- ----------------------------------
LIBERTY ALL*STAR GROWTH FUND, INC.
New York Stock Exchange Trading Symbol: ASG
Fund Manager
Liberty Asset Management Company
Federal Reserve Plaza
600 Atlantic Avenue
Boston, Massachusetts 02210-2214
1-617-722-6036
Internet: http://www.lib.com/LAMCO/lamco.html
Independent Auditors
KPMG Peat Marwick llp
99 High Street
Boston, Massachusetts 02110
Custodian
Boston Safe Deposit & Trust Company
One Cabot Road
Medford, Massachusetts 02155
Investor Assistance,
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)
Legal Counsel
Bingham, Dana & Gould
150 Federal Street
Boston, Massachusetts 02110
Directors
Robert J. Birnbaum*
Harold W. Cogger
James E. Grinnell*
Richard W. Lowry*
Officers
Harold W. Cogger, Chairman of the Board of Directors
Richard R. Christensen, President & Chief Executive Officer
William R. Parmentier, Jr., Vice President & Chief Investment Officer
Peter L. Lydecker, Treasurer and Controller
John L. Davenport, Secretary
[Liberty logo]
*Member of the audit committee.
Printed with Soybean Inks
[Recycle logo]
Printed on Recycled Paper D/75m/2-11
[Liberty logo]
LIBERTY
ALL*STAR
GROWTH FUND, Inc.
- -----------------
1st
Quarter Report
1996
<PAGE>
Liberty ALL*STAR Growth Fund, Inc.
- --------------------
First Quarter Report
Chairman's Letter
To Our Fellow Shareholders: April 1996
The first quarter of 1996 was the first full quarter in which Liberty Asset
Management Company (LAMCO) was responsible for managing the entire portfolio
of the Fund.
<TABLE>
<CAPTION>
Fund Performance for the first quarter and latest 12 months
ended March 31, 1996. Figures shown for the Fund and the
Lipper Growth Mutual Fund Average are total returns, which
include income, less fees and other operating expenses.
Figures shown for the unmanaged S&P 500 and Dow Jones
indices are total returns including income.
<S> <C> <C>
First Latest
Quarter 12 Months
------- ----------
Liberty ALL-STAR Growth Fund, Inc.:
Shares Valued at Net Asset
Value 5.1% 15.8%
Shares Valued at Market Price
Reinvested 0.0% 17.6%
LAMCO Managed Portion of the
Fund
Valued at Net Asset Value 5.1% 26.1%
Lipper Growth Mutual Fund
Average 5.4% 28.0%
S&P 500 Stock Index 5.4% 32.0%
Dow Jones Industrial Average 9.8% 37.5%
Fund's Closing Price Range $9.50 to $10 to
9.125 8.625
Fund's Discount Range 17.2% to 17.6% to
8.0% 8.0%
</TABLE>
The net asset value (NAV) of a common share of the Fund rose from $10.55 on
December 31, 1995 to $11.09 on March 31, 1996. The market price of a share of
the Fund traded in a range from $9.125 to $9.50 before closing the quarter at
$9.375. The ending price represented a discount to NAV of 15.5 percent compared
with a discount to NAV of 11.1 percent on December 31, 1995. Key investment
results and comparisons are noted in the box.
The stock market continued its advance for the fifth quarter in a row. As
the box at the left shows, ALL-STAR Growth Fund was up 5.1 percent, which
compares with 5.4 percent for the Lipper Growth Mutual Fund Average (ALL-STAR
Growth Fund's primary benchmark comparison) and 5.4 percent for the S&P 500
Index.
As was mentioned in the 1995 Annual Report, St. Louis-based Mississippi
Valley Advisors Inc. (MVA) became one of the three Portfolio Managers of the
Fund at the beginning of the quarter. MVA's small cap growth style is
complementary to the styles of Oppenheimer Capital and Provident Investment
Counsel, Inc., the other two Portfolio Managers. Small cap stocks came back
into favor late in the quarter and the Fund was able to participate in this
market move through MVA.
We continue to believe that LAMCO's blending of different managers and
investment styles will help the Fund achieve its dual objectives of above
average returns and lower than average volatility compared to other growth
funds.
Sincerely,
[Signature of Harold W. Cogger]
Harold W. Cogger
Chairman of the Board of Directors
Liberty ALL-STAR Growth Fund, Inc.
1
<PAGE>
Liberty ALL*STAR Growth Fund, Inc.
