Liberty ALL*STAR Growth Fund, Inc.
(formerly The Charles Allmon Trust, Inc.)
November 1995
Dear Shareholders and Friends,
Talk about a boom! In 1995 the U.S. may rack up a $7 trillion economy
employing 125 million workers. What's more, the U.S. economy is half again
larger than that of Japan, but more on that later. This broad economic boom,
in turn, spawned the greatest bull market ever. Many excellent companies held
by the Trust should participate in any continued growth, albeit at a slower
pace.
Total Trust assets shot ahead at nine months to $125,418,796. Net asset value
per share stood at $11.06, after the $.16 per share cash dividend paid in
June. On a total payout basis, the Trust gained 12.8% for nine months,
despite our high cash position. Our three Liberty Asset Management (LAMCO)
asset managers racked up an impressive 30% gain at nine months. The equity
portion of the Trust assets which I managed moved up 35% at nine months.
Three of our largest positions grew substantially . . . International
Speedway, Bristol-Myers Squibb, and St. Jude Medical. STJM rewarded us with a
1,500% gain from our first purchase. I pulled some chips off the table
recently when STJM shares soared well above a 30 P/E multiple, lofty in any
market.
Taxes continue to be a hot topic, particularly the capital gains question.
The U.S. Senate passed a tax bill on October 13 which would roll back the
maximum capital gains tax to 19.8%, down from 28% of recent years. Unless the
tax package is vetoed, effective date for the new tax in the Senate bill is
October 13, the date of passage. We're not out of the woods yet, but
prospects seem promising for lower taxes. Keep this in mind, too. The
Heritage Foundation reports that the $245 billion tax-cut proposal repeals
only one-third of the 1990 and 1993 tax hikes. I've been stating for a couple
of years that we're looking at the faint outline of a tax rebellion.
When I spoke at an investment conference in Montana in September, I mentioned
three problems which could derail the stock market juggernaut: (1) Japan, (2)
Bosnia, and (3) Outlook for the U.S. economy. Japan was mentioned at length
in my second quarter report. The Japanese banking system may be one big,
rotten mess. That $ 1.1 billion cover-up loss at DAIWA may be only the tip of
the iceberg. Bank of Japan has cut the discount rate from 6.0% in early 1991
to a minuscule 0.5% recently. Has this helped the Japanese economy? Not at
all. Japan is in the throes of a deflationary depression, similar to the U.S.
experience of the 1930s.
Could this Japan deflation go global? While the probability appears small at
present, the risk is high. Japan has the world's second largest economy, so
global deflation triggered by a crisis there will affect securities markets
everywhere . . . and particularly in the U.S. Japan is practically giving
away money at 0.5% interest, yet nothing happens. In October there was
serious discussion of a U.S. bailout of the Japanese banking system, a la
Mexico, to prevent a downward spiral in the global economy. I'm sticking to
my Nikkei forecast of 8,000 to 12,000.
<PAGE>
New technology and the ever-widening search for new energy fields could have
the world awash in oil by the turn of the century. Lifting the embargo
against Iraq would quickly tilt the global oil picture. Perhaps the most
astute observer of the world oil scene is my friend Charles Maxwell, of C. J.
Lawrence. Some years ago, when oil hovered around $25-$26, Maxwell forecast
oil at $10 within 18 months, and as low as $6. He scored a perfect
bull's-eye. My November 1, 1995 issue of Growth Stock Outlook carries
Maxwell's October 1995 forecast--"The End of OPEC as We Know It." Maxwell
said, "We think that there is better than a 50-50 chance that OPEC will
become inoperable within the next two years."
Year Close % Change Earnings % Change
----- ----- --------- --------- ---------
1994 3834 2.1% $256.13 74%
1991 3169 20.3 49.27 -71
1985 1547 27.6 96.11 -15
1984 1212 -3.7 113.58 57
1978 805 -3.1 112.79 27
1975 852 38.3 75.66 -24
1974 616 -27.6 99.04 15
1973 851 -16.6 86.17 28
1962 652 -10.8 36.43 14
1958 584 33.9 27.95 -23
1946 177 -8.3 13.63 29
1938 155 28.1 6.01 -48
1937 121 -32.8 11.49 14
1929 248 -17.3 19.94 25
Profits and the stock market frequently move inversely to each other. Most
investors peg their investments to profits, often to their chagrin. The
accompanying data on the DJIA should be an eye-opener, the opposite of most
investor perceptions. For instance, in 1994 the Dow eked out a minuscule 2.1%
gain. At the same time Dow profits soared 74%. Or take a look at 1973-1974,
when the Dow fell while profits soared, then both reversed in 1975. Or go
back to 1929, when the market had a mild "correction" of 17.3% while profits
soared. The big decline in both profits and the Dow began in 1930.
