Beginning on January 1, 2021,
as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Fund’s annual and
semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead,
the reports will be made available on the Fund’s website at www.all-starfunds.com,
and you will be notified by mail each time a report is posted and provided with a website link to access the report.
You may elect to receive all
future shareholder reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial
intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the
Fund and your shares are held with the Fund’s transfer agent, Computershare, you can call 1-800-542-3863 to let the Fund
know you wish to continue receiving paper copies of your shareholder reports.
If you already elected to receive
shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to
receive shareholder reports and other communications from a Fund electronically anytime by contacting your financial intermediary
(such as a broker-dealer or bank) or, if you are a direct investor you may log into your Investor Center account at www.computershare.com/investor
and change your communication preferences.
Equity investors were well rewarded in
2019 as key benchmarks reached record high levels throughout the year in the course of propelling the S&P 500®
Index to an annual return of 31.49 percent. The widely-followed Dow Jones Industrial Average (DJIA) returned 25.34 percent for
the year while the NASDAQ Composite Index posted the strongest gains of the three with a return of 36.69 percent.
All four quarters generated positive returns
led by a 13.65 percent gain for the S&P 500® in the first quarter. Returns for the index were positive in 10
months, with only May and August recording modest reversals; the strongest monthly returns were posted in January and June (8.01
percent and 7.05 percent, respectively). All 11 sectors comprising the S&P 500® recorded positive returns,
led by information technology with a return of 50.33 percent. Energy trailed by a significant margin and posted the lowest return
among the sectors, 11.87 percent.
Although both styles produced strong returns
in 2019, growth style stocks once again outperformed their value counterparts across all capitalization ranges. Among key growth
benchmarks for the year, the broad market Russell 3000® Growth Index returned 35.85 percent versus 26.26 percent
for its value counterpart. Among growth style market capitalization indices for the year, the Russell 1000® Growth
Index (large cap) returned 36.39 percent, less than 100 basis points higher than the Russell Midcap® Growth Index,
which returned 35.47 percent. Small cap stocks, as represented by the Russell 2000® Growth Index, returned 28.48
percent.
A stable economy—underpinned by unemployment
at a 50-year low, muted levels of inflation and better than expected corporate earnings—provided the stock market with the
foundation for a strong year. But the factor that ultimately propelled the market to record levels was three interest rate reductions
by the Federal Reserve—a reversal of 2018, when the Fed raised short-term rates four times. As well, the Fed indicated after
its October rate cut that it would likely remain in a holding pattern for the foreseeable future insofar as rate actions are concerned.
For certain, 2019 was not without questions
and concerns, the chief one being the trade/ tariff dispute between the U.S. and China. Markets rose or fell depending on the
tenor of pronouncements from Washington and Beijing. But in the fourth quarter, the administration began touting an imminent “Phase
One” agreement with China that would provide relief to farmers and some companies. Investors concluded that their worst
tariff concerns would not likely materialize, despite a worrisome decline in manufacturing activity in the U.S. Although messy,
Brexit, too, began to show progress toward a resolution in early 2020 although the potential for tariffs negatively impacting
U.S.-Europe trade lingered. As the year progressed, bond markets stabilized and the yield curve steepened on optimism that the
U.S. economy would not slow. Indeed, around the world there was a growing feeling that economic growth may rebound from recent
anemic levels.
For the full year, Liberty All-Star
Growth Fund returns were very strong on both an absolute and relative basis. The Fund returned 35.79 percent with shares
valued at net asset value (NAV) with dividends reinvested and 60.45 percent when shares are valued at market price with
dividends reinvested. (Fund returns are net of expenses.) The Fund’s primary benchmark, the Lipper Multi-Cap Growth
Mutual Fund Average, returned 31.47 percent in 2019. The market price return on Fund shares (with dividends reinvested) was
well ahead of the return of the three benchmarks mentioned earlier—the S&P 500®, the DJIA and the
NASDAQ Composite.
For the fourth quarter, the Fund returned
8.82 percent with shares valued at NAV with dividends reinvested and 11.95 percent with shares valued at market price with dividends
reinvested. For the same period, the Lipper benchmark returned 9.09 percent.
Over the course of the year, Fund
shares at various times traded at both a discount and a premium to their underlying NAV. For the year, the premium/(discount)
ranged from 6.1 percent to -10.1 percent. In the fourth quarter, Fund shares traded at a premium ranging from 0.3 percent to
6.1 percent.
In accordance with the Fund’s distribution
policy, the Fund paid a distribution of $0.12 to shareholders during the fourth quarter ($0.46 for 2019), bringing the total distributed
to shareholders since 1997, when the distribution policy commenced, to $14.35 per share. The Fund’s distribution policy is
a major component of the Fund’s total return, and we continue to emphasize that shareholders should include these distributions
when determining the total return on their investment in the Fund.
Turning to Fund news, the Board of Directors
has authorized a rights offering enabling shareholders to purchase one additional share of the Fund for every five shares held,
with the right to subscribe for additional shares not subscribed by others. The subscription price per share will be 95 percent
of the reported NAV or market price per share, whichever is lower as of the expiration date. If over-subscription requests exceed
the number of shares available in the offering, the Fund may elect to issue up to an additional 25 percent of shares above those
offered in the primary subscription. The offering is being made only by means of a prospectus and expires on March 13, 2020.
One of the key principles on which the
Fund was founded is multi-management, or the practice of allocating the Fund’s assets to carefully selected growth style
managers investing across the capitalization spectrum of large-, mid- and small-cap growth stocks. Thus, we are once again offering
insights into the managers’ thinking through our annual Manager Roundtable and invite shareholders to read the managers’
comments beginning on page 13.
We are gratified with the Fund’s
exceptional performance in 2019, but even more so with the Fund’s results over the long term. Based on underlying NAV and
market price (both with dividends reinvested), the Fund has outperformed its primary benchmark, the Lipper Multi-Cap Growth Mutual
Fund Average, for the past three-, five-, and 10-year periods. We believe this underscores the strength of the Fund’s multi-manager
structure, but also our role at ALPS as the Fund’s Advisor. Our mission is implementing our philosophy and process and, in
doing so, selecting and monitoring the Fund’s three managers. As appropriate, this includes replacing a manager—an
action we have taken nine times since ALPS Advisors began managing the Fund in November 1995—in order to build and maintain
the Fund’s long-term performance. Results confirm the soundness of our approach, and we are committed to diligently executing
it in the future.
William R. Parmentier, Jr.
The views expressed in the President’s
Letter, Unique Fund Attributes and Manager Roundtable reflect the current views of the respective parties. 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 respective parties disclaim 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. References to specific company securities should not be construed as a recommendation
or investment advice.
Liberty
All-Star® Growth Fund
|
President’s
Letter
|
(Unaudited)
LONG-TERM PERFORMANCE SUMMARY AND DISTRIBUTIONS PERIODS ENDED DECEMBER
31, 2019
|
|
ANNUALIZED
RATES OF RETURN
|
|
|
|
3 YEARS
|
|
|
5 YEARS
|
|
|
10
YEARS
|
|
|
|
|
|
|
|
|
|
|
|
LIBERTY ALL-STAR® GROWTH FUND, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
|
|
$
|
1.34
|
|
|
$
|
2.47
|
|
|
$
|
3.90
|
|
Shares Valued at NAV with Dividends Reinvested
|
|
|
20.02
|
%
|
|
|
13.48
|
%
|
|
|
13.95
|
%
|
Shares Valued at Market Price with Dividends Reinvested
|
|
|
27.75
|
%
|
|
|
16.86
|
%
|
|
|
16.53
|
%
|
Dow Jones Industrial Average
|
|
|
15.73
|
%
|
|
|
12.59
|
%
|
|
|
13.40
|
%
|
Lipper Multi-Cap Growth Mutual Fund Average
|
|
|
17.70
|
%
|
|
|
11.39
|
%
|
|
|
13.30
|
%
|
NASDAQ Composite Index
|
|
|
19.86
|
%
|
|
|
14.93
|
%
|
|
|
16.05
|
%
|
Russell Growth Benchmark
|
|
|
17.10
|
%
|
|
|
12.21
|
%
|
|
|
14.28
|
%
|
S&P 500® Index
|
|
|
15.27
|
%
|
|
|
11.70
|
%
|
|
|
13.56
|
%
|
Performance
returns for the Fund are calculated assuming all distributions are reinvested at actual reinvestment prices and all primary rights
in the Fund’s rights offering were exercised. Returns are
net of management fees and other Fund expenses.
The returns shown for the Lipper Multi-Cap
Growth Mutual Fund Average are based on open-end mutual funds’ total returns, which include dividends, and are net of fund
expenses. Returns for the unmanaged Dow Jones Industrial Average, NASDAQ Composite Index, the Russell Growth Benchmark and the
S&P 500® Index are total returns, including dividends. A description of
the Lipper benchmark and the market indices can be found on page 55.
Past performance cannot predict future
results. Performance will fluctuate with market conditions. Current performance may be lower or higher than the performance
data shown. Performance information does not reflect the deduction of taxes that shareholders would pay on Fund distributions or
the sale of Fund shares. An investment in the Fund involves risk, including loss of principal.
Closed-end funds raise money in an initial
public offering and shares are listed and traded on an exchange. Open-end mutual funds continuously issue and redeem shares at
net asset value. Shares of closed-end funds frequently trade at a discount to net asset value. The price of the Fund’s shares
is determined by a number of factors, several of which are beyond the control of the Fund. Therefore, the Fund cannot predict whether
its shares will trade at, below or above net asset value.
Annual Report | December 31, 2019
|
5
|
Liberty All-Star® Growth
Fund
|
Unique Fund Attributes
|
(Unaudited)
UNIQUE ATTRIBUTES OF
Liberty All-Star® Growth Fund
Several attributes help to make the Fund a core equity holding
for investors seeking a diversified growth portfolio, income and the potential for long-term appreciation.
|
MULTI-MANAGEMENT
FOR INDIVIDUAL INVESTORS
|
|
|
|
|
|
Large institutional investors have traditionally employed multiple investment managers. With three investment managers investing across the full capitalization range of growth stocks, the Fund brings multi-management to individual investors.
|
|
REAL-TIME
TRADING AND LIQUIDITY
|
|
|
|
|
|
The Fund has a fixed number of shares that trade on the New York Stock Exchange and other exchanges. Share pricing is continuous—not just end-of-day, as it is with open-end mutual funds. Fund shares offer immediate liquidity, there are no annual sales fees and can often be traded commission free.
|
Liberty All-Star® Growth
Fund
|
Unique Fund Attributes
|
(Unaudited)
|
ACCESS TO
INSTITUTIONAL MANAGERS
|
|
|
|
|
|
The Fund’s investment managers invest primarily for pension funds, endowments, foundations and other institutions. Because institutional managers are closely monitored by their clients, they tend to be more disciplined and consistent in their investment process.
|
|
MONITORING
AND REBALANCING
|
|
|
|
|
|
ALPS Advisors continuously monitors these investment managers to ensure that they are performing as expected and adhering to their style and strategy, and will replace the managers when warranted. Periodic rebalancing maintains the Fund’s structural integrity and is a well-recognized investment discipline.
|
|
ALIGNMENT
AND OBJECTIVITY
|
|
|
|
|
|
Alignment with shareholders’ best interests and objective decision-making help to ensure that the Fund is managed openly and equitably. In addition, the Fund is governed by a Board of Directors that is elected by and responsible to shareholders.
|
|
DISTRIBUTION
POLICY
|
|
|
|
|
|
Since 1997, the Fund has followed a policy of paying annual distributions on its shares at a rate that approximates historical equity market returns. The current annual distribution rate is 8 percent of the Fund’s net asset value (paid quarterly at 2 percent per quarter), providing a systematic mechanism for distributing funds to shareholders.
|
Annual Report | December 31, 2019
|
7
|
Liberty All-Star®
Growth Fund
|
Investment
Growth
|
(Unaudited)
GROWTH
OF A HYPOTHETICAL $10,000 INVESTMENT
The
graph below illustrates the growth of a hypothetical $10,000 investment assuming the purchase of shares of common stock at the
closing market price (NYSE: ASG) of $9.25 on December 31, 1996, and tracking its progress through December 31, 2019. For certain
information, it also assumes that a shareholder exercised all primary rights in the Fund’s rights offerings (see below).
