<PAGE> 1
LIBERTY ALL - STAR GROWTH & INCOME FUND Annual Report
DECEMBER 31, 1999
<PAGE> 2
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
I am pleased to present the first annual report for the Liberty All-Star Growth
& Income Fund.
The improvement in the performance of value stocks during the first several
months since the Fund's inception was short-lived. By year-end, market
leadership consisted primarily of technology and Internet-related stocks. The
technology sector of the Standard & Poor's 500 Index -- a broad-based index
tracking the U.S. stock market -- was responsible for a large part of its 21%
total return for the year. In addition, more than two-thirds of the stocks in
the S&P 500 underperformed that index. This created a challenging environment
for the All-Star Growth & Income Fund, given its diversified approach to
investing in both growth and value styles of investment management.
Liberty All-Star Growth & Income Fund's Class A shares had a total return of
11.50%, without a sales charge, from the Fund's inception on March 1, 1999 to
December 31, 1999. The following report will provide you with more specific
information about your Fund's performance and the strategies used during the
period. We thank you for choosing Liberty All-Star Growth & Income Fund and for
giving us the opportunity to serve your investment needs.
Sincerely,
/s/ William R. Parmentier, Jr.
- ------------------------------
William R. Parmentier, Jr.
President
February 11, 2000
Not FDIC Insured
May Lose Value
No Bank Guarantee
Because economic and market conditions change frequently, there can be no
assurance that the trends described above or on the following pages will
continue.
<PAGE> 3
HIGHLIGHTS
(C) LARGE-CAP TECHNOLOGY SOARED DURING 1999.
A narrow group of large-capitalization growth stocks led the U.S. stock
market during 1999. The NASDAQ Composite Index, with its large position in
these technology stocks, returned 85.6% for the year. More than half of
this gain came after the Nasdaq crossed the 3000 level on November 3, 1999.
(C) VALUE STOCKS CONTINUED TO UNDERPERFORM.
The rally in value stocks during the second quarter of the year proved to
be short-lived, as investors focused on technology and Internet-related
companies. However, strong domestic growth and improvement in overseas
economies have resulted in increased prices for many natural resources.
Traditional value sectors like energy, basic materials and industrial
cyclicals may benefit going forward.
(C) PERFORMANCE OF GROWTH AND VALUE STYLES.
The chart below illustrates the dramatic shift between growth and value
styles, showing how these investment styles go in and out of favor. Rather
than rely on one style or the other, Liberty All-Star Growth & Income Fund
combines the two in an attempt to provide more consistent returns.
[GRAPHIC CHART}
GROWTH VS. VALUE
3/31/99 - 12/31/99
<TABLE>
<CAPTION>
S&P Barra Growth Index S&P Barra Value Index
---------------------- ---------------------
<S> <C> <C>
Q2 3.83% 10.8%
Q3 -3.49% -9.23%
Q4 19.74% 8.97%
</TABLE>
Growth is represented by the S&P Barra Growth Index. Value is represented by the
S&P Barra Value Index. Both are unmanaged indexes that contain a subset of the
stocks in the S&P 500 Index. The Value Index contains companies with lower
price-to-book ratios, while the Growth Index contains those with higher ratios.
Unlike mutual funds, indexes do not incur fees or expenses. It is not possible
to invest in an index.
Past performance cannot predict future results.
1
<PAGE> 4
A DISTINCTIVE INVESTMENT APPROACH
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.
TCW INVESTMENT
MANAGEMENT
COMPANY 20%
GROWTH Invest in companies that have superior sales growth, leading market
share, and high profit margins.
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.
J.P. MORGAN
INVESTMENT INC. 20%
VALUE Invest in companies diversified across all sectors that are undervalued
relative to their projected growth rates.
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.
[PIE CHART]
<TABLE>
<CAPTION>
Westwood Management TCW Investment Boston Partners J.P. Morgan OPCAP
Corporation Management Company Asset Management, L.P. Investment, Inc Advisors
- ------------------- ------------------ ---------------------- --------------- --------
<S> <C> <C> <C> <C>
20% 20% 20% 20% 20%
</TABLE>
Most mutual funds are run by a manager or a team of managers that pursue a
particular investment style, whether it is growth or value. This approach works
well when the manager's style is in favor, but styles go in and out of favor.
What produces strong returns one year may produce disappointing results the
next.
Large institutions, on the other hand, traditionally rely on a multi-management
approach to manage the more than $7 trillion they hold in their pension and
endowment plans. By employing independent investment managers who practice
different investment styles, these institutions seek to reduce volatility while
producing attractive returns. Liberty Asset Management Company (LAMCO) uses this
same multi-manager approach for Liberty All-Star Growth & Income Fund
(All-Star).