Shareholders approved the full LAMCO management of The Charles Allmon Trust,
beginning in November 1995. While this closes one chapter in my life, let me
state that I'm not retiring. I do want to thank many shareholders for their
gracious letters and encouragement over the years. From inception of our fund
to my departure this month, I'll remember fondly several things: the faith
which shareholders placed in me at the outset, the camaraderie of our great
board meetings, igniting an $80 billion investment stampede, and the fact
that our Trust apparently was the only equity fund in the country to rise in
price on "Black Monday." I do want to take this last opportunity to pay
special tribute and thanks to the original Trust directors who shared my idea
from the incubation stage. To Bill Colby, Gil Grosvenor, Atlee Kohl, and
Governor Endicott Peabody my deepest appreciation for their wise counsel and
advice over the years. And to Rich Carlson, too, who came aboard later. A
world of thanks and appreciation also to Janet Hudson, Wayne Patterson, and
Mike Sweeney of my staff, with whom I work closely on a daily basis.
There is an old Chinese proverb--"May your shadow never grow less."
Sincerely,
/s/ Charles Allmon
Charles Allmon
Former Chairman of the Board and CEO
The Charles Allmon Trust, Inc.
2
<PAGE>
(This page intentionally left blank.)
3
<PAGE>
Liberty ALL*STAR Growth Fund, Inc.
(formerly The Charles Allmon Trust, Inc.)
November 1995
To Our Fellow Shareholders:
The LAMCO-managed portion of The Charles Allmon Trust had third quarter and
year-to-date returns of 8.4% and 29.9%, respectively, which, as the
accompanying table shows, compare favorably with other stock market
benchmarks. Our 29.4% return since inception of LAMCO's involvement (June 1,
1994) exceeds the Lipper Growth Mutual Fund Average for the same period by
0.6%.
- --------------------------------------------------------------------------------
Performance of the LAMCO-managed portion of the Trust for the third quarter,
the three quarters ending September 30, 1995 and the period since LAMCO's
inception (June 1, 1994) is shown below. Figures shown for LAMCO and the
Lipper Growth Mutual Fund Average are total returns, including income, less
fees and other operating expenses. Figures shown for the unmanaged S & P 500
Index and Dow Jones Average include income.
Cumulative
From LAMCO
First Three Inception
Third Quarters, (June 1,
Quarter 1995 1994)
------ ----------- -------------
LAMCO-managed portion of the
Trust 8.4% 29.9% 29.4%
Lipper Growth Mutual Fund Average 8.6% 27.5% 28.8%
S & P 500 Stock Index 7.9% 29.7% 32.5%
Dow Jones Industrial Average 5.7% 27.2% 31.1%
- --------------------------------------------------------------------------------
As mentioned in Mr. Allmon's letter, the second closing under the Asset
Acquisition and Fund Management Transition Agreement among Liberty Asset
Management Company, Growth Stock Outlook, Inc. and Charles Allmon was
consummated on November 6, 1995.
Accordingly, on November 6th, and as approved by shareholders at the 1995
Annual Meeting:
(bullet) The name was changed to Liberty All-Star Growth Fund, Inc. The New
York Stock Exchange ticker symbol is now ASG.
(bullet) LAMCO became the manager of all the Fund's assets. In accordance
with LAMCO's multi-management methodology, the assets were split
essentially equally among the three Portfolio Managers: Provident
Investment Counsel, Inc., Oppenheimer Capital and Cooke & Bieler,
Inc.
(bullet) The investment objective became long-term capital appreciation.
4
<PAGE>
It is anticipated that, under normal market conditions, the Fund's Portfolio
Managers within three to six months will invest at least 65% of the Fund's
assets in equity securities in accordance with their respective investment
styles.
We deeply appreciate the support and counsel of Mr. Charles Allmon, the
Founder and retiring Chairman, and the other retiring Directors: Messrs.
Richard Carlson, William E. Colby, Gilbert M. Grosvenor, Atlee M. Kohl and
The Honorable Endicott Peabody. I would also like to welcome Mr. Robert J.
Birnbaum as a new Director; he brings a wealth of experience to the Board. He
joins Messrs. James E. Grinnell, Richard W. Lowry and me on the Board.
In previous letters, we have discussed various aspects of LAMCO's
multi-management process. An important part of this process is the continuing
evaluation of the Portfolio Managers compared with their respective peer
groups. From time to time, we replace a manager when we believe such
replacement will enhance the Fund's ability to achieve the dual objectives of
better than average returns and less than average volatility compared with
other growth funds.
We seek three fundamental attributes in a manager:
(bullet) Compatibility with the basic nature of the Fund, which is designed
to be a domestic growth equity fund. In addition, we seek a
distinctive style that is consistently followed and is different
from and complementary to those of the other Portfolio Managers to
reduce the overall volatility of the Fund.
(bullet) Good long-term investment performance relative to its peer group.
(bullet) Consistency of investment philosophy, decision making process and
organization through time.
Manager searches have both quantitative and qualitative aspects. We start
with a universe of over one thousand institutional managers whose style could
logically fit into the Fund's team of managers (these managers typically
manage corporate pension plans, university endowment funds and the like).