- --------------------
First Quarter Report
President's Letter
April 1996
To Our Fellow Shareholders:
As discussed in the Chairman's letter, the stock market's advance continued
unabated during the first quarter. However, the quarter was marked by
significant rotation among the various economic sectors of the market as
investors sought companies that would perform well in a moderate growth
environment. In contrast to the generally strong market, utilities suffered a
loss for the quarter in the aftermath of both a bitter winter across the U.S.
and the February passage of the Telecommunications Bill.
Despite a rising interest rate environment, finance issues posted an
impressive gain for the quarter, paced by the brokerage firms that benefited
from extensive initial public offerings and merger advisory fees and banks
that benefited from consolidation. Previously sluggish industries like
chemicals, air transportation and consumer durables performed strongly. The
retail sector also bounced back as investors looked for undervalued and
neglected areas of the market. Conversely, the technology sector experienced
a sharp correction in January followed by a modest rally toward the end of
the quarter.
The first quarter also witnessed the re-emergence of small to mid cap stocks
after an 18 to 24 month period of underperformance. Whether this trend will
continue remains to be seen. However, much of the outperformance by large cap
companies has been related to restructuring, downsizing and cost cutting. The
strongest growth in the future may come from smaller companies as investors
focus on future growth and earnings.
Mississippi Valley Advisors Inc., a small capitalization growth stock
manager, is the subject of the manager interview beginning on page 6. Bob
Anthony, MVA's Portfolio Manager for the Fund, discusses MVA'S investment
philosophy and decision making process. He also offers his outlook for the
remainder of 1996.
In accordance with the Fund's policies, the Fund is now essentially fully
invested in equities. The percentage of the Fund's assets invested in equity
securities rose from 55% at the beginning of the quarter to 93% at the end.
Monthly portfolio and other information is now available to shareholders via
the Internet. LAMCO's internet address can be found on the back cover of this
report.
Sincerely,
[Signature of Richard R. Christensen]
Richard R. Christensen
President and Chief Executive Officer
Liberty ALL-STAR Growth Fund, Inc. and
Liberty Asset Management Company
2
<PAGE>
- ----------
Commentary
Managers' Differing Investment Styles
Are Reflected in Portfolio Characteristics
The Portfolio Characteristics table on this page is a regular feature of
ALL-STAR Growth's shareholder reports. It serves as a useful tool for
understanding the value of a multi-managed portfolio. The characteristics are
different for each of ALL-STAR Growth's three investment managers. These
differences are a reflection of the fact that each pursues an individual
Investment Style. The shaded column highlights the characteristics
of ALL-STAR Growth, as a whole, while the final column shows portfolio
characteristics for the entire S&P 500 Stock Index.
The Investment Styles practiced by ALL-STAR Growth's three Portfolio Managers
are:
Mississippi Valley Advisors Inc. (MVA)
Small capitalization growth companies that sell at a reasonable current price
relative to future earnings.
Oppenheimer Capital
Contrarian holdings being overlooked and undervalued by investors.
Provident Investment Counsel, Inc.
Large capitalization companies with fast growing earnings and bright
prospects.
- -------------------------------------------------------------------------------
Portfolio Characteristics
as of
March 31, 1996
<TABLE>
<CAPTION>
Market Capitalization
-----------------------------
Small Large
ALL-STAR S&P
MVA Oppenheimer Provident Growth 500 Index
---- ----------- --------- ------ ---------
<S> <C> <C> <C> <C> <C>
Number of Holdings 61 35 46 138 500
- ----------------------------------------------------------------------------------
Weighted Average Market
Capitalization
(billions) $1.1 $14.2 $19.6 $11.7 $31.9
- ----------------------------------------------------------------------------------
Percent of Holdings
in S&P 500 9.4% 69.9% 74.7% 51.5% --
- ----------------------------------------------------------------------------------
Dividend Yield 0.9% 1.5% 0.6% 1.0% 2.3%
- ----------------------------------------------------------------------------------
Average Price/
Earnings Ratio 17.8x 14.2x 28.8x 18.6X 18.2x
- ----------------------------------------------------------------------------------
Average Price/
Book Value Ratio 2.4x 2.7x 6.2x 3.2X 3.2x
- ----------------------------------------------------------------------------------
Average Five-Year
Earnings Per Share
Growth 29.2% 31.1% 24.8% 28.3% 21.8%
- ----------------------------------------------------------------------------------
</TABLE>
1996 Annual Meeting
At ALL-STAR Growth's 1996 Annual Meeting held on April 17,
shareholders reelected Robert J. Birnbaum and elected Harold W. Cogger as
Directors, ratified the portfolio manager agreement with Mississippi Valley
Advisors Inc., and ratified the selection of KPMG Peat Marwick LLP as the Fund's
Independent Auditors for the current year.
