| Liberty All-Star® Growth Fund | President’s Letter |
| Fellow Shareholders: |
October 2011 | |||
The third quarter represented the worst percentage decline for equities since the fourth quarter of 2008. The S&P 500 Index fell 13.87 percent and pulled that benchmark well into negative territory for the first nine months of 2011, a decline of 8.68 percent. By the end of September, the S&P 500 had declined for five consecutive months, marking its longest losing streak since March 2008. A key growth benchmark, the NASDAQ Composite Index, was off 12.70 percent over the quarter, bringing its nine-month return to -8.33 percent. The Russell 2000® Growth Index, a measure of small cap growth stocks, ended the third quarter and first nine months down 22.25 percent and 15.57 percent, respectively.
A number of factors combined to create the prevailing mood of pessimism. The first was the ongoing crisis in Europe. The risk of Greece defaulting on its debt stoked fears of a financial crisis like the one that hit the U.S. in 2008. Similar debt problems in Spain, Ireland, Portugal and Italy lurked, creating doubt about the future of the euro and the European Union. The second factor was slowing economies around the world. Gross domestic product growth in the U.S. during the second quarter was an anemic 1.3 percent. With unemployment remaining high, housing still depressed and consumer confidence ebbing, the debate domestically was whether the U.S. would slip back into recession—the so-called “double dip.” Falling industrial commodity prices were indicative of an economic slowdown in China, as well; and, the previously mentioned woes in Europe meant that growth there would likely remain stagnant. The third factor was the debt ceiling spectacle and concerns about the ability of this nation to put its own fiscal house in order.
In addition to the absolute declines in value, investors had to endure market volatility that was at its highest since the first quarter of 2009. The S&P 500 experienced daily moves (higher or lower) of greater than 1 percent on 21 percent of trading days in the first quarter and 24 percent of trading days in the second quarter. That figure soared to 55 percent in the third quarter, and since July 21 it is even higher—60 percent of all trading days until quarter’s end.
After outperforming through the first half of the year, third quarter returns for Liberty All-Star Growth Fund were mixed. The Fund declined 16.75 percent with shares valued at net asset value (NAV); 16.67 percent with shares valued at NAV with dividends reinvested; and 17.72 percent with shares valued at market price (with dividends reinvested). The Lipper Multi-Cap Growth Mutual Fund Average declined 17.00 percent for the quarter; the Fund’s return ranked in the 46th percentile within that universe for the quarter and in the 29th percentile for the first nine months of the year. Longer term relative results are above average as well; the Fund is ranked in the 38th percentile or better for trailing one-, three-and five-year periods.
The discount at which Fund shares traded relative to their underlying NAV narrowed moderately. For the quarter, shares traded in a discount range of 2.7 percent to 8.9 percent to NAV compared to last quarter’s range of 4.9 percent to 8.3 percent.
| Third Quarter Report (Unaudited) | September 30, 2011 | 1 |
| President’s Letter | Liberty All-Star® Growth Fund |
During the quarter, Fund shareholders approved a new Fund Management Agreement with ALPS Advisors (AAI) and new Portfolio Management Agreements among the Fund, AAI and each Portfolio Manager. These approvals were needed to ensure that the operation of our Fund would continue without interruption once the acquisition of AAI’s parent company, ALPS Holdings, Inc., by DST Systems was completed. DST Systems is publicly-traded and listed on the New York Stock Exchange. AAI will continue to advise Liberty All-Star Growth Fund, and no change in investment management, objectives, distribution policy, or Board of Directors composition is anticipated. After the quarter ended, the transaction closed on October 31.
The third quarter was difficult for investors everywhere. But, looking at the bigger picture, one quarter should not unduly influence investors’ long-term thinking. We believe the Fund remains well positioned to benefit when investor sentiment shifts, as it inevitably does. We remain committed to providing a high quality growth equity investment vehicle for our shareholders, and we thank you for your support and confidence in the Fund going forward.
| Sincerely, |
|
|
| William R. Parmentier, Jr. |
| President and Chief Executive Officer Liberty All-Star® Growth Fund, Inc. |
The views expressed in the President’s letter reflect the views of the President as of October 2011 and may not reflect his views on the date this report is first published or anytime thereafter. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the Fund disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for the Fund are based on numerous factors, may not be relied on as an indication of trading intent.