Then we use a series of quantitative, computer-based screens, including
long-term investment performance, to narrow down the list. The final step is
a series of intensive interviews to understand in depth the investment
philosophy, decision making process and organization of each of the
finalists. Then we choose the manager we consider to be the best for the Fund
and so recommend to the Board of Directors for approval.
Thank you again for your support and confidence in Liberty Asset Management
Company. Please note our new address and telephone number on the back cover
of this report.
Sincerely,
/s/ Richard R. Christensen
Richard R. Christensen
Chairman and Chief Executive Officer
Liberty All-Star Growth Fund, Inc.
President and Chief Executive Officer
Liberty Asset Management Company
5
<PAGE>
Liberty ALL*STAR Growth Fund, Inc.
(formerly The Charles Allmon Trust, Inc.)
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 1995
(Unaudited)
No. of
Shares Company Value
- --------- ---------------------------------------------- -------------
Common Stocks
--------------------------------------------
AEROSPACE - 0.7%
4,000 The Boeing Co. $ 273,000
7,500 McDonnell Douglas Corp. 620,625
-----------
$ 893,625
-----------
BANKING - 1.3%
8,000 Citicorp (a) $ 566,000
1,880 Financial Trust Corp. Pennsylvania 55,460
2,134 Harleysville National Corp. 56,017
8,500 Mellon Bank Corp. 379,312
1,300 Mercantile Bankshares Corp. 35,425
1,000 National Australia Bank Ltd. (ADR)* 44,375
9,000 State Street Boston Corp. 360,000
3,700 Wachovia Corp. 159,563
-----------
$1,656,152
-----------
BROADCASTING & CABLE - 0.3%
3,000 Capital Cities/ABC, Inc. $ 352,875
-----------
BUSINESS SERVICES - 0.5%
6,200 The Dun & Bradstreet Corp. $ 358,825
4,600 First Data Corp. 285,200
1,300 Manpower, Inc. 37,700
-----------
$ 681,725
-----------
CHEMICALS/OIL/GAS - 2.5%
6,000 Burlington Resources, Inc. $ 232,500
4,300 Enron Corp. 144,050
5,200 Exxon Corp. 375,700
6,000 Hercules, Inc. 348,000
7,000 The Lubrizol Corp. 228,375
4,000 Monsanto Co. 403,000
5,600 Royal Dutch Pet. Co. (ADR)* 687,400
6,000 Tenneco, Inc. 277,500
10,000 Triton Energy Corp. (a) 483,750
-----------
$3,180,275
-----------
COMMERCIAL SERVICES - 0.3%
3,500 Loewen Group, Inc.* $ 144,375
6,000 Service Corporation International 234,750
-----------
$ 379,125
-----------
COMPUTERS/PERIPHERALS - 1.0%
2,000 Applied Materials, Inc. (a) $ 204,500
5,000 Avery Dennison Corp. 210,000
4,000 Hewlett-Packard Corp. 333,500
10,000 Oracle Systems Corp. (a) 383,750
3,400 3Com Corporation Designs (a) 154,700
-----------
$1,286,450
-----------
COMPUTER SERVICES - 0.6%
5,105 American List Corp. $ 146,131
3,000 Automatic Data Processing, Inc. 204,375
2,000 Brandon Systems Corp. 39,250
1,000 Ceridian Corp. (a) 44,375
3,000 Computer Sciences Corp. (a) 193,125
1,000 First Financial Management Corp. 97,625
-----------
$ 724,881
-----------
COMPUTER SOFTWARE - 0.9%
2,000 BMC Software, Inc. (a) $ 92,000
3,000 Cisco Systems, Inc. (a) 207,000
5,025 Computer Associates Int'l, Inc. 212,306
3,100 Informix Corp. (a) 100,750
5,000 Microsoft Corp.(a) 452,500
-----------
$1,064,556
-----------
CONSUMER PRODUCTS - 0.4%
6,000 General Electric Co. $ 382,500
4,500 Hasbro, Inc. 140,062
-----------
$ 522,562