3
<PAGE>
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LIBERTY ALL*STAR GROWTH FUND, INC.
- ----------------------------------
MAJOR STOCK CHANGES IN
FIRST QUARTER
The following are major ($750,000 or more) stock changes--both additions and
reductions--that were made in the ALL-STAR Growth Fund's portfolio during the
first quarter of 1996.
<TABLE>
<CAPTION>
Shares
---------------------------------
Held
Security Name Additions Reductions 3/31/96
- ----------------------------------- -------- --------- --------
<S> <C> <C> <C>
Allergan Inc. 25,000 25,000
American Re Corp. 18,000 18,000
Arch Communications Group, Inc. 33,000 33,000
Caterpillar, Inc. 15,000 15,000
Department 56, Inc. 22,000 22,000
First Interstate BanCorp 5,000 5,000
Horizon Healthcare Corp. 40,000 40,000
Hubbell, Inc. Class B 12,000 12,000
IBP, Inc. 30,000 30,000
Lockheed Martin Corp. 14,000 14,000
Mobile Telecomm Technologies Corp. 60,000 60,000
Modine Manufacturing Co. 30,000 30,000
PMI Group, Inc. 24,000 25,000
R. P. Scherer Corp. 19,000 19,000
Sprint Corp. 20,000 30,000
Sungard Data Systems, Inc. 27,000 27,000
Transamerica Corp. 18,000 18,000
Union Texas Petroleum Holdings,
Inc. 46,000 76,000
Varity Corp. 30,000 30,000
Zebra Technologies Corp., Class A 28,200 28,200
Bristol-Myers Squibb Co. (10,500) 0
Intel Corp. (18,000) 22,000
Royal Dutch Petroleum Co. ADR (6,100) 0
Schering-Plough Corp. (14,000) 0
</TABLE>
DIVIDEND REINVESTMENT PLAN
THROUGH ITS AUTOMATIC DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN (THE PLAN),
ALL-STAR GROWTH OFFERS SHAREHOLDERS THE OPPORTUNITY TO REINVEST DISTRIBUTIONS IN
ADDITIONAL SHARES OF THE FUND. EACH REGISTERED SHAREHOLDER IS CONSIDERED A
PARTICIPANT IN THE PLAN, UNLESS THE SHAREHOLDER ELECTS OTHERWISE. THE PLAN
PROVIDES A WAY TO ACQUIRE ADDITIONAL SHARES OF THE FUND.
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. SHAREHOLDERS ARE KEPT APPRISED
OF THE STATUS OF THEIR ACCOUNT THROUGH QUARTERLY STATEMENTS.
FOR COMPLETE INFORMATION PLEASE CALL INVESTOR ASSISTANCE TOLL-FREE AT
1-800-LIB-FUND (1-800-542-3863) WEEKDAYS BETWEEN 9 AM AND 5 PM EASTERN TIME.
4
<PAGE>
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LIBERTY ALL*STAR GROWTH FUND, INC.