CONSTRUCTING THE MANAGEMENT TEAM
LAMCO searches for successful, independent investment management
organizations to hire as Portfolio Managers for All-Star. LAMCO employs
qualitative and quantitative analysis, face-to-face meetings and other
techniques to select managers it believes can bring to All-Star both a
value-added approach and the ability to complement the investment styles of the
other All-Star managers.
LAMCO looks for the following characteristics in potential investment managers:
- - A constant focus on a particular style of investing.
- - A disciplined investment decision-making process.
- - A record of success relative to other managers who practice the same
investment style.
- - Continuity among investment professionals, so that those who have built
the record remain the managers.
- - A well-managed, highly responsive organization.
LAMCO has chosen five independent investment managers that it believes will
provide a style combination that will achieve All-Star's investment objectives.
Three of the investment managers, representing approximately 60% of All-Star's
assets, employ value-oriented styles, which focus on the selection of companies
that trade at comparatively low multiples of company earnings and book value.
The other two styles, representing 40% of the portfolio, are growth-oriented
styles, which focus on the selection of companies whose growth prospects are
better than the average company. Within these broad categories of value and
growth are the specific styles shown in the box on the left.
2
<PAGE> 5
MANAGER EVALUATION AND, OCCASIONALLY, REPLACEMENT
LAMCO conducts continuing evaluation of the Portfolio Managers. Through meetings
with each investment manager, and qualitative and quantitative analysis, LAMCO
evaluates each manager to determine whether:
- - It is consistently practicing its investment style.
- - Its transactions and holdings reflect the style.
- - Its organization and investment process continue to support the style.
- - Its investment performance is competitive when compared with other managers
using a similar style.
LAMCO also reviews the collective performance of the Portfolio Management team
so that All-Star receives the full benefits of multi-management.
LAMCO's procedures in this regard include:
- - Seeing that All-Star's total portfolio has the proper investment
characteristics.
- - Researching new investment managers as possible future Portfolio Managers.
- - Making Portfolio Manager changes when necessary.
LAMCO also shifts assets among the Portfolio Managers at selected times. As the
previous pie chart indicates, All-Star's assets are allocated among the five
Portfolio Managers to provide the desired style diversification. However, each
day stock market action changes the actual assets under management of the
various managers. Accordingly, from time to time, LAMCO reallocates assets in
order to preserve the benefits of All-Star's multi-management methodology. This
procedure is called rebalancing.
3
<PAGE> 6
Portfolio Managers' Report
Top 10 Holdings as of 12/31/99
(as a percentage of net assets)
<TABLE>
<S> <C>
1. Intel Corp. 2.2%
2. Cisco Systems, Inc. 2.0%
3. Citigroup, Inc. 2.0%
4. Microsoft Corp. 1.9%
5. Dell Computer Corp. 1.7%
6. AMFM, Inc. 1.6%
7. Siebel Systems, Inc. 1.6%
8. Computer Associates,
Intl., Inc. 1.6%
9. SBC
Communications, Inc. 1.4%
10. Nokia Corp. ADR 1.4%
</TABLE>
Portfolio 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 Sectors as of 12/31/99
(as a percentage of investments)
<TABLE>
<S> <C>
1. Technology 26.2%
2. Financials 17.8%
3. Consumer Staples 13.5%
4. Capital Goods 7.7%
5. Consumer Cyclicals 7.6%
</TABLE>
Sector breakdowns are calculated as a percentage of investments. Because the
Fund is actively managed, there can be no guarantee that the Fund will maintain
these holdings.
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 Advisor's defined criteria as used in the investment process.
The net asset value of Liberty All-Star Growth & Income Fund's Class A shares
increased from $10.00 on March 1, 1999 to $11.15 on December 31, 1999. The
Fund's Class A shares had a total return of 11.50% during this period.
The Fund trailed the Standard and Poor's 500 (S&P 500) Index, a broad-based
benchmark of stock market performance, which returned 19.90% during the 10-month
period. The Fund's position with three value managers contributed to the
underperformance. However, when the value style of investment management comes
back into favor, the Fund's performance should benefit. Liberty Asset Management
Company (LAMCO) continuously monitors the performance of the Fund and its
portfolio managers. We do this to ascertain whether shortfalls in performance
are style-related, explained by current market conditions, or of such a nature
to warrant a specific manager change. Even though some of the shortfall in
relative performance this year was style-related, we also felt that a manager
change would benefit shareholders as we move into the new millennium.