-----------
See Accompanying Notes to Financial Statements
6
<PAGE>
SCHEDULE OF INVESTMENTS (Continued)
DIVERSIFIED - 0.4%
3,300 American Standard Companies, Inc. $ 97,350
16,000 Coltec Industries, Inc. (a) 192,000
11,000 Whitman Corp. 226,875
-----------
$ 516,225
-----------
DRUGS/TOILETRIES - 1.8%
2,000 Amgen, Inc. $ 99,750
10,500 Bristol-Myers Squibb Co. 765,188
2,000 Cardinal Health, Inc. 110,750
6,000 Gillette Co. 285,750
4,000 Merck & Co., Inc. 224,000
14,000 Schering-Plough Corp. 721,000
-----------
$2,206,438
-----------
ELECTRONICS &
ELECTRICAL EQUIPMENT - 2.4%
2,000 Analog Devices, Inc. (a) $ 69,250
8,000 Arrow Electronics, Inc. (a) 435,000
6,400 Cooper Industries, Inc. 225,600
2,500 General Instrument Corp. (a) 75,000
10,800 Intel Corp. 649,350
2,200 LSI Logic Corp. (a) 127,050
10,000 Motorola, Inc. 763,750
4,000 Raytheon Co. 340,000
3,000 Texas Instruments, Inc. 239,625
1,600 Xilinx, Inc. (a) 77,000
-----------
$3,001,625
-----------
FINANCIAL SERVICES - 1.6%
7,000 Federal Home Loan Mortgage Corp. $ 483,875
2,600 Federal National Mortgage Association 269,100
3,500 First USA, Inc. 189,875
6,000 MBNA Corp. 249,750
4,000 Morgan Stanley Group, Inc. 384,500
9,000 Travelers, Inc. 478,125
-----------
$2,055,225
-----------
FOODS - 1.5%
10,000 Dole Food Co. $ 346,250
11,500 Eskimo Pie Corp. 215,625
8,000 Hershey Foods Corp. 515,000
7,500 McCormick & Company, Inc. 179,063
2,000 Nestle S.A. (ADR)* 102,954
6,544 Tootsie Roll Industries, Inc. 259,306
2,000 Unilever N.V.* 260,000
-----------
$1,878,198
-----------
HEALTH CARE &
MEDICAL EQUIPMENT - 1.6%
7,000 Medtronic, Inc. $ 376,250
23,500 St. Jude Medical, Inc. 1,486,375
2,500 United Healthcare Corp. 122,187
-----------
$1,984,812
-----------
HOUSEHOLD PRODUCTS - 0.7%
7,500 The Clorox Company $ 535,313
6,000 Premark International, Inc. 305,250
-----------
$ 840,563
-----------
INSURANCE - 2.5%
5,000 AFLAC, Inc. $ 207,500
3,000 American International Group, Inc. 255,000
8,000 EXEL Limited 465,000
15,537 Harleysville Group, Inc. 462,225
3,400 MBIA, Inc. 239,700
4,700 Marsh & McLennan Companies, Inc. 413,013
3,000 MGIC Investment Corp. 171,750
1,900 Penn Treaty American Corp. (a) 27,075
1,000 The PMI Group, Inc. 47,375
8,000 Progressive Corp. 358,000
32,000 United Insurance Companies,
Inc. (a) 448,000
-----------
$3,094,638
-----------
LEISURE/AMUSEMENT - 1.8%
5,200 Boston Acoustics, Inc. $ 104,000
2,200 Circus Circus Enterprises 61,600
1,200 HFS, Inc. (a) 62,850
9,800 International Speedway Corp. 2,067,800
-----------
$2,296,250
-----------
7
<PAGE>
MANUFACTURING - 1.1%
2,000 Cabletron Systems, Inc. (a) $ 131,750
10,400 Dover Corp. 397,800
3,000 Eaton Corp. 159,000
9,000 Sherwin-Williams Co. 315,000
1,500 Tyco International Ltd. 94,500
4,000 W.H. Brady Co. 292,000
-----------
$ 1,390,050
-----------
MINING - 3.7%
38,000 Barrick Gold Corp.* $ 983,250
20,000 Euro-Nevada Mining Corp. Ltd.* 766,312
20,500 Franco-Nevada Mining Corp. Ltd.* 1,227,773
30,000 Freeport-McMoRan Inc. 168,750
12,000 Freeport-McMoRan Copper & Gold Inc. Class A 307,500
9,481 Newmont Mining Corp. 402,943
30,000 Placer Dome, Inc.* 787,500
-----------
$ 4,644,028
-----------
PUBLISHING - 0.4%
2,000 McGraw Hill, Inc. $ 163,500
7,500 Readers Digest Association, Inc.