| 2 | www.all-starfunds.com |
| Liberty All-Star® Growth Fund | Table of Distributions & Rights Offerings |
| Rights Offerings | ||||||||||||||||||||||
| Year | Per Share Distributions |
Month Completed | Shares Needed to Purchase One Additional Share |
Subscription Price | ||||||||||||||||||
| 1997 |
$1.24 | |||||||||||||||||||||
| 1998 |
1.35 | July | 10 | $12.41 | ||||||||||||||||||
| 1999 |
1.23 | |||||||||||||||||||||
| 2000 |
1.34 | |||||||||||||||||||||
| 2001 |
0.92 | September | 8 | 6.64 | ||||||||||||||||||
| 2002 |
0.67 | |||||||||||||||||||||
| 2003 |
0.58 | September | 8* | 5.72 | ||||||||||||||||||
| 2004 |
0.63 | |||||||||||||||||||||
| 2005 |
0.58 | |||||||||||||||||||||
| 2006 |
0.59 | |||||||||||||||||||||
| 2007 |
0.61 | |||||||||||||||||||||
| 2008 |
0.47 | |||||||||||||||||||||
| 2009** |
0.24 | |||||||||||||||||||||
| 2010 |
0.25 | |||||||||||||||||||||
| 2011 |
||||||||||||||||||||||
| 1st Quarter |
0.07 | |||||||||||||||||||||
| 2nd Quarter |
0.07 | |||||||||||||||||||||
| 3rd Quarter |
0.06 | |||||||||||||||||||||
| * | The number of shares offered was increased by an additional 25% to cover a portion of the over-subscription requests. |
| ** | Effective with the second quarter distribution, the annual distribution rate was changed from 10 percent to 6 percent. |
DISTRIBUTION POLICY
Liberty All-Star® Growth Fund, Inc.’s current policy is to pay distributions on its shares totaling approximately 6 percent of its net asset value per year, payable in four quarterly installments of 1.5 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 and may be taxed as ordinary income up to the amount of the Fund’s current and accumulated earnings and profits. If, for any calendar year, the total distributions made under the distribution policy exceed the Fund’s net investment income and net realized capital gains, the excess will generally be treated as a non-taxable 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 distributed under the distribution policy, the Fund may, in its discretion, retain and not distribute net realized capital gains and pay income tax thereon to the extent of such excess.
| Third Quarter Report (Unaudited) | September 30, 2011 | 3 |
| Top 20 Holdings & Economic Sectors | Liberty All-Star® Growth Fund | |
| September 30, 2011 (Unaudited) |
| Top 20 Holdings* | Percent of Net Assets | ||||
| Apple, Inc. |
2.48 | % | |||
| C.H. Robinson Worldwide, Inc. |
2.35 | ||||
| Salesforce.com, Inc. |
2.10 | ||||
| QUALCOMM, Inc. |
1.90 | ||||
| ACE Ltd. |
1.90 | ||||
| IHS, Inc., Class A |
1.85 | ||||
| American Tower Corp., Class A |
1.75 | ||||
| ARM Holdings PLC |
1.73 | ||||
| Cerner Corp. |
1.68 | ||||
| Intuitive Surgical, Inc. |
1.68 | ||||
| Green Mountain Coffee Roasters, Inc. |
1.61 | ||||
| FMC Technologies, Inc. |
1.61 | ||||
| Core Laboratories N.V. |
1.59 | ||||
| Expeditors International of Washington, Inc. |
1.56 | ||||
| Oceaneering International, Inc. |
1.56 | ||||
| Google, Inc., Class A |
1.55 | ||||
| BioMarin Pharmaceutical, Inc. |
1.48 | ||||
| Baidu, Inc. |
1.44 | ||||
| VMware, Inc., Class A |
1.34 | ||||
| Allergan, Inc. |
1.33 | ||||
| 34.49 | % | ||||
| Economic Sectors* | Percent of Net Assets | ||||
| Information Technology |
28.09 | % | |||
| Industrials |
15.67 | ||||
| Health Care |
14.43 | ||||
| Consumer Discretionary |
12.48 | ||||
| Financials |
9.31 | ||||
| Energy |
8.90 | ||||
| Consumer Staples |
3.59 | ||||
| Materials |
2.66 | ||||
| Telecommunication Services |
1.75 | ||||
| Utilities |
0.85 | ||||
| Other Net Assets |
2.27 | ||||
| 100.00 | % | ||||
| * | Because the Fund is actively managed, there can be no guarantee that the Fund will continue to hold securities of the indicated issuers and sectors in the future. |
| 4 | www.all-starfunds.com |
| Liberty All-Star® Growth Fund | Major Stock Changes in the 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 2011.