In October, we recommended -- and the Board of Trustees approved -- the hiring
of TCW Investment Management Company to replace Wilke/Thompson Capital
Management, Inc. as one of the Fund's two growth managers. Glen E. Bickerstaff,
Managing Director U.S. Equities at TCW, will serve as the portfolio manager to
the Fund. Mr. Bickerstaff and his investment team practice a growth equity
investment style which they will apply to their portion of the Fund's assets.
Prior to joining TCW in 1998, Mr. Bickerstaff was vice president and senior
portfolio manager at Transamerica Investment Services, a Los Angeles-based
investment management subsidiary of Transamerica Corporation. While at
Transamerica, Mr. Bickerstaff managed the Transamerica Premier Equity Fund from
its inception on October 1, 1995 to April 30, 1998.
LAMCO remains committed to providing a diversified domestic equity Fund
managed by both value and growth portfolio managers. This approach seeks to
provide more consistent returns by combining both styles of investment
management.
/S/ WILLIAM R. PARMENTIER /S/ CHRISTOPHER S. CARBELL
- ------------------------- ---------------------------
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.
4
<PAGE> 7
Performance Information
Performance of a $10,000 investment in Class A shares 3/1/99 - 12/31/99
<TABLE>
<CAPTION>
With Sales Charge Without Sales Charge S&P 500 Index
----------------- -------------------- -------------
<S> <C> <C> <C>
3/01/99 9425 10000 10000
3/31/99 9755 10350 10400
4/30/99 10311 10940 10802
5/31/99 10160 10780 10548
6/30/99 10528 11170 11133
7/31/99 10104 10720 10786
8/31/99 9774 10371 10732
9/30/99 9549 10131 10438
10/31/99 9963 10571 11098
11/30/99 10029 10641 11324
12/31/99 10509 11150 11989
</TABLE>
The Standard & Poor's 500 Index is an unmanaged index that tracks the
performance of 500 widely held, large-capitalization stocks. Unlike mutual
funds, indexes do not incur fees or expenses. It is not possible to invest in an
index.
Performance Information -- Cumulative Total Returns as of 12/31/99
<TABLE>
<CAPTION>
Share Class A B C Z
Inception 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
charge charge charge charge charge charge
<S> <C> <C> <C> <C> <C> <C> <C>
Life 11.50% 5.09% 10.90% 5.90% 10.80% 9.80% 11.70%
</TABLE>
Past performance cannot predict future results. Returns and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. The "with sales charge" returns include
the maximum 5.75% charge for Class A shares and the maximum contingent deferred
sales charge (CDSC) of 5% for one year for Class B shares and 1% for one year
for Class C shares. 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 or its affiliates. Absent these waivers or reimbursement
arrangements performance results would have been lower.
Performance of a $10,000
investment in all share classes from 3/1/99 - 12/31/99
<TABLE>
<CAPTION>
Without With
sales sales
charge charge
------ ------
<S> <C> <C>
Class A $11,150 $10,509
Class B $11,090 $10,590
Class C $11,080 $10,980
Class Z $11,170 --
</TABLE>
5
<PAGE> 8
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (95.5%) SHARES MARKET VALUE
- ------------------------------------------------------------
<S> <C> <C>
AEROSPACE & DEFENSE (1.2%)
Boeing Co. 4,093 $ 170,115
Northrop Grumman Corp. 2,300 124,344
------------
294,459
------------
AUTOS, TIRES & ACCESSORIES (0.7%)
Delphi Automotive Systems Corp. 4,000 63,000
Ford Motor Co. 400 21,375
Lear Corp. (a) 2,800 89,600
------------
173,975
------------
BANKS (4.9%)
ABN AMRO Holdings NV (ADR) 2,386 60,396
Astoria Financial Corp. 600 18,263
Bank of America Corp. 700 35,131
Citigroup, Inc. 8,390 466,169
First Union Corp. 2,800 91,875
FleetBoston Financial Group, Inc. 3,575 124,455
KeyCorp. 1,100 24,338
PNC Bank Corp. 2,650 117,925
Washington Mutual, Inc. 2,600 67,600