Class A 353,438
-----------
$ 516,938
-----------
REAL ESTATE
INVESTMENT TRUST - 0.3%
15,000 New Plan Realty Trust $ 331,875
-----------
RETAIL - 1.2%
11,000 American Greetings Corp. $ 335,500
6,000 AutoZone, Inc. (a) 153,000
2,500 Home Depot 99,687
5,000 J.C. Penney Company, Inc. 248,125
8,000 May Department Stores 350,000
4,500 Office Depot (a) 135,562
8,000 Wal-Mart Stores, Inc. 199,000
-----------
$ 1,520,874
-----------
TELECOMMUNICATIONS - 1.5%
2,500 Andrew Corp. (a) $ 152,813
1,000 Glenayre Technologies, Inc. (a) 72,000
18,000 L.M. Ericsson Telefonaktiebolaget* 441,000
4,200 Nokia, Inc. (ADR)* 292,950
6,000 Pacific Telesis Group 184,500
5,400 SBC Communications, Inc. 297,000
10,000 Sprint Corp. 350,000
1,600 U.S. Robotics Corp. (a) 136,400
-----------
$ 1,926,663
-----------
OTHERS - 1.8%
1,500 Alco Standard Corp. $ 127,125
5,000 AMR Corp. (a) 360,625
3,900 Avon Products, Inc. 279,825
21,874 Citizens Utilities Company 'B' 240,619
10,800 Corning, Inc. 309,150
8,000 Genuine Parts Co. 321,000
4,000 Pitney Bowes, Inc. 168,000
6,700 Union Camp Corp. 386,088
-----------
$ 2,192,432
-----------
TOTAL COMMON STOCKS 32.8% $41,139,060
----- -----------
Principal Value
- ----------------------------------------------------------- -------------
U.S. GOVERNMENT OBLIGATIONS
$ 5,500,000 U.S. Treasury Bills 5.89%-5.90% due 10/05/95 $ 5,495,738
$ 4,000,000 U.S. Treasury Bills 5.83% due 10/12/95 3,992,576
$ 3,000,000 U.S. Treasury Bills 5.91% due 10/19/95 2,991,070
$ 3,800,000 U.S. Treasury Bills 5.41% due 12/21/95 3,753,640
$ 500,000 U.S. Treasury Note 7.50% due 1/31/96 503,065
$17,500,000 U.S. Treasury Bills 5.45% due 1/25/96 17,200,575
$ 6,000,000 U.S. Treasury Bills 5.39% due 2/1/96 5,891,280
$ 7,500,000 U.S. Treasury Bills 5.39% due 2/8/96 7,352,850
8
<PAGE>
U.S. GOVERNMENT OBLIGATIONS (continued)
$13,000,000 U.S. Treasury Bills 5.43% due 2/22/96 $12,722,190
$ 4,000,000 U.S. Treasury Bills 5.30% due 3/7/96 3,904,880
$ 7,500,000 U.S. Treasury Bills 5.21% due 3/21/96 7,306,425
$ 5,000,000 U.S. Treasury Bills 5.27% due 3/28/96 4,866,786
----------
TOTAL U.S. GOVERNMENT OBLIGATIONS 60.6% $75,981,075
----- -----------
Value
-------------
SHORT-TERM INVESTMENTS
State Street Bank & Trust Co.
Repurchase Agreement dated 9/29/95, 5.25%,
to be repurchased at $1,471,644 on 10/2/95,
collateralized by a $1,325,000 U.S. Treasury
Note at 7.625%, due 11/15/22, with a current
market value of $1,502,550 1.2% $ 1,471,000
---- -----------
TOTAL INVESTMENTS 94.6% $118,591,135
---- -----------
CASH, RECEIVABLES,
OTHER ASSETS
& LIABILITIES (NET) 5.4% $ 6,827,661
---- -----------
NET ASSETS 100.0% $125,418,796
==== ===========
(a) Non-income producing security.
*Corporations whose headquarters and principal operations are outside the
United States. These investments aggregate $5,737,889 or 4.6% of net assets.
ADRs and ADSs (American Depositary Receipts/Shares) are negotiable receipts
issued by U.S. banks representing underlying shares of foreign securities.
-----------------------------------------------------------------------------
PRINCIPAL PORTFOLIO CHANGES
Three Months Ended September 30, 1995
(Unaudited)
Shares or Principal Amount
---------------------------------------------
Balance
Additions Reductions September 30, 1995
-------- --------- --------------------
AMR Corp. 2,000 5,000
Browning-Ferris
Industries, Inc. 3,000 --
Eaton Corp. 3,000 3,000
Freeport-McMoRan Copper &
Gold, Inc. Class A 11,500 12,000
Freeport-McMoRan, Inc. 12,000 30,000
Home Depot 3,500 2,500
Homestake Mining Company 20,000 --
International Speedway
Corp. 6,000 9,800
LSI Logic Corp. 2,200 2,200
McCormick & Company, Inc. 7,500 7,500
Medicine Shoppe
International, Inc. 20,700 --
Pioneer Hi-Bred
International, Inc. 3,000 --
Polaroid Corp. 1,700 --
St. Jude Medical, Inc. 3,300 23,500
Warnaco Group, Inc. Class 'A' 7,000 --
9
<PAGE>
Liberty ALL*STAR Growth Fund, Inc.
(formerly The Charles Allmon Trust, Inc.)
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1995
(Unaudited)
Assets
Investments, at value (cost $104,119,812) $118,591,135
Cash and cash items 6,871,922
Receivable for securities sold 230,048
Dividends and interest receivable 102,433
Other assets 14,084
-----------
Total assets 125,809,622
-----------
Liabilities
Payable for securities purchased 35,050
Accounts payable and accrued liabilities 355,776
-----------
Total liabilities 390,826
-----------
Net assets $125,418,796
===========
Net Assets
Common stock, $0.10 Par (auth. 20,000,000 shs.;
outstanding 11,339,096 shs.) $ 1,133,910
Capital in excess of par value 104,944,039
Undistributed net investment income 986,569
Undistributed net realized capital gain 3,882,955
Net unrealized appreciation of investments 14,471,323
-----------
Net assets $125,418,796
===========
Net asset value per share $11.06
=======
-----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Nine Moths Ended September 30, 1995
(Unaudited)
Investment income
Income
Dividends $ 509,592
Interest 3,431,677
---------
3,941,269
Expenses
Investment advisory $ 666,698
Administrative 222,233
Custodian and Accounting 87,993
Directors; fees and expenses 48,801
Legal and audit 61,057
Transfer agent 39,126
Printing 31,414
Postage 54,362
Insurance 32,785
Other 24,605 1,269,074
------ ---------
Net investment income ($0.24 per share) 2,672,195
Realized gain and change in unrealized
appreciation of investments
Net realized gain from security
transactions 3,904,662
Net increase in unrealized appreciation 7,795,187
------
Net gain on investments 11,699,849
---------
Gain in net assets resulting from operations $14,372,044
=========
See Accompanying Notes to Financial Statements
10
<PAGE>
Liberty ALL*STAR Growth Fund, Inc.