| Security Name | Purchases (Sales) | Shares as of 9/30/11 | ||||||||
| Purchases |
||||||||||
| BorgWarner, Inc. |
11,186 | 11,186 | ||||||||
| Dick’s Sporting Goods, Inc. |
19,300 | 19,300 | ||||||||
| Liquidity Services, Inc. |
23,000 | 23,000 | ||||||||
| Lufkin Industries, Inc. |
12,400 | 12,400 | ||||||||
| SuccessFactors, Inc. |
23,181 | 47,081 | ||||||||
| Virtus Investment Partners, Inc. |
7,301 | 7,301 | ||||||||
| Sales |
||||||||||
| Capella Education Co. |
(16,749 | ) | 96 | |||||||
| Green Mountain Coffee Roasters, Inc. |
(7,000 | ) | 20,600 | |||||||
| Lincare Holdings, Inc. |
(24,990 | ) | 0 | |||||||
| MSCI, Inc., Class A |
(23,364 | ) | 22,825 | |||||||
| SEI Investments Co. |
(39,200 | ) | 0 | |||||||
| Stericycle, Inc. |
(10,457 | ) | 0 | |||||||
| Strayer Education, Inc. |
(6,900 | ) | 0 | |||||||
| Teva Pharmaceutical Industries Ltd. |
(20,210 | ) | 0 | |||||||
| Ultra Petroleum Corp. |
(15,300 | ) | 0 | |||||||
| Third Quarter Report (Unaudited) | September 30, 2011 | 5 |
| Investment Managers/ Portfolio Characteristics |
Liberty All-Star® Growth Fund |
THE FUND’S THREE GROWTH INVESTMENT MANAGERS AND THE MARKET CAPITALIZATION ON WHICH EACH FOCUSES:
MANAGERS’ DIFFERING INVESTMENT STRATEGIES 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 investment managers. These differences are a reflection of the fact that each has a different capitalization focus and investment strategy. The shaded column highlights the characteristics of the Fund as a whole, while the first three columns show portfolio characteristics for the Russell Smallcap, Midcap and Largecap Growth indices. See page 16 for a description of these indices.
| PORTFOLIO CHARACTERISTICS As of September 30, 2011 (Unaudited) | ||||||||||||||||
| Market CapitalizationSpectrum | ||||||||||||||||
| RUSSELL GROWTH: | Small |
|
Large | |||||||||||||
| SMALLCAP INDEX |
MIDCAP INDEX |
LARGECAP INDEX |
M.A. WEATHERBIE |
TCW (MID-CAP) |
TCW (LARGE-CAP) |
TOTAL FUND |
||||||||||
| Number of Holdings | 1,141 | 465 | 587 | 60 | 52 | 31 | 127* | |||||||||
| Weighted Average Market Capitalization (billions) | $1.2 | $7.1 | $88.2 | $2.2 | $7.7 | $59.4 | $24.0 | |||||||||
| Average Five-Year Sales Per Share Growth | 9% | 10% | 12% | 15% | 17% | 17% | 17% | |||||||||
| Average Five-Year Earnings Per Share Growth | 14% | 12% | 14% | 13% | 24% | 25% | 21% | |||||||||
| Price/Earnings Ratio** | 18x | 17x | 15x | 22x | 24x | 22x | 23x | |||||||||
| Price/Book Value Ratio | 3.6x | 4.0x | 4.5x | 4.1x | 5.9x | 4.9x | 5.0x | |||||||||
| * | Certain holdings are held by more than one manager. |
| ** | Excludes negative earnings. |
| 6 | www.all-starfunds.com | |
| Liberty All-Star® Growth Fund |
Schedule of Investments |
| SHARES | MARKET VALUE | |||||||
| COMMON STOCKS (97.74%) |
||||||||
| CONSUMER DISCRETIONARY (12.48%) |
||||||||
| Auto Components (0.57%) |
||||||||
| BorgWarner, Inc.(a) |
11,186 | $677,089 | ||||||
|
|
|
|||||||
| Automobiles (0.45%) |
||||||||
| Thor Industries, Inc. |
24,333 | 538,976 | ||||||
|
|
|
|||||||
| Distributors (1.32%) |
||||||||
| LKQ Corp.(a) |
64,805 | 1,565,689 | ||||||
|
|
|
|||||||
| Diversified Consumer Services (0.17%) |
||||||||
| Capella Education Co.(a) |
96 | 2,725 | ||||||
| Global Education & Technology Group Ltd.(a)(b) |
27,358 | 129,403 | ||||||
| Xueda Education Group(a)(b) |
24,978 | 68,190 | ||||||
|
|
|
|||||||
| 200,318 | ||||||||
|
|
|
|||||||
| Hotels, Restaurants & Leisure (1.22%) |
||||||||
| BJ’s Restaurants, Inc.(a) |
14,945 | 659,224 | ||||||
| Ctrip.com International Ltd.(a)(b) |
24,366 | 783,610 | ||||||
|
|
|
|||||||
| 1,442,834 | ||||||||
|
|
|
|||||||
| Household Durables (0.16%) |