Wells Fargo & Co. 3,593 145,291
------------
1,151,443
------------
BROADCASTING AND CABLE (2.7%)
AMFM, Inc. (a) 4,967 388,668
AT&T Corp- Liberty Media
Group Class A 1,300 73,775
Cox Communications, Inc. Class A (a) 2,600 133,900
The News Corp., Ltd. (ADR) 1,300 49,725
------------
646,068
------------
BUSINESS & CONSUMER SERVICES (0.5%)
America Online, Inc. (a) 900 67,894
Cendant Corp. 2,000 53,125
------------
121,019
------------
CHEMICALS (1.7%)
Monsanto Co. 8,783 312,894
Rohm & Hass Co. 2,300 93,581
------------
406,475
------------
COMMUNICATIONS EQUIPMENT (4.5%)
Cisco Systems, Inc.(a) 4,500 $ 482,062
Cobalt Networks, Inc. 400 43,350
Lucent Technologies, Inc. 3,000 224,438
Nokia Corp. (ADR) 1,714 325,660
------------
1,075,510
------------
COMPUTER & BUSINESS
EQUIPMENT (6.1%)
Apple Computer, Inc. (a) 200 20,563
Compaq Computer Corp. 8,196 221,804
Dell Computer Corp. (a) 7,700 392,700
EMC Corp. (a) 600 65,550
Hewlett-Packard Co. 1,900 216,481
International Business
Machines Corp. 1,720 185,760
Seagate Technology, Inc. (a) 2,300 107,094
Sun Microsystems, Inc. (a) 1,600 123,900
3Com Corp. (a) 2,400 112,800
------------
1,446,652
------------
COMPUTER SERVICES &
SOFTWARE (8.2%)
Citrix Systems, Inc. (a) 200 24,600
Computer Associates
International, Inc. 5,267 368,361
Electronic Data Systems Corp. 2,300 153,956
Intuit, Inc. (a) 1,200 71,925
Microsoft Corp. (a) 3,950 461,163
Oracle Corp. (a) 1,650 184,903
Siebel Systems, Inc. (a) 4,400 369,600
Sterling Software, Inc. (a) 10,200 321,300
------------
1,955,808
------------
CONSUMER PRODUCTS (2.8%)
Avon Products, Inc. 4,484 147,972
Clorox Co. 400 20,150
Gillette Co. 800 32,950
Kimberly-Clark Corp. 3,000 195,750
Philip Morris Companies, Inc. 3,100 71,881
Procter & Gamble Co. 1,700 186,256
------------
654,959
------------
DIVERSIFIED (3.7%)
Cooper Industries, Inc. 400 16,175
General Electric Co. 400 61,900
Honeywell International, Inc. 3,625 209,117
Loews Corp. 2,125 128,961
Minnesota Mining &
Manufacturing Co. 1,642 160,711
The Seagram Co., Ltd. 1,500 67,406
Textron, Inc. 1,300 99,694
Tyco International Ltd. 3,500 136,062
------------
880,026
------------
</TABLE>
See Notes to Schedule of Investments.
6
<PAGE> 9
SCHEDULE OF INVESTMENTS (CONTINUED)
December 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED) SHARES MARKET VALUE
- ------------------------------------------------------------
<S> <C> <C>
DRUGS & HEALTH CARE (6.2%)
ALZA Corp. (a) 400 $ 13,850
American Home Products Corp. 600 23,662
Amgen, Inc. (a) 3,100 186,194
Biogen, Inc. (a) 2,800 236,600
Bristol-Myers Squibb Co. 1,300 83,444
Eli Lilly & Co. 500 33,250
Forest Laboratories, Inc. (a) 1,150 70,653
Medtronic, Inc. 2,400 87,450
PE Corp-PE Biosystems Group 300 36,094
Pfizer, Inc. 4,900 158,944
Pharmacia & Upjohn, Inc. 2,200 99,000
SmithKline Beecham PLC ADR 1,900 122,431
Tenet Healthcare Corp. (a) 2,000 47,000
Warner-Lambert Co. 2,000 163,875
Wetpoint Health Networks, Inc. 1,600 105,500
------------
1,467,947
------------
ELECTRIC & GAS UTILITIES (2.2%)
Allegheny Energy, Inc. 500 13,469
Columbia Energy Group 1,200 75,900
Florida Progress Corp. 2,000 84,625
Northern States Power Co. 1,100 21,450
Peco Energy Co. 4,600 159,850
P G & E Corp. 1,000 20,500
Raytheon Co. 1,950 48,384
Reliant Energy, Inc. 4,300 98,363
------------
522,541
------------
ELECTRONICS & ELECTRICAL EQUIPMENT (5.6%)
Applied Materials, Inc. 2,300 291,381
Emerson Electric Co. 2,306 132,307
Intel Corp. 6,210 511,160
Maxim Integrated Products, Inc. 5,800 273,688
Motorola, Inc. 520 76,570
Sensormatic Electronics Corp. 900 15,694
Texas Instruments, Inc. 300 29,063
------------
1,329,863
------------
FINANCIAL SERVICES (5.5%)
The Charles Schwab Corp. 5,300 203,388
The CIT Group, Inc. 1,900 40,137
Countrywide Credit Industries, Inc. 6,293 158,898
Freddie Mac 6,396 301,012