(formerly The Charles Allmon Trust, Inc.)
STATEMENTS OF CHANGES IN NET ASSETS
For the Nine For the Year
Months Ended Ended
September 30, 1995 December 31,
(Unaudited) 1994
------------------ ---------------
Operations
Net investment income $ 2,672,195 $ 2,583,199
Net realized gains from security
transactions 3,904,662 3,981,260
Net increase (decrease) in
unrealized appreciation 7,795,187 (7,199,247)
----------------- --------------
Increase (decrease) in net
assets resulting from
operations 14,372,044 (634,788)
Distributions to shareholders
Net investment income (1,733,723) (2,575,989)
Net realized gains from security
transactions (52,159) (3,989,019)
----------------- --------------
Decrease in net assets from
distributions (1,785,882) (6,565,008)
Capital share transactions
Cost of repurchase of shares 0 (4,984,843)
----------------- --------------
Total increase (decrease)
in net assets 12,586,162 (12,184,639)
Net assets
Beginning of period 112,832,634 125,017,273
----------------- --------------
End of period (including
undistributed net investment
income of $986,569 and $48,097,
respectively) $125,418,796 $112,832,634
================= ==============
-----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The table below sets forth selected financial data for a share of common
stock outstanding throughout each period presented and certain supplemental
data. The following information should be read in conjunction with the
Financial Statements and the Notes.
<TABLE>
<CAPTION>
For the
Nine Months
Ended
September 30,
1995 For the Year Ended December 31
------------------------------------------------------------
(Unaudited) 1994 1993 1992 1991 1990
--------------- ------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance
- --------------------------
Net asset value, beginning
of period $ 9.95 $ 10.54 $10.28 $10.40 $ 9.90 $10.10
------------- ------ ------ ------ ------ -------
Net investment income .24 .23 .18 .29 .44 .54
Net realized and
unrealized gains
(losses) on investments 1.03 (.24) .56 .03 .71 (.12)
------------- ------ ------ ------ ------ -------
Total from investment
operations $ 1.27 $ (.01) $ .74 $ .32 $ 1.15 $ .42
------------- ------ ------ ------ ------ -------
Less Distributions
Net investment
income .15 .23 .18 .30 .44 .54
Net realized gains .01 .35 .30 .14 .21 .08
------------- ------ ------ ------ ------ -------
Total distributions $ .16 $ .58 $ .48 $ .44 $ .65 $ .62
------------- ------ ------ ------ ------ -------
Net asset value, end of
period $11.06 $ 9.95 $10.54 $10.28 $10.40 $ 9.90
============= ====== ====== ====== ====== =======
Per share market value,
end of period $ 9.25 $ 8.50 $10.25 $10.00 $10.00 $10.25
Total Investment Return 12.8%* -11.50% 7.23% 4.43% 3.91% 8.85%
Ratios/Supplemental Data
- --------------------------
Net assets, end of period
(000) $125,419 $112,833 $125,017 $122,851 $125,330 $120,906
Ratio of expenses to
average net assets 1.42%** 1.51% 1.35% 1.33% 1.31% 1.48%
Ratio of net income to
average net assets 2.99%** 2.12% 1.71% 2.80% 4.17% 5.30%
Portfolio turnover rate 9%** 50% 47% 19% 25% 41%
</TABLE>
*Total investment return has not been annualized.
**Annualized.
See Accompanying Notes to Financial Statements
11
<PAGE>
Liberty ALL*STAR Growth Fund, Inc.
(formerly The Charles Allmon Trust, Inc.)
Notes to Financial Statements
September 30, 1995
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES:
Liberty All-Star Growth Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified closed-end
management investment company and commenced operations on March 14, 1986. The
following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
Security Valuation:
Investments in securities which are traded on stock exchanges are valued at
the last sale price as of the close of business on the day of valuation, or
lacking any sales, at the mean of the closing bid and asked quotations on
that date. Securities traded in the Over-the-Counter market which are
National Market System securities are valued at the last sale price as of the
close of business on the day of valuation. Other Over-the-Counter securities
are valued at the most recent bid prices as obtained from one or more dealers
that make markets in the securities. Securities and assets for which market
quotations are not readily available are valued at fair value as determined
by the Board of Directors. Short term investments that mature in 60 days or
less are valued at amortized cost, which approximates market value.