This graph covers the period since the Fund commenced its distribution policy in 1997.
|
|
The
growth of the investment assuming all distributions were received in cash and not reinvested
back into the Fund. The value of the investment under this scenario grew to $22,541
(including the December 31, 2019 value of the original investment of $7,027, plus distributions
during the period of $15,514).
|
|
|
The
additional value realized through reinvestment of all distributions. The value of the
investment under this scenario grew to $63,779.
|
|
|
The
additional value realized by exercising all primary rights in the Fund’s rights
offerings. The value of the investment under this scenario grew to $93,786 excluding
the cost to exercise all primary rights in the rights offerings which was $25,131.
|
Past
performance cannot predict future results. Performance will fluctuate with changes in market conditions. Current performance may
be lower or higher than the performance data shown. Performance information does not reflect the deduction of taxes that shareholders
would pay on Fund distributions or the sale of Fund shares. An investment in the Fund involves risk, including loss of principal.
Liberty
All-Star® Growth Fund
|
Table
of Distributions and
Rights Offerings
|
(Unaudited)
|
|
|
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
|
81
|
5.72
|
2004
|
0.63
|
|
|
|
2005
|
0.58
|
|
|
|
2006
|
0.59
|
|
|
|
2007
|
0.61
|
|
|
|
2008
|
0.47
|
|
|
|
20092
|
0.24
|
|
|
|
2010
|
0.25
|
|
|
|
2011
|
0.27
|
|
|
|
2012
|
0.27
|
|
|
|
2013
|
0.31
|
|
|
|
2014
|
0.33
|
|
|
|
20153
|
0.77
|
|
|
|
2016
|
0.36
|
|
|
|
2017
|
0.42
|
|
|
|
2018
|
0.46
|
November
|
3
|
4.81
|
2019
|
0.46
|
|
|
|
Total
|
$14.35
|
|
|
|
|
1
|
The
number of shares offered was increased by an additional 25 percent to cover a portion
of the over-subscription requests.
|
|
2
|
Effective
with the second quarter distribution, the annual distribution rate was changed from 10
percent to 6 percent.
|
|
3
|
Effective
with the second quarter distribution, the annual distribution rate was changed from 6
percent to 8 percent.
|
DISTRIBUTION
POLICY
The
current policy is to pay distributions on its shares totaling approximately 8 percent of its net asset value per year, payable
in four quarterly installments of 2 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. Sources of distributions to shareholders may include ordinary dividends,
long-term capital gains and return of capital. The actual amounts and sources of the amounts for tax reporting purposes will depend
upon the Fund’s investment experience during its fiscal year and may be subject to changes based on tax regulations. If
a distribution includes anything other than net investment income, the Fund provides a Section 19(a) notice of the best estimate
of its distribution sources at that time. These estimates may not match the final tax characterization (for the full year’s
distributions) contained in shareholder 1099-DIV forms after the end of the year. If the Fund’s ordinary dividends and long-term
capital gains for any year exceed the amount distributed under the distribution policy, the Fund may, in its discretion, retain
and not distribute capital gains and pay income tax thereon to the extent of such excess.
Annual Report
| December 31, 2019
|
9
|
Liberty
All-Star® Growth Fund
|
Investment
Managers/
Portfolio Characteristics
|
(Unaudited)
THE
FUND’S THREE GROWTH INVESTMENT MANAGERS
AND THE MARKET CAPITALIZATION ON WHICH EACH FOCUSES:
ALPS
Advisors, Inc., the investment advisor to the Fund, has the ultimate authority (subject to oversight by the Board of Directors)
to oversee the investment managers and recommend their hiring, termination and replacement.
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 55 for a description of these indices.
|
|
|
MARKET
CAPITALIZATION
SPECTRUM
|
|
PORTFOLIO
CHARACTERISTICS
|
|
|
SMALL
|
|
LARGE
|
|
AS OF DECEMBER
31, 2019
|
|
|
|
|
|
RUSSELL
GROWTH:
|
|
|
Smallcap
Index
|
Midcap
Index
|
Largecap
Index
|
Weatherbie
|
Congress
|
Sustainable
|
Total
Fund
|
Number
of Holdings
|
1,172
|
403
|
530
|
50
|
40
|
30
|
120
|
Percent
of Holdings in Top 10
|
5%
|
12%
|
37%
|
50%
|
29%
|
43%
|
17%
|
Weighted
Average Market Capitalization (billions)
|
$2.8
|
$20.3
|
$394.6
|
$4.7
|
$13.0
|
$240.1
|
$86.5
|
Average
Five-Year Earnings Per Share Growth
|
14%
|
15%
|
16%
|
24%
|
16%
|
16%
|
17%
|
Average
Five-Year Sales Per Share Growth
|
9%
|
12%
|
13%
|
17%
|
11%
|
11%
|
12%
|
Price/Earnings
Ratio*
|
27x
|
29x
|
29x
|
52x
|
31x
|
35x
|
36x
|
*
Excludes negative earnings.
Liberty All-Star®
Growth Fund
|
Top
20 Holdings and Economic Sectors
|
December
31, 2019 (Unaudited)
TOP
20 HOLDINGS*
|
PERCENT
OF NET ASSETS
|
Paylocity
Holding Corp.
|
2.01%
|
Nevro
Corp.
|
1.97
|
FirstService
Corp.
|
1.95
|
Chegg,
Inc.
|
1.92
|
Casella
Waste Systems, Inc.
|
1.56
|
Insulet
Corp.
|
1.53
|
salesforce.com,
Inc.
|
1.53
|
Yum!
Brands, Inc.
|
1.50
|
Microsoft
Corp.
|
1.50
|
UnitedHealth
Group, Inc.
|
1.50
|
Amazon.com,
Inc.
|
1.39
|
PayPal
Holdings, Inc.
|
1.35
|
Autodesk,
Inc.
|
1.33
|
EPAM
Systems, Inc.
|
1.32
|
Visa,
Inc.
|
1.30
|
Alphabet,
Inc.
|
1.30
|
Abbott
Laboratories
|
1.30
|
NIKE,
Inc.
|
1.29
|
Mondelez
International, Inc.
|
1.28
|
Equinix,
Inc.
|
1.22
|
|
30.05%
|
ECONOMIC
SECTORS*
|
PERCENT
OF NET ASSETS
|
Information
Technology
|
30.72%
|
Health
Care
|
22.04
|
Consumer
Discretionary
|
15.49
|
Industrials
|
12.08
|
Consumer
Staples
|
4.13
|
Real
Estate
|
4.03
|
Financials
|
3.26
|
Communication
Services
|
3.02
|
Materials
|
2.73
|
Energy
|
0.19
|
Other
Net Assets
|
2.31
|
|
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.
|
Annual Report
| December 31, 2019
|
11
|
Liberty All-Star®
Growth Fund
|
Major
Stock Changes in the Quarter
|
December
31, 2019 (Unaudited)
The
following are the major ($600,000 or more) stock changes - both purchases and sales - that were made in the Fund’s portfolio
during the fourth quarter of 2019.
|
SHARES
|
SECURITY
NAME
|
PURCHASE (SALES)
|
HELD AS OF 12/31/19
|
|
|
|
|
|
PURCHASES
|
|
|
|
|
|
|
|
|
|
FirstService
Corp.
|
7,449
|
|
49,280
|
|
Varian
Medical Systems, Inc.
|
15,000
|
|
15,000
|
|
WEX,
Inc.
|
9,500
|
|
9,500
|
|
Yum!
Brands, Inc.
|
6,289
|
|
35,145
|
|
|
|
|
|
|
SALES
|
|
|
|
|
|
|
|
|
|
Generac
Holdings, Inc.
|
(7,500)
|
|
23,000
|
|
Independent
Bank Group, Inc.
|
(16,849)
|
|
0
|
|
Insulet
Corp.
|
(4,753)
|
|
21,067
|
|
Nevro
Corp.
|
(7,507)
|
|
39,364
|
|
Portola
Pharmaceuticals, Inc.
|
(27,131)
|
|
48,853
|
|
Rollins,
Inc.
|
(42,750)
|
|
0
|
|
SS&C
Technologies Holdings, Inc.
|
(30,000)
|
|
0
|
|
Liberty All-Star®
Growth Fund
|
Manager
Roundtable
|
(Unaudited)
MANAGER
ROUNDTABLE
An
exceptional year created an attractive environment for growth style investors but keeping pace demanded a proven investment process
and rigorous company analysis—as well as a watchful eye to the future.
Liberty
All-Star Growth Fund’s three investment managers have long experience, in-depth knowledge, a proven track record and a firm
commitment to growth style investing. Once again, we are grateful to be able to call upon this resource to provide Fund shareholders
with timely commentary and insight. The Fund’s Investment Advisor, ALPS Advisors, serves as moderator of the roundtable.
Participating investment management firms, the portfolio manager for each and their respective capitalization ranges are:
CONGRESS
ASSET MANAGEMENT COMPANY, LLP
Portfolio
Manager/Todd Solomon, CFA
Senior
Vice President/Portfolio Manager
Capitalization
Focus/Mid-Cap Growth—Congress Asset Management’s mid-cap growth strategy focuses on established, high-quality
companies that are growing earnings and generating attractive levels of free cash flow. The firm also strives to construct portfolios
with relatively low levels of volatility.
SUSTAINABLE
GROWTH ADVISERS, LP
Portfolio
Manager/Kishore D. Rao
Principal
and Portfolio Manager
Capitalization
Focus/Large-Cap Growth—Sustainable Growth Advisers (SGA) focuses on companies that have unique characteristics that
lead to a high degree of predictability, strong profitability and above-average earnings and cash flow growth over the long term.
WEATHERBIE
CAPITAL, LLC
Portfolio
Manager/Matthew A. Weatherbie, CFA
President
and Founder
Capitalization
Focus/Small-Cap Growth—Weatherbie practices a small capitalization growth investment style focusing on high quality
companies that demonstrate superior earnings growth prospects, yet are reasonably priced relative to their intrinsic value. The
firm seeks to provide superior returns relative to small capitalization growth indices over a full market cycle.
Growth
outperformed value once again in 2019, but results for growth companies have varied across the capitalization spectrum with mid-cap
growth and large-cap growth outperforming small-cap growth. Reflecting the capitalization range that is your particular focus
for the Liberty All-Star Growth Fund, what’s the case for large-, mid- and small-cap growth stocks in the current and foreseeable
investment environment? Let’s start with the Fund’s mid-cap growth manager.
“Mid-sized
companies often combine some of the best attributes of larger and smaller companies.”
—Todd
Solomon
(Congress
– Mid-Cap Growth)
Solomon
(Congress – Mid-Cap Growth): Mid-sized companies often combine some of the best attributes of larger and smaller companies.