The Goldman Sachs Group, Inc. (a) 600 56,513
Morgan Stanley Dean Witter & Co. 1,300 185,575
Paychex, Inc. 4,100 164,000
Providian Financial Corp. 1,700 154,806
U.S. Bancorp. 2,000 47,625
------------
1,311,954
------------
FOOD, BEVERAGE & RESTAURANTS
(2.9%)
Anheuser-Busch Companies, Inc. 1,900 $ 134,662
Bestfoods 400 21,025
Coca Cola Co. 200 11,650
Diageo PLC ADR 3,593 114,976
International Home Foods, Inc. (a) 3,400 59,075
McDonald's Corp. 3,212 129,484
Nabisco Holdings Corp. 3,525 111,478
PepsiCo, Inc. 1,100 38,775
Sara Lee Corp. 3,500 77,219
------------
698,344
------------
HOTELS & ENTERTAINMENT/LEISURE
(2.6%)
Mirage Resorts, Inc. (a) 3,100 47,469
Pixar, Inc. 2,200 77,825
Starwood Hotels & Resorts
Worldwide, Inc. 2,900 68,150
Time Warner, Inc. 3,800 275,262
The Walt Disney Co. 5,200 152,100
------------
620,806
------------
INDUSTRIAL EQUIPMENT (2.3%)
Caterpillar, Inc. 2,655 124,951
Deere & Co. 3,500 151,813
Dover Corp. 3,293 149,420
Ingersoll-Rand Co. 2,225 122,514
------------
548,698
------------
INSURANCE (6.1%)
ACE Ltd. 7,650 127,659
AFLAC, Inc. 3,271 154,350
Allmerica Financial Corp. 2,075 115,422
Ambac Financial Group, Inc. 1,100 57,406
American International
Group, Inc. 1,100 118,938
CIGNA Corp. 2,175 175,223
Conseco, Inc. 9,549 170,688
Marsh & McLennan
Companies, Inc. 950 90,903
The Progressive Corp. 2,300 168,188
UnumProvident Corp. 1,111 35,621
XL Capital Ltd. 2,300 232,919
------------
1,447,317
------------
METALS & MINING (1.6%)
Alcoa, Inc. 3,850 319,550
Allegheny Teledyne, Inc. 1,100 24,681
USX-US Steel Group 900 29,700
------------
373,931
------------
</TABLE>
See Notes to Schedule of Investments.
7
<PAGE> 10
SCHEDULE OF INVESTMENTS (CONTINUED)
December 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED) SHARES MARKET VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
OIL & GAS (6.3%)
Apache Corp. 3,500 $129,281
Burlington Resources, Inc. 5,900 195,068
Conoco, Inc. Class A 6,150 152,212
Conoco, Inc. Class B 7,300 181,587
Cooper Cameron Corp. (a) 800 39,150
Devon Energy Corp. 2,008 66,013
El Paso Energy Corp. 2,600 100,913
Exxon Mobil Corp. 1,716 138,245
Halliburton Co. 4,675 188,169
Occidental Petroleum Corp. 5,300 114,613
Royal Dutch Petroleum Co. 600 36,263
Texaco, Inc. 1,900 103,194
Tosco Corp. 1,900 51,656
-----------
1,496,364
-----------
PAPER (1.1%)
Smurfit-Stone Container Corp. (a) 900 22,050
Temple-Inland, Inc. 3,750 247,266
-----------
269,316
-----------
POLLUTION CONTROL (0.4%)
Waste Management, Inc. 5,106 87,759
-----------
PUBLISHING (0.9%)
R. R. Donnelley & Sons Co. 4,840 120,093
Tribune Co. 1,800 99,113
-----------
219,206
-----------
REAL ESTATE INVESTMENT TRUSTS (0.5%)
Kimco Realty Corp. 1,700 57,588
Vornado Realty Trust 1,900 61,750
-----------
119,338
-----------
RETAIL TRADE (6.6%)
Abercrombie & Fitch Co. (a) 1,000 26,687
AnnTaylor Stores Corp. (a) 1,500 51,656
Circuit City Stores, Inc. 2,600 117,163
Dayton Hudson Corp. 500 36,719
Federated Department Stores, Inc. (a) 5,050 255,341
Harcourt General, Inc. 2,625 105,656
The Home Depot, Inc. 3,900 267,394
The Limited, Inc. 3,100 134,269
May Department Stores Co. 3,814 123,001
Office Depot, Inc. (a) 6,000 65,625
Safeway, Inc. (a) 5,700 202,706
Tiffany & Co. 1,000 89,250
TJX Companies, Inc. 1,100 22,481
Wal-Mart Stores, Inc. 900 62,212
-----------
1,560,160
-----------
TELECOMMUNICATIONS (4.3%)
AT&T Corp. 1,200 $ 60,900
Bell Atlantic Corp. 500 30,781
Global Crossing Ltd. (a) 600 30,000
GTE Corp. 2,650 186,991
Level 3 Communications, Inc. (a) 150 12,281
MCI WorldCom, Inc. (a) 3,600 191,025
SBC Communications, Inc. 6,759 329,501
Sprint Corp. (FON Group) 2,653 178,580
Sprint Corp. (PCS Group) (a) 100 10,250
-----------
1,030,309
-----------
TRANSPORTATION (3.2%)
AMR Corp. (a) 2,271 152,157
Burlington Northern Santa Fe Corp. 4,547 110,265