||||||||
| Harman International Industries, Inc. |
6,667 | 190,543 | ||||||
|
|
|
|||||||
| Internet & Catalog Retail (2.54%) |
||||||||
| Amazon.com, Inc.(a) |
6,740 | 1,457,390 | ||||||
| Expedia, Inc. |
15,000 | 386,250 | ||||||
| priceline.com, Inc.(a) |
2,600 | 1,168,596 | ||||||
|
|
|
|||||||
| 3,012,236 | ||||||||
|
|
|
|||||||
| Specialty Retail (4.04%) |
||||||||
| CarMax, Inc.(a) |
31,672 | 755,377 | ||||||
| Dick’s Sporting Goods, Inc.(a) |
19,300 | 645,778 | ||||||
| Francesca’s Holdings Corp.(a) |
8,649 | 183,445 | ||||||
| Monro Muffler Brake, Inc. |
19,911 | 656,466 | ||||||
| Rue21, Inc.(a) |
52,761 | 1,197,147 | ||||||
| Teavana Holdings, Inc.(a) |
14,828 | 301,601 | ||||||
| Ulta Salon, Cosmetics & Fragrance, Inc.(a) |
7,929 | 493,422 | ||||||
| Urban Outfitters, Inc.(a) |
25,100 | 560,232 | ||||||
|
|
|
|||||||
| 4,793,468 | ||||||||
|
|
|
|||||||
| Textiles, Apparel & Luxury Goods (2.01%) |
||||||||
| Fossil, Inc.(a) |
10,200 | 826,812 | ||||||
| Gildan Activewear, Inc. |
31,100 | 803,624 | ||||||
| Under Armour, Inc., Class A(a) |
11,472 | 761,856 | ||||||
|
|
|
|||||||
| 2,392,292 | ||||||||
|
|
|
|||||||
| See Notes to Schedule of Investments. | ||
| Third Quarter Report (Unaudited) | September 30, 2011 | 7 |
| Schedule of Investments | Liberty All-Star® Growth Fund |
| SHARES | MARKET VALUE | |||||||
| COMMON STOCKS (continued) |
||||||||
| CONSUMER STAPLES (3.59%) |
||||||||
| Food & Staples Retailing (0.85%) |
||||||||
| Costco Wholesale Corp. |
12,300 | $1,010,076 | ||||||
|
|
|
|||||||
| Food Products (2.74%) |
||||||||
| Green Mountain Coffee Roasters, Inc.(a) |
20,600 | 1,914,564 | ||||||
| Mead Johnson Nutrition Co. |
19,400 | 1,335,302 | ||||||
|
|
|
|||||||
| 3,249,866 | ||||||||
|
|
|
|||||||
| ENERGY (8.90%) |
||||||||
| Energy Equipment & Services (7.47%) |
||||||||
| CARBO Ceramics, Inc. |
6,200 | 635,686 | ||||||
| Core Laboratories N.V. |
21,057 | 1,891,550 | ||||||
| Dril-Quip, Inc.(a) |
11,856 | 639,157 | ||||||
| FMC Technologies, Inc.(a) |
50,900 | 1,913,840 | ||||||
| Lufkin Industries, Inc. |
12,400 | 659,804 | ||||||
| Oceaneering International, Inc. |
52,300 | 1,848,282 | ||||||
| Schlumberger Ltd. |
21,395 | 1,277,924 | ||||||
|
|
|
|||||||
| 8,866,243 | ||||||||
|
|
|
|||||||
| Oil, Gas & Consumable Fuels (1.43%) |
||||||||
| Brigham Exploration Co.(a) |
15,700 | 396,582 | ||||||
| Occidental Petroleum Corp. |
18,200 | 1,301,300 | ||||||
|
|
|
|||||||
| 1,697,882 | ||||||||
|
|
|
|||||||
| FINANCIALS (9.31%) |
||||||||
| Capital Markets (2.97%) |
||||||||
| Affiliated Managers Group, Inc.(a) |
13,790 | 1,076,309 | ||||||
| The Charles Schwab Corp. |
64,600 | 728,042 | ||||||
| FXCM, Inc., Class A |
37,685 | 528,344 | ||||||
| T. Rowe Price Group, Inc. |
16,700 | 797,759 | ||||||
| Virtus Investment Partners, Inc.(a) |
7,301 | 391,480 | ||||||
|
|
|
|||||||
| 3,521,934 | ||||||||
|
|
|
|||||||
| Commercial Banks (1.18%) |
||||||||
| Signature Bank(a) |
29,359 | 1,401,305 | ||||||
|
|
|
|||||||
| Consumer Finance (0.63%) |
||||||||
| Green Dot Corp., Class A(a) |
23,800 | 745,416 | ||||||
|
|
|
|||||||
| Diversified Financial Services (1.24%) |
||||||||
| MSCI, Inc., Class A(a) |
22,825 | 692,282 | ||||||
| Portfolio Recovery Associates, Inc.(a) |
12,635 | 786,150 | ||||||
|
|
|
|||||||
| 1,478,432 | ||||||||
|
|
|
|||||||
| Insurance (2.42%) |
||||||||
| ACE Ltd. |
37,200 | 2,254,320 | ||||||
| Greenlight Capital Re Ltd., Class A(a) |
29,803 | 618,114 | ||||||
|
|
|
|||||||
| 2,872,434 | ||||||||
|
|
|
|||||||
| See Notes to Schedule of Investments. | ||
| 8 | www.all-starfunds.com | |
| Liberty All-Star® Growth Fund |
Schedule of Investments |
| SHARES | MARKET VALUE | |||||||