TOP 50
HOLDINGS
AS OF
MARCH 31, 1996
<TABLE>
<CAPTION>
RANK
AS OF VALUE PERCENT OF
RANK 12/31/95 SECURITY NAME ($000) NET ASSETS
- ----- -------- ------------- ------ -----------
<S> <C> <C> <C> <C>
1 5 Microsoft Corp. $2,063 1.6%
2 9 Federal Home Loan Mortgage Corp. 1,961 1.6
3 10 Federal National Mortgage Association 1,913 1.5
4 17 Pfizer, Inc. 1,675 1.3
5 4 First Data Corp. 1,635 1.3
6 30 Citicorp 1,600 1.3
7 47 Union Texas Petroleum Holdings, Inc. 1,501 1.2
8 11 Computer Associates, International, Inc. 1,433 1.1
9 6 Oracle Systems Corp. 1,414 1.1
10 57 Monsanto Co. 1,382 1.1
11 19 McDonnell Douglas Corp. 1,374 1.1
12 12 Hercules, Inc. 1,364 1.1
13 New Transamerica Corp. 1,348 1.1
14 37 AMR Corp. 1,343 1.1
15 7 Travelers Group, Inc. 1,320 1.0
16 24 Arrow Electronics, Inc. 1,316 1.0
17 2 St. Jude Medical, Inc. 1,315 1.0
18 New Varity Corp. 1,298 1.0
19 31 Morgan Stanley Group, Inc. 1,294 1.0
20 1 Intel Corp. 1,251 1.0
21 38 MBNA Corp. 1,244 1.0
22 23 Countrywide Credit Industries, Inc. 1,217 1.0
23 58 Mellon Bank Corp. 1,213 1.0
24 15 Medtronic, Inc. 1,193 0.9
25 16 AFLAC, Inc. 1,172 0.9
26 38 Cisco Systems, Inc. 1,159 0.9
27 67 Sprint Corp. 1,140 0.9
28 27 Champion International Corp. 1,131 0.9
29 14 Merck & Co., Inc. 1,121 0.9
30 50 Triton Energy Corp. 1,115 0.9
31 111 PMI Group, Inc. 1,091 0.9
32 41 Unilever N.V.ADR 1,086 0.9
33 New Lockheed Martin Corp. 1,062 0.8
34 26 Motorola, Inc. 1,060 0.8
35 13 United Healthcare Corp. 1,058 0.8
36 20 EXEL Limited 1,035 0.8
37 43 US Robotics Corp. 1,034 0.8
38 New Caterpillar, Inc. 1,020 0.8
39 56 Tenneco, Inc. 1,006 0.8
40 28 HFS, Inc. 973 0.8
41 77 May Department Stores Co. 965 0.8
42 91 Glenayre Technologies, Inc. 956 0.8
43 51 Freeport McMoRan Copper & Gold,Inc.
Class A 949 0.8
44 22 Automatic Data Processing, Inc. 945 0.8
45 New Mobile Telecommunication Technologies
Corp. 938 0.7
46 18 American International Group, Inc. 936 0.7
47 39 General Electric Co. 935 0.7
48 New Sungard Data Systems, Inc. 925 0.7
49 New Allergan, Inc. 922 0.7
50 48 Coltec Industries, Inc. 909 0.7
</TABLE>
5
<PAGE>
- ----------------------------------
LIBERTY ALL*STAR GROWTH FUND, INC.
[photo of Roberty J. Anthony]
Robert J. Anthony
Mississippi Valley Advisors Inc.
Manager Interview
Buying Growth Companies in Emerging Industries While Paying Reasonable Prices
Is Key to MVA's Approach
Mississippi Valley Advisors (MVA) is one of the ALL-STAR growth fund's three
investment managers. MVA's investment discipline seeks to achieve a high
total return by investing in a portfolio of small capitalization growth
stocks chosen based on a bottom-up "relative value" approach in which MVA
ranks candidates for investment on relative price/earnings ratio, earnings
growth and total return. The firm looks for strong management and managers
with an equity stake in the company; leadership in one or two markets by one
or two products; and strong financial condition as well as companies that are
under- researched by Wall Street analysts. we recently had the opportunity to
talk with Robert J. Anthony, Small Capitalization Portfolio Manager for MVA.
The Fund Manager, Liberty Asset Management Company (LAMCO), serves as the
moderator for the interview.
LAMCO: Please review Mississippi Valley Advisors' investment philosophy and
style.
Anthony: Mississippi Valley Advisors' small capitalization equity style is
designed to take advantage of the opportunity in small capitalization
companies. We are long-term investors with the objective of buying growth at
a reasonable price within emerging growth industries, as well as specialized
segments of more mature industries. We consider for purchase stocks selling at
low relative price/earnings ratios (P/Es), at P/E discounts to their growth
rates, and at P/Es below their peer groups. Also considered are small companies
with unique features including asset values, high cash flows, or other factors
which offer the potential for above average capital appreciation. Since we
believe our strength is in stock selection and not in market timing, the
objective is to stay fully invested and broadly diversified among economic
sectors. For purposes of risk control, our portfolios are closely monitored to
assure broad diversification among economic sectors.
Stocks are selected by our internal staff of nine equity analysts who are
each responsible for a sector or sectors of the economy, which are broken
down by energy, technology, medical, etc. Using a bottom-up stock selection
............................................................................