CSX Corp. 600 18,825
Kansas City Southern Industries, Inc. 4,200 313,425
Union Pacific Corp. 1,400 61,075
United Parcel Service, Inc. Class B 1,600 110,400
-----------
766,147
-----------
TOTAL COMMON STOCKS
(Cost $21,217,529) 22,676,394
-----------
PREFERRED STOCK (0.7%)
BROADCASTING & CABLE (0.7%)
The News Corp., Ltd. ADR
(Cost $147,054) 4,848 162,105
-----------
TOTAL INVESTMENTS (96.2%)
(Cost $21,364,583) (b) 22,838,499
===========
</TABLE>
<TABLE>
<CAPTION>
PAR
- -------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENT (1.9%)
REPURCHASE AGREEMENT (1.9%)
SBC Warburg Ltd., Repurchase Agreement
dated 12/31/99, 2.50% to be repurchased
at $451,094 on 01/03/00, collateralized by
U.S. Treasury bonds and/or notes with
various maturities to 2021, with a current
market value of $460,322. $451,000 451,000
Other Assets and Liabilities, Net (1.9%) 445,810
-----------
Net Assets (100.0%) $23,735,309
===========
</TABLE>
See Notes to Schedule of Investments.
8
<PAGE> 11
SCHEDULE OF INVESTMENTS (CONTINUED)
December 31, 1999
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) The cost of investments for federal income tax purposes is $21,484,490.
Gross unrealized appreciation and depreciation of investments at
December 31, 1999 is as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 3,068,097
Gross unrealized depreciation (1,714,088)
-----------
Net unrealized appreciation $ 1,354,009
===========
</TABLE>
<TABLE>
<CAPTION>
Acronym Name
------- ----
<S> <C>
ADR American Depositary Receipt
</TABLE>
See notes to Financial Statements
9
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Investments at value (cost $21,364,583) $ 22,838,499
Short-term obligations 451,000
-----------
23,289,499
Cash $ 20,952
Receivable for:
Fund shares sold 208,850
Investments sold 179,471
Dividends 22,112
Interest 32
Receivable due from Advisor 101,348 532,765
------------ -----------
Total Assets 23,822,264
LIABILITIES
Payable for:
Investments purchased 35,383
Other 51,572
-----------
Total Liabilities 86,955
-----------
NET ASSETS $23,735,309
===========
Net asset value & redemption price per share --
Class A ($3,707,964/332,543) $ 11.15(a)
===========
Maximum offering price per share --
Class A ($11.15/0.9425) $ 11.83(b)
===========
Net asset value & offering price per share --
Class B ($13,706,301/1,236,329) $ 11.09(a)
===========
Net asset value & offering price per share --
Class C ($4,087,180/368,749) $ 11.08(a)
===========
Net asset value, offering and redemption
price per share --
Class Z ($2,233,864/199,907) $ 11.17
===========
COMPOSITION OF NET ASSETS
Capital paid in $22,582,204
Net realized loss (320,811)
Net unrealized appreciation 1,473,916
-----------
$23,735,309
===========
</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 Period Ended December 31, 1999(a)
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C> <C>
Dividends $ 147,354
Interest 25,657
----------
Total Investment Income (net of
nonreclaimable foreign taxes
withheld at source which
amounted to $986) 173,011
EXPENSES
Management fee $ 71,143
Administrative fee 23,715
Service fee -- Class A, Class B, Class C 24,762
Distribution fee -- Class B 47,392
Distribution fee -- Class C 14,671
Transfer agent 31,440
Bookkeeping fee 30,000
Trustees fee 12,744
Custodian fee 28,543
Audit fee 11,400
Legal fee 3,413
Registration fee 95,013
Other 39,867
---------
434,103
Fees and expenses waived or
borne by the Advisor (199,062) 235,041
--------- ----------
Net Investment Loss (62,030)
----------
NET REALIZED & UNREALIZED GAIN (LOSS) ON
PORTFOLIO POSITIONS
Net realized loss (320,811)
Net change in unrealized appreciation 1,473,916
----------
Net Gain 1,153,105
----------
Increase in Net Assets from Operations $1,091,075
==========
</TABLE>
(a) The Fund commenced investment operations on March 1, 1999.
