - 4%, fourth year
- 3%, fifth year - 2%, sixth year - 1%, thereafter - 0% and the Class C
contingent deferred sales charge of 1% for the first year only. Performance for
different share classes will vary based on differences in sales charges and fees
associated with each class.
Performance results reflect any voluntary waivers or reimbursements of Fund
expenses by the Advisor of its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
2
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Manager Interview
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[PHOTO OF GLEN E. BICKERSTAFF
TCW Investment Management Company]
MANAGER INTERVIEW
THE TCW FORMULA FOR SUCCESS: PAY A REASONABLE PRICE FOR GREAT COMPANIES
BENEFITING FROM SECULAR TRENDS AND HOLD THEM FOR THE LONG TERM
LAMCO: Welcome. Perhaps, we could start with some insights into the firm.
BICKERSTAFF: TCW was established in 1971 and we continue today as a privately
held firm that focuses solely on investment management. The shares of ownership
are held primarily by employees and some outside members of the Board of
Directors.
As of December 31, 1999, we had in excess of $70 billion under management for
more than 1,200 clients. The assets we manage are about one-half fixed income.
We have had in excess of 600 employees, and we're headquartered in Los Angeles.
We also have offices in New York, Houston, San Francisco, Hong Kong and London.
With our focus on the investment management business and our private ownership,
we have had the ability to attract and retain some of the best people in the
business and to create a true entrepreneurial spirit.
LAMCO: Tell us about the investment style, objectives, philosophy and strategy
that you bring to the All-Star portfolio.
BICKERSTAFF: Our concentrated portfolio for Liberty All-Star Growth & Income
Fund is based on our philosophy that superior performance over time can be
achieved by participating in the long-term success of selected extraordinary
businesses purchased at attractive valuations. Our style is focused on owning
high quality companies that have had true business advantages, and strong and
enduring business models. We also require our companies to benefit from
long-term, secular trends. We're looking for companies that can truly dominate
their industries, but we also want them to be able to capitalize on major
secular trends in the economy.
LAMCO: You also want to stay invested in those companies for a fairly long
period of time?
BICKERSTAFF: Absolutely. While our valuations are based on a two-year forecast,
we're affording growing companies the valuation they deserve for their ability
to achieve sustainable, consistent growth. In fact, the ideal investment is the
one that we never have to sell.
TCW is a growth manager, seeking to invest in companies that have superior sales
growth, leading and/or rising market shares, and/or rising profit margins. Its
concentrated growth equity strategy seeks to invest in leading companies with
distinct advantages in their business model and an inherent edge over
competitors. Research plays a critical role in the selection process, and the
investment horizon is long term. TCW is the newest of the Fund's five portfolio
management firms, having joined the team in November 1999. Glen E. Bickerstaff,
Managing Director, U.S. Equities, shared his thoughts recently with the Fund
Manager, LAMCO.
--------------------------------------------------------------------------------
The views expressed in this interview represent the portfolio manager's views at
the time of the discussion (April 2000) and are subject to change.
--------------------------------------------------------------------------------
3
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Manager Interview (continued)
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LAMCO: How do you find those companies?
BICKERSTAFF: The first step in our investment process is to identify long-term
secular changes. We think about changes in industry dynamics or technology that
create significant opportunities for certain types of companies.
We try to get our arms around how big the change can be, how long will it last,
who will benefit and who will become a victim. Then we begin to focus on
individual players within the industry to determine which of them will have
superior business models and advantages that are both sustainable and scalable.
We want companies that will not only grow, but improve their cash flow and
profitability at the same time.
The inputs to this process can come from company management visits, our in-house
research department or from others at TCW or Wall Street. We analyze these
trends and individual companies ourselves, and then make judgements as to which
companies to include in the portfolio.
LAMCO: Give us a couple of examples of long-term secular change, please.
BICKERSTAFF: One very long-lived secular change is based on demographics, and
that is the graying of America and the opportunity it creates for financial
services companies to provide investment services for the generation that's
concerned about retirement. So, we own some "asset gatherers" -- lower-cost
brokerage service providers, for instance. Another demographically-based trend
is the demand for pharmaceutical and biotechnological healthcare products for an
aging population.
Another very broad trend is technology, more specifically the proliferation of
technologies supporting the notion that as products become more functional,
lightweight and powerful, we as business and individual consumers will demand
more and more of them. The potential growth rate for companies that produce
products that offer very quick productivity payback is very compelling. We
believe that while the proliferation of technology has been a strong secular
trend in recent years, it will continue to accelerate owing to new Internet
solutions and services.
LAMCO: In what sense are you using the term "scalable?"
BICKERSTAFF: We want companies whose opportunity will get better as they get
bigger -- in other words, we want companies to be able to leverage their
strengths. In the case of software, the source code is scalable. In health care,
it's research and development. In the case of retail or distribution companies,
scale is achieved through warehousing and supply chain economies. We also very
much want managements that have proven their ability to continuously create
business advantage. We want companies that don't rest on their laurels, but
continually reinvest to make themselves more productive and innovative.
4
<PAGE> 7
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Manager Interview (continued)
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LAMCO: How about your sell disciplines?