| COMMON STOCKS (continued) |
||||||||
| Real Estate Management & Development (0.87%) |
||||||||
| FirstService Corp.(a) |
40,205 | $1,034,073 | ||||||
|
|
|
|||||||
| HEALTH CARE (14.43%) |
||||||||
| Biotechnology (3.68%) |
||||||||
| BioMarin Pharmaceutical, Inc.(a) |
54,989 | 1,752,499 | ||||||
| Dendreon Corp.(a) |
55,200 | 496,800 | ||||||
| Human Genome Sciences, Inc.(a) |
55,388 | 702,874 | ||||||
| Ironwood Pharmaceuticals, Inc.(a) |
19,200 | 207,360 | ||||||
| Pharmasset, Inc.(a) |
4,200 | 345,954 | ||||||
| Vertex Pharmaceuticals, Inc.(a) |
19,300 | 859,622 | ||||||
|
|
|
|||||||
| 4,365,109 | ||||||||
|
|
|
|||||||
| Health Care Equipment & Supplies (3.97%) |
||||||||
| Accuray, Inc.(a) |
44,878 | 180,409 | ||||||
| Intuitive Surgical, Inc.(a) |
5,470 | 1,992,612 | ||||||
| Masimo Corp. |
27,495 | 595,267 | ||||||
| Varian Medical Systems, Inc.(a) |
22,600 | 1,178,816 | ||||||
| Volcano Corp.(a) |
25,800 | 764,454 | ||||||
|
|
|
|||||||
| 4,711,558 | ||||||||
|
|
|
|||||||
| Health Care Providers & Services (1.39%) |
||||||||
| IPC The Hospitalist Co., Inc.(a) |
10,835 | 386,701 | ||||||
| PSS World Medical, Inc.(a) |
34,111 | 671,646 | ||||||
| VCA Antech, Inc.(a) |
36,775 | 587,664 | ||||||
|
|
|
|||||||
| 1,646,011 | ||||||||
|
|
|
|||||||
| Health Care Technology (2.47%) |
||||||||
| athenahealth, Inc.(a) |
15,683 | 933,923 | ||||||
| Cerner Corp.(a) |
29,100 | 1,993,932 | ||||||
|
|
|
|||||||
| 2,927,855 | ||||||||
|
|
|
|||||||
| Life Sciences Tools & Services (0.97%) |
||||||||
| Life Technologies Corp.(a) |
29,900 | 1,149,057 | ||||||
|
|
|
|||||||
| Pharmaceuticals (1.95%) |
||||||||
| Allergan, Inc. |
19,100 | 1,573,458 | ||||||
| Mylan, Inc.(a) |
44,000 | 748,000 | ||||||
|
|
|
|||||||
| 2,321,458 | ||||||||
|
|
|
|||||||
| INDUSTRIALS (15.67%) |
||||||||
| Aerospace & Defense (2.99%) |
||||||||
| Aerovironment, Inc.(a) |
18,020 | 507,263 | ||||||
| HEICO Corp. |
16,871 | 830,728 | ||||||
| Precision Castparts Corp. |
8,800 | 1,368,048 | ||||||
| TransDigm Group, Inc.(a) |
10,349 | 845,203 | ||||||
|
|
|
|||||||
| 3,551,242 | ||||||||
|
|
|
|||||||
| See Notes to Schedule of Investments. | ||
| Third Quarter Report (Unaudited) | September 30, 2011 | 9 |
| Schedule of Investments | Liberty All-Star® Growth Fund |
| SHARES | MARKET VALUE | |||||||
| COMMON STOCKS (continued) |
||||||||
| Air Freight & Logistics (3.91%) |
||||||||
| C.H. Robinson Worldwide, Inc. |
40,650 | $2,783,305 | ||||||
| Expeditors International of Washington, Inc. |
45,700 | 1,853,135 | ||||||
|
|
|
|||||||
| 4,636,440 | ||||||||
|
|
|
|||||||
| Commercial Services & Supplies (0.98%) |
||||||||
| American Reprographics Co.(a) |
47,576 | 159,855 | ||||||
| Waste Connections, Inc. |
29,575 | 1,000,227 | ||||||
|
|
|
|||||||
| 1,160,082 | ||||||||
|
|
|
|||||||
| Electrical Equipment (1.76%) |
||||||||
| II-VI, Inc.(a) |
32,210 | 563,675 | ||||||
| Rockwell Automation, Inc. |
27,100 | 1,517,600 | ||||||
|
|
|
|||||||
| 2,081,275 | ||||||||
|
|
|
|||||||
| Machinery (0.85%) |
||||||||
| Graco, Inc. |
18,546 | 633,160 | ||||||
| Middleby Corp.(a) |
5,376 | 378,793 | ||||||
|
|
|
|||||||
| 1,011,953 | ||||||||
|
|
|
|||||||
| Professional Services (4.56%) |
||||||||
| Huron Consulting Group, Inc.(a) |
27,815 | 865,881 | ||||||
| ICF International, Inc.(a) |
14,139 | 265,955 | ||||||
| IHS, Inc., Class A(a) |
29,350 | 2,195,673 | ||||||
| Resources Connection, Inc. |
82,682 | 808,630 | ||||||
| Robert Half International, Inc. |
37,400 | 793,628 | ||||||
| Stantec, Inc.(a) |
21,775 | 486,018 | ||||||
|
|
|
|||||||
| 5,415,785 | ||||||||
|
|
|
|||||||
| Road & Rail (0.62%) |
||||||||
| Landstar System, Inc. |