Federal Income Taxes:
The Fund qualifies as a "regulated investment company." As a result, a
federal income tax provision is not required for amounts distributed to
shareholders. The Fund generally reserves the right to retain for
reinvestment net long term capital gains in excess of net short term capital
losses, which would require federal income taxes to be paid by the Fund on
behalf of its shareholders. Pursuant to provisions of the Internal Revenue
Code applicable to regulated investment companies, any necessary tax
provision on net gains realized but not distributed will not be made until
the last day of the year.
Distributions to Shareholders:
Income and capital gains distributions are determined in accordance with
federal income tax regulations, which may differ from generally accepted
accounting principles. These differences are primarily due to different
treatments for the deferral of wash sales.
Other:
Security transactions are accounted for on trade date basis. Interest income
and expenses are recorded on the accrual basis. Dividend income is recorded
on the ex-dividend date. Discounts on debt securities are amortized in
accordance with Internal Revenue Code requirements.
2. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities other than United States Government
obligations aggregated $7,898,225 and $16,878,203, respectively, for the nine
months ended September 30, 1995. For federal income tax purposes the
identified cost of investments owned at September 30, 1995 was $104,119,812.
Gross unrealized appreciation and depreciation of investments at September
30, 1995 are $14,875,176 and $403,853, respectively. In determining the net
gain or loss on securities sold, the cost of securities has been determined
on identified cost basis.
3. INVESTMENT ADVISORY AND ADMINISTRATIVE FEES:
On May 27, 1994, the Fund entered into a new Investment Advisory Agreement
with Growth Stock Outlook, Inc. (GSO), a Fund Management Agreement with
Liberty Asset Management Company (LAMCO), an indirect subsidiary of Liberty
Mutual Insurance Company, and separate portfolio management agreements with
LAMCO and three independent Portfolio Managers. Under these agreements, from
June 1, 1994 to November 6, 1995, LAMCO provided administrative services to
the Fund and multi-management services for approximately 20% of the Fund's
assets, and GSO continued to provide investment advisory services for the
remaining 80% of the Fund's assets. The combined fee rates paid under the May
27, 1994 agreements with LAMCO and GSO were equal to the fee rates paid to
GSO under the previous Investment Advisory Agreement. See Note 6, Subsequent
Event, below.
12
<PAGE>
Notes to Financial Statements (Continued)
The quarterly fees payable by the Fund to LAMCO for administrative services
and the combined quarterly fees paid by the Fund to LAMCO and GSO for
investment advisory services expressed as an annual rate based upon a
percentage of the Fund's average weekly net assets are summarized as follows:
- --------------------------------------------------------------------------------
Combined
Administrative Investment
Fee Advisory Fee Total
------------------ ------------------ ----------------
Net assets
up to
$125 million .25% per annum .75% per annum 1.00% per annum
Net assets
exceeding
$125 million
up to
$250 million .1875% per annum .5625% per annum .75% per annum
Net assets
exceeding $250
million .125% per annum .375% per annum .50% per annum
- --------------------------------------------------------------------------------
Under separate Portfolio Management Agreements, LAMCO paid each Portfolio
Manager a quarterly fee of .40% per annum of the portion of the Fund's assets
managed by that Portfolio Manager, with such rate reduced to .30% per annum
of the Portfolio Manager's allocated portion of the Fund's assets exceeding
$125 million up to $250 million and to .20% per annum of such portion of the
Fund's assets exceeding $250 million.
Under the previous Investment Advisory Agreement in effect prior to May 27,
1994, the Fund paid GSO a quarterly fee at the annual rates shown under
"Total" above.
4. REPURCHASE OF SHARES:
In accordance with Section 23(c) of the Investment Company Act of 1940, the
Fund may repurchase its shares from time to time as and when it is deemed
advisable by the Fund. Such purchases will be made only when the Fund's
shares are trading below net asset value. Since such purchases are made at
prices below net asset value, they increase the net asset value of the
remaining outstanding shares. Shares repurchased by the Fund are retired.
5. INVESTMENT IN REPURCHASE AGREEMENTS:
The Fund may enter into repurchase agreements with banks, broker-dealer firms
and other recognized financial institutions whereby such institutions sell an
instrument in which the Fund may invest, and the seller agrees, at the time
of the sale, to repurchase that instrument at a specified time and price. The
Fund requires the seller of the instrument to maintain on deposit with the
Fund custodian bank or in the Federal Reserve Book-Entry System securities in
an amount at all times equal to or in excess of the value of the repurchase
agreement plus accrued interest. In the event that the seller of the
instrument defaults on the repurchase obligation, the Fund could receive less
than the repurchase price on the sale of the securities to another party or
could be subject to delays in selling the securities.
6. SUBSEQUENT EVENTS
On November 6, 1995, pursuant to approval by the shareholders of the Fund at
the June 13, 1995 session of the Fund's 1995 Annual Meeting of Shareholders,
(i) a new Fund Management Agreement between the Fund and LAMCO and new
Portfolio Management Agreements among the Fund, LAMCO and the three Portfolio
Managers were entered into pursuant to which LAMCO is providing
administrative services and its multi-management services for all of the
Fund's assets, subject to the Fund's investment objective and policies and
any directions of the Directors, (ii) the Fund's name was changed to "Liberty
All-Star Growth Fund, Inc.", and (iii) the Fund's investment objective was
changed to long-term capital appreciation.