BICKERSTAFF: Our sell disciplines are based on the fundamentals of the company
relative to price as opposed to absolute price alone. The first discipline is to
sell or reduce a position at a point where the stock's price reflects the most
optimistic outlook. As a means of risk control, we will also sell or scale back
when a stock becomes too large a position in the portfolio.
The second sell discipline is to sell a stock, even though there's still a
compelling case for owning it, if we find better opportunity in the market
place. At all times, we want our concentrated portfolio to contain the very best
companies we can own.
The third sell discipline is a situation in which companies' operational
expectations fail to materialize. This, for instance, could be a company that is
not meeting cash flow projections, or experiencing a slowdown in revenue growth.
LAMCO: Do you look at companies within a certain capitalization range?
BICKERSTAFF: Yes, we typically look at companies that have a market
capitalization of $3 billion or greater. We're generally large-cap investors,
but we allow ourselves to identify attractive companies that have the potential
to become significantly larger.
LAMCO: How about overall portfolio construction such as the portion of the
All-Star portfolio that TCW manages?
BICKERSTAFF: I believe we're adequately diversified, but at the same time we're
concentrated. Our portfolios typically have 30 holdings, and we think that a
30-stock portfolio provides very good diversification, while enabling us to
capture the positive effects of the good companies we identify in the investment
process.
In terms of portfolio construction, we weight the holdings such that those ideas
that we believe have the greatest ability to capitalize on secular trends or
have extraordinary growth prospects will be overweighted. Thus, some positions
might be five to six percent of the portfolio, others might be as small as two
percent.
Our portfolio characteristics versus the S&P 500 are actually fairly close in
terms of weighted average market capitalization.
Currently, we're a bit north of $100 billion. The S&P 500 is well north of $100
billion. But the revenue and earnings growth rates of our companies are well in
excess of those in the S&P 500. In addition, our companies tend to be much more
profitable than the S&P 500 as a whole and they typically have less debt. Our
companies trade at a premium multiple in both earnings and book value versus the
market. However, we feel that our companies' consistency of growth warrants the
higher valuation. Further, the prices we're paying for the growth we're getting
makes our portfolio much more compelling than the broad market.
5
<PAGE> 8
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Manager Interview (continued)
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LAMCO: To sum up, what you just said is the most differentiating thing about TCW
and what you do for the All-Star Portfolio?
BICKERSTAFF: We feel that TCW is distinguished for fostering an environment that
allows for an entrepreneurial approach to investment management. We have
appropriate risk controls, but also enjoy autonomy. The firm is very, very
supportive in terms of resources for research and trading, legal and compliance,
and state-of-the-art information systems. The investment professionals here have
all of the tools and support they need, yet they're able to act with the freedom
of a smaller investment boutique. So, I think TCW is distinguished in that it
has created an environment that is the best of both worlds. In terms of what we
do for the All-Star Portfolio, I think what's distinctive about our concentrated
growth strategy is that the investment process is designed to capture advantage
in every possible way. That includes conviction-weighting the holdings, being
concentrated and not over-diversified, capturing the benefit of leading
companies that have a wind at their back, a valuation methodology that prevents
us from paying too much, and a heavy orientation toward avoiding negative
outcomes by researching our holdings and candidates for purchase very, very
intensely. We are very focused on our investment approach and the principles of
investing are consistently applied.
LAMCO: Borrowing from the term "new economy," do you think we have a new stock
market, paradigm today, as some investors suggest?
BICKERSTAFF: We note, with interest, the divergence and recent convergence
between so-called "new economy" stocks and "old economy" stocks, or what is
depicted by the NASDAQ Composite and the Dow Jones Industrial Average. We also
note that the extraordinary gap between those two indices narrowed in the latter
part of March then crossed over in the month of April. Our response has been to
structure the portfolio to benefit from companies that are providing the
infrastructure for technological development in the Internet-based economy.
We've also structured it such that we participate in the companies that utilize
the Internet to reduce their cost structure and improve profitability. We have
largely avoided the direct Internet companies that we feel do not yet have
proven business models, but we are watching several of them with keen interest
to see how they progress. In sum, rather than focus on the "new economy" or the
"old economy," we'd rather orient ourselves toward the "real economy" -- that
is, companies that are creating real wealth for shareholders.
LAMCO: Thank you very much for giving us a good look at TCW and your position in
the All-Star portfolio, and for sharing insights into today's market
environment. Once again, welcome to the All-Star team.