"Since we believe our strength is in stock selection and not in market
timing, the objective is to stay fully invested and broadly diversified among
economic sectors."
--Robert Anthony
............................................................................
The views expressed in this Interview represent the manager's views at the time
of the discussion and are subject to change.
6
<PAGE>
- ----------------------------------
LIBERTY ALL*STAR GROWTH FUND, INC.
process, analysts screen stocks seeking the highest possible total return
based upon projected earnings and historic relative P/E ratios. The stocks
are ranked in deciles with the portfolio being selected from the top four
deciles. The stocks become sale candidates when they fall below the sixth
decile.
LAMCO: Please discuss the first quarter in relation to your investment style.
Anthony: Unlike 1995, which saw large capitalization stocks significantly
outperform small capitalization issues and small capitalization growth (which
was momentum led) performing well ahead of small capitalization value, the
market in the first quarter of 1996 broadened considerably, with most indexes
performing near the S&P 500. This significant broadening of the market saw many
sectors such as consumer cyclicals and energy, which lagged considerably in
1995, showing good performance for the first quarter of 1996. According to the
Russell 2000, all of the major sectors in the first quarter rose in value, with
autos and transportation, consumer discretionary, energy, healthcare, and
materials processing all showing above average gains.
This broadening of the market worked to our benefit given our broadly
diversified portfolio. Our positive performance can be linked to good stock
selection throughout the major sectors. We saw strong gains in numerous
stocks including Advanta and United Companies Financial Corporation within
the interest rate sensitive sector, Sterling House and Emeritus within the
healthcare sector, Sungard Data and Verifone within technology, M A Hanna
within industrial cyclicals and Glenayre Technologies within the
telecommunications sector.
LAMCO: Please discuss two or three recent acquisitions to your portfolio and
the reasons why you bought them? And, can you comment on your portfolio
turnover rate?
Anthony: A recent addition to our portfolio is Mobile Telecommunications
Technology Corp. which is a leading provider of nationwide and international
wireless messaging services. Through its wholly- owned Skytel Corp., the
company markets nationwide paging and voice messaging systems. We recently
purchased this stock which has declined roughly 50 percent from its high. The
stock has declined due to concerns regarding technical difficulties
associated with the introduction of new two-way paging services. We believe
the product cycle related problems are transitory and will be resolved over
the next several quarters. The stock currently ranks in the top decile of
total return potential looking at both one year and three years.
Another recent addition to the portfolio is Paxson Communications, which has
created a nationwide network of television stations dedicated to the airing
of infomerical programming. In addition, the company owns 16 radio stations
in the four largest Florida cities. We believe the company has 20 percent
growth potential and ranks in the top decile for total return potential
looking out both one and three years.
Historically, our portfolio turnover has been in the vicinity of 80 percent,
but turnover of our assets within the Liberty ALL-STAR Growth Fund was less
in the first quarter of 1996.
LAMCO: Please discuss your sell discipline, including a specific example.
Continued on page 8
............................................................................
"Unlike 1995, which saw large capitalization stocks significantly outperform
small capitalization issues . . . the market in the first quarter of 1996
broadened considerably . . ."
--Robert Anthony
............................................................................
7
<PAGE>
- ----------------------------------
LIBERTY ALL*STAR GROWTH FUND, INC.
Continued from page 7
Anthony: Our investment philosophy calls for investing in securities that
offer well above average total return potential looking one and three years
into the future. Conversely, our sell discipline looks to remove those stocks
in the portfolio that fall in the bottom 40 percent of total return potential
looking ahead over the same time periods.
A recent example of our sell discipline includes Glenayre Technologies
(GEMS), which is a manufacturer of telecommunications equipment and software
used by service providers in paging and wireless personal com- munications
markets. We originally purchased this stock at $35.125 when it ranked in the top
two deciles of total return potential looking out one and three years. The stock
was sold at $47.37 for a gain of 35 percent when it ranked in the eighth decile
of total return potential looking out one year and the seventh decile of total
return potential looking out three years.
LAMCO: Please discuss your outlook for 1996. What factors will drive the
market for small capitalization stocks?
Anthony: For the remainder of 1996, our view is for a continued slow growth
economy with low inflation and minimal interest rate changes. High consumer
debt will likely continue to hold back the consumer, but steady growth should
continue in exports and capital equipment. In this environment, stock
selection should remain extremely important and we continue to find good
opportunities within the various sectors.