See notes to Financial Statements.
10
<PAGE> 13
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1999(a)
- -------------------------------------------------------------------
<S> <C>
Operations:
Net investment loss $ (62,030)
Net realized loss (320,811)
Net unrealized appreciation 1,473,916
------------
Net Increase from Operations 1,091,075
Fund Share Transactions:
Receipts for shares sold -- Class A 3,835,797
Cost of shares repurchased -- Class A (270,986)
------------
3,564,811
------------
Receipts for shares sold -- Class B 14,588,835
Cost of shares repurchased -- Class B (1,375,484)
------------
13,213,351
------------
Receipts for shares sold -- Class C 4,155,190
Cost of shares repurchased -- Class C (239,118)
------------
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 22,644,234
------------
Total Increase 23,735,309
NET ASSETS
Beginning of period --
------------
End of period $ 23,735,309
============
</TABLE>
(a) The Fund commenced investment operations on March 1, 1999.
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
NUMBER OF FUND SHARES 1999(a)
- -------------------------------------------------------------------
<S> <C>
Sold-- Class A 358,222
Repurchased-- Class A (25,679)
------------
332,543
------------
Sold-- Class B 1,366,155
Repurchased-- Class B (129,826)
------------
1,236,329
------------
Sold -- Class C 390,902
Repurchased -- Class C (22,153)
------------
368,749
------------
Sold -- Class Z 270,000
Repurchased -- Class Z (70,093)
------------
199,907
------------
</TABLE>
See notes to Financial Statements.
11
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
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. The Fund commenced investment operations on March 1, 1999.
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 on redemptions made within
eighteen months on an original purchase of $1 million to $5 million. Class B
shares are subject to an annual distribution fee and a contingent deferred sales
charge. Class B shares will convert to Class A shares when they have been
outstanding approximately eight years. 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 the 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 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% of All-Star's
average net assets over $50 million.
12
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999
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.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES:
Liberty Funds Distributor, Inc., a subsidiary of the Manager, is the Fund's
principal underwriter. For the year ended December 31, 1999, the Fund has been
advised that the Distributor retained net underwriting discounts of $215,867 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $40, $33,992 and $9,171 on Class A, Class B and Class C share
redemptions, respectively.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee 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 fees,
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 period ended December 31, 1999 were $30,775,337 and
$9,090,773, 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 carryforwards) 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 period ended December 31, 1999.
NOTE 6. OTHER RELATED PARTY TRANSACTIONS
During the period ended December 31, 1999, the Fund used Alphatrade, a wholly
owned subsidiary of Colonial Management Associates, Inc., as a broker. Total
commissions paid to Alphatrade during the year were $16,469.
NOTE 7. OTHER RELATED PARTY TRANSACTIONS
At December 31, 1999, LAMCO owned 10.3% of the Fund's outstanding shares.
13
<PAGE> 16
FINANCIAL HIGHLIGHTS
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
</TABLE>
(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.
14
<PAGE> 17
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND THE TRUSTEES OF LIBERTY ALL-STAR GROWTH & INCOME FUND
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations, changes
in net assets and the financial highlights present fairly, in all material
respects, the financial position of Liberty All-Star Growth & Income Fund at
December 31, 1999, the results of its operations, the changes in its net assets
and the financial highlights for the period from March 1, 1999 (commencement of
operations) to December 31, 1999, in conformity with accounting principles
generally accepted in the United States. These financial statements and the
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audit of these financial statements in accordance with auditing standards
generally accepted in the United States which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit, which included confirmation of portfolio positions at
December 31, 1999 by correspondence with the custodian and brokers, provides a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 11, 2000
15
<PAGE> 18
SHAREHOLDER SERVICES
TO MAKE INVESTING
Your Fund has one of the most extensive selections of shareholder services
available. Your financial advisor can help you arrange for any of these
services, or you can call Colonial Investors Service Center directly at
1-800-345-6611.