The quarterly administrative and investment advisory fees payable to LAMCO by
the Fund under the new Fund Management Agreement are the same as those shown
in Note 3 above.
The litigation previously commenced in the Federal District Court of
Massachusetts by a shareholder of the Fund challenging the transactions
described above whereby LAMCO has assumed full management responsibilities
for the Fund was settled by the parties at no cost to the Fund, and the Court
approved such settlement and dismissed the litigation by order dated October
2, 1995.
13
<PAGE>
INVESTMENT OBJECTIVE AND POLICY
With Liberty Asset Management Company's assumption of investment management
responsibilities for all of the Fund's assets on November 6, 1995, the
investment objective of Liberty All-Star Growth Fund, Inc. (formerly The
Charles Allmon Trust, Inc.) was changed to long term capital appreciation.
The Fund will attempt to achieve this objective by investing at least 65% of
its total assets under normal market conditions in a diversified portfolio of
equity securities. The Fund's assets not invested in equity securities may be
invested in U.S. Government securities, repurchase agreements with respect to
U.S. Government securities and money market mutual funds that invest
primarily in U.S. Government securities.
* * * * * *
AUTOMATIC DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Each registered shareholder is considered a participant in the Fund's
Dividend Reinvestment and Cash Purchase Plan (the Plan), unless the
shareholder elects otherwise. The Plan is available to all registered
shareholders of the Fund and provides a convenient way to acquire additional
shares of the Fund.
The Fund generally declares and pays net investment income and capital gain
distributions semi-annually. All distributions payable to participants in the
Plan are automatically reinvested in shares of the Fund by State Street Bank
(SSB), the dividend paying agent, unless the shareholder elects to receive
the dividend in cash. If a shareholder wishes to receive distributions in
cash, the shareholder must notify SSB (for shareholders of record), or notify
the institution (bank, broker or other nominee) in whose name the shares are
held.
Participants in the Plan also have the option of making additional cash
payments on a monthly basis for investment in Fund shares. Such payments can
be made in any amount from $100 to $3,000. For more information about the
Plan, please ask us for our summary brochure on the Automatic Dividend
Reinvestment and Cash Purchase Plan.
* * * * * *
Net Asset Value -- The Fund's net asset value is determined daily as of the
close of the New York Stock Exchange and is available by calling State Street
Bank and Trust Company at 1-800-542-3863.
The net asset value of the Fund is also published each Monday in The Wall
Street Journal and Saturday in Barron's and The New York Times under "Liberty
All-Star Growth Fund."
Questions -- If you lose your stock certificate, have a change of address, or
have any questions concerning your Fund shares you may call toll free at
1-800-542-3863 or write Liberty All-Star Growth Fund, Inc., c/o State Street
Bank and Trust Company, P.O. Box 8200, Boston, Massachusetts 02266-8200. If
your Fund shares are held in "Street Name" by your broker, you must contact
your broker.
- ------------------------------------------------------------------------------
This report, including accompanying financial statements, is sent to
shareholders of Liberty All-Star Growth Fund, Inc. for their information. It
is not a prospectus, circular or representation intended for use in the
purchase or sale of shares of the Fund, or of any securities mentioned in
this report.
- ------------------------------------------------------------------------------
14
<PAGE>
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15
<PAGE>
[Back cover]
LIBERTY ALL*STAR GROWTH FUND, INC.
(formerly The Charles Allmon Trust, Inc.)
Fund Manager
Liberty Asset Management Company
Federal Reserve Plaza
600 Atlantic Avenue
Boston, Massachusetts 02210-2214
1-617-722-6036
Independent Auditors
KPMG Peat Marwick LLP
One Boston Place, Boston, Massachusetts 02108
Investor Assistance
Custodian, Transfer and Dividend
Disbursing Agent and Registrar
State Street Bank and Trust Company
P.O. Box 8200, Boston, Massachusetts 02266-8200
1-800-LIB-FUND (1-800-542-3863)
Directors
Robert J. Birnbaum
Richard R. Christensen
James E. Grinnell
Richard W. Lowry
Officers
Richard R. Christensen, Chairman and Chief
Executive Officer
William R. Parmentier, Jr., President
Peter L. Lydecker, Treasurer and Controller
John L. Davenport, Secretary
Gail D. Knudsen, Assistant Controller
Common Stock Data
Listed New York Stock Exchange, symbol ASG
Price (9-30-95) ............................................... $9.25
Net Asset Value (9-30-95) ..................................... $11.06
Discount ..................................................... -16.4%
[Liberty logo]
Printed with Soybean Inks
["Recycled" symbol] Printed on Recycled Paper
[Front cover]
[Liberty logo] LIBERTY
ALL*STAR
GROWTH FUND, Inc.
(Formerly The Charles Allmon Trust, Inc.)
3rd
Quarter Report
1995