Small capitalization stocks have lagged large capitalization indices since
September 1995. Over this period, larger capitalization stocks have generated
about double the price performance of smaller companies. This underperformance
of small capitalization stocks seems to have been caused by investors seeking a
flight to quality, greater interest in multinational companies and a clear
preference for companies with more predictable earning streams. All of these
factors would be consistent with a perceived slowdown in the U.S. economy. This
period of underperformance has led to small capitalization stocks becoming even
more undervalued vis-a-vis their larger capitalization counterparts on a P/E
basis. We think a key for small capitalization stocks going forward will be a
potential reacceleration in the U.S. economy in the second half of 1996 and
1997.*
"We think a key for small capitalization stocks going forward will be a
potential reacceleration in the U.S. economy in the second half of 1996 and
1997."
--Robert Anthony
8
<PAGE>
- ----------------------------------
LIBERTY ALL*STAR GROWTH FUND, INC.
Schedule of Investments as of March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Common Stocks (93.3% Shares Market Value
<S> <C> <C>
Lockheed Martin Corp. 14,000 $ 1,062,250
McDonnell Douglas Corp. 15,000 1,374,375
-----------
2,436,625
-----------
Auto Parts (1.0%)
Varity Corp. (a) 30,000 1,297,500
-----------
Banks (5.2%)
Charter One Financial, Inc. 22,000 742,500
Citicorp 20,000 1,600,000
Crestar Financial Corp. 12,000 690,000
First Financial Corp. 5,000 106,875
First Interstate BanCorp. 5,000 867,500
Mellon Bank Corp. 22,000 1,212,750
Standard Federal BanCorporation 13,800 586,500
Union Planters Corp. 22,500 680,625
-----------
6,486,750
-----------
Broadcasting & Cable (1.4%)
British Sky Broadcasting Group ADR 19,000 762,375
Cabletron Systems, Inc. (a) 10,000 662,500
Paxson Communications Corp. (a) 24,000 375,000
-----------
1,799,875
-----------
Business Services (1.3%)
First Data Corp. 23,185 1,634,543
-----------
Chemicals (3.2%)
Hanna (M.A.) Co. 24,000 834,000
Hercules, Inc. 22,000 1,364,000
Monsanto Co. 9,000 1,381,500
NL Industries 30,000 397,500
-----------
3,977,000
-----------
Computer & Business Equipment (12.5%)
Active Voice Corp. (a) 20,000 260,000
Automatic Data Processing, Inc. 24,000 945,000
Avid Technology, Inc. (a) 15,000 315,000
Ceridian Corp. (a) 9,000 387,000
Cisco Systems, Inc. (a) 25,000 1,159,375
Computer Assoc. International, Inc. 20,000 1,432,500
Computer Sciences Corp. (a) 10,000 703,750
Hewlett-Packard Co. 8,000 752,000
Informix Corp. (a) 25,000 659,375
Intel Corp. 22,000 1,251,250
Microsoft Corp. (a) 20,000 2,062,500
Norand (a) 28,452 469,458
Nu-Kote Holdings, Inc. (a) 42,000 740,250
Oracle Systems Corp. (a) 30,000 1,413,750
Quantum Corp. (a) 30,000 540,000
Sungard Data Systems, Inc. (a) 27,000 924,750
The Peak Technologies Group (a) 15,000 273,750
3Com Corp. (a) 18,000 717,750
Zebra Technologies Corp., Class A (a) 28,200 747,300
-----------
15,754,758
-----------
Construction (0.3%)
J. Ray McDermott, S.A. (a) 20,000 $ 387,500
-----------
Consumer Products (1.6%)
Department 56, Inc. (a) 22,000 481,250
Gucci Group NV ADR (a) 8,000 384,000
Unilever NV ADR 8,000 1,086,000
-----------
1,951,250
-----------
Cosmetics & Toiletries (0.6%)
Gillette Co. 15,000 776,250
-----------
Diversified (3.7%)
American Standard Co., Inc. (a) 16,000 468,000
Ball Corp. 13,000 403,000
Coltec Industries, Inc. (a) 75,000 909,375
General Electric Co. 12,000 934,500