18,616 | 736,449 | ||||||
|
|
|
|||||||
| INFORMATION TECHNOLOGY (28.10%) |
||||||||
| Communications Equipment (4.33%) |
||||||||
| Acme Packet, Inc.(a) |
4,000 | 170,360 | ||||||
| Aruba Networks, Inc.(a) |
41,700 | 871,947 | ||||||
| F5 Networks, Inc.(a) |
9,100 | 646,555 | ||||||
| InterDigital, Inc. |
12,661 | 589,749 | ||||||
| Polycom, Inc.(a) |
33,235 | 610,527 | ||||||
| QUALCOMM, Inc. |
46,365 | 2,254,730 | ||||||
|
|
|
|||||||
| 5,143,868 | ||||||||
|
|
|
|||||||
| Computers & Peripherals (2.70%) |
||||||||
| Apple, Inc.(a) |
7,710 | 2,938,898 | ||||||
| Fusion-io, Inc.(a) |
14,276 | 271,244 | ||||||
|
|
|
|||||||
| 3,210,142 | ||||||||
|
|
|
|||||||
| Electronic Equipment & Instruments (1.57%) |
||||||||
| FARO Technologies, Inc.(a) |
21,048 | 664,064 | ||||||
| FLIR Systems, Inc. |
9,325 | 233,591 | ||||||
| National Instruments Corp. |
25,147 | 574,861 | ||||||
| See Notes to Schedule of Investments. | ||
| 10 | www.all-starfunds.com | |
| Liberty All-Star® Growth Fund | Schedule of Investments |
| SHARES | MARKET VALUE | |||||||
| COMMON STOCKS (continued) |
||||||||
| Electronic Equipment & Instruments (continued) |
||||||||
| Universal Display Corp.(a) |
8,100 | $388,314 | ||||||
|
|
|
|||||||
| 1,860,830 | ||||||||
|
|
|
|||||||
| Internet Software & Services (5.18%) |
||||||||
| Baidu, Inc.(a)(b) |
16,000 | 1,710,560 | ||||||
| Google, Inc., Class A(a) |
3,570 | 1,836,337 | ||||||
| Liquidity Services, Inc.(a) |
23,000 | 737,610 | ||||||
| Monster Worldwide, Inc.(a) |
67,527 | 484,844 | ||||||
| SINA Corp.(a) |
4,400 | 315,084 | ||||||
| VistaPrint Ltd.(a) |
19,908 | 538,113 | ||||||
| Youku.com, Inc.(a)(b) |
31,864 | 521,295 | ||||||
|
|
|
|||||||
| 6,143,843 | ||||||||
|
|
|
|||||||
| IT Services (3.23%) |
||||||||
| Cognizant Technology Solutions Corp., Class A(a) |
19,900 | 1,247,730 | ||||||
| FleetCor Technologies, Inc.(a) |
9,177 | 240,988 | ||||||
| ServiceSource International, Inc.(a) |
17,738 | 234,319 | ||||||
| VeriFone Systems, Inc.(a) |
30,938 | 1,083,448 | ||||||
| Visa, Inc., Class A |
11,915 | 1,021,354 | ||||||
|
|
|
|||||||
| 3,827,839 | ||||||||
|
|
|
|||||||
| Semiconductors & Semiconductor Equipment (2.94%) |
||||||||
| ARM Holdings PLC(b) |
80,500 | 2,052,750 | ||||||
| Cavium, Inc.(a) |
27,488 | 742,451 | ||||||
| Hittite Microwave Corp.(a) |
14,151 | 689,154 | ||||||
|
|
|
|||||||
| 3,484,355 | ||||||||
|
|
|
|||||||
| Software (8.15%) |
||||||||
| ANSYS, Inc.(a) |
13,963 | 684,746 | ||||||
| Concur Technologies, Inc.(a) |
15,406 | 573,411 | ||||||
| QLIK Technologies, Inc.(a) |
36,577 | 792,258 | ||||||
| RealPage, Inc.(a) |
30,444 | 622,580 | ||||||
| Salesforce.com, Inc.(a) |
21,800 | 2,491,304 | ||||||
| Solera Holdings, Inc. |
24,735 | 1,249,117 | ||||||
| SuccessFactors, Inc.(a) |
47,081 | 1,082,392 | ||||||
| Ultimate Software Group, Inc.(a) |
12,557 | 586,663 | ||||||
| VMware, Inc., Class A(a) |
19,800 | 1,591,524 | ||||||
|
|
|
|||||||
| 9,673,995 | ||||||||
|
|
|
|||||||
| MATERIALS (2.66%) |
||||||||
| Chemicals (1.64%) |
||||||||
| CF Industries Holdings, Inc. |
4,700 | 579,933 | ||||||
| Praxair, Inc. |
14,600 | 1,364,808 | ||||||
|
|
|
|||||||
| 1,944,741 | ||||||||
|
|
|
|||||||
| Metals & Mining (1.02%) |
||||||||
| Allegheny Technologies, Inc. |
15,800 | 584,442 | ||||||
| Silver Wheaton Corp. |
21,250 | 625,812 | ||||||
|
|
|
|||||||
| 1,210,254 | ||||||||
|
|
|
|||||||
| See Notes to Schedule of Investments. | ||
| Third Quarter Report (Unaudited) | September 30, 2011 | 11 |
| Schedule of Investments | Liberty All-Star® Growth Fund |
| SHARES | MARKET VALUE | |||||||
| COMMON STOCKS (continued) |
||||||||
| TELECOMMUNICATION SERVICES (1.75%) |