They have progressed enough to establish a proven business model and economies of scale but remain nimble enough to pivot in reaction
to changing business conditions. In comparison to small caps, they generally have greater management experience, better trading
liquidity and superior asset capacity. Also, mid-cap stocks have exhibited higher long-term revenue and earnings per share growth
than both large- and small-cap stocks over the past 20 years, which is the longest time period for which common data is available
for all three. Recently published data by Jeffries shows expectations for 2020 are for continued faster earnings growth from mid-
than large- and small-cap stocks.
Annual Report
| December 31, 2019
|
13
|
Liberty All-Star®
Growth Fund
|
Manager
Roundtable
|
(Unaudited)
Thanks,
Todd. Kishore, what’s the perspective from the large-cap growth point of view?
“We
see attractive opportunities in the health care, consumer staples, information technology and consumer discretionary sectors.”
—Kishore
Rao
(Sustainable
– Large-Cap Growth)
Rao
(Sustainable – Large-Cap Growth): In our analysis of companies, we consider businesses where their liquidity is sufficient
for us to be able to build large positions in the stock consistent with our focus on constructing highly concentrated portfolios.
Most businesses that make it on to our Qualified Company List—our highly selective buy list of businesses that have been
fully vetted by our analyst team and determined to possess the key business quality and long-term sustainable growth we seek—fall
into the large- and mid-cap, earlier lifecycle tiers. The proportion between them varies considerably depending on the valuations
of the respective revenue and earnings growth streams. We see attractive opportunities in several areas ranging from the health
care and consumer staples sectors to the information technology, consumer discretionary and communication services sectors. The
highly bifurcated nature of the growth stock advance over the past few years has created myriad opportunities across capitalization
tiers.
Thanks.
What about small-caps, Matt?
Weatherbie
(Weatherbie – Small-Cap Growth): Weatherbie Capital focuses particularly on smaller-cap growth stocks, and we believe
a strong case can be made that this range of the spectrum may outperform others in the foreseeable future. Capital markets research
from our parent, Alger, suggests that smaller capitalization stocks may be poised to outperform based on three factors. First,
stronger fundamentals: small companies are expected to grow faster than large ones. Second, compelling valuations: the average
small cap price/earnings multiple premium is low relative to history, based on data from FactSet. Third, less exposure to international
economies: U.S. small caps are more linked to our domestic economy. Benefits to this include recognizing revenue in U.S. dollar
terms—the dollar remains historically strong relative to non-U.S. currencies. While our portfolio companies do not typically
have significant debt on their balance sheets, those with debt to service may benefit from historically low interest rates. Finally,
Weatherbie portfolio companies with energy as a significant raw input to their business model are enjoying some of the lowest
energy prices, on an inflation-adjusted basis, of the last half-century.
Liberty All-Star®
Growth Fund
|
Manager
Roundtable
|
(Unaudited)
What
types of companies and/or industries do you expect to offer particularly compelling investment opportunities over the next 12
to 24 months or longer? Include specific company names or industries, if appropriate, to make the point. Matt, let’s stay
with you.
“We
mine for ‘hidden gems’ potentially offering steadier growth rates, more predictable cash flows and significant competitive
advantages.”
—Matt
Weatherbie
(Weatherbie
– Small-Cap Growth)
Weatherbie
(Weatherbie – Small-Cap Growth): The share of the Liberty All-Star Growth Fund that we manage is a diversified portfolio
of smaller-capitalization U.S. stocks including several companies in mundane industries. It is a category we will continue to
mine for “hidden gems” potentially offering steadier growth rates, more predictable cash flows and significant competitive
advantages. Two examples among Weatherbie’s current top 10 positions are Chegg, Inc. (CHGG) and Casella Waste Systems, Inc.
(CWST).
Chegg
is a leader in providing learning solutions and services to high school and college students. Originally focused on textbook rentals,
it has recently completely revamped its business model to provide services in high-growth areas such as study assistance, tutoring
and writing tools. This is proving to be a successful strategy and could result in significant top-line growth and improved profitability.
Currently Chegg has low double-digit penetration in the U.S. four-year college market, estimated at more than 20 million students.
Casella
Waste Systems is a well-managed, smaller-capitalization waste processing company in the Northeast benefiting from significant
free cash flow generation, favorable industry dynamics and revenue growth potential ahead of its peers. While Weatherbie Capital
sees no signs of recession in the immediate future, with contracts placed among cities, municipalities and other public sector
entities, Casella is positioned to hold up well in a slowing economy.
At
the opposite end of the capitalization spectrum, share your thoughts, please, Kishore.
Rao
(Sustainable – Large-Cap Growth): We do not focus on evaluating sectors or industries other than in the normal course
of understanding the ecosystems our companies operate within. Rather, our focus is on individual businesses where we seek quality
companies with superior pricing power, recurring revenues, long runways of growth, strong cash flow generation and financial characteristics,
and a management team whose interests are well aligned with shareholders. We see attractive opportunities in several areas that
I previously mentioned—the health care, consumer staples, information technology, consumer discretionary and communication
services sectors. Likewise, there are areas of the market that fail to meet our business quality and growth criteria. Generally,
you will not see our portfolios heavily invested in the more cyclical industrials, energy or materials sectors due to our preference
for more predictable and recurring revenue streams. Likewise, we tend not to invest in utilities or real estate, which normally
fail to offer the above-average growth or business quality that we seek.
Todd,
will you round it out with the viewpoint of a mid-cap growth manager?
Solomon
(Congress – Mid-Cap Growth): Although we are a growth investor, we do not limit ourselves to the fastest growing stocks
or industries. We consider growth in revenue or earnings as any number greater than zero. Quality, consistent, conservative growth
investments can be found in many areas of the market and are easy to overlook if seeking only the highest levels of growth. Such
investments are the best way to diversify a portfolio and attempt to minimize volatility. In 2020,
we may find such investments in the consumer discretionary, industrial and technology hardware areas. These have likely passed
the worst of the effects of tariffs, will benefit from steady global growth and have attractive valuations.
Annual Report
| December 31, 2019
|
15
|
Liberty All-Star®
Growth Fund
|
Manager
Roundtable
|
(Unaudited)
On
the other hand, are there companies/industries that have been growth stock leaders but that now, for various reasons, warrant
a greater degree of caution? As needed, cite specific company names and/or industries to make the point. Let’s cover the
capitalization range small to large.
Weatherbie
(Weatherbie – Small-Cap Growth): Baby Boomers continue to be a force in U.S. consumption, but since the needs of that
cohort continually change, certain companies and industries become less relevant. We believe a perfect example is the RV modification
business. Since the year 2000 those Boomers have been reaching retirement age in the U.S. Many “empty nesters” have
opted for RV ownership over other forms of retirement travel or, indeed, as an alternative to conventional home ownership. As
RV sales were strong across the 2010–2017 time period, we captured this trend in our portfolio.
More
recently, RV demand has slowed down, manufacturers’ inventories have piled up and dealers selling new RVs have suffered
from the slowdown in sales. With the RV market down from its 2018 peak, another set of companies that warrants a greater degree
of caution are those providing upgrades and modifications to used RVs. With new RV prices lower, consumers are less likely to
buy used RVs and invest in upgrades. This is just one example of how Boomer buying patterns will continue to evolve and affect
companies’ performance.
Solomon
(Congress – Mid-Cap Growth): The two areas of caution for us are consumer staples and technology software. In both instances,
we believe there are concerns regarding valuations and expected growth rates. Consumer staples has been a solid area of returns
for our portfolio and a successful way to keep volatility in check. At current valuations, however, we feel there may be better
opportunities elsewhere in our universe. In the same vein, technology software has seen great growth in revenue, earnings and
valuations. The high valuations may lead to volatility if companies can’t repeat the hypergrowth experienced over the past
several years.
Rao
(Sustainable – Large-Cap Growth): Apple (AAPL) is a company that retains a significant weight in the Russell 1000®
Growth Index and has been a stellar performer over the past year. We continue to think highly of Apple as a quality business,
but do not see that it has the earnings growth opportunity that it once did, and have therefore not owned the stock since April
of 2017 due to our concerns about its slowing earnings growth trajectory. We have owned several of the information technology
and e-commerce businesses that have led the market in recent years, taking our weight in them down, or exiting the positions when
valuations seemed stretched, and adding to them or reinitiating positions when they appeared more attractively valued. As an example,
Facebook (FB) exited the portfolio and is now back in. Amazon’s (AMZN) weight was consistently reduced due to valuation
in recent years but has now become a larger weight as its valuation has become more attractive.
Liberty All-Star®
Growth Fund
|
Manager
Roundtable
|
(Unaudited)
With
very few exceptions—other than the U.S-China tariff dispute and Brexit, although both look somewhat less daunting after
recent events—perceptions of risk seem to have diminished and investor sentiment has become much more positive as the rally
that paused in August continued into year-end 2019. What risks do you see on the horizon that concern you or, at the least, warrant
closer monitoring? Kishore, let’s stay with you.
Rao
(Sustainable – Large-Cap Growth): While investors have increased their risk tolerance due to the trade accord, better
than expected global economic data and willingness by monetary authorities to maintain accommodative policies longer, we remain
cautious. Market profit expectations declined in 2019 due to these fears. It’s likely that expectations overshot on the
negative side and now some recalibration, which benefits cyclical businesses that are most levered to economic growth, is taking
place. In the short term this could pose a headwind for our focus on more predictable growth. Beyond this, we remain wary of trade
policy and rhetoric. The implications of the first U.S.-China agreement are still uncertain and difficult negotiations remain.
Recent U.K. elections paved the way for Brexit, but how that affects European consumer and business sentiment remains uncertain.
Flaring Middle East tensions and the impact on oil prices create significant uncertainty for consumer confidence and global growth.
Finally, 2020 election results will affect U.S. economic growth over coming years due to major differences between the parties
concerning tax and regulatory policies.
Todd,
what are your thoughts?
Solomon
(Congress – Mid-Cap Growth): In no particular order, our global/international concerns include: political upheaval,
an example being the Hong Kong protests; Russia-Belarus tensions; the potential for conflict in the South China Sea; the U.S.
relationship with North Korea; data security; and cybercurrencies. Focusing on the U.S., we would include the possibility of a
recession; consumer psychology during an election year; impeachment; Federal Reserve Bank interventions and policies; bull market
fatigue; and labor market tightness.
Matt,
kindly wrap it up for us, please.
Weatherbie
(Weatherbie – Small-Cap Growth): The U.S.-China tariff dispute and Brexit do seem to be waning as concerns, but the
Middle East remains volatile. At this point we do not see events there unduly roiling the U.S. stock market. At Weatherbie Capital,
the investment teams are monitoring concerns as diverse as changes in immigration rates, IPO/startup rates, labor force education
levels and climate change indicators. Two specific areas being monitored are U.S. exports and changes in the fed funds rate.
Earlier
we mentioned the strong U.S. dollar, low U.S. interest rates and beneficial low energy costs. The relative weaknesses on these
fronts outside the U.S.—combined with significant ongoing trade issues—are weighing on U.S. exports, threatening to
drag down overall U.S. growth. Add to this the fact that in China, Japan and Europe industrial production is slowing. U.S. export
orders, which were growing one year ago, are now declining.
Annual Report
| December 31, 2019
|
17
|
Liberty All-Star®
Growth Fund
|
Manager
Roundtable
|
(Unaudited)
Another
factor that Alger capital market analysts are watching closely is the fed funds rate—the rate at which banks with balances
held at the Federal Reserve borrow from one another on an overnight basis. Looking back to periods preceding the past three recessions—the
1989–1992, 2001–2003 and 2007–2008 downturns—this rate was much higher. In fact, it was more than double
its present levels, giving the Fed more room to respond by stimulating growth through cuts. When the next recession eventually
comes, will the Federal Reserve have enough “ammunition” to stimulate the economy? As Japan and Europe have made all
too clear, it is difficult to stimulate economies with real interest rates close to zero.