Lydall, Inc. (a) 23,000 575,000
Modine Manufacturing Co. 30,000 795,000
Sonoco Products Co. 22,000 599,500
-----------
4,684,375
-----------
Drugs & Health Care (13.8%)
Allergan, Inc. 25,000 921,875
Amgen, Inc. (a) 12,000 697,500
Bard (C.R.) Inc. 18,000 641,250
Beverly Enterprises, Inc. (a) 50,000 550,000
Boston Scientific Corp. (a) 10,000 460,000
Cardinal Health, Inc. 9,000 578,250
Dentsply International, Inc. 13,000 523,250
Elan Corp. ADR (a) 8,000 514,000
Emeritus Corp. (a) 13,000 264,875
Fisher Scientific International 20,000 765,000
HEALTHSOUTH Corp. (a) 20,000 680,000
Horizon Healthcare (a) 40,000 560,000
Living Centers of America, Inc. (a) 18,500 689,125
Schedule of Investments (continued) 28,000 630,000
Medtronic, Inc. 20,000 1,192,500
Merck & Co., Inc. 18,000 1,120,500
Oxford Health Plans, Inc. (a) 9,000 789,750
Pfizer, Inc. 25,000 1,675,000
R.P. Scherer Corp. (a) 19,000 833,624
St. Jude Medical, Inc. (a) 35,250 1,315,266
Sterling House Corp. (a) 12,000 214,500
Sun Healthcare Group, Inc. (a) 50,000 662,500
United Healthcare Corp. 17,200 1,057,800
-----------
17,336,565
-----------
Electronics & Electrical Equipment (2.4%)
Analog Devices, Inc. (a) 15,000 420,000
Arrow Electronics, Inc. (a) 28,000 1,316,000
Hubbell, Inc., Class B 12,000 778,500
Tyco International Ltd. 15,000 536,250
-----------
3,050,750
-----------
Financial Services (10.9%)
Advanta Corp., Class B 19,000 902,500
Capital One Financial Corp. 25,000 687,500
CMAC Investment Corp. 7,500 423,750
Countrywide Credit Industries, Inc. 55,000 1,216,875
9
<PAGE>
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LIBERTY ALL*STAR GROWTH FUND, INC.
Schedule of Investments (continued)
Common Stocks-continued
Financial Services (continued)
CUC International, Inc. (a) 14,000 $ 409,500
Federal Home Loan Mortgage Corp. 23,000 1,960,750
Federal National Mortgage Assoc. 60,000 1,912,500
Finova Group, Inc. 8,000 437,000
First USA, Inc. 14,000 792,750
MBNA Corp. 42,000 1,244,250
Morgan Stanley Group, Inc. 25,000 1,293,750
Paychex, Inc. 5,000 292,500
Travelers Group, Inc. 20,000 1,320,000
United Companies Financial Corp. 27,000 860,625
-----------
13,754,250
-----------
Food & Beverage (3.4%)
Canandaigua Wine Co., Class A (a) 20,000 775,000
Dole Foods, Inc. 20,000 770,000
Flowers Industries, Inc. 55,000 742,500
Hormel Foods Corp. 29,000 761,250
IBP, Inc. 30,000 768,750
Performance Food Group Co. (a) 17,000 416,500
-----------
4,234,000
-----------
Hotels & Leisure (1.3%)
HFS, Inc. (a) 20,000 972,500
Walt Disney Co. 11,147 712,015
-----------
1,684,515
-----------
Industrial Equipment (0.8%)
Caterpillar, Inc. 15,000 1,020,000
-----------
Insurance (7.1%)
Ace, Ltd. 15,000 669,375
AFLAC, Inc. 37,500 1,171,875
American International Group, Inc. 10,000 936,250
American Re Corp. 18,000 720,000
EXEL Limited 15,000 1,035,000
MGIC Investment Corp. 13,000 708,500
NAC Re Corp. 11,000 358,875
PMI Group, Inc. 25,000 1,090,625
Progressive Corp. (a) 20,000 892,500
Transamerica Corp. 18,000 1,347,750
-----------
8,930,750
-----------
Metals & Mining (0.8%)
Freeport-McMoRan Copper & Gold, Inc., Class A 30,000 948,750
-----------
Oil & Gas (4.1%)
Enron Corp. 11,000 405,625
Murphy Oil Corp. 17,000 728,875
Oryx Energy Co. 28,000 388,500
Tenneco, Inc. 18,000 1,005,750
Triton Energy Corp. (a) 20,000 1,115,000
Oil & Gas (continued)
Union Texas Petroleum Holdings, Inc. 76,000 $ 1,501,000
-----------
5,144,750
-----------
Paper (1.4%)
Alco Standard Corp. 12,000 625,500
Champion International Corp. 25,000 1,131,250
-----------
1,756,750
-----------
Pollution Control (0.2%)
Republic Industries, Inc. (a) 8,000 251,000
-----------
Publishing (0.7%)
R.R. Donnelley & Sons Co. 25,000 862,500
-----------
Retail Trade (3.1%)
AutoZone, Inc. (a) 16,000 542,000
Discount Auto Parts, Inc. (a) 24,000 669,000
Heilig Meyers Co. 30,000 618,750
May Department Stores Co. 20,000 965,000
Michaels Stores, Inc. (a) 42,000 588,000
Micro Warehouse, Inc. (a) 12,800 531,200
-----------
3,913,950
-----------
Services (0.3%)
Service Corp. International 9,000 438,750
-----------
Telecommunications (7.2%)
Arch Communications Group, Inc. (a) 33,000 763,125
Colonial Data Technologies Corp. (a) 30,000 663,750
Glenayre Technologies, Inc. (a) 25,000 956,250
Mobile Telecommunication Technologies Corp. (a) 60,000 937,500
Motorola, Inc. 20,000 1,060,000
Nokia Corp. ADR 25,000 856,250
Palmer Wireless, Inc. (a) 18,000 344,250
Sprint Corp. 30,000 1,140,000
Telefonakteibolaget LM Ericsson, Class B, ADR 40,000 855,000
U.S. Order, Inc. (a) 19,000 389,500
U.S. Robotics Corp. (a) 8,000 1,034,000
-----------
8,999,625
-----------
Transportation (3.1%)
American Freightways Corp.(a) 45,000 579,375
AMR Corp.(a) 15,000 1,342,500
Consolidated Freightways, Inc. 25,000 640,625
U.S. Freightways Corp. 35,000 796,250
ValuJet Airlines, Inc. (a) 20,000 500,000
-----------
3,858,750
-----------
Total Common Stocks
(Cost $106,492,643) 117,372,081
-----------
</TABLE>
10
<PAGE>
- ----------------------------------
LIBERTY ALL*STAR GROWTH FUND, INC.
<TABLE>
<CAPTION>
Short-term Investments (6.8) Interest Maturity Par Market
Rate Date Value Value
<S> <C> <C> <C> <C>
Commercial Paper (1.6%)
Ford Motor Credit Co. 5.35% 4/11/96 $2,000,000 $ 2,000,000
-----------
U.S. Government Security (2.0%)
U.S. Treasury Bill 5.22% 4/18/96 2,500,000 2,493,695
-----------
Repurchase Agreement (3.2%)
Bankers Trust Securities Corp. dated 03/29/96, 5.50%, to be
repurchased at $4,030,847 on 04/01/96, collateralized by
U.S. Treasury notes with various maturities to 1998, with
a current market value of $4,118,150 4,029,000
-----------
Total Short-term Investments (Cost $8,522,695) 8,522,695
-----------
Total Investments (100.1%) (Cost $115,015,338) (b) 125,894,776
Other Assets and Liabilities, Net (-0.1%) (144,764)
-----------
Net Assets (100.0%) $125,750,012
===========
Net Asset Value Per Share (11,339,096 shares outstanding) $ 11.09
===========
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Gross unrealized appreciation and depreciation of
investments at March 31, 1996 is as follows:
Gross unrealized appreciation $ 14,133,071
Gross unrealized depreciation (3,253,633)
-----------
Net unrealized appreciation $ 10,879,438
===========
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Acronym Name
- ---------- ---------------------------
ADR American Depository Receipt
</TABLE>
Per Share Changes in Net Assets
<TABLE>
<CAPTION>
Three Months Ended Year Ended December 31,
March 31, 1996 --------------------------------------------
(Unaudited) 1995 1994 1993 1992 1991
--------------- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $10.55 $ 9.95 $10.54 $10.28 $10.40 $ 9.90
------ ------ ------ ------ ------ ------
Net investment income 0.01 0.31 0.23 0.18 0.29 0.44
Distributions declared -- (0.76) (0.58) (0.48) (0.44) (0.65)
Net realized and unrealized gain (loss)
on investments 0.53 1.05 (0.24) 0.56 0.03 0.71
------ ------ ------ ------ ------ -----
Net asset value at end of period $11.09 $10.55 $ 9.95 $10.54 $10.28 $10.40
====== ====== ====== ====== ====== ======
</TABLE>
11