[LOGO] LIBERTY
ALL*STAR
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GROWTH FUND
[COVER GRAPHIC]
SMALL-CAP MID-CAP
LARGE-CAP
THIRD QUARTER REPORT 2000
<PAGE>
[BACKGROUND GRAPHIC]
LIBERTY ALL-STAR GROWTH FUND, INC.
2nd Quarter 3rd Quarter
Fund Facts 2000 2000
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Net Asset Value (NAV) $13.90 $13.91
Market Price $11.875 $12.250
Quarter End Discount 14.6% 11.9%
Dividends Declared $0.33 $0.36
Market Price Trading Range $9.875 to $12.125 $11.438 to $12.563
Discount Range 23.9% to 13.5% 18.9% to 9.5%
Annualized Rates of Return
--------------------------
Performance Summary 9 1 3 4 3/4
Periods Ending Sept. 30, 2000 Quarter Months Year Year Year*
----------------------------- ------- ------ ---- ---- -----
Shares Valued at NAV 2.6% 11.2% 32.2% 13.7% 18.1%
Shares Valued at NAV
with Dividends Reinvested 3.0 12.8 34.2 14.5 18.8
Shares Valued at Market Price
with Dividends Reinvested 6.2 23.5 37.6 10.5 18.6
Lipper Multi-Cap Core
Mutual Fund Average 1.5 4.5 21.6 13.2 18.0
Lipper Multi-Cap Growth
Mutual Fund Average 2.7 10.1 53.4 27.7 25.5
Russell Midcap Index 6.8 12.3 31.6 13.9 18.5
Figures shown for the Fund and the Lipper Multi-Cap Core and Multi-Cap Growth
Mutual Fund Averages are total returns, which include dividends, after deducting
fund expenses. The Fund's reinvested returns assume all primary subscription
rights in the Fund's rights offering were exercised. Figures shown for the
unmanaged Russell Midcap Index are total returns, including income.
*Liberty Asset Management Company (LAMCO) assumed complete management of the
Fund in November 1995, therefore, 1996 represents the first full calendar year
of management by LAMCO.
<PAGE>
PRESIDENT'S LETTER
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Fellow Shareholders: October 2000
Many growth stocks experienced a correction during the third quarter. Much
has been said and written about squeezing the speculative excess out of the
market, and that process appears to be taking place. Investors are becoming much
more selective, and are once again basing buy and sell decisions on
fundamentals, such as sustainable earnings, sound business models and financial
strength. Despite the weakness in growth stocks, Liberty All-Star Growth Fund
posted positive returns and performed well compared to relevant benchmarks for
the third quarter. More importantly, the Fund continued to build on its solid
long-term performance.
The Fund's third quarter return valued at net asset value (NAV) with
dividends reinvested exceeded both the Lipper Multi-Cap Core Mutual Fund Average
and the Lipper Multi-Cap Growth Mutual Fund Average. The Fund's market price
return with dividends reinvested was even stronger, reflecting the ongoing
narrowing of the Fund's discount to a level more in line with its historic norm.
The Fund's returns, no matter how they are measured, are into double digits
year-to-date and in excess of 30 percent for the trailing 12 months. We are
gratified with this performance, especially in light of the fact that the Fund
was recently transitioned to its final structure. Let me pause for a moment to
review that structural change, as I believe it is important for shareholders to
understand our long-term strategy.
The third quarter was the first complete quarter for our all-cap growth
strategy. We now have three portfolio managers implementing complementary growth
strategies across all market capitalizations:
o M.A. Weatherbie & Co. -- Small-capitalization growth
o TCW Investment Management Company -- Mid-capitalization growth
o William Blair & Company -- Large-capitalization growth
The retention of TCW Investment Management Company on May 1 of this year
completed this structure. The Fund's assets are now approximately equally
divided among these three complimentary growth style managers, each focusing on
a specific capitalization range. This structure gives the Fund exposure to
small, mid, and large capitalization growth stocks, which enhanced the Fund's
results in the third quarter.
It is interesting to note the disparity in performance that the different
capitalization ranges produced during the third quarter. The Russell Large and
Small capitalization growth indices declined by 5.4 percent and 4.0 percent
respectively, while the Russell Midcap Growth Index actually rose by 2.5
percent, as the chart on the following page illustrates.
LIBERTY ALL-STAR GROWTH FUND 1
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PRESIDENT'S LETTER -- CONTINUED
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Fund Returns Versus Russell Growth Indices
Third Quarter 2000
[The following information was represented as a bar chart in the
printed materials.]
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Market
Large Mid Small "Blend"* NAV Price
Cap Cap Cap Reinvested Reinvested
-5.4% 2.5% -4.0% -2.3% 3.0% 6.2%
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*Average of the three Russell Growth Indices.
By averaging the performance of each of these growth indices, the bar labeled
"Blend" was created. Since the Fund has assets equally invested across the three
capitalization ranges, the "Blend" of all three is an appropriate measure to use
for evaluating the Fund's performance. For the third quarter, the "Blend"
declined 2.3 percent. By comparison, the Fund's performance was positive as
reflected by the two bars to the right. Measured by NAV with dividends
reinvested, the Fund returned 3.0 percent. When Fund shares are valued at market
price with dividends reinvested, the Fund returned a strong 6.2 percent. It is
the ability to perform consistently over longer time periods that the Fund's
multi-managed structure seeks to deliver, and it proved its merits in the third
quarter given the dispersion in returns across the various capitalization
ranges.
Whatever happens in the last quarter of 2000, it is safe to say the stock
market will fall short of the stellar performance of the previous three years.
We asked our three portfolio managers to assess the year through the first nine
months and they highlight some specific stock decisions, their comments begin on
page 8.
We are pleased to have a sound, long-term growth strategy in place for
you, and we are confident it will prove rewarding over time. As always, thank
you for your continuing support of the Fund.
Sincerely,
/s/ William R. Parmentier, Jr.
William R. Parmentier, Jr.
President and Chief Executive Officer
Liberty All-Star Growth Fund, Inc. and
Liberty Asset Management Company
2 LIBERTY ALL-STAR GROWTH FUND
<PAGE>
INVESTMENT GROWTH AS OF JUNE 30, 2000
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[The following table was represented as a mountain chart in the printed
material.]
Includes Additional Investments
Made Through Rights Offering $25.90(2)
Net Asset Value of Shares
Acquired Through Distributions
Reinvestment $23.54(2)
Net Asset Value Per Share
Plus Distributions Paid $19.76(1)
1. Net asset value (NAV) of one share of the Fund as of 9/30/00 plus
distributions paid since 1996, which is the first full year that Liberty
Asset Management Company assumed complete management responsibilities.
2. To evaluate your investment in the Fund, these values should be used. Each
shows how your investment has fared by reinvesting the Fund's
distributions. The upper value includes additional investments made
through the rights offering in 1998.
The above chart illustrates the net asset value (NAV) growth of an
original share of the Fund since 1996, which is the first full year that Liberty
Asset Management Company assumed complete management responsibilities, through
September 30, 2000.
The bottom region of the chart reflects NAV growth assuming all
distributions were received in cash and not reinvested back into the Fund. As of
September 30, 2000, the NAV grew to $19.76 (current NAV of $13.91 plus
distributions since 1996 totaling $5.85).
Moving up the chart, the middle region depicts additional value added
through the reinvestment and compounding of distributions. An original share
with distributions reinvested grew to $23.54 (1.692 shares times the current NAV
of $13.91).
On one occasion, the Fund allowed the purchase of additional shares of the
Fund at a discount through a rights offering. The top region illustrates the
additional value added assuming participation in the rights offering and the
reinvestment of all distributions. An original share grew to $25.90 (1.862
shares times the current NAV of $13.91).
LIBERTY ALL-STAR GROWTH FUND 3
<PAGE>
A TABLE OF PER-SHARE VALUES, DISTRIBUTIONS AND REINVESTMENT /
DISTRIBUTION POLICY
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<TABLE>
<CAPTION>
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Shares Shares
Shares Purchased Acquired Shares NAV(2) Market Price Total Market
Owned At Through Through Owned Per Share Total NAV Per Share Price Of
Beginning Per Share Reinvestment Rights At End At End Of Shares At End Shares
Year Of Period Distributions Program Offering Of Period Of Period Owned Of Period Owned
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996(1) 1.000 $1.02 0.107 -- 1.107 $11.27 $12.48 $9.25 $10.24
-----------------------------------------------------------------------------------------------------------------------------
1997 1.107 1.24 0.125 -- 1.232 12.89 15.88 11.938 14.71
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1998 1.232 1.35 0.159 0.130(3) 1.521 13.03 19.82 11.438 17.40
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1999 1.521 1.23 0.188 -- 1.709 13.44 22.97 10.813 18.48
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2000
1st Quarter 1.709 0.32 0.051 -- 1.760 14.34 25.24 11.000 19.36
2nd Quarter 1.760 0.33 0.049 -- 1.809 13.90 25.15 11.875 21.48
3rd Quarter 1.809 0.36 0.053 -- 1.862 13.91 25.90 12.250 22.81
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
1. Represents the first full year that Liberty Asset Management Company
assumed complete management responsibility for the Fund.
2. Net Asset Value.
3. Rights offering completed in July 1998. One share offered at $12.41 for
every 10 shares owned.
DISTRIBUTION POLICY
Liberty All-Star Growth Fund, Inc.'s current policy, in effect since 1997, is to
pay distributions on its common stock totaling approximately 10 percent of its
net asset value per year, payable in four quarterly installments of 2.5 percent
of the Fund's net asset value at the close of the New York Stock Exchange on the
Friday prior to each quarterly declaration date. The fixed distributions are not
related to the amount of the Fund's net investment income or net realized
capital gains or losses. If, for any calendar year, the total distributions
required by the 10 percent pay-out policy exceed the Fund's net investment
income and net realized capital gains, the excess will generally be treated as a
tax-free return of capital, reducing the shareholder's adjusted basis in his or
her shares. If the Fund's net investment income and net realized capital gains
for any year exceed the amount required to be distributed under the 10 percent
pay-out policy, the Fund may, at its discretion, retain and not distribute net
realized capital gains and pay income tax thereon to the extent of such excess.
4 LIBERTY ALL-STAR GROWTH FUND
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PORTFOLIO MANAGERS/PORTFOLIO CHARACTERISTICS
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THE FUND'S THREE GROWTH PORTFOLIO MANAGERS AND THE MARKET CAPITALIZATION THEY
FOCUS ON:
M.A. WEATHERBIE & CO., INC. (SMALL-CAP GROWTH)
Companies with enduring competitive advantages and high, sustainable earnings
growth.
TCW INVESTMENT MANAGEMENT COMPANY (MID-CAP GROWTH)
Companies with competitive advantages and superior business models that should
result in rapidly growing sales and earnings.
WILLIAM BLAIR & COMPANY, L.L.C. (LARGE-CAP GROWTH)
Companies that have demonstrated consistent high rates of growth and are highly
profitable.
MANAGERS' DIFFERING INVESTMENT STYLES ARE REFLECTED IN PORTFOLIO CHARACTERISTICS
The portfolio characteristics table below is a regular feature of the Fund's
shareholder reports. It serves as a useful tool for understanding the value of
the Fund's multi-managed portfolio. The characteristics are different for each
of the Fund's three portfolio managers. These differences are a reflection of
the fact that each pursues a different investment style. The shaded column
highlights the characteristics of the Fund as a whole, while the first three
columns show portfolio characteristics for the S&P/Barra Growth SmallCap, MidCap
and LargeCap indices.
PORTFOLIO MARKET CAPITALIZATION SPECTRUM
CHARACTERISTICS
AS OF SEPTEMBER 30, 2000 SMALL LARGE
(UNAUDITED) ------------------------------
------------------------------
<TABLE>
<CAPTION>
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S&P/BARRA GROWTH:
------------------------------------
SmallCap MidCap LargeCap M.A. William Total
600 Index 400 Index 500 Index Weatherbie TCW Blair Fund
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<S> <C> <C> <C> <C> <C> <C> <C>
Number of Holdings 178 137 109 58 60 30 138
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Median Market
Capitalization (billions) $0.7 $2.7 $20.1 $1.7 $8.5 $30.3 $5.7
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Average Five-Year
Earnings Per Share
Growth 11% 7% 19% 30% 33% 23% 27%
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Dividend Yield 0.3% 0.2% 0.7% 0.1% 0.2% 0.4% 0.2%
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Average Price/
Earnings Ratio 27x 35x 45x 32x 55x 36x 37x
---------------------------------------------------------------------------------------------------------------
Average Price/Book
Value Ratio 5.4x 7.2x 9.8x 6.6x 6.0x 7.2x 6.7x
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</TABLE>
LIBERTY ALL-STAR GROWTH FUND 5
<PAGE>
TOP 50 HOLDINGS
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RANK RANK MARKET
AS OF AS OF VALUE PERCENT OF
9/30/00 6/30/00 SECURITY NAME ($000) NET ASSETS
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1 2 Bed Bath & Beyond, Inc. $7,555 3.3%
2 3 Siebel Systems, Inc. 7,258 3.2
3 7 Paychex, Inc. 5,237 2.3
4 5 VeriSign, Inc. 5,125 2.3
5 8 Automatic Data Processing, Inc. 5,083 2.2
6 6 Concord EFS, Inc. 4,893 2.2
7 26 Micrel, Inc. 4,153 1.8
8 14 American International Group, Inc. 4,037 1.8
9 15 Robert Half International, Inc. 4,020 1.8
10 27 Juniper Networks, Inc. 3,985 1.8
11 11 Genentech, Inc. 3,974 1.8
12 17 Molex, Inc. 3,829 1.7
13 12 The Home Depot, Inc. 3,821 1.7
14 36 Financial Federal Corp. 3,604 1.6
15 16 Xilinx, Inc. 3,365 1.5
16 1 Intel Corp. 3,338 1.5
17 21 Solectron Corp. 3,321 1.5
18 18 Dollar Tree Stores, Inc. 3,297 1.5
19 40 MBNA Corp. 3,263 1.4
20 29 State Street Corp. 3,224 1.4
21 22 Catalina Marketing Corp. 3,197 1.4
22 10 Nokia Corp. ADR 3,185 1.4
23 4 Westwood One, Inc. 3,176 1.4
24 43 MiniMed, Inc. 3,137 1.4
25 13 Vodafone Group PLC 3,053 1.3
26 28 Fastenal Co. 3,011 1.3
27 25 Medtronic, Inc. 2,850 1.3
28 31 Cognex Corp. 2,794 1.2
29 52 Ariba, Inc. 2,736 1.2
30 44 Freddie Mac 2,717 1.2
31 32 National Instruments Corp. 2,527 1.1
32 39 Pride International, Inc. 2,466 1.1
33 49 99 Cents Only Stores 2,382 1.1
34 45 Maxim Integrated Products, Inc. 2,381 1.1
35 9 Linear Technology Corp. 2,354 1.0
36 60 Investors Financial Services Corp. 2,343 1.0
37 19 Yahoo! Inc. 2,275 1.0
38 New Baxter International, Inc. 2,272 1.0
39 48 Cintas Corp. 2,268 1.0
40 47 Elan Corp. ADR 2,234 1.0
41 35 Family Dollar Stores, Inc. 2,216 1.0
42 34 Investment Technology Group, Inc. 2,205 1.0
43 30 Microchip Technology, Inc. 2,195 1.0
44 53 Acxiom Corp. 2,124 0.9
45 37 American Tower Corp. 2,107 0.9
46 42 Oracle Corp. 1,969 0.9
47 59 Whole Foods Market, Inc. 1,933 0.9
48 20 Sprint Corp. (FON Group) 1,759 0.8
49 38 AT&T Corp. - Liberty Media Group 1,728 0.8
50 78 EchoStar Communications Corp. 1,656 0.7
6 LIBERTY ALL-STAR GROWTH FUND
<PAGE>
MAJOR STOCK CHANGES IN THE THIRD QUARTER
--------------------------------------------------------------------------------
The following are the major ($500,000 or more) stock changes -- both purchases
and sales -- that were made in the Fund's portfolio during the third quarter of
2000.
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SHARES
-------------------------------------
SECURITY NAME PURCHASED SOLD AS OF 9/30/00
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Aether Systems, Inc. 5,000 5,000
Aspen Technology, Inc. 18,770 18,770
Baxter International, Inc. 28,469 28,469
Clarent Corp. 19,000 19,000
Cognex Corp. 21,300 70,845
Eli Lilly & Co. 18,275 18,275
Predictive Systems, Inc. 36,610 51,130
Tidewater, Inc. 18,700 18,700
Zebra Technologies Corp. 17,800 17,800
BMC Software, Inc. (26,200) 0
CheckFree Corp. (16,785) 19,770
Computer Sciences Corp. (13,100) 12,100
Concord EFS, Inc. (31,400) 137,770
E*TRADE Group, Inc. (43,400) 0
Extreme Networks, Inc. (13,430) 0
GetThere.com, Inc. (35,050) 0
Illinois Tool Works, Inc. (10,000) 25,100
Intel Corp. (5,100) 80,200*
Linear Technology Corp. (26,450) 36,350
MedQuist, Inc. (48,655) 36,060
PacifiCare Health Systems, Inc. (16,450) 0
Peregrine Systems, Inc. (25,385) 0
Royal Caribbean Cruises Ltd. (35,300) 0
Stanford Microdevices, Inc. (15,595) 8,930
Texas Instruments, Inc. (19,050) 22,150
* Adjusted for stock split.
LIBERTY ALL-STAR GROWTH FUND 7
<PAGE>
MANAGER ROUNDTABLE
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[PHOTO] MATTHEW A. WEATHERBIE
M. A. Weatherbie & Co., Inc.
(Small-capitalization growth)
[PHOTO] DOUGLAS S. FOREMAN
TCW Investment
Management Company
(Mid-capitalization growth)
[PHOTO] JOHN F. JOSTRAND
William Blair &
Company, L.L.C.
(Large-capitalization growth)
Third Quarter
Analysis and Assessment
Three Quarters into the Year, the Portfolio Managers Share their Thoughts on the
Stock Market and on Specific Stocks
For investors, the millennium year started like New Year's fireworks. But with
the coming of the second quarter, the market pulled back. The summer saw stocks
in a trading range, but late in the season a moderate rally took hold. September
was another matter (as were early trading days in October) as stocks fell prey
to investor worries over earnings, the viability of certain dot-coms, higher
energy prices and the combination of a strong U.S. dollar/weak euro.
The Fund Manager, Liberty Asset Management Company, felt this would be a good
opportunity for a "reality check" with the fund's three managers. We asked about
the market overall and about specific stocks that they have bought or sold
recently. The following are their responses.
--------------------------------------------------------------------------------
The views expressed in this interview represent the portfolio managers' views at
the time of the discussion (October 2000) and are subject to change.
--------------------------------------------------------------------------------
LAMCO: Please give us your assessment of the stock market through the first nine
months of the year, with an emphasis on growth style investing.
WEATHERBIE: Since the market for highly speculative dot-com stocks broke in
early March, investors have become more disciplined and rational in
distinguishing high quality, fast growing, well managed, and profitable
companies from the rest. These are the types of companies we invest in on behalf
of fund shareholders. Because they have, overall, delivered strong earnings
growth and have had and continue to have reasonable valuations, they've showed
solid investment returns in what has been a flattish market.
JOSTRAND: The first nine months of this year have been marked by dizzying
volatility. To put things in perspective, as of October 6, the Nasdaq had
declined 33% over the preceding 150 trading days.
8 LIBERTY ALL-STAR GROWTH FUND
<PAGE>
MANAGER ROUNDTABLE -- CONTINUED
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The last time it performed this poorly was the 1974 bear market. This year has
seen vicious rotations from tech to perceived bastions of safety -- energy,
health care and financials. The stock market has battled the demons of a
slowdown in corporate profit growth, higher energy prices, weak foreign
currencies and the digestion of five consecutive years of outsized gains. Growth
managers have found themselves relying more and more on their stock picking
prowess. Skittish investors have treated underachieving growth stocks with
utmost disdain. As always, growth investors have had to be sure of sound
fundamentals, flawless execution and a clear business model when choosing
stocks. Companies that have demonstrated these characteristics over the long
term have done well this year.
FOREMAN: The key issue that continues to have a significant effect on the
performance of a number of emerging growth areas in our portfolio is the
continued change in Internet spending patterns. Spending is moving from free
wheeling dot-com startups to more established "bricks and mortar" companies.
Ultimately, these companies are likely to spend much more than dot-coms ever did
on hardware, software and services to Internet-enable their businesses. This
transition is challenging, but these large enterprises tend to have longer sales
cycles. Additionally, a sharp drop in Internet advertising spending has caused
investors to dump radio and media stocks, even though ad spending is still
growing at nearly double-digit rates. Internet company problems could be
affecting everything from computers and cell phones to software and
semiconductors, as expenditures on all kinds of equipment and services were
inflated by the billions of dollars that were raised by the dot-com companies
and quickly spent. This abrupt downturn in spending patterns has caused
short-term concern for many of our media, consulting and Internet companies. We
believe these issues will prove to be transitory and the higher quality,
well-positioned companies we own will actually end up being the beneficiaries of
this shakeout.
Uncertainty was the one overriding theme dominating equity markets in the
quarter. Uncertainty over Federal Reserve actions, the Presidential election,
declining earnings and currency issues have left investors with little
information. To some extent, those conditions are the perfect environment for
our strategy. By doing the fundamental research, by knowing our companies and
what drives their businesses, and by staying close to management, we are able to
discern what news is important and what is irrelevant. We are taking advantage
of stock market volatility to upgrade the portfolio.
LAMCO: Would you highlight stocks that have figured in portfolio decisions over
the past several months? What was the rationale for the decision in each case?
JOSTRAND: I believe that the most important decision with regard to our portion
of the fund this year has been the decision to significantly decrease our
exposure to semiconductors throughout the year. With global growth clearly
slowing, worldwide computer demand slowing and semiconductor sales up over 50%
on a year-over-year basis, we felt something had to give. Semiconductors have
traditionally been a cyclical industry. Reducing semiconductor stocks prior to
the September sell-off locked in some gains. Semi conductor stocks would include
Texas Instruments, Intel and Linear Technology.
LIBERTY ALL-STAR GROWTH FUND 9
<PAGE>
MANAGER ROUNDTABLE -- CONTINUED
--------------------------------------------------------------------------------
On the purchase side, we believe the trend toward outsourced manufacturing by
technology companies will continue to gain momentum as the preferred cost saving
business model. The beneficiaries of this trend should be companies like
Solectron.
FOREMAN: This is the ideal time to be taking advantage of real bargains --
quality companies whose stock prices have fallen for specious reasons or because
investor sentiment has temporarily changed. We have been able to buy companies
that once were out of reach based on our valuation and market capitalization
criteria. Over the past quarter, we purchased positions in Aether, GlobeSpan and
New Focus. To fund these new holdings, we sold Kana Communications and Viant.
Here are some details:
Among purchases, Aether develops applications and services for delivering
data over wireless networks. We believe the wireless delivery of data is the
next major step in the evolution of the Internet into a ubiquitous data network.
Aether has emerged as an early leader in this space.
GlobeSpan is a supplier of integrated circuit, software and system design
for DSL (Digital Subscriber Line) applications. Broadband access rollout is in
its early stages and GlobeSpan should be a key beneficiary of its deployment.
New Focus designs, manufactures and markets next-generation optical
products. Phenomenal increases in data traffic due to the growth of the Internet
has driven the need for optical networks.
Kana was a stock we sold following the release of its second quarter
results. Although the company reported strong revenue growth, it also
experienced a significant increase in their accounts receivable. To us, this
cast doubt on both the quality of the revenue reported and the outlook for
continued strong revenue growth.
We sold Viant when the company preannounced disappointing third quarter
revenue growth and earnings. The company suffered this shortfall due to the
cancellation of many of the projects it was undertaking with clients.
WEATHERBIE: Extreme Networks was a portfolio holding that doubled in price
during our six-month holding period as investors seemed to realize how strongly
positioned the company was in the fast growing networking equipment market.
However, with the doubling of its price, the stock reached a level where we
considered it significantly overvalued. Hence, it was sold. Pericom
Semiconductor is a recent purchase. This analog and mixed signal integrated
circuit company has many of the same positive characteristics as Micrel, which
has been one of our top performers. Analog semiconductors are inherently a
highly profitable business with less cyclicality than microprocessors or memory
chips and with significant barriers to entry. We feel management is very capable
and the company is poised for 30 percent or greater revenue and earnings growth.
LAMCO: Thank you all for your insights.
10 LIBERTY ALL-STAR GROWTH FUND
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COMMON STOCKS (98.7%) SHARES MARKET VALUE
--------------------------------------------------------------------------------
BROADCASTING & CABLE (4.7%)
AT&T Corp. - Liberty Media Group Class A (a) 96,000 $ 1,728,000
Cablevision Systems Corp. Class A (a) 15,400 1,021,212
Citadel Communications Corp. (a) 48,665 827,305
Clear Channel Communications, Inc. (a) 8,700 491,550
Cox Radio, Inc. Class A (a) 14,500 252,844
EchoStar Communications Corp. Class A (a) 31,400 1,656,350
Hispanic Broadcasting Corp. (a) 14,000 390,250
Mediacom Communications Corp. (a) 29,500 475,688
Univision Communications, Inc. Class A (a) 22,600 844,675
Westwood One, Inc. (a) 148,140 3,175,751
------------
10,863,625
------------
BUSINESS & CONSUMER SERVICES (9.0%)
autobytel.com, Inc. (a) 2,400 10,800
Autoweb.com, Inc. (a) 52,710 70,829
Catalina Marketing Corp. (a) 84,960 3,196,620
C-bridge Internet Solutions, Inc. (a) 27,250 510,938
Cintas Corp. 52,060 2,267,864
eBay, Inc. (a) 20,000 1,372,500
Equinix, Inc. (a) 28,600 253,825
Getty Images, Inc. (a) 53,390 1,625,058
HomeStore.com, Inc. (a) 11,100 518,925
Paychex, Inc. 99,750 5,236,875
Robert Half International, Inc. (a) 115,890 4,019,934
StarMedia Network, Inc. (a) 7,600 57,000
TMP Worldwide, Inc. (a) 15,180 1,221,990
------------
20,363,158
------------
COMMUNICATIONS EQUIPMENT (6.4%)
Aether Systems, Inc. (a) 5,000 527,500
American Tower Corp. Class A (a) 55,897 2,106,618
Corvis Corp. (a) 1,700 103,779
Ditech Communications Corp. (a) 10,810 443,210
Foundry Networks, Inc. (a) 5,800 388,237
Juniper Networks, Inc. (a) 18,200 3,984,663
Metromedia Fiber Network, Inc. Class A (a) 21,400 520,288
New Focus, Inc. (a) 2,500 197,656
Nokia Corp. (b) 80,000 3,185,000
ONI Systems Corp. (a) 1,000 86,313
Powerwave Technologies, Inc. (a) 12,315 467,585
Sonus Networks, Inc. (a) 5,000 631,875
Spectrasite Holdings, Inc. (a) 38,300 710,944
Stanford Microdevices, Inc. (a) 8,930 477,755
Sycamore Networks, Inc. (a) 7,000 756,000
------------
14,587,423
------------
See Notes to Schedule of Investments. LIBERTY ALL-STAR GROWTH FUND 11
<PAGE>
SCHEDULE OF INVESTMENTS (UNAUDITED) -- CONTINUED
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--------------------------------------------------------------------------------
COMMON STOCKS -- CONTINUED SHARES MARKET VALUE
--------------------------------------------------------------------------------
COMPUTER & BUSINESS EQUIPMENT (1.7%)
Cognex Corp. (a) 70,845 $ 2,793,949
StorageNetworks, Inc. (a) 3,100 316,781
Zebra Technologies Corp. (a) 17,800 855,513
------------
3,966,243
------------
COMPUTER SERVICES & SOFTWARE (22.3%)
Acxiom Corp. (a) 66,900 2,124,075
Akamai Technologies, Inc. (a) 2,500 131,289
Ariba, Inc. (a) 19,100 2,736,373
Aspen Technology, Inc. (a) 18,770 846,996
Automatic Data Processing, Inc. 76,000 5,082,500
Blue Martini Software, Inc. (a) 6,600 233,757
CheckFree Corp. (a) 19,770 828,177
Clarent Corp. (a) 19,000 748,125
Commerce One, Inc. (a) 12,900 1,012,650
Computer Sciences Corp. (a) 12,100 898,425
Concord EFS, Inc. (a) 137,770 4,892,988
Critical Path, Inc. (a) 9,070 551,003
Exodus Communications, Inc. (a) 28,200 1,392,375
Extensity, Inc. (a) 24,390 512,190
F5 Networks, Inc. (a) 7,510 255,340
Microsoft Corp. (a) 26,400 1,590,600
National Instruments Corp. (a) 57,270 2,527,039
NOVA Corp. (a) 20,000 342,500
Oracle Corp. (a) 25,000 1,968,750
Packeteer, Inc. (a) 20,235 767,665
Phone.com, Inc. (a) 7,100 806,738
Portal Software, Inc. (a) 18,100 724,000
Predictive Systems, Inc. (a) 51,130 987,448
Proxicom, Inc. (a) 19,370 377,715
Rational Software Corp. (a) 13,200 915,750
Register.com, Inc. (a) 27,250 258,875
Scient Corp. (a) 18,100 378,969
Siebel Systems, Inc. (a) 65,200 7,257,575
VeriSign, Inc. (a) 25,300 5,124,831
Vignette Corp. (a) 45,700 1,365,288
webMethods, Inc. (a) 4,795 552,024
Yahoo! Inc. (a) 25,000 2,275,000
------------
50,456,848
------------
DRUGS & HEALTH CARE (12.6%)
Abgenix, Inc. (a) 18,200 1,470,787
Affymetrix, Inc. (a) 6,400 319,200
Andrx Group (a) 15,900 1,484,662
Baxter International, Inc. 28,469 2,272,182
BioChem Pharma, Inc. (a) 56,070 1,230,035
12 LIBERTY ALL-STAR GROWTH FUND See Notes to Schedule of Investments.
<PAGE>
SCHEDULE OF INVESTMENTS (UNAUDITED) -- CONTINUED
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COMMON STOCKS -- CONTINUED SHARES MARKET VALUE
--------------------------------------------------------------------------------
DRUGS & HEALTH CARE (CONTINUED)
Cytyc Corp. (a) 32,295 $ 1,392,722
Elan Corp. (a)(b) 40,800 2,233,800
Eli Lilly & Co. 18,275 1,482,559
Genentech, Inc. (a) 21,400 3,973,713
Gilead Sciences, Inc. (a) 4,700 515,531
Human Genome Sciences, Inc. (a) 6,800 1,177,250
MedQuist, Inc. (a) 36,060 727,961
Medtronic, Inc. 55,000 2,849,688
MiniMed, Inc. (a) 35,100 3,137,063
ORATEC Interventions, Inc. (a) 10,095 123,664
Pharmacia Corp. 26,180 1,575,709
ResMed, Inc. (a) 44,085 1,377,656
Sepracor, Inc. (a) 8,200 1,006,038
WebMD Corp. (a) 13,700 208,925
------------
28,559,145
------------
ELECTRONICS & ELECTRICAL EQUIPMENT (12.3%)
Altera Corp. (a) 26,400 1,260,600
GlobeSpan, Inc. (a) 2,800 341,600
Intel Corp. 80,200 3,338,325
Linear Technology Corp. 36,350 2,353,663
Maxim Integrated Products, Inc. (a) 29,600 2,380,950
Micrel, Inc. (a) 61,980 4,152,660
Microchip Technology, Inc. (a) 66,375 2,194,523
Molex, Inc. Class A 92,397 3,828,701
Pericom Semiconductor Corp. (a) 10,204 377,548
Solectron Corp. (a) 72,000 3,321,000
Texas Instruments, Inc. 22,150 1,045,203
Xilinx, Inc. (a) 39,300 3,365,063
------------
27,959,836
------------
FINANCIAL SERVICES (7.8%)
Financial Federal Corp. (a) 149,000 3,603,938
Freddie Mac 50,250 2,716,641
Investment Technology Group, Inc. 55,215 2,205,149
Investors Financial Services Corp. 37,110 2,342,569
MBNA Corp. 84,750 3,262,875
State Street Corp. 24,800 3,224,000
T. Rowe Price Associates, Inc. 9,900 464,681
------------
17,819,853
------------
FOOD, BEVERAGE & RESTAURANTS (1.5%)
Outback Steakhouse, Inc. (a) 33,630 912,214
Papa John's International, Inc. (a) 18,370 460,398
Whole Foods Market, Inc. (a) 36,000 1,932,750
------------
3,305,362
------------
See Notes to Schedule of Investments. LIBERTY ALL-STAR GROWTH FUND 13
<PAGE>
SCHEDULE OF INVESTMENTS (UNAUDITED) -- CONTINUED
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COMMON STOCKS -- CONTINUED SHARES MARKET VALUE
--------------------------------------------------------------------------------
INDUSTRIAL EQUIPMENT (1.9%)
Fastenal Co. 52,260 $ 3,011,482
Illinois Tool Works, Inc. 25,100 1,402,463
------------
4,413,945
------------
INSURANCE (1.8%)
American International Group, Inc. 42,187 4,036,769
------------
OIL & GAS (1.7%)
Petroleum Geo-Services (a)(b) 23,495 405,288
Pride International, Inc. (a) 93,045 2,465,693
Tidewater, Inc. 18,700 850,850
------------
3,721,831
------------
REAL ESTATE INVESTMENT TRUST (0.2%)
Pinnacle Holdings, Inc. (a) 14,200 378,075
------------
RETAIL TRADE (10.2%)
Amazon.com, Inc. (a) 14,800 568,875
Bed Bath & Beyond, Inc. (a) 309,760 7,555,240
The Children's Place Retail Stores, Inc. (a) 51,810 1,334,108
Dollar Tree Stores, Inc. (a) 81,285 3,297,122
Family Dollar Stores, Inc. 115,105 2,215,771
The Home Depot, Inc. 72,000 3,820,500
99 Cents Only Stores (a) 47,471 2,382,451
Staples, Inc. (a) 114,750 1,628,016
The Talbots, Inc. 5,000 331,250
------------
23,133,333
------------
TELECOMMUNICATIONS (4.1%)
CoreComm Ltd. (a) 26,515 210,463
McLeodUSA, Inc. Class A (a) 36,000 515,250
Price Communications Corp. (a) 59,187 1,157,845
Sprint Corp. (FON Group) 60,000 1,758,750
U.S. Cellular Corp. (a) 18,300 1,281,000
Vodafone Group PLC (b) 82,500 3,052,500
Western Wireless Corp. Class A (a) 34,815 1,240,284
------------
9,216,092
------------
TRANSPORTATION (0.5%)
USFreightways Corp. 50,300 1,141,181
------------
TOTAL COMMON STOCKS
(Cost $149,849,642) 223,922,719
------------
14 LIBERTY ALL-STAR GROWTH FUND See Notes to Schedule of Investments.
<PAGE>
SCHEDULE OF INVESTMENTS (UNAUDITED) -- CONTINUED
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENT (2.0%) PAR MARKET
VALUE VALUE
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT (2.0%)
SBC Warburg Ltd., Repurchase Agreement dated
9/29/00, 6.50% to be repurchased at $4,427,397
on 10/02/00, collateralized by U.S. Treasury
notes with various maturities to 2027,
with a current market value of $4,522,524. $4,425,000 $ 4,425,000
------------
TOTAL INVESTMENTS (100.7%) (COST $154,274,642) 228,347,719
OTHER ASSETS AND LIABILITIES, NET (-0.7%) (1,601,370)
------------
NET ASSETS (100.0%) $226,746,349
============
NET ASSET VALUE PER SHARE (16,302,347 SHARES OUTSTANDING) $13.91
============
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Represents an American Depositary Receipt.
Gross unrealized appreciation and depreciation of investments
at September 30, 2000 is as follows:
Gross unrealized appreciation $ 85,395,016
Gross unrealized depreciation (11,321,939)
-------------
Net unrealized appreciation $ 74,073,077
=============
LIBERTY ALL-STAR GROWTH FUND 15
<PAGE>
PER SHARE CHANGES IN NET ASSETS / DIVIDEND REINVESTMENT PLAN
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, 2000 --------------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE CHANGES IN NET ASSETS:
Net asset value at beginning of year $13.44 $13.03 $12.89 $11.27 $10.55 $9.95
------ ------ ------ ------ ------ -----
Net investment income (loss) (0.07) (0.05) (0.03) (0.02) 0.01 0.31
Net realized and unrealized
gains on investments 1.55 1.83 1.73 2.88 1.86 1.05
Distributions declared (1.01) (1.23) (1.35) (1.24) (1.02) (0.76)
Change due to rights offering (a) -- -- (0.21) -- -- --
Impact of shares issued in dividend
reinvestment (b) -- (0.14) -- -- (0.13) --
====== ====== ====== ====== ====== =====
Net asset value at end of period $13.91 $13.44 $13.03 $12.89 $11.27 $10.55
====== ====== ====== ====== ====== =====
</TABLE>
(a) Effect of Fund's rights offering for shares at a price below net asset
value.
(b) Effect of payment of a portion of distributions in newly issued shares
valued at a discount from net asset value.
DIVIDEND REINVESTMENT PLAN
Each registered shareholder of the Fund will automatically be a participant in
the Fund's Automatic Dividend Reinvestment and Cash Purchase Plan unless the
shareholder specifically elects otherwise by writing to the Plan Agent, State
Street Bank and Trust Company, c/o EquiServe, P.O. Box 8200, Boston, MA
02266-8200 or by calling 1-800-LIB-FUND (1-800-542-3863). If your shares are
held for you by a broker, bank or other nominee, you should contact the
institution holding your shares as to whether you wish to participate, or not
participate, in the Plan. Participants in the Plan have their dividends and
distributions automatically reinvested in additional shares of the Fund. Since
1996 -- the first full year that Liberty Asset Management Company assumed
complete management responsibilities for the Fund -- participating shareholders
have been rewarded as a result of the consistent reinvestment of distributions.
Each share of the Fund owned by shareholders, who have participated in the
Dividend Reinvestment Program since 1996, would have grown to 1.692 shares as of
September 30, 2000, with a total net asset value of $23.54. Participants are
kept apprised of the status of their account through quarterly statements.
16 LIBERTY ALL-STAR GROWTH FUND
<PAGE>
[LOGO] LIBERTY ASG
ALL*STAR ------
----------- LISTED
GROWTH FUND ------
NYSE
FUND MANAGER
Liberty Asset Management Company
Federal Reserve Plaza
600 Atlantic Avenue
Boston, Massachusetts 02210-2214
1-617-722-6036
Internet: www.libertyallstar.com
INDEPENDENT AUDITORS
PricewaterhouseCoopers, LLP
160 Federal Street
Boston, Massachusetts 02110
CUSTODIAN
The Chase Manhattan Bank
270 Park Avenue
New York, NY 10017-2070
INVESTOR ASSISTANCE,
TRANSFER & DIVIDEND
DISBURSING AGENT & REGISTRAR
State Street Bank and Trust Company c/o EquiServe
P.O. Box 8200, Boston, Massachusetts 02266-8200
1-800-LIB-FUND (1-800-542-3863)
Internet: www.equiserve.com
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
DIRECTORS
Robert J. Birnbaum*
James E. Grinnell*
Richard W. Lowry*
William E. Mayer
Dr. John J. Neuhauser*
Joseph J. Palombo
OFFICERS
Joseph J. Palombo, Chairman of the Board of Directors
William R. Parmentier, Jr., President and Chief Executive Officer
Kevin M. Carome, Executive Vice President
Christopher S. Carabell, Vice President
Mark T. Haley, Vice President
Pamela A. McGrath, Treasurer
William J. Ballou, Secretary
* Member of the audit committee.
--------------------------------------------------------------------------------
Liberty Asset Management Company, the Fund's manager, is one of the Liberty
Financial Companies (NYSE: L).
[LOGO] LIBERTY
FINANCIAL
<PAGE>
[LOGO] LIBERTY
ALL*STAR
-----------
GROWTH FUND
Liberty Asset Management Company
Federal Reserve Plaza
600 Atlantic Avenue
Boston, Massachusetts 02210-2214
ASG A MEMBER OF THE
------ CLOSED-END
LISTED FUND
------ ASSOCIATION, INC.
NYSE WWW.CLOSED-ENDFUNDS.COM