Many
thanks for sharing your thinking. Certainly, a rewarding 2019. Lots of variables await in 2020, so we already look forward to
our next conversation.
Liberty All-Star® Growth Fund
|
Schedule of Investments
|
December 31, 2019
|
|
SHARES
|
|
|
MARKET VALUE
|
|
COMMON STOCKS (97.69%)
|
|
|
|
|
|
|
|
|
COMMUNICATION SERVICES (3.02%)
|
|
|
|
|
|
|
|
|
Entertainment (0.67%)
|
|
|
|
|
|
|
|
|
Take-Two Interactive Software, Inc.(a)
|
|
|
13,000
|
|
|
$
|
1,591,590
|
|
|
|
|
|
|
|
|
|
|
Interactive Media & Services (2.35%)
|
|
|
|
|
|
|
|
|
Alphabet, Inc., Class C(a)
|
|
|
2,292
|
|
|
|
3,064,450
|
|
Facebook, Inc., Class A(a)
|
|
|
11,986
|
|
|
|
2,460,126
|
|
|
|
|
|
|
|
|
5,524,576
|
|
CONSUMER DISCRETIONARY (15.49%)
|
|
|
|
|
|
|
|
|
Distributors (0.99%)
|
|
|
|
|
|
|
|
|
Pool Corp.
|
|
|
11,000
|
|
|
|
2,336,180
|
|
|
|
|
|
|
|
|
|
|
Diversified Consumer Services (1.92%)
|
|
|
|
|
|
|
|
|
Chegg, Inc.(a)
|
|
|
119,360
|
|
|
|
4,524,938
|
|
|
|
|
|
|
|
|
|
|
Hotels, Restaurants & Leisure (2.76%)
|
|
|
|
|
|
|
|
|
Lindblad Expeditions Holdings, Inc.(a)
|
|
|
23,413
|
|
|
|
382,802
|
|
Planet Fitness, Inc., Class A(a)
|
|
|
34,403
|
|
|
|
2,569,216
|
|
Yum! Brands, Inc.
|
|
|
35,145
|
|
|
|
3,540,156
|
|
|
|
|
|
|
|
|
6,492,174
|
|
Internet & Direct Marketing Retail (3.71%)
|
|
|
|
|
|
|
|
|
Amazon.com, Inc.(a)
|
|
|
1,764
|
|
|
|
3,259,590
|
|
Booking Holdings, Inc.(a)
|
|
|
1,156
|
|
|
|
2,374,112
|
|
Etsy, Inc.(a)
|
|
|
30,000
|
|
|
|
1,329,000
|
|
Wayfair, Inc., Class A(a)(b)
|
|
|
19,488
|
|
|
|
1,761,130
|
|
|
|
|
|
|
|
|
8,723,832
|
|
Multiline Retail (0.86%)
|
|
|
|
|
|
|
|
|
Ollie’s Bargain Outlet Holdings, Inc.(a)
|
|
|
30,850
|
|
|
|
2,014,814
|
|
|
|
|
|
|
|
|
|
|
Specialty Retail (3.46%)
|
|
|
|
|
|
|
|
|
Burlington Stores, Inc.(a)
|
|
|
9,500
|
|
|
|
2,166,285
|
|
Five Below, Inc.(a)
|
|
|
15,000
|
|
|
|
1,917,900
|
|
Lowe’s Cos., Inc.
|
|
|
14,035
|
|
|
|
1,680,832
|
|
TJX Cos., Inc.
|
|
|
38,983
|
|
|
|
2,380,302
|
|
|
|
|
|
|
|
|
8,145,319
|
|
Textiles, Apparel & Luxury Goods (1.79%)
|
|
|
|
|
|
|
|
|
Canada Goose Holdings, Inc.(a)(b)
|
|
|
32,574
|
|
|
|
1,180,482
|
|
NIKE, Inc., Class B
|
|
|
29,931
|
|
|
|
3,032,309
|
|
|
|
|
|
|
|
|
4,212,791
|
|
CONSUMER STAPLES (4.13%)
|
|
|
|
|
|
|
|
|
Food Products (2.81%)
|
|
|
|
|
|
|
|
|
Lamb Weston Holdings, Inc.
|
|
|
21,000
|
|
|
|
1,806,630
|
|
McCormick & Co., Inc.
|
|
|
10,500
|
|
|
|
1,782,165
|
|
See Notes to Financial Statements.
Annual Report | December 31, 2019
|
19
|
Liberty All-Star® Growth Fund
|
Schedule of Investments
|
December 31, 2019
|
|
SHARES
|
|
|
MARKET VALUE
|
|
COMMON STOCKS (continued)
|
|
|
|
|
|
|
|
|
Food Products (continued)
|
|
|
|
|
|
|
|
|
Mondelez International, Inc., Class A
|
|
|
54,795
|
|
|
$
|
3,018,109
|
|
|
|
|
|
|
|
|
6,606,904
|
|
Household Products (0.74%)
|
|
|
|
|
|
|
|
|
Church & Dwight Co., Inc.
|
|
|
25,000
|
|
|
|
1,758,500
|
|
|
|
|
|
|
|
|
|
|
Personal Products (0.58%)
|
|
|
|
|
|
|
|
|
Estee Lauder Cos., Inc., Class A
|
|
|
6,627
|
|
|
|
1,368,740
|
|
|
|
|
|
|
|
|
|
|
ENERGY (0.19%)
|
|
|
|
|
|
|
|
|
Energy Equipment & Services (0.19%)
|
|
|
|
|
|
|
|
|
Solaris Oilfield Infrastructure, Inc., Class A
|
|
|
31,552
|
|
|
|
441,728
|
|
|
|
|
|
|
|
|
|
|
FINANCIALS (3.26%)
|
|
|
|
|
|
|
|
|
Banks (1.11%)
|
|
|
|
|
|
|
|
|
First Republic Bank
|
|
|
18,000
|
|
|
|
2,114,100
|
|
Signature Bank
|
|
|
3,631
|
|
|
|
496,031
|
|
|
|
|
|
|
|
|
2,610,131
|
|
Capital Markets (1.66%)
|
|
|
|
|
|
|
|
|
Hamilton Lane, Inc., Class A
|
|
|
33,204
|
|
|
|
1,978,959
|
|
Raymond James Financial, Inc.
|
|
|
21,500
|
|
|
|
1,923,390
|
|
|
|
|
|
|
|
|
3,902,349
|
|
Insurance (0.41%)
|
|
|
|
|
|
|
|
|
eHealth, Inc.(a)
|
|
|
6,864
|
|
|
|
659,493
|
|
Goosehead Insurance, Inc., Class A
|
|
|
7,003
|
|
|
|
296,927
|
|
|
|
|
|
|
|
|
956,420
|
|
Thrifts & Mortgage Finance (0.08%)
|
|
|
|
|
|
|
|
|
Axos Financial, Inc.(a)
|
|
|
6,619
|
|
|
|
200,423
|
|
|
|
|
|
|
|
|
|
|
HEALTH CARE (22.04%)
|
|
|
|
|
|
|
|
|
Biotechnology (2.60%)
|
|
|
|
|
|
|
|
|
ACADIA Pharmaceuticals, Inc.(a)
|
|
|
43,057
|
|
|
|
1,841,978
|
|
Portola Pharmaceuticals, Inc.(a)
|
|
|
48,853
|
|
|
|
1,166,610
|
|
Puma Biotechnology, Inc.(a)
|
|
|
76,285
|
|
|
|
667,494
|
|
Regeneron Pharmaceuticals, Inc.(a)
|
|
|
5,895
|
|
|
|
2,213,455
|
|
Ultragenyx Pharmaceutical, Inc.(a)
|
|
|
5,409
|
|
|
|
231,018
|
|
|
|
|
|
|
|
|
6,120,555
|
|
Health Care Equipment & Supplies (11.47%)
|
|
|
|
|
|
|
|
|
Abbott Laboratories
|
|
|
35,260
|
|
|
|
3,062,684
|
|
Becton Dickinson and Co.
|
|
|
8,669
|
|
|
|
2,357,708
|
|
Cooper Cos., Inc.
|
|
|
6,000
|
|
|
|
1,927,740
|
|
Danaher Corp.
|
|
|
16,130
|
|
|
|
2,475,632
|
|
Glaukos Corp.(a)
|
|
|
47,260
|
|
|
|
2,574,252
|
|
See Notes to Financial Statements.
Liberty All-Star® Growth Fund
|
Schedule of Investments
|
December 31, 2019
|
|
SHARES
|
|
|
MARKET VALUE
|
|
COMMON STOCKS (continued)
|
|
|
|
|
|
|
|
|
Health Care Equipment & Supplies (continued)
|
|
|
|
|
|
|
|
|
Insulet Corp.(a)
|
|
|
21,067
|
|
|
$
|
3,606,670
|
|
Nevro Corp.(a)
|
|
|
39,364
|
|
|
|
4,626,845
|
|
ResMed, Inc.
|
|
|
15,000
|
|
|
|
2,324,550
|
|
STERIS PLC
|
|
|
12,500
|
|
|
|
1,905,250
|
|
Varian Medical Systems, Inc.(a)
|
|
|
15,000
|
|
|
|
2,130,150
|
|
|
|
|
|
|
|
|
26,991,481
|
|
Health Care Providers & Services (3.15%)
|
|
|
|
|
|
|
|
|
PetIQ, Inc.(a)(b)
|
|
|
42,644
|
|
|
|
1,068,232
|
|
Progyny, Inc.(a)(b)
|
|
|
20,189
|
|
|
|
554,188
|
|
UnitedHealth Group, Inc.
|
|
|
11,969
|
|
|
|
3,518,647
|
|
US Physical Therapy, Inc.
|
|
|
19,840
|
|
|
|
2,268,704
|
|
|
|
|
|
|
|
|
7,409,771
|
|
Health Care Technology (0.18%)
|
|
|
|
|
|
|
|
|
Tabula Rasa HealthCare, Inc.(a)(b)
|
|
|
8,720
|
|
|
|
424,490
|
|
|
|
|
|
|
|
|
|
|
Life Sciences Tools & Services (2.45%)
|
|
|
|
|
|
|
|
|
Charles River Laboratories International, Inc.(a)
|
|
|
13,500
|
|
|
|
2,062,260
|
|
Illumina, Inc.(a)
|
|
|
5,199
|
|
|
|
1,724,716
|
|
Mettler-Toledo International, Inc.(a)
|
|
|
2,500
|
|
|
|
1,983,200
|
|
NeoGenomics, Inc.(a)
|
|
|
128
|
|
|
|
3,744
|
|
|
|
|
|
|
|
|
5,773,920
|
|
Pharmaceuticals (2.19%)
|
|
|
|
|
|
|
|
|
Aerie Pharmaceuticals, Inc.(a)(b)
|
|
|
5,532
|
|
|
|
133,708
|
|
Dermira, Inc.(a)
|
|
|
124,477
|
|
|
|
1,887,071
|
|
Jazz Pharmaceuticals PLC(a)
|
|
|
10,500
|
|
|
|
1,567,440
|
|
Novo Nordisk A/S(c)
|
|
|
27,020
|
|
|
|
1,563,918
|
|
|
|
|
|
|
|
|
5,152,137
|
|
INDUSTRIALS (12.08%)
|
|
|
|
|
|
|
|
|
Aerospace & Defense (1.59%)
|
|
|
|
|
|
|
|
|
Kratos Defense & Security Solutions, Inc.(a)
|
|
|
92,652
|
|
|
|
1,668,662
|
|
Teledyne Technologies, Inc.(a)
|
|
|
6,000
|
|
|
|
2,079,240
|
|
|
|
|
|
|
|
|
3,747,902
|
|
Air Freight & Logistics (0.21%)
|
|
|
|
|
|
|
|
|
XPO Logistics, Inc.(a)
|
|
|
6,152
|
|
|
|
490,314
|
|
|
|
|
|
|
|
|
|
|
Building Products (0.88%)
|
|
|
|
|
|
|
|
|
Lennox International, Inc.
|
|
|
8,500
|
|
|
|
2,073,745
|
|
|
|
|
|
|
|
|
|
|
Commercial Services & Supplies (3.52%)
|
|
|
|
|
|
|
|
|
Casella Waste Systems, Inc., Class A(a)
|
|
|
79,601
|
|
|
|
3,664,034
|
|
Cintas Corp.
|
|
|
8,000
|
|
|
|
2,152,640
|
|
See Notes to Financial Statements.