6
<PAGE> 9
-----------------------------
Schedule of Investments
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June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (95.5%) SHARES MARKET VALUE
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<S> <C> <C>
AEROSPACE & DEFENSE (0.6%)
Boeing Co. 3,793 $ 158,595
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AUTOS, TIRES & ACCESSORIES (0.3%)
Ford Motor Co. 400 25,800
Lear Corp. (a) 2,800 56,000
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81,800
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BANKS (3.8%)
ABN AMRO Holdings NV (b) 3,286 80,712
Astoria Financial Corp. 600 15,450
Banc One Corp. 4,100 108,906
Bank of America Corp. 500 21,500
Chase Manhattan Corp. 3,250 149,703
First Union Corp. 2,800 69,475
FleetBoston Financial Corp. 4,000 136,000
KeyCorp 1,200 21,150
PNC Bank Corp. 3,350 157,031
Washington Mutual, Inc. 2,000 57,750
Wells Fargo & Co. 4,193 162,479
Zions Bancorporation 1,300 59,658
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1,039,814
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BROADCASTING & CABLE (2.2%)
AMFM, Inc. (a) 3,500 241,500
AT&T Corp.-Liberty Media Group (a) 3,600 87,300
Cablevision Systems Corp. Class A (a) 1,200 81,450
Comcast Corp. Special Class A 600 24,300
Cox Communications, Inc. (a) 2,150 97,959
The News Corp. Ltd. (b) 1,400 76,300
----------
608,809
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BUSINESS & CONSUMER SERVICES (1.7%)
America Online, Inc. (a) 1,200 63,300
Cendant Corp. (a) 2,100 29,400
Paychex, Inc. 6,150 258,300
Sabre Group Holdings, Corp. 4,230 120,555
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471,555
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CHEMICALS (0.7%)
E.I. du Pont de Nemours & Co. 2,900 126,875
Rohm & Haas Co. 2,300 65,550
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192,425
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COMMUNICATIONS EQUIPMENT (3.4%)
Cisco Systems, Inc. (a) 7,400 $ 470,362
Lucent Technologies, Inc. 2,800 165,900
Nokia Corp. (b) 4,500 224,719
Nortel Networks Corp. 700 47,775
Tellabs, Inc. (a) 400 27,375
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936,131
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COMPUTER & BUSINESS EQUIPMENT (4.8%)
Compaq Computer Corp. 7,000 178,937
Dell Computer Corp. (a) 8,900 438,881
EMC Corp. (a) 1,000 76,938
Hewlett-Packard Co. 1,600 199,800
International Business Machines Corp. 1,720 188,447
Seagate Technology, Inc. (a) 600 33,000
Sun Microsystems, Inc. (a) 1,600 145,500
3Com Corp. (a) 1,100 63,388
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1,324,891
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COMPUTER SERVICES & SOFTWARE (6.0%)
Citrix Systems, Inc. (a) 500 9,469
Computer Associates International, Inc. 11,423 584,715
Electronic Data Systems Corp. 900 37,125
Intuit, Inc. (a) 1,700 70,338
Microsoft Corp. (a) 4,250 340,000
Oracle Corp. (a) 600 50,437
Parametric Technology Co. (a) 6,400 70,400
Siebel Systems, Inc. (a) 2,650 433,441
Synopsys, Inc. (a) 1,900 65,669
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1,661,594
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CONSUMER PRODUCTS (3.7%)
Avon Products, Inc. 9,184 408,688
Clorox Co. 500 22,406
Gillette Co. 4,350 151,978
Kimberly-Clark Corp. 3,400 195,075
Philip Morris Companies, Inc. 2,800 74,375
Procter & Gamble Co. 1,850 105,912
UST, Inc. 4,200 61,688
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1,020,122
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DIVERSIFIED (3.3%)
Cooper Industries, Inc. 700 22,794
General Electric Co. 2,700 143,100
Honeywell International, Inc. 900 30,319
Minnesota Mining & Manufacturing Co. 4,142 341,715
Textron, Inc. 2,600 141,213
The Seagram Co. Ltd. 1,000 58,000
Tyco International Ltd. 3,600 170,550
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907,691
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</TABLE>
See notes to investment portfolio.
7
<PAGE> 10
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Schedule of Investments (continued)
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June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED) SHARES MARKET VALUE
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<S> <C> <C>
DRUGS & HEALTH CARE (9.0%)
ALZA Corp. (a) 1,500 $ 88,688
American Home Products Corp. 600 35,250
Amgen, Inc. 3,250 228,313
Aventis S.A. (b) 800 58,050
Baxter International, Inc. 4,400 309,375
Biogen, Inc. (a) 3,050 196,725
Bristol-Myers Squibb Co. 3,200 186,400
Eli Lilly & Co. 1,000 99,875
Genentech, Inc. (a) 800 137,600
Medtronic, Inc. 2,400 119,550
PE Corp-PE Biosystems Group 300 19,762
Pfizer, Inc. 7,025 337,200
Pharmacia Corp. 8,796 454,643
Schering-Plough Corp. 1,100 55,550
Wellpoint Health Networks, Inc. (a) 2,100 152,119
----------
2,479,100
----------
ELECTRIC & GAS UTILITIES (1.9%)
Allegheny Energy, Inc. 1,200 21,600
Columbia Energy Group 700 45,938
DTE Energy Co. 800 24,450
Florida Progress Corp. 2,000 93,750
Peco Energy Co. 4,100 165,281
P G & E Corp. 900 22,162
Reliant Energy, Inc. 5,400 159,637
----------
532,818
----------
ELECTRONICS & ELECTRICAL EQUIPMENT (6.7%)
Agilent Technologies, Inc. (a) 1,200 88,500
Applied Materials, Inc. (a) 2,900 262,813
Emerson Electric Co. 3,306 199,600
Intel Corp. 5,450 728,597
JDS Uniphase Corp. (a) 1,050 125,868
Maxim Integrated Products, Inc. (a) 4,550 309,115
Motorola, Inc. 1,560 45,337
Sensormatic Electronics Corp. (a) 1,600 25,300
Texas Instruments, Inc. 900 61,819
----------
1,846,949
----------
FINANCIAL SERVICES (8.2%)
AXA Financial, Inc. 4,300 146,200
Capital One Financial Corp. 1,000 44,625
The Charles Schwab Corp. 7,950 267,319
The CIT Group, Inc. 2,000 32,500
Citigroup, Inc. 8,490 511,522
Countrywide Credit Industries, Inc. 10,593 321,100
Fannie Mae 400 20,875
Freddie Mac 9,096 368,388
MetLife, Inc. (a) 1,700 35,806
The Goldman Sachs Group, Inc. 500 47,438
Morgan Stanley Dean Witter & Co. 1,900 158,175
Providian Financial Corp. 2,650 238,500
U.S. Bancorp 3,000 57,750
----------
2,250,198
----------
FOOD, BEVERAGE & RESTAURANTS (2.9%)
Anheuser-Busch Companies, Inc. 2,100 156,843
Bestfoods 600 41,550
The Coca Cola Co. 700 40,206
Diageo PLC (b) 5,193 184,676
Heinz (H.J.) Co. 1,700 74,375
McDonald's Corp. 5,112 168,377
Sara Lee Corp. 6,300 121,669
----------
787,696
----------
HOTELS & ENTERTAINMENT/LEISURE (2.1%)
Carnival Corp. 4,200 81,900
Pixar, Inc. (a) 2,200 77,550
Starwood Hotels & Resorts
Worldwide, Inc. 2,600 84,013
Time Warner, Inc. 2,600 197,600
The Walt Disney Co. 3,600 139,725
----------
580,788
----------
INDUSTRIAL EQUIPMENT (3.2%)
Caterpillar, Inc. 3,755 127,200
Deere & Co. 9,500 351,500
Dover Corp. 3,793 153,854
Illinois Tool Works, Inc. 2,800 159,600
Ingersoll-Rand Co. 2,525 101,631
----------
893,785
----------
INSURANCE (6.1%)
ACE Ltd. 10,950 306,600
AFLAC, Inc. 4,271 196,199
Allmerica Financial Corp. 3,375 176,766
Ambac Financial Group, Inc. 1,300 71,256
American International Group, Inc. 1,100 129,250
CIGNA Corp. 2,275 212,713
The Progressive Corp. 4,900 362,600
XL Capital Ltd. 4,090 221,371
----------
1,676,755
----------
METALS & MINING (1.4%)
Alcan Aluminum Ltd. 5,000 155,000
Alcoa, Inc. 7,560 219,240
----------
374,240
----------
</TABLE>
See notes to investment portfolio.
8
<PAGE> 11
------------------------------------
Schedule of Investments (continued)
------------------------------------
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (continued) SHARES MARKET VALUE
----------------------------------------------------------------------------------
<S> <C> <C>
OIL & GAS (8.0%)
Apache Corp. 2,800 $ 164,675
Baker Hughes, Inc. 800 25,600
Burlington Resources, Inc. 7,800 298,350
Conoco, Inc., Class A 6,450 141,900
Conoco, Inc., Class B 5,800 142,463
Devon Energy Corp. 2,708 152,156
Dynegy Inc. 400 27,325
El Paso Energy Corp. 6,200 315,813
Exxon Mobil Corp. 4,016 315,256
Global Marine, Inc. (a) 1,100 31,006
Halliburton Co. 2,975 140,382
Occidental Petroleum Corp. 7,700 162,181
Royal Dutch Petroleum Co. 1,000 61,563
Tosco Corp. 800 22,650
USX-Marathon Group 4,800 120,300
The Williams Companies, Inc. 1,900 79,206
----------
2,200,826
----------
PAPER (0.2%)
Temple-Inland, Inc. 1,000 42,000
----------
POLLUTION CONTROL (0.1%)
Waste Management, Inc. 1,200 22,800
----------
REAL ESTATE (1.0%)
Kimco Realty Corp. 1,700 69,700
TrizecHahn Corp. 8,400 150,150
Vornado Realty Trust 1,500 52,125
----------
271,975
----------
RETAIL TRADE (5.2%)
Circuit City Stores, Inc. 600 19,912
Costco Wholesale Corp. (a) 2,750 90,750
Federated Department Stores, Inc. (a) 4,500 151,875
Harcourt General, Inc. 4,725 256,922
The Home Depot, Inc. 4,600 229,712
The Limited, Inc. 6,000 129,750
May Department Stores Co. 5,214 125,136
Safeway, Inc. (a) 2,400 108,300
Target Corp. 600 34,800
Tiffany & Co. 1,300 87,750
The TJX Companies, Inc. 1,400 26,250
Wal-Mart Stores, Inc. 3,150 181,519
----------
1,442,676
----------
TELECOMMUNICATIONS (4.9%)
Allegiance Telecom, Inc. (a) 250 $ 16,000
AT&T Corp. 3,100 98,038
Bell Atlantic Corp. 2,400 121,950
Global Crossing Ltd. (a) 1,000 26,313
GTE Corp. 2,950 183,638
Level 3 Communications, Inc. (a) 250 22,000
Qwest Communications
International, Inc. (a) 500 24,844
SBC Communications, Inc. 9,959 430,727
Sprint Corp. (FON Group) 3,253 165,903
Sprint Corp. (PCS Group) (a) 500 29,750
WorldCom, Inc. (a) 5,200 238,550
----------
1,357,713
----------
TRANSPORTATION (4.1%)
AMR Corp. (a) 4,000 105,750
Burlington Northern Santa Fe Corp. 6,647 152,465
CSX Corp. 2,500 52,969
Delta Air Lines, Inc. 3,000 151,687
Kansas City Southern Industries, Inc. 3,750 332,578
Southwest Airlines Co. 8,650 163,809
Union Pacific Corp. 1,400 52,063
United Parcel Service, Inc. Class B 2,300 135,700
----------
1,147,021
----------
TOTAL COMMON STOCKS
(Cost $23,966,981) 26,310,767
----------
PREFERRED STOCK (0.8%)
BROADCASTING & CABLE
The News Corp. Ltd. (b) 4,848 216,030
(Cost $137,354) ----------
TOTAL INVESTMENTS (96.3%)
(Cost $24,104,335) (c) 26,526,797
==========
</TABLE>
See notes to investment portfolio.
9
<PAGE> 12
------------------------------------
Schedule of Investments (continued)
------------------------------------
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PAR MARKET VALUE
------------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENT (3.5%)
REPURCHASE AGREEMENT (3.5%)
SBC Warburg Ltd., Repurchase Agreement
dated 6/30/00, 6.60% to be repurchased
at $972,535 on 7/03/00, collateralized by
U.S. Treasury notes with various
maturities to 2026, with a current
market value of $992,402 $ 972,000 $ 972,000
-----------
OTHER ASSETS & LIABILITIES, NET (0.2%) 38,012
-----------
NET ASSETS (100.0%) $27,536,809
===========
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Represents an American Depositary Receipt.
(c) Cost for federal income tax purposes
is the same.
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation and depreciation of
investments at June 30, 2000 is as follows:
Gross unrealized appreciation $ 4,233,728
Gross unrealized depreciation (1,811,266)
-----------
Net unrealized appreciation $ 2,422,462
===========
</TABLE>
See notes to financial statements.
10
<PAGE> 13
-------------------------------------
Statement of Assets and Liabilities
-------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investments at value (cost $24,104,335) $ 26,526,797
Short-term obligations 972,000
------------
$ 27,498,797
------------
Cash $ 17,844
Receivable for:
Investments sold 279,611
Fund shares sold 51,664
Dividends 28,111
Interest 178
Expense reimbursement due from Advisor 89,368 466,776
------------ ------------
Total Assets $ 27,965,573
LIABILITIES
Payable for:
Investments purchased 367,661
Fund shares repurchased 9,287
Accrued:
Management fee 13,591
Administration fee 5,225
Service fee 1,164
Distribution fee -- Class B 1,818
Distribution fee -- Class C 536
Bookkeeping fee 3,000
Transfer agent fee 2,003
Other 24,479
------------
Total Liabilities 428,764
------------
NET ASSETS $ 27,536,809
============
Net asset value & redemption price per share --
Class A ($4,300,146/368,759) $ 11.66(a)
============
Maximum offering price per share --
Class A ($11.66/0.9425) $ 12.37(b)
============
Net asset value & offering price per share --
Class B ($16,364,155/1,417,146) $ 11.55(a)
============
Net asset value & offering price per share --
Class C ($4,534,229/392,735) $ 11.55(a)
============
Net asset value, offering and redemption
price per share --
Class Z ($2,338,279/199,907) $ 11.70
============
COMPOSITION OF NET ASSETS
Capital paid in $ 25,295,581
Overdistributed net investment income (88,397)
Accumulated realized loss (92,837)
Net unrealized appreciation 2,422,462
------------
$ 27,536,809
============
</TABLE>
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
---------------------------------------------------
Statement of Operations
---------------------------------------------------
For the Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 149,978
Interest 19,589
-----------
Total investment income (net of
nonreclaimable foreign taxes
withheld at source which
amounted to $1,203) 169,567
EXPENSES
Management fee $ 75,748
Administrative fee 25,249
Service fee -- Class A, Class B, Class C 28,747
Distribution fee -- Class B 55,287
Distribution fee -- Class C 16,122
Transfer agent fee 25,852
Bookkeeping fee 18,000
Trustees fee 5,406
Custodian fee 13,912
Audit fee 6,243
Legal fee 3,570
Reports to shareholders 9,653
Registration fee 22,495
Other 1,980
-----------
308,264
-----------
Fees and expenses waived or
borne by the Advisor (50,300) 257,964
----------- -----------
Net Investment Loss (88,397)
-----------
NET REALIZED & UNREALIZED GAIN ON
PORTFOLIO POSITIONS
Net realized gain 227,974
Net Change in Unrealized Appreciation/
Depreciation 948,546
-----------
Net Gain 1,176,520
-----------
Increase in Net Assets from Operations $ 1,088,123
===========
</TABLE>
See notes to financial statements.
11
<PAGE> 14
----------------------------------
Statement of Changes in Net Assets
----------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS PERIOD ENDED
ENDED JUNE 30, DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 2000 1999(a)
----------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment loss $ (88,397) $ (62,030)
Net realized gain (loss) 227,974 (320,811)
Net change in unrealized
appreciation/depreciation 948,546 1,473,916
------------ ------------
Net Increase from Operations 1,088,123 1,091,075
Fund Share Transactions:
Receipts for shares sold -- Class A 770,115 3,835,797
Cost of shares repurchased -- Class A (358,718) (270,986)
------------ ------------
411,397 3,564,811
------------ ------------
Receipts for shares sold -- Class B 3,550,051 14,588,835
Cost of shares repurchased -- Class B (1,520,136) (1,375,484)
------------ ------------
2,029,915 13,213,351
------------ ------------
Receipts for shares sold -- Class C 457,912 4,155,190
Cost of shares repurchased -- Class C (185,847) (239,118)
------------ ------------
272,065 3,916,072
------------ ------------
Receipts for shares sold -- Class Z -- 2,700,000
Cost of shares repurchased -- Class Z -- (750,000)
------------ ------------
-- 1,950,000
------------ ------------
Net Increase from Fund
Share Transactions 2,713,377 22,644,234
------------ ------------
Total Increase 3,801,500 23,735,309
NET ASSETS
Beginning of period 23,735,309 --
------------ ------------
End of period (net of accumulated
net investment loss of $88,397
and none, respectively) $ 27,536,809 $ 23,735,309
------------ ------------
</TABLE>
(a) The Fund commenced operations on March 1, 1999.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS PERIOD ENDED
ENDED JUNE 30, DECEMBER 31,
NUMBER OF FUND SHARES 2000 1999(a)
-----------------------------------------------------------------
<S> <C> <C>
Sold -- Class A 68,680 358,222
Repurchased -- Class A (32,464) (25,679)
---------- ----------
36,216 332,543
---------- ----------
Sold -- Class B 317,909 1,366,155
Repurchased -- Class B (137,092) (129,826)
---------- ----------
180,817 1,236,329
---------- ----------
Sold -- Class C 40,847 390,902
Repurchased -- Class C (16,861) (22,153)
---------- ----------
23,986 368,749
---------- ----------
Sold -- Class Z -- 270,000
Repurchased -- Class Z -- (70,093)
---------- ----------
-- 199,907
---------- ----------
</TABLE>
See notes to financial statements.
12
<PAGE> 15
--------------------------------------------------------------------------------
Notes To Financial Statements
--------------------------------------------------------------------------------
June 30, 2000 (Unaudited)
NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES
Liberty All-Star Growth and Income Fund (All-Star or the Fund) organized as a
Massachusetts business trust in 1998, is an open-end, diversified management
investment company. All-Star's investment objective is to seek total investment
return, comprised of long term capital appreciation and current income, through
investment primarily in a diversified portfolio of equity securities. All-Star
is managed by Liberty Asset Management Company (the "Manager"). The Manager is a
subsidiary of Liberty Financial Companies, Inc., a publicly traded company of
which Liberty Mutual Insurance Company is the majority shareholder. The Fund may
issue an unlimited number of shares. The Fund offers four classes of shares:
Class A, Class B, Class C and Class Z. Class A shares are sold with a front-end
sales charge. A 1.00% contingent deferred sales charge is assessed to Class A
shares purchased without an initial sales charge on redemptions made within
eighteen months on an original purchase of $1 million to $25 million. Class B
shares are subject to an annual distribution fee and a contingent deferred sales
charge. Effective February 1, 2000, Class B shares will convert to Class A
shares as follows:
<TABLE>
<CAPTION>
ORIGINAL PURCHASE CONVERTS TO CLASS A SHARES
-----------------------------------------------------------------------
<S> <C>
Less than $250,000 8 years
$250,000 to less than $500,000 4 years
$500,000 to less than $1,000,000 3 years
</TABLE>
Class C shares are subject to a contingent deferred sales charge on redemptions
made within one year after purchase and an annual distribution fee. Class Z
shares are offered continuously at net asset value. There are certain
restrictions on the purchase of Class Z shares, as described in the Fund's
prospectus.
The following is a summary of significant accounting policies followed by
All-Star in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results, if different,
are expected to be immaterial to the net assets of the Fund.
VALUATION OF INVESTMENTS:
Portfolio securities listed on an exchange and over-the-counter securities
quoted on the NASDAQ system are valued on the basis of the last sale on the date
as of which the valuation is made, or, lacking any sales, at the current bid
prices. Over-the-counter securities not quoted on the NASDAQ system are valued
on the basis of the mean between the current bid and asked prices on that date.
Securities for which reliable quotations are not readily available are valued at
fair value, as determined in good faith and pursuant to procedures established
by the Trustees. Short-term instruments maturing in more than 60 days for which
market quotations are readily available are valued at current market value.
Short-term instruments with remaining maturities of 60 days or less are valued
at amortized cost, unless the Board of Trustees determines that this does not
represent fair value.
PROVISION FOR FEDERAL INCOME TAX:
The Fund qualifies as a "regulated investment company." As a result, a federal
income tax provision is not required for amounts distributed to shareholders.
OTHER:
Security transactions are accounted for on the trade date. Interest income and
expenses are recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS:
All income, expenses (other than Class A, Class B and Class C service fees and
Class B and Class C distribution fees), and realized and unrealized gains
(losses), are allocated to each class proportionately on a daily basis for
purposes of determining the net asset value of each class.
Per share data is calculated using the average shares outstanding during the
period. In addition, Class A, Class B and Class C net investment income per
share data reflects the service fee per share applicable to Class A, Class B and
Class C shares and the distribution fee applicable to Class B and Class C shares
only.
Class A, Class B and Class C ratios are calculated by adjusting the expense and
net investment income ratios for the Fund for the entire period by the service
fee applicable to Class A, Class B and Class C shares and the distribution fee
applicable to Class B and Class C shares only.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE:
Under All-Star's Management and Portfolio Management Agreements, All-Star pays
the Manager a management fee for its investment management services at an annual
rate of 0.60% of All-Star's average net assets. The manager pays each Portfolio
Manager other than OpCap Advisors a portfolio management fee at an annual rate
of 0.30% of the average net assets of the portion of the investment portfolio
managed by it. The agreement with OpCap Advisors provides for a fee of 0.40% per
year of the average net assets of the portion of the investment portfolio
managed by it. OpCap Advisors has voluntarily agreed, however, to waive any fee
in excess of 0.30% until the earlier of March 1, 2002 or the date the total of
the Fund's net assets reaches $100 million. Any increase in the fee payable to
OpCap Advisors following the expiration of its fee waiver agreement will be
borne by the Manager.
ADMINISTRATION FEE:
All-Star pays the Manager an administrative fee for its administrative services
at an annual rate of 0.20% of All-Star's average net assets.
BOOKKEEPING FEE:
Colonial Management Associates, Inc., an affiliate of the Manager, provides
bookkeeping and pricing services for $36,000 annually plus 0.035% annually of
All-Star's average net assets over $50 million.
13
<PAGE> 16
--------------------------------------------------------------------------------
Notes To Financial Statements (continued)
--------------------------------------------------------------------------------
June 30, 2000 (Unaudited)
TRANSFER AGENT FEE:
Liberty Funds Services, Inc., an affiliate of the Manager, provides shareholder
services for a monthly fee equal to 0.236% annually of the Fund's average net
assets and receives reimbursement for certain out-of-pocket expenses.
Effective January 1, 2000, the Transfer Agent fee was changed to a fee comprised
of 0.07% annually of average net assets plus charges based on the number of
shareholder accounts and transactions.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES:
Liberty Funds Distributor, Inc., a subsidiary of the Manager, is the Fund's
principal underwriter. For the six months ended June 30, 2000, the Fund has been
advised that the Distributor retained net underwriting discounts of $18,857 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of none, $30,122 and $1,224 on Class A, Class B and Class C share
redemptions, respectively.
The Fund has adopted a 12b-1 plan which requires the payment of a service fee to
the Distributor equal to 0.25% annually on Class A, Class B and Class C net
assets as of the 20th of each month. The plan also requires the payment of a
distribution fee to the Distributor equal to 0.75% annually of the average net
assets attributable to Class B and Class C shares only. The CDSC and the fees
received from the 12b-1 plan are used principally as repayment to the
Distributor for amounts paid by the Distributor to dealers who sold such shares.
EXPENSE LIMITS:
The Manager has agreed, until further notice, to waive fees and bear certain
Fund expenses to the extent that total expenses (exclusive of service and
distribution fees, brokerage commissions, interest, taxes and extraordinary
expenses, if any) exceed 1.25% annually of the Fund's average net assets.
NOTE 3. SECURITIES TRANSACTIONS
Realized gains and losses are recorded on the identified cost basis for both
financial reporting and federal income tax purposes. The cost of investments
purchased and the proceeds from investments sold excluding short-term debt
obligations for the six months ended June 30, 2000 were $11,021,141 and
$8,509,363, respectively.
The Fund may enter into repurchase agreements and require the seller of the
instruments to maintain on deposit with the Fund's custodian bank or in the
Federal Reserve Book-Entry System securities in the amount at all times equal to
or in excess of the value of the repurchase agreement plus accrued interest. The
Fund may experience costs and delays in liquidating the collateral if the issuer
defaults or enters bankruptcy.
CAPITAL LOSS CARRYFORWARDS:
At December 31, 1999, capital loss carryforwards available (to the extent
provided in regulations) to offset future realized gains were approximately as
follows:
<TABLE>
<CAPTION>
YEAR OF EXPIRATION CAPITAL LOSS CARRYFORWARD
----------------------------------------------------------------------
<S> <C>
2007 $ 84,000
--------
</TABLE>
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized gains,
it is unlikely that such gains would be distributed since they may be taxable to
shareholders as ordinary income.
NOTE 4. DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting principles.
Reclassifications are made to the Fund's capital accounts to reflect income and
gains available for distribution (or available capital loss carryovers) under
income tax regulations.
NOTE 5. LINE OF CREDIT
The Fund may borrow up to 33 1/3 % of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%. (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the six months ended June 30, 2000.
NOTE 6. OTHER RELATED PARTY TRANSACTIONS
At June 30, 2000, LAMCO owned 3%, 3%, and 100% of the Fund's outstanding Class
A, Class C and Class Z shares, respectively. June 30, 2000 (Unaudited)
14
<PAGE> 17
--------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2000
CLASS A CLASS B CLASS C CLASS Z
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.150 $ 11.090 $ 11.080 $ 11.170
---------- ----------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a)(b) (0.009) (0.051) (0.051) 0.005
Net realized and unrealized gain 0.519 0.511 0.521 0.525
---------- ----------- ---------- ----------
Total from Investment Operations 0.510 0.460 0.470 0.530
---------- ----------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 11.660 $ 11.550 $ 11.550 $ 11.700
========== =========== ========== ==========
Total return (c)(d)(e) 4.57% 4.15% 4.24% 4.74%
========== =========== ========== ==========
RATIOS TO AVERAGE NET ASSETS
Expenses (f)(g) 1.50% 2.25% 2.25% 1.25%
Fees and expenses waived or borne by the Advisor (f)(g) 0.40% 0.40% 0.40% 0.40%
Net investment income (loss) (f)(g) (0.17)% (0.92)% (0.92)% 0.08%
Portfolio turnover (e) 34% 34% 34% 34%
Net assets at end of period (000) $ 4,300 $ 16,364 $ 4,534 $ 2,338
(a) Net of fees and expenses waived or borne by the
Advisor which amounted to: $ 0.022 $ 0.022 $ 0.022 $ 0.022
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(g) Annualized.
</TABLE>
15
<PAGE> 18
--------------------------------------------------------------------------------
Financial Highlights (continued)
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
PERIOD ENDED DECEMBER 31, 1999 (b)
CLASS A CLASS B CLASS C CLASS Z
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.000 $ 10.000 $ 10.000 $ 10.000
---------- ----------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a)(c) (0.003) (0.071) (0.071) 0.019
Net realized and unrealized gain 1.153 1.161 1.151 1.151
---------- ----------- ---------- ----------
Total from Investment Operations 1.150 1.090 1.080 1.170
---------- ----------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 11.150 $ 11.090 $ 11.080 $ 11.170
========== =========== ========== ==========
Total return (d)(e)(f) 11.50% 10.90% 10.80% 11.70%
========== =========== ========== ==========
RATIOS TO AVERAGE NET ASSETS
Expenses (g)(h) 1.50% 2.25% 2.25% 1.25%
Fees and expenses waived or borne by the Advisor (g)(h) 1.69% 1.69% 1.69% 1.69%
Net investment income (loss) (g)(h) (0.03)% (0.78)% (0.78)% 0.22%
Portfolio turnover (f) 68% 68% 68% 68%
Net assets at end of period (000) $ 3,708 $ 13,706 $ 4,087 $ 2,234
(a) Net of fees and expenses waived or borne by the
Advisor which amounted to: $ 0.150 $ 0.150 $ 0.150 $ 0.150
(b) The Fund commenced investment operations on March 1, 1999. Per share data
reflects activity from that date.
(c) Per share data was calculated using average shares outstanding during the
period.
(d) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(e) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(h) Annualized.
</TABLE>
16
<PAGE> 19
TRUSTEES & TRANSFER AGENT
--------------------------------------------------------------------------------
ROBERT J. BIRNBAUM
Consultant (formerly Special Counsel, Dechert, Price & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.; President, American
Stock Exchange, Inc.)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Partner, Park Avenue Equity Partners, (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JOHN J. NEUHAUSER
Academic Vice President and Dean of Faculties, Boston College (formerly Dean,
Boston College School of Management)
--------------------------------------------------------------------------------
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Liberty All-Star Growth & Income Fund is:
Liberty Funds Services, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
The Fund mails one shareholder report to each shareholder address. If you would
like more than one report, please call 1-800-426-3750 and additional reports
will be sent to you.
This report has been prepared for shareholders of Liberty All-Star Growth &
Income Fund.This report may also be used as sales literature when preceded or
accompanied by the current prospectus which provides details of sales charges,
investment objectives and operating policies of the Fund and with the most
recent copy of the Liberty Funds Distributor, Inc. Performance Update.
SEMIANNUAL REPORT:
LIBERTY ALL-STAR GROWTH & INCOME FUND
<PAGE> 20
--------------------------------------------------------------------------------
Choose Liberty
--------------------------------------------------------------------------------
BECAUSE NO SINGLE INVESTMENT MANAGER CAN BE ALL THINGS TO ALL INVESTORS.(SM)
--------------------------------------------------------------------------------
LIBERTY
---------------------------------------------------------------
FUNDS
ALL-STAR Institutional money management approach for individual
investors.
COLONIAL Fixed income and value style equity investing.
CRABBE HUSON A contrarian approach to fixed income and equity investing.
NEWPORT A leader in international investing.(SM)
STEIN ROE ADVISOR Innovative solutions for growth and income investing.
KEYPORT A leading provider of innovative annuity products.
--------------------------------------------------------------------------------
Liberty's mutual funds are offered by prospectus through Liberty Funds
Distributor, Inc.
BEFORE YOU INVEST, CONSULT YOUR FINANCIAL ADVISOR.
Your financial advisor can help you develop a long-term plan for reaching your
financial goals.
--------------------------------------------------------------------------------
LIBERTY ALL-STAR GROWTH & INCOME FUND semiannual report
--------------------------------------------------------------------------------
[LIBERTY FUNDS LOGO]
ALL-STAR - COLONIAL - CRABBE HUSON - NEWPORT - STEIN ROE ADVISOR
Liberty Funds Distributor, Inc. (c)2000
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
www.libertyfunds.com
---------------
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U.S. POSTAGE
PAID
HOLLISTON, MA
PERMIT NO. 20
---------------
707-03/361C -0700 (8/00) 00/1396