||||||||
| Wireless Telecommunication Services (1.75%) |
||||||||
| American Tower Corp., Class A(a) |
38,600 | $2,076,680 | ||||||
|
|
|
|||||||
| UTILITIES (0.85%) |
||||||||
| Electric Utilities (0.85%) |
||||||||
| ITC Holdings Corp. |
13,083 | 1,013,017 | ||||||
|
|
|
|||||||
| TOTAL COMMON STOCKS (COST OF $108,389,510) |
115,994,944 | |||||||
|
|
|
|||||||
| PAR VALUE | ||||||||
| SHORT TERM INVESTMENT (2.63%) |
||||||||
| REPURCHASE AGREEMENT (2.63%) |
||||||||
| Repurchase agreement with State Street Bank & Trust Co., dated 09/30/11, due 10/03/11 at 0.01%, collateralized by several Fannie Mae and Freddie Mac instruments with various maturity dates, market value of $3,195,728 (Repurchase proceeds of $3,127,000) |
$3,127,000 | 3,127,000 | ||||||
|
|
|
|||||||
| TOTAL SHORT TERM INVESTMENT (COST OF $3,127,000) |
3,127,000 | |||||||
|
|
|
|||||||
| TOTAL INVESTMENTS (100.37%) (COST OF $111,516,510)(c) |
119,121,944 | |||||||
| LIABILITIES IN EXCESS OF OTHER ASSETS (-0.37%) |
(436,230) | |||||||
|
|
|
|||||||
| NET ASSETS (100.00%) |
$118,685,714 | |||||||
|
|
|
|||||||
| NET ASSET VALUE PER SHARE (30,080,350 SHARES OUTSTANDING) |
$3.95 | |||||||
|
|
|
|||||||
| (a) | Non-income producing security. |
| (b) | American Depositary Receipt. |
| (c) | Cost of investments for federal income tax purposes is $111,880,618. |
Gross unrealized appreciation and depreciation at September 30, 2011 based on cost of investments for federal income tax purposes is as follows:
| Gross unrealized appreciation |
$ | 20,417,963 | ||
| Gross unrealized depreciation |
(13,176,637) | |||
| Net unrealized appreciation |
$ | 7,241,326 |
For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease. Industries are shown as a percent of net assets. These industry classifications are unaudited.
| See Notes to Schedule of Investments. | ||
| 12 | www.all-starfunds.com | |
| Liberty All-Star® Growth Fund | Notes to Schedule of Investments |
Security Valuation
Equity securities including common stocks and exchange traded funds are valued at the last sale price at the close of the principal exchange on which they trade, except for securities listed on the National Association of Securities Dealers Automated Quotations (“NASDAQ”) exchange, which are valued at the NASDAQ official closing price. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets.
Short-term debt obligations maturing in more than 60 days for which market quotations are readily available are valued at current market value. Short-term debt obligations maturing within 60 days are valued at amortized cost, which approximates market value.
Investments for which market quotations are not readily available are valued at fair value as determined in good faith under consistently applied procedures approved by and under the general supervision of the Liberty All-Star® Growth Fund’s (the “Fund”) Board of Directors (the “Board”).
Foreign Securities
The Fund invests in foreign securities including American Depositary Receipts, which may involve a number of risk factors and special considerations not present with investments in securities of U.S. corporations.
Security Transactions
Security transactions are recorded on the trade date. Cost is determined and gains/(losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Repurchase Agreements
The Fund may engage in repurchase agreement transactions with institutions that the Fund’s investment advisor has determined are creditworthy. The Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon a Fund’s ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights.
Income Recognition
Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date.
Fair Value Measurements
The Fund discloses the classification of its fair value measurements following the three-tier hierarchy based on the inputs used to measure fair value. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability that are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability that are developed based on the best information available.
| Third Quarter Report (Unaudited) | September 30, 2011 | 13 |
| Notes to Schedule of Investments | Liberty All-Star® Growth Fund | |
| September 30, 2011 (Unaudited) |
Various inputs are used in determining the value of the Fund’s investments as of the end of the reporting period. When inputs used fall into different levels of the fair value hierarchy, the level in the hierarchy within the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The designated input levels are not necessarily an indication of the risk or liquidity associated with these investments. These inputs are categorized in the following hierarchy under applicable financial accounting standards:
| Level 1 – |
Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that a Fund has the ability to access at the measurement date; | |
| Level 2 – |
Quoted prices which are not active, quoted prices for similar assets or liabilities in active | |
| markets or inputs other than quoted prices that are observable (either directly or | ||
| indirectly) for substantially the full term of the asset or liability; and | ||
| Level 3 – |
Significant unobservable prices or inputs (including the Fund’s own assumptions in determining the fair value of investments) where there is little or no market activity for the asset or liability at the measurement date. | |
The following is a summary of the inputs used to value the Fund’s investments as of September 30, 2011:
| Valuation Inputs | ||||||||||||||||
| Investments in Securities at Value* |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Common Stocks |
$ | 115,994,944 | $ | – | $ | – | $ | 115,994,944 | ||||||||
| Short Term Investment |
– | 3,127,000 | – | 3,127,000 | ||||||||||||
| Total |
$ | 115,994,944 | $ | 3,127,000 | $ | – | $ | 119,121,944 | ||||||||
*See Schedule of Investments for industry classifications
For the three months ended September 30, 2011, the Fund did not have any significant transfers between Level 1 and Level 2 securities. The Fund did not have any securities which used significant unobservable inputs (Level 3) in determining fair value.
Indemnification
In the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnities. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims against the Fund. Also, under the Fund’s organizational documents and by contract, the Directors and Officers of the Fund are indemnified against certain liabilities that may arise out of their duties to the Fund. However, based on experience, the Fund expects the risk of loss due to these warranties and indemnities to be minimal.
Maryland Statutes
By resolution of the Board of Directors, the Fund has opted into the Maryland Control Share Acquisition Act and the Maryland Business Combination Act. In general, the Maryland Control Share Acquisition Act provides that “control shares” of a Maryland corporation acquired in a control share acquisition may not be voted except to the extent approved by shareholders at a meeting by a vote
| 14 | www.all-starfunds.com |
| Liberty All-Star® Growth Fund | Notes to Schedule of Investments |
of two-thirds of the votes entitled to be cast on the matter (excluding shares owned by the acquiror and by officers or directors who are employees of the corporation). “Control shares” are voting shares of stock which, if aggregated with all other shares of stock owned by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors within certain statutorily-defined ranges (one-tenth but less than one-third, one-third but less than a majority, and more than a majority of the voting power). In general, the Maryland Business Combination Act prohibits an interested shareholder (a shareholder that holds 10% or more of the voting power of the outstanding stock of the corporation) of a Maryland corporation from engaging in a business combination (generally defined to include a merger, consolidation, share exchange, sale of a substantial amount of assets, a transfer of the corporation’s securities and similar transactions to or with the interested shareholder or an entity affiliated with the interested shareholder) with the corporation for a period of five years after the most recent date on which the interested shareholder became an interested shareholder. At the time of adoption, March 19, 2009, the Board and the Fund were not aware of any shareholder that held control shares or that was an interested shareholder under the statutes.
| Third Quarter Report (Unaudited) | September 30, 2011 | 15 |
| Description of Lipper Benchmark and Market Indices |
Liberty All-Star® Growth Fund | |
| September 30, 2011 (Unaudited) |
Lipper Multi-Cap Growth Mutual Fund Average
The average of funds that, by portfolio practice, invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. Multi-Cap growth funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P SuperComposite 1500 Index.
NASDAQ Composite Index
Measures all NASDAQ domestic and international based common type stocks listed on the NASDAQ Stock Market.
Russell 3000® Growth Index
Measures the performance of those Russell 3000® companies with higher price-to-book-ratios and higher forecasted growth values. The Russell 3000® Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market.
Russell 1000® Growth Index (Largecap)
Measures the performance of those Russell 1000® companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000® Index measures the performance of the 1,000 largest companies in the Russell 3000® Index.
Russell Midcap® Growth Index
Measures the performance of those Russell Midcap® companies with higher price-to-book ratios and higher forecasted growth values. The Russell Midcap® Index measures the performance of the 800 smallest companies in the Russell 1000® Index.
Russell 2000® Growth Index (Smallcap)
Measures the performance of those Russell 2000® companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index.
S&P 500 Index
A representative sample of 500 leading companies in leading industries of the U.S. economy. Focuses on the large-cap segment of the market with approximately 75% coverage of U.S. equities.
| 16 | www.all-starfunds.com |
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