AFFORDABLE ADDITIONAL INVESTMENTS: Add to your account with as little as $50 on
most funds; $25 for an IRA account.
FREE EXCHANGES(1): Exchange all or part of your account into the same share
class of another fund distributed by Liberty Financial Investments, Inc. by
phone or mail.
EASY ACCESS TO YOUR MONEY(1): Make withdrawals from your account by phone, by
mail or, for certain funds, by check.
ONE-YEAR REINSTATEMENT PRIVILEGE: If you need access to your money, but then
choose to return it within one year, you can reinvest in any fund distributed by
Liberty Financial Investments of the same share class without any penalty or
sales charge.
FUNDAMATIC: Make periodic investments as low as $50 from your checking account
to your Fund account.
SYSTEMATIC WITHDRAWAL PLAN (SWP): Receive monthly, quarterly or semiannual
payments via check or bank transmission. There is a $5,000 account value
required, but no minimum for the payment amount. The maximum annual withdrawal
is 12% of account balance at time SWP is established. SWPs by check are
processed on the 10th calendar day of each month unless the 10th falls on a
non-business day or the first business day of the week. If this occurs, the
processing date will be the previous business day. Dividends and capital
gains must be reinvested.
AUTOMATED DOLLAR COST AVERAGING: Transfer money on a monthly basis from any fund
with a balance of $5,000 into the same share class of up to four other funds
distributed by Liberty Financial Investments. Minimum for each transfer is $100.
RETIREMENT PLANS: Choose from a broad range of retirement plans, including IRAs
(1) Redemptions and exchanges are made at the next determined net asset value
after the request is received by the Transfer Agent. Proceeds may be more or
less than your original cost. The exchange privilege may be terminated at any
time. Exchanges are not available on all funds. Investors who purchase Class B
or C shares, or $1 million or more of Class A shares, may be subject to a
contingent deferred sales charge.
SHAREHOLDER COMMUNICATIONS
TO KEEP YOU INFORMED
To make recordkeeping easy and keep you up-to-date on the performance of your
investments, you can expect to receive the following information about your
account:
TRANSACTION CONFIRMATIONS: Each time you make a purchase, sale or exchange, you
receive a confirmation statement within just a few days.
QUARTERLY STATEMENTS: Every three months, if any transactions are made that
affect your share balance, this statement reports on your account activity
during the quarter (including any reinvestment of dividends). This statement
also provides year-to-date information.
LIBERTY FINANCIAL INVESTMENTS INVESTOR OPPORTUNITIES: Mailed with your quarterly
account statements, this newsletter highlights timely investment strategies,
portfolio manager commentary and shareholder service updates.
TAX FORMS AND YEAR-END TAX GUIDE: Easy-to-use forms and timely information are
designed to make tax reporting simpler. (Usually mailed in January.)
AVERAGE COST BASIS STATEMENTS: If you sold or exchanged shares during the year,
this statement may help you calculate your gain/loss for tax purposes. (Usually
mailed in February.)
16
<PAGE> 19
Trustees & Transfer Agent
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
JOHN V. CARBERRY
Senior Vice President of Liberty Financial Companies, Inc. (formerly Managing
Director, Salomon Brothers)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis & Frankel)
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)
SALVATORE MACERA
Private Investor (formerly Executive Vice President of Itek Corp. and President
of Itek Optical & Electronic Industries, Inc.)
WILLIAM E. MAYER
Partner, Development Capital, LLC (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)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board, Chief Executive Officer and Director
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Academic Vice President and Dean of Faculties, Boston College (former Dean,
Boston College School of Management)
THOMAS E. STITZEL
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
ROBERT L. SULLIVAN
Retired Partner, KPMG LLP (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
ANNE-LEE VERVILLE
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
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.
ANNUAL REPORT:
LIBERTY ALL-STAR GROWTH & INCOME FUND
<PAGE> 20
Liberty offers the independent thinking and collective strength of six financial
specialists. Our distinguished product line helps financial advisors and their
clients build diversified investment portfolios for long-term financial goals.
[LIBERTY FUNDS LOGO]
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 LOGO] 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 ANNUAL 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
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