Annual Report | December 31, 2019
|
21
|
Liberty All-Star® Growth Fund
|
Schedule of Investments
|
December 31, 2019
|
|
SHARES
|
|
|
MARKET VALUE
|
|
COMMON STOCKS (continued)
|
|
|
|
|
|
|
|
|
Commercial Services & Supplies (continued)
|
|
|
|
|
|
|
|
|
Copart, Inc.(a)
|
|
|
27,000
|
|
|
$
|
2,455,380
|
|
|
|
|
|
|
|
|
8,272,054
|
|
Electrical Equipment (0.98%)
|
|
|
|
|
|
|
|
|
Generac Holdings, Inc.(a)
|
|
|
23,000
|
|
|
|
2,313,570
|
|
|
|
|
|
|
|
|
|
|
Machinery (2.77%)
|
|
|
|
|
|
|
|
|
IDEX Corp.
|
|
|
12,000
|
|
|
|
2,064,000
|
|
Middleby Corp.(a)
|
|
|
6,317
|
|
|
|
691,838
|
|
RBC Bearings, Inc.(a)
|
|
|
11,500
|
|
|
|
1,820,910
|
|
Xylem, Inc.
|
|
|
24,500
|
|
|
|
1,930,355
|
|
|
|
|
|
|
|
|
6,507,103
|
|
Professional Services (0.75%)
|
|
|
|
|
|
|
|
|
IHS Markit, Ltd.(a)
|
|
|
23,554
|
|
|
|
1,774,794
|
|
|
|
|
|
|
|
|
|
|
Trading Companies & Distributors (1.38%)
|
|
|
|
|
|
|
|
|
HD Supply Holdings, Inc.(a)
|
|
|
35,000
|
|
|
|
1,407,700
|
|
SiteOne Landscape Supply, Inc.(a)
|
|
|
20,255
|
|
|
|
1,836,116
|
|
|
|
|
|
|
|
|
3,243,816
|
|
INFORMATION TECHNOLOGY (30.72%)
|
|
|
|
|
|
|
|
|
Electronic Equipment, Instruments & Components (2.12%)
|
|
|
|
|
|
|
|
|
Keysight Technologies, Inc.(a)
|
|
|
20,000
|
|
|
|
2,052,600
|
|
nLight, Inc.(a)
|
|
|
13,275
|
|
|
|
269,217
|
|
Novanta, Inc.(a)
|
|
|
7,133
|
|
|
|
630,843
|
|
Zebra Technologies Corp., Class A(a)
|
|
|
8,000
|
|
|
|
2,043,520
|
|
|
|
|
|
|
|
|
4,996,180
|
|
IT Services (8.68%)
|
|
|
|
|
|
|
|
|
Automatic Data Processing, Inc.
|
|
|
11,295
|
|
|
|
1,925,797
|
|
Booz Allen Hamilton Holding Corp.
|
|
|
20,000
|
|
|
|
1,422,600
|
|
EPAM Systems, Inc.(a)
|
|
|
14,623
|
|
|
|
3,102,416
|
|
FleetCor Technologies, Inc.(a)
|
|
|
7,757
|
|
|
|
2,231,844
|
|
Genpact, Ltd.
|
|
|
45,000
|
|
|
|
1,897,650
|
|
Jack Henry & Associates, Inc.
|
|
|
11,000
|
|
|
|
1,602,370
|
|
PayPal Holdings, Inc.(a)
|
|
|
29,319
|
|
|
|
3,171,436
|
|
Visa, Inc., Class A
|
|
|
16,334
|
|
|
|
3,069,159
|
|
WEX, Inc.(a)
|
|
|
9,500
|
|
|
|
1,989,870
|
|
|
|
|
|
|
|
|
20,413,142
|
|
Semiconductors & Semiconductor Equipment (2.90%)
|
|
|
|
|
|
|
|
|
Diodes, Inc.(a)
|
|
|
44,901
|
|
|
|
2,531,069
|
|
Impinj, Inc.(a)
|
|
|
4,885
|
|
|
|
126,326
|
|
Monolithic Power Systems, Inc.
|
|
|
11,500
|
|
|
|
2,047,230
|
|
Skyworks Solutions, Inc.
|
|
|
17,500
|
|
|
|
2,115,400
|
|
|
|
|
|
|
|
|
6,820,025
|
|
See Notes to Financial Statements.
Liberty All-Star® Growth Fund
|
Schedule of Investments
|
December 31, 2019
|
|
SHARES
|
|
|
MARKET VALUE
|
|
COMMON STOCKS (continued)
|
|
|
|
|
|
|
|
|
Software (17.02%)
|
|
|
|
|
|
|
|
|
Altair Engineering, Inc., Class A(a)(b)
|
|
|
25,932
|
|
|
$
|
931,218
|
|
Autodesk, Inc.(a)
|
|
|
17,101
|
|
|
|
3,137,349
|
|
Avalara, Inc.(a)
|
|
|
21,715
|
|
|
|
1,590,624
|
|
Bill.Com Holdings, Inc.(a)
|
|
|
1,480
|
|
|
|
56,314
|
|
Ebix, Inc.
|
|
|
32,153
|
|
|
|
1,074,232
|
|
Everbridge, Inc.(a)
|
|
|
22,449
|
|
|
|
1,752,818
|
|
Globant SA(a)
|
|
|
14,346
|
|
|
|
1,521,393
|
|
HubSpot, Inc.(a)
|
|
|
8,442
|
|
|
|
1,338,057
|
|
Intuit, Inc.
|
|
|
10,148
|
|
|
|
2,658,066
|
|
LivePerson, Inc.(a)
|
|
|
754
|
|
|
|
27,898
|
|
Microsoft Corp.
|
|
|
22,370
|
|
|
|
3,527,749
|
|
Paycom Software, Inc.(a)
|
|
|
8,000
|
|
|
|
2,118,080
|
|
Paylocity Holding Corp.(a)
|
|
|
39,061
|
|
|
|
4,719,350
|
|
Qualys, Inc.(a)
|
|
|
22,000
|
|
|
|
1,834,140
|
|
Rapid7, Inc.(a)
|
|
|
34,168
|
|
|
|
1,914,091
|
|
salesforce.com, Inc.(a)
|
|
|
22,090
|
|
|
|
3,592,718
|
|
SPS Commerce, Inc.(a)
|
|
|
25,094
|
|
|
|
1,390,709
|
|
Synopsys, Inc.(a)
|
|
|
15,000
|
|
|
|
2,088,000
|
|
Telaria, Inc.(a)
|
|
|
14,133
|
|
|
|
124,512
|
|
Trade Desk, Inc., Class A(a)
|
|
|
9,767
|
|
|
|
2,537,271
|
|
Workday, Inc., Class A(a)
|
|
|
11,777
|
|
|
|
1,936,728
|
|
Zuora, Inc., Class A(a)
|
|
|
13,151
|
|
|
|
188,454
|
|
|
|
|
|
|
|
|
40,059,771
|
|
MATERIALS (2.73%)
|
|
|
|
|
|
|
|
|
Chemicals (1.76%)
|
|
|
|
|
|
|
|
|
Ecolab, Inc.
|
|
|
12,546
|
|
|
|
2,421,252
|
|
Linde PLC
|
|
|
8,074
|
|
|
|
1,718,955
|
|
|
|
|
|
|
|
|
4,140,207
|
|
Containers & Packaging (0.97%)
|
|
|
|
|
|
|
|
|
Avery Dennison Corp.
|
|
|
17,500
|
|
|
|
2,289,350
|
|
|
|
|
|
|
|
|
|
|
REAL ESTATE (4.03%)
|
|
|
|
|
|
|
|
|
Equity Real Estate Investment Trusts (REITs) (2.08%)
|
|
|
|
|
|
|
|
|
Equinix, Inc.
|
|
|
4,908
|
|
|
|
2,864,800
|
|
Sun Communities, Inc.
|
|
|
13,500
|
|
|
|
2,026,350
|
|
|
|
|
|
|
|
|
4,891,150
|
|
Real Estate Management & Development (1.95%)
|
|
|
|
|
|
|
|
|
FirstService Corp.
|
|
|
49,280
|
|
|
|
4,585,011
|
|
|
|
|
|
|
|
|
|
|
TOTAL COMMON STOCKS
|
|
|
|
|
|
|
|
|
(COST OF $149,749,222)
|
|
|
|
|
|
|
229,901,897
|
|
See Notes to Financial Statements.
Annual Report | December 31, 2019
|
23
|
Liberty All-Star® Growth Fund
|
Schedule of Investments
|
December 31, 2019
|
|
SHARES
|
|
|
MARKET VALUE
|
|
SHORT TERM INVESTMENTS (4.17%)
|
|
|
|
|
|
|
|
|
MONEY MARKET FUND (2.33%)
|
|
|
|
|
|
|
|
|
State Street Institutional US Government Money Market Fund, 1.531%(d)
|
|
|
|
|
|
|
|
|
(COST OF $5,481,060)
|
|
|
5,481,060
|
|
|
$
|
5,481,060
|
|
|
|
|
|
|
|
|
|
|
INVESTMENTS PURCHASED WITH COLLATERAL FROM
|
|
|
|
|
|
|
|
|
SECURITIES LOANED (1.84%)
|
|
|
|
|
|
|
|
|
State Street Navigator Securities Lending Government Money Market Portfolio, 1.58%
|
|
|
|
|
|
|
|
|
(COST OF $4,327,352)
|
|
|
4,327,352
|
|
|
|
4,327,352
|
|
|
|
|
|
|
|
|
|
|
TOTAL SHORT TERM INVESTMENTS
|
|
|
|
|
|
|
|
|
(COST OF $9,808,412)
|
|
|
|
|
|
|
9,808,412
|
|
|
|
|
|
|
|
|
|
|
TOTAL INVESTMENTS (101.86%)
|
|
|
|
|
|
|
|
|
(COST OF $159,557,634)
|
|
|
|
|
|
|
239,710,309
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES IN EXCESS OF OTHER ASSETS (-1.86%)
|
|
|
|
|
|
|
(4,384,869
|
)
|
|
|
|
|
|
|
|
|
|
NET ASSETS (100.00%)
|
|
|
|
|
|
$
|
235,325,440
|
|
|
|
|
|
|
|
|
|
|
NET ASSET VALUE PER SHARE
|
|
|
|
|
|
|
|
|
(38,017,859 SHARES OUTSTANDING)
|
|
|
|
|
|
$
|
6.19
|
|
|
(a)
|
Non-income producing security.
|
|
(b)
|
Security, or a portion of the security position, is currently
on loan. The total market value of securities on loan is $4,276,211.
|
|
(c)
|
American Depositary Receipt.
|
|
(d)
|
Rate reflects seven-day effective yield on December 31,
2019.
|
See Notes to Financial Statements.
Liberty All-Star® Growth Fund
|
Statement of Assets and Liabilities
|
December 31, 2019
ASSETS:
|
|
|
|
Investments at market value (Cost $159,557,634)(a)
|
|
$
|
239,710,309
|
|
Receivable for investment securities sold
|
|
|
4,298,414
|
|
Dividends and interest receivable
|
|
|
100,794
|
|
Tax reclaim receivable
|
|
|
19,356
|
|
Receivable for dividends reinvested
|
|
|
1,393,948
|
|
Prepaid and other assets
|
|
|
9,290
|
|
TOTAL ASSETS
|
|
|
245,532,111
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
Payable for investments purchased
|
|
|
990,458
|
|
Distributions payable to shareholders
|
|
|
4,534,766
|
|
Investment advisory fee payable
|
|
|
157,454
|
|
Payable for administration, pricing and bookkeeping fees
|
|
|
94,750
|
|
Payable for collateral upon return of securities loaned
|
|
|
4,327,352
|
|
Accrued Directors’ fees payable
|
|
|
3,096
|
|
Accrued expenses
|
|
|
98,795
|
|
TOTAL LIABILITIES
|
|
|
10,206,671
|
|
NET ASSETS
|
|
$
|
235,325,440
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS REPRESENTED BY:
|
|
|
|
|
Paid-in capital
|
|
$
|
153,385,925
|
|
Total distributable earnings
|
|
$
|
81,939,515
|
|
NET ASSETS
|
|
$
|
235,325,440
|
|
|
|
|
|
|
Shares of common stock outstanding (authorized 60,000,000 shares at $0.10 Par)
|
|
|
38,017,859
|
|
NET ASSET VALUE PER SHARE
|
|
$
|
6.19
|
|
(a)
|
Includes securities on loan of $4,276,211.
|
See Notes to Financial Statements.
|
|
Annual Report | December 31, 2019
|
25
|
Liberty All-Star® Growth Fund
|
Statement of Operations
|
For the Year Ended December 31, 2019
INVESTMENT INCOME:
|
|
|
|
Dividends (Net of foreign taxes withheld at source which amounted to $13,040)
|
|
$
|
1,388,791
|
|
Securities lending income
|
|
|
24,698
|
|
TOTAL INVESTMENT INCOME
|
|
|
1,413,489
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
Investment advisory fee
|
|
|
1,753,896
|
|
Administration fee
|
|
|
437,851
|
|
Pricing and bookkeeping fees
|
|
|
89,087
|
|
Audit fee
|
|
|
30,263
|
|
Custodian fee
|
|
|
44,472
|
|
Directors’ fees and expenses
|
|
|
88,448
|
|
Insurance expense
|
|
|
8,116
|
|
Legal fees
|
|
|
59,867
|
|
NYSE fee
|
|
|
35,855
|
|
Shareholder communication expenses
|
|
|
29,270
|
|
Transfer agent fees
|
|
|
70,398
|
|
Miscellaneous expenses
|
|
|
26,947
|
|
TOTAL EXPENSES
|
|
|
2,674,470
|
|
NET INVESTMENT LOSS
|
|
|
(1,260,981
|
)
|
|
|
|
|
|
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
|
|
|
|
|
Net realized gain on investments
|
|
|
15,310,254
|
|
Net change in unrealized appreciation on investments
|
|
|
49,957,427
|
|
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
|
|
|
65,267,681
|
|
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
|
$
|
64,006,700
|
|
See Notes to Financial Statements.
|
|
Liberty All-Star® Growth Fund
|
Statements of Changes in Net Assets
|
|
|
For the
Year Ended
December 31, 2019
|
|
|
For the
Year Ended
December 31, 2018
|
|
FROM OPERATIONS:
|
|
|
|
|
|
|
|
|
Net investment loss
|
|
$
|
(1,260,981
|
)
|
|
$
|
(784,904
|
)
|
Net realized gain on investments
|
|
|
15,310,254
|
|
|
|
13,382,402
|
|
Net change in unrealized appreciation/(depreciation) on investments
|
|
|
49,957,427
|
|
|
|
(17,781,923
|
)
|
Net Increase/(Decrease) in Net Assets From Operations
|
|
|
64,006,700
|
|
|
|
(5,184,425
|
)
|
|
|
|
|
|
|
|
|
|
DISTRIBUTIONS TO SHAREHOLDERS:
|
|
|
|
|
|
|
|
|
From distributable earnings
|
|
|
(17,226,881
|
)
|
|
|
(13,595,941
|
)
|
Total Distributions
|
|
|
(17,226,881
|
)
|
|
|
(13,595,941
|
)
|
|
|
|
|
|
|
|
|
|
CAPITAL SHARE TRANSACTIONS:
|
|
|
|
|
|
|
|
|
Proceeds from rights offering, net of offering cost
|
|
|
—
|
|
|
|
44,010,788
|
|
Dividend reinvestments
|
|
|
5,195,479
|
|
|
|
4,402,476
|
|
Net increase resulting from Capital Share Transactions
|
|
|
5,195,479
|
|
|
|
48,413,264
|
|
|
|
|
|
|
|
|
|
|
Total Increase in Net Assets
|
|
|
51,975,298
|
|
|
|
29,632,898
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS:
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
183,350,142
|
|
|
|
153,717,244
|
|
End of period
|
|
$
|
235,325,440
|
|
|
$
|
183,350,142
|
|
See Notes to Financial Statements.
|
|
Annual Report | December 31, 2019
|
27
|
Liberty All-Star® Growth Fund
Financial Highlights
PER SHARE OPERATING PERFORMANCE:
|
Net asset value at beginning of period
|
INCOME FROM INVESTMENT OPERATIONS:
|
Net investment loss(a)
|
Net realized and unrealized gain/(loss) on investments
|
Total from Investment Operations
|
|
LESS DISTRIBUTIONS TO SHAREHOLDERS:
|
Net realized gain on investments
|
Total Distributions
|
Change due to rights offering(b)
|
Net asset value at end of period
|
Market price at end of period
|
|
TOTAL INVESTMENT RETURN FOR SHAREHOLDERS:(c)
|
Based on net asset value
|
Based on market price
|
|
RATIOS AND SUPPLEMENTAL DATA:
|
Net assets at end of period (millions)
|
Ratio of expenses to average net assets
|
Ratio of net investment loss to average net assets
|
Portfolio turnover rate
|
|
(a)
|
Calculated using average shares outstanding during the
period.
|
|
(b)
|
Effect of Fund’s rights offering for shares at a price
below net asset value, net of costs.
|
|
(c)
|
Calculated assuming all distributions are reinvested at actual reinvestment prices and all primary
rights in the Fund’s rights offering were exercised. The net asset value and market price returns will differ depending upon the
level of any discount from or premium to net asset value at which the Fund’s shares traded during the period. Past performance
is not a guarantee of future results.
|
See Notes to Financial Statements.
|
|
Financial Highlights
For the Year
Ended December 31,
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4.94
|
|
|
$
|
5.67
|
|
|
$
|
4.80
|
|
|
$
|
4.99
|
|
|
$
|
5.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.03
|
)
|
|
|
(0.03
|
)
|
|
|
(0.02
|
)
|
|
|
(0.02
|
)
|
|
|
(0.03
|
)
|
|
1.74
|
|
|
|
(0.01
|
)
|
|
|
1.31
|
|
|
|
0.19
|
|
|
|
0.10
|
|
|
1.71
|
|
|
|
(0.04
|
)
|
|
|
1.29
|
|
|
|
0.17
|
|
|
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.46
|
)
|
|
|
(0.46
|
)
|
|
|
(0.42
|
)
|
|
|
(0.36
|
)
|
|
|
(0.77
|
)
|
|
(0.46
|
)
|
|
|
(0.46
|
)
|
|
|
(0.42
|
)
|
|
|
(0.36
|
)
|
|
|
(0.77
|
)
|
|
—
|
|
|
|
(0.23
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
$
|
6.19
|
|
|
$
|
4.94
|
|
|
$
|
5.67
|
|
|
$
|
4.80
|
|
|
$
|
4.99
|
|
$
|
6.50
|
|
|
$
|
4.39
|
|
|
$
|
5.54
|
|
|
$
|
4.18
|
|
|
$
|
4.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35.8
|
%
|
|
|
(1.0
|
%)
|
|
|
28.6
|
%
|
|
|
4.8
|
%
|
|
|
3.9
|
%
|
|
60.5
|
%
|
|
|
(9.9
|
%)
|
|
|
44.3
|
%
|
|
|
(0.6
|
%)
|
|
|
5.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
235
|
|
|
$
|
183
|
|
|
$
|
154
|
|
|
$
|
126
|
|
|
$
|
124
|
|
|
1.22
|
%
|
|
|
1.25
|
%
|
|
|
1.26
|
%
|
|
|
1.35
|
%
|
|
|
1.30
|
%
|
|
(0.57
|
%)
|
|
|
(0.47
|
%)
|
|
|
(0.46
|
%)
|
|
|
(0.34
|
%)
|
|
|
(0.45
|
%)
|
|
34
|
%
|
|
|
49
|
%
|
|
|
40
|
%
|
|
|
100
|
%
|
|
|
58
|
%
|
Annual Report | December 31, 2019
|
29
|
Liberty
All-Star® Growth Fund
|
Notes
to Financial Statements
|
NOTE
1. ORGANIZATION
Liberty
All-Star® Growth Fund, Inc. (the “Fund”) is a Maryland corporation registered under the Investment
Company Act of 1940 (the “1940 Act”), as amended, as a diversified, closed-end management investment company.
Investment
Goal
The
Fund seeks long-term capital appreciation.
Fund
Shares
The
Fund may issue 60,000,000 shares of common stock at $0.10 par.
NOTE
2. SIGNIFICANT ACCOUNTING POLICIES
The
following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial
statements. The Fund is considered an investment company under U.S. generally accepted accounting principles (“GAAP”)
and follows the accounting and reporting guidance applicable to investment companies in the Financial Accounting Standards Board
Accounting Standards Codification Topic 946.
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates.
Security
Valuation
Equity
securities are valued at the last sale price at the close of the principal exchange on which they trade, except for securities
listed on the NASDAQ Stock Market LLC (“NASDAQ”), 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.
Cash
collateral from securities lending activity is reinvested in the State Street Navigator Securities Lending Government Money Market
Portfolio (“State Street Navigator”), a registered investment company under the 1940 Act, which operates as a money
market fund in compliance with Rule 2a-7 under the 1940 Act. Shares of registered investment companies are valued daily at that
investment company’s net asset value per share.
The
Fund’s investments are valued at market value or, in the absence of market value with respect to any portfolio securities,
at fair value according to procedures adopted by the Fund’s Board of Directors (the “Board”). When market quotations
are not readily available, or in management’s judgment they do not accurately reflect fair value of a security, or an event
occurs after the market close but before the Fund is priced that materially affects the value of a security, the securities will
be valued by the Fund’s Fair Valuation Committee, using fair valuation procedures established by the Board. Examples of
potentially significant events that could materially impact the value of a security include, but are not limited to: single issuer
events such as corporate actions, reorganizations, mergers, spin-offs, liquidations, acquisitions and buyouts; corporate announcements
on earnings or product offerings; regulatory news; and litigation and multiple issuer events such as governmental actions; natural
disasters or armed conflicts that affect a country or a region; or significant market fluctuations. Potential significant events
are monitored by the Advisor, ALPS Advisors, Inc. (the “Advisor” and “AAI”), Sub-Advisers and/or the Valuation
Committee through independent reviews of market indicators, general news sources and communications from the Fund’s custodian.
As of December 31, 2019, the Fund held no securities that were fair valued.
Liberty
All-Star® Growth Fund
|
Notes
to Financial Statements
|
Security
Transactions
Security
transactions are recorded on trade date. Cost is determined and gains/(losses) are based upon the specific identification method
for both financial statement and federal income tax purposes.
Income
Recognition
Interest
income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date.
The
Fund estimates components of distributions from real estate investment trusts (“REITs”). Distributions received in
excess of income are recorded as a reduction of the cost of the related investments. Once the REIT reports annually the tax character
of its distributions, the Fund revises its estimates. If the Fund no longer owns the applicable securities, any distributions
received in excess of income are recorded as realized gains.
Lending
of Portfolio Securities
The
Fund may lend its portfolio securities only to borrowers that are approved by the Fund’s securities lending agent, State
Street Bank & Trust Co. (“SSB”). The Fund will limit such lending to not more than 20% of the value of its total
assets. The borrower pledges and maintains with the Fund collateral consisting of cash (U.S. Dollar only), securities issued or
guaranteed by the U.S. government or its agencies or instrumentalities, or by irrevocable bank letters of credit issued by a person
other than the borrower or an affiliate of the borrower. The initial collateral received by the Fund is required to have a value
of no less than 102% of the market value of the loaned securities for securities traded on U.S. exchanges and a value of no less
than 105% of the market value for all other securities. The collateral is maintained thereafter, at a market value equal to no
less than 100% of the current value of the securities on loan. The market value of the loaned securities is determined at the
close of each business day and any additional required collateral is delivered to the Fund on the next business day. During the
term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities. Loans of securities
are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time
period for settlement of securities transactions.
Any
cash collateral received is reinvested in State Street Navigator. Non-cash collateral, in the form of securities issued or guaranteed
by the U.S. government or its agencies or instrumentalities, is not disclosed in the Fund’s Statements of Assets and Liabilities
as it is held by the lending agent on behalf of the Fund and the Fund does not have the ability to re-hypothecate these securities.
Income earned by the Fund from securities lending activity is disclosed in the Statement of Operations.
Annual Report
| December 31, 2019
|
31
|
Liberty
All-Star® Growth Fund
|
Notes
to Financial Statements
|
The
following is a summary of the Fund’s securities lending positions and related cash and non-cash collateral received as
of December 31, 2019:
Market Value of
Securities on Loan
|
|
Cash
Collateral Received
|
|
Non-Cash
Collateral Received
|
|
Total
Collateral Received
|
$
|
4,276,211
|
|
|
$
|
4,327,352
|
|
|
$
|
13,920
|
|
|
$
|
4,341,272
|
|
The
risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not
return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by SSB.
SSB’s indemnity allows for full replacement of securities lent wherein SSB will purchase the unreturned loaned securities
on the open market by applying the proceeds of the collateral or to the extent such proceeds are insufficient or the collateral
is unavailable, SSB will purchase the unreturned loan securities at SSB’s expense. However, the Fund could suffer a loss
if the value of the investments purchased with cash collateral falls below the value of the cash collateral received.
The
following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of
collateral pledged or securities loaned, and the remaining contractual maturity of those transactions as of December 31, 2019:
|
|
Remaining contractual maturity of the agreements
|
|
|
|
Securities Lending Transactions
|
|
Overnight &
Continuous
|
|
Up to 30
days
|
30-90
days
|
|
Greater than
90 days
|
|
Total
|
Common Stocks
|
|
$
|
4,327,352
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,327,352
|
|
Total Borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,327,352
|
|
Gross amount of recognized liabilities for securities lending (collateral received)
|
|
|
|
|
|
$
|
4,327,352
|
|
Fair
Value Measurements
The
Fund discloses the classification of its fair value measurements following a 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.
Valuation
techniques used to value the Fund’s investments by major category are as follows:
Equity
securities that are valued based on unadjusted quoted prices in active markets are categorized as Level 1 in the hierarchy. In
the event there were no sales during the day or closing prices are not available, securities are valued at the mean of the most
recent quoted bid and ask prices on such day and are generally categorized as Level 2 in the hierarchy. Investments in open-end
mutual funds are valued at their closing NAV each business day and are categorized as Level 1 in the hierarchy.
Liberty All-Star®
Growth Fund
|
Notes
to Financial Statements
|
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 which 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 investments, 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 December 31, 2019:
|
|
Valuation Inputs
|
|
|
Investments in Securities at Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Common Stocks*
|
|
$
|
229,901,897
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
229,901,897
|
|
Short Term Investments
|
|
|
9,808,412
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,808,412
|
|
Total
|
|
$
|
239,710,309
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
239,710,309
|
|
|
*
|
See
Schedule of Investments for industry classifications.
|
The
Fund did not have any securities that used significant unobservable inputs (Level 3) in determining fair value during the period.
Distributions
to Shareholders
The
Fund currently has a policy of paying distributions on its common shares totaling approximately 8% of its net asset value per
year. The distributions are payable in four quarterly distributions of 2% 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. Distributions to shareholders are recorded
on ex-date.
Annual Report | December
31, 2019
|
33
|
Liberty All-Star®
Growth Fund
|
Notes
to Financial Statements
|
NOTE
3. FEDERAL TAX INFORMATION
The
timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which
may differ from GAAP. Reclassifications are made to the Fund’s capital accounts for permanent tax differences to reflect
income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. 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.
Classification
of Distributions to Shareholders
Net
investment income/(loss) and net realized gain/(loss) may differ for financial statement and tax purposes. The character of distributions
made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal
income tax purposes. Due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ
from the fiscal year in which the income or realized gain was recorded by the Fund. The amounts and characteristics of tax basis
distributions and composition of distributable earnings/(accumulated losses) are determined at the time in which distributions
are paid, which may occur after the fiscal year end. Accordingly, tax basis balances have not been determined as of December 31,
2019.
The
tax character of distributions paid during the years ended December 31, 2019 and December 31, 2018 were as follows:
Distributions Paid From:
|
|
December 31, 2019
|
|
December 31, 2018
|
Ordinary Income
|
|
$
|
1,835,951
|
|
|
$
|
999,321
|
|
Long-term capital gains
|
|
|
15,390,930
|
|
|
|
12,596,620
|
|
Total
|
|
$
|
17,226,881
|
|
|
$
|
13,595,941
|
|
As
of December 31, 2019, the components of distributable earnings on a tax basis were as follows:
Undistributed
Ordinary Income
|
|
Accumulated
Capital Gains
|
|
Net Unrealized
Appreciation
|
|
Other Cumulative
Effect of Timing
Differences
|
|
Total
|
$
|
—
|
|
|
$
|
3,696,780
|
|
|
$
|
78,233,360
|
|
|
$
|
9,375
|
|
|
$
|
81,939,515
|
|
Liberty All-Star®
Growth Fund
|
Notes
to Financial Statements
|
As
of December 31, 2019, the cost of investments for federal income tax purposes and accumulated net unrealized appreciation/(depreciation)
on investments was as follows:
Cost of Investments
|
|
|
Gross unrealized
Appreciation (excess of
value over tax cost)
|
|
|
Gross unrealized
Depreciation (excess of
tax cost over value)
|
|
|
Net Unrealized
Appreciation
|
|
$
|
161,476,949
|
|
|
$
|
82,633,747
|
|
|
$
|
(4,400,387
|
)
|
|
$
|
78,233,360
|
|
The
differences between book-basis and tax-basis are primarily due to deferral of losses from wash sales and the differing treatment
of certain other investments.
Federal
Income Tax Status
For
federal income tax purposes, the Fund currently qualifies, and intends to remain qualified, as a regulated investment company
under the provisions of Subchapter M of the Internal Revenue Code of 1986, as amended, by distributing substantially all of its
investment company taxable net income including realized gain, not offset by capital loss carryforwards, if any, to its shareholders.
Accordingly, no provision for federal income or excise taxes has been made.
As
of and during the year ended December 31, 2019, the Fund did not have a liability for any unrecognized tax benefits. The Fund
files U.S. federal, state, and local tax returns as required. The Fund’s tax returns are subject to examination by the relevant
tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of
the tax return. Tax returns for open years have incorporated no uncertain tax positions that require a provision for income taxes.
NOTE
4. FEES AND COMPENSATION PAID TO AFFILIATES
Investment
Advisory Fee
AAI
serves as the investment advisor to the Fund. AAI receives a monthly investment advisory fee based on the Fund’s average
daily net assets at the following annual rates:
Average Daily
Net Assets
|
Annual Fee Rate
|
First $300 million
|
0.80%
|
Over $300 million
|
0.72%
|
Investment
Advisory Fees for the year ended December 31, 2019 are reported on the Statement of Operations.
AAI
retains multiple Portfolio Managers to manage the Fund’s investments in various asset classes. AAI pays each Portfolio Manager
a portfolio management fee based on the assets of the investment portfolio that they manage. The portfolio management fee is paid
from the investment advisory fees collected by AAI and is based on the Fund’s average daily net assets at the following
annual rates:
Average
Daily Net Assets
|
Annual
Fee Rate
|
First $300 million
|
0.40%
|
Over $300 million
|
0.36%
|
Annual Report | December
31, 2019
|
35
|
Liberty All-Star®
Growth Fund
|
Notes
to Financial Statements
|
Administration,
Bookkeeping and Pricing Services
ALPS
Fund Services, Inc. (“ALPS”) serves as the administrator to the Fund and the Fund has agreed to pay expenses incurred
in connection with this service. Pursuant to an Administrative, Bookkeeping and Pricing Services Agreement, ALPS provides operational
services to the Fund including, but not limited to, fund accounting and fund administration and generally assists in the Fund’s
operations. Officers of the Trust are employees of ALPS. The Fund’s administration fee is accrued on a daily basis and paid
monthly. Administration, Pricing and Bookkeeping fees paid by the Fund for the year ended December 31, 2019 are disclosed in the
Statement of Operations.
The
Fund also reimburses ALPS for out-of-pocket expenses and charges, including fees payable to third parties for pricing the Fund’s
portfolio securities and direct internal costs incurred by ALPS in connection with providing fund accounting oversight and monitoring
and certain other services.
Fees
Paid to Officers
All
officers of the Fund, including the Fund’s Chief Compliance Officer, are employees of AAI or its affiliates, and receive
no compensation from the Fund. The Board of Directors has appointed a Chief Compliance Officer to the Fund in accordance with
federal securities regulations.
NOTE
5. PORTFOLIO INFORMATION
Purchases
and Sales of Securities
For
the year ended December 31, 2019, the cost of purchases and proceeds from sales of securities, excluding short-term obligations,
were $72,605,734 and $87,025,226, respectively.
NOTE
6. CAPITAL TRANSACTIONS
In
a rights offering, which expired on October 31, 2018, shareholders exercised rights to purchase 9,205,421 shares at $4.81 per
share for proceeds, net of expenses, of $44,010,788. During the year ended December 31, 2019 and year ended December 31, 2018,
distributions in the amounts of $5,195,479 and $4,402,476, respectively, were paid in newly issued shares valued at market value
or net asset value, but not less than 95% of market value. Such distributions resulted in the issuance of 914,730 and 798,763
shares, respectively.
NOTE
7. 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.
Liberty All-Star®
Growth Fund
|
Notes
to Financial Statements
|
NOTE
8. OTHER MATTERS
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 of two-thirds of the votes entitled to be cast on the matter (excluding shares owned by the acquirer 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 acquirer or in respect of which the acquirer is able to exercise or direct the exercise
of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer 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.
NOTE
9. SUBSEQUENT EVENT
On
December 6, 2019, the Board of Directors of the Fund authorized and set the terms of an offering to the Fund’s shareholders
of rights to purchase additional shares of the Fund. Record date shareholders at the close of business on February 7, 2020 were
issued non-transferable rights entitling them to subscribe for one additional share for every five shares held (the “Primary
Subscription”), with the right to subscribe for additional shares not subscribed for by others in the Primary Subscription.
The rights offering commenced on February 12, 2020 and will expire on March 13, 2020.
Annual Report | December
31, 2019
|
37
|
Liberty All-Star®
Growth Fund
|
Report
of Independent Registered
Public Accounting Firm
|
To
the shareholders and the Board of Trustees of Liberty All-Star® Growth Fund, Inc.
Opinion
on the Financial Statements and Financial Highlights
We
have audited the accompanying statement of assets and liabilities of Liberty All-Star® Growth Fund, Inc. (the “Fund”),
including the schedule of investments, as of December 31, 2019, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the
five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights
present fairly, in all material respects, the financial position of the Fund as of December 31, 2019, and the results of its operations
for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United
States of America.
Basis
for Opinion
These
financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to
express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent
with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement,
whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial
reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial
reporting. Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as
of December 31, 2019, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed
other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE
& TOUCHE LLP
Denver,
Colorado
February 20, 2020
We
have served as the auditor of one or more investment companies advised by ALPS Advisors, Inc. since 2007.
Liberty
All-Star® Growth Fund
|
Automatic
Dividend Reinvestment and
Direct Purchase Plan
|
Under
the Fund’s Automatic Dividend Reinvestment and Direct Purchase Plan (the “Plan”), shareholders automatically
participate and have all their Fund dividends and distributions reinvested by Computershare Trust Company, N.A., as agent for
participants in the Plan (the “Plan Agent”), in additional shares of the Fund. For further information, call Investor
Assistance at 1-800-LIB-FUND (1-800-542-3863) weekdays between 9 a.m. and 5 p.m. Eastern Time.
Shareholders
whose shares are held in the name of a brokerage firm, bank or other nominee can participate in the Plan only if their brokerage
firm, bank or nominee is able to do so on their behalf. Shareholders participating in the Plan through a brokerage firm may not
be able to transfer their shares to another brokerage firm and continue to participate in the Plan.
Under
the Plan, all dividends and distributions will be reinvested in additional shares of the Fund. Distributions declared payable
in cash will be reinvested for the accounts of participants in the Plan in additional shares purchased by the Plan Agent on the
open market at prevailing market prices. If, prior to the Plan Agent’s completion of such open market purchases, the market
price of a share plus estimated brokerage commissions exceeds the net asset value, the remainder of the distribution will be paid
in newly issued shares valued at net asset value (but not at a discount of more than 5% from market price). Distributions declared
payable in shares (or cash at the option of shareholders) are paid to participants in the Plan entirely in newly issued full and
fractional shares valued at the lower of market value or net asset value per share on the valuation date for the distribution
(but not at a discount of more than 5 percent from market price). Dividends and distributions are subject to taxation, whether
received in cash or in shares.
Plan
participants have the option of making additional investments of $100 or more on a monthly basis up to a maximum of $120,000 in
a calendar year. These direct purchases will be invested on or shortly after the 15th of each month and direct purchases should
be sent so as to be received by the Plan Agent at least two business days prior to the next investment date. Barring suspension
of trading, direct purchases will be invested within 35 days after such date. Alternatively, participants can authorize an automatic
monthly deduction from a checking or savings account at a U.S. bank or other financial institution. A participant may withdraw
a direct purchase by written notice received by the Plan Agent at least two business days before such payment is to be invested.
The
Plan Agent maintains all shareholder accounts in the Plan and furnishes confirmations of all transactions in the account, including
information needed by shareholders for tax records. Shares in the account of each Plan participant will be held by the Plan Agent
in book-entry or noncertificated form in the name of the participant, and each shareholder’s proxy will include those shares
purchased or received pursuant to the Plan.
There
is no charge to participants for reinvesting distributions pursuant to the Plan. The Plan Agent’s fees are paid by the Fund,
therefore indirectly by shareholders. There are no brokerage charges with respect to shares issued directly by the Fund as a result
of dividends or distributions declared payable in shares. However, each participant bears a per share fee (which includes any
brokerage commissions the Plan Agent is required to pay) incurred with respect to the Plan Agent’s open market purchases
in connection with the reinvestment of distributions declared payable in cash.
Annual Report | December
31, 2019
|
39
|
Liberty
All-Star® Growth Fund
|
Automatic
Dividend Reinvestment and
Direct Purchase Plan
|
With
respect to direct purchases, the Plan Agent will charge $1.25 for purchase by check and $2.00 for automatic investment transactions,
plus a per share fee (which includes any brokerage commissions the Plan Agent is required to pay). Sales of shares held in the
Plan will also be subject to a service fee of $2.50 and a per share fee currently $0.10. All fees described in this summary are
subject to change. Please contact the Plan Agent for the current fees.
Shareholders
may terminate their participation in the Plan by notifying the Plan Agent by telephone, through the Internet or in writing. Such
termination will be effective immediately if notice is received by The Plan Agent prior to any dividend record date and all subsequent
dividends and distributions will be paid in cash instead of shares.
The
Fund reserves the right to amend or terminate the Plan.
The
full text of the Plan may be found on the Fund’s website at www.all-starfunds.com.
Liberty All-Star®
Growth Fund
|
Additional
Information
|
TAX
INFORMATION
All
2019 distributions whether received in cash or shares of the Fund consist of the following:
(1) ordinary
dividends
(2) long-term
capital gains
The
table below details the breakdown of each 2019 distribution for federal income tax purposes.
|
|
|
Total Ordinary Dividends
|
|
Record Date
|
Payable Date
|
Amount per Share
|
Qualified
|
Non-Qualified
|
Long-Term Capital Gains
|
01/25/19
|
03/11/19
|
$0.10
|
6.62%
|
4.04%
|
89.34%
|
04/26/19
|
06/10/19
|
$0.12
|
6.62%
|
4.04%
|
89.34%
|
07/26/19
|
09/09/19
|
$0.12
|
6.62%
|
4.04%
|
89.34%
|
11/15/19
|
01/02/20
|
$0.12
|
6.62%
|
4.04%
|
89.34%
|
Tax
Designations
The
Fund designates the following as a percentage of taxable ordinary income distributions for the calendar year ended December 31,
2019:
|
Qualified
Dividend Income
|
62.16%
|
|
Dividend
Received Deduction
|
55.59%
|
Pursuant
to Section 852(b)(3) of the Internal Revenue Code, Liberty All-Star Growth Fund designated $15,390,930 as long-term capital gain
dividends.
SHAREHOLDER
MEETING RESULTS
On
August 22, 2019, the Annual Meeting of Shareholders of the Fund was held to elect two Directors to the Board. On June 10, 2019,
the record date for the meeting, the Fund had outstanding 37,545,864 shares of common stock. The votes cast at the meeting were
as follows:
Proposal
2 - To elect two Directors:
Nominee
|
For
|
Against/Withheld
|
George R. Gaspari
|
27,917,063.689
|
1,402,399.023
|
Edmund J. Burke
|
28,041,988.226
|
1,277,474.486
|
Annual Report | December
31, 2019
|
41
|
Liberty All-Star® Growth Fund
|
Directors and Officers
|
(Unaudited)
The Fund’s Statement of Additional Information includes
additional information about the Fund’s Directors and is available, without charge, by contacting the Fund at 1-800-542-3863.
INDEPENDENT DIRECTORS
Name (Year of Birth)
and Address*
|
Position with
Growth Fund,
Term of Office
and Length
of Service
|
Principal
Occupation(s)
During Past
Five Years
|
Number of
Portfolios in
Fund Complex
Overseen
By Trustee**
|
Other
Directorships Held
|
Thomas W. Brock
Year of Birth: 1947
|
Director
since 2005;
Chairman
since 2015;
Term expires
2021
|
Chief Executive Officer, Silver Bay Realty (2016-2017); Acting Chief Executive Officer, Silver Bay Realty (2016); Director, Silver Bay Realty (2012-2017)
|
2
|
Trustee, Equitable AXA Annuity Trust (since January 2016), and 1290 Funds (since January 2016)
|
George R. Gaspari
Year of Birth: 1940
|
Director
since 2006;
Term expires
2022
|
Financial Services Consultant (1996-2012)
|
2
|
Trustee (since 1999) and Chairman – Audit Committee (since January 2015), The Select Sector SPDR Trust
|
John J. Neuhauser
Year of Birth: 1943
|
Director
since 1998;
Term expires
2021
|
Retired. Formerly, President, St. Michael’s College (2007-2018); University Professor 2005-2007, Boston College (formerly Academic Vice President and Dean of Faculties, from 1999-2005, Boston College)
|
2
|
Trustee, Columbia Funds Series Trust I (since 1985)
|
|
*
|
The address for all Directors is: c/o ALPS Fund Services, Inc., 1290 Broadway, Suite 1000, Denver, CO 80203.
|
|
**
|
The Fund Complex for the Funds includes any registered investment company advised by ALPS Advisors,
Inc. or any registered investment company sub-advised by Congress Asset Management Company, LLP, Pzena Investment Management, LLC,
Macquarie Investment Management, Aristotle Capital Management, LLC, Weatherbie Capital, LLC, TCW Investment Management Company
and Sustainable Growth Advisers, LP.
|
Liberty All-Star® Growth Fund
|
Directors and Officers
|
(Unaudited)
INDEPENDENT DIRECTORS (continued)
Name (Year of Birth)
and Address*
|
Position with
Growth Fund,
Term of Office
and Length
of Service
|
Principal
Occupation(s)
During Past
Five Years
|
Number of
Portfolios in
Fund Complex
Overseen
By Trustee**
|
Other
Directorships Held
|
Maureen K. Usifer
Year of Birth: 1960
|
Director since
2018; Term
Expires 2020
|
Board Member Green Mountain Care Board (2017-Present), Board Advisor, Healthy Living Market (2017-Present), Board of Trustees, Saint Michael’s College (2015-Present), and Chief Financial Officer, Seventh Generation, Inc. (2012-2016)
|
2
|
Director BlackRock Capital Investment Corporation (since 2005)
|
Milton M. Irvin
Year of Birth: 1949
|
Director since
2018; Term
Expires 2020
|
Retired (2012); Chair, Advisory Board Member Castle Oak Securities (2012-present); Chair, Investment Committee Member Executive Leadership Counsel (2006-present); Chair, Board Member South Carolina State University (2015-present); Graduate Executive Board Member Wharton School (2009-2016)
|
2
|
None
|
|
*
|
The address for all Directors is: c/o ALPS Fund Services, Inc., 1290 Broadway, Suite 1000, Denver, CO 80203.
|
|
**
|
The Fund Complex for the Funds includes any registered investment company advised by ALPS Advisors,
Inc. or any registered investment company sub-advised by Congress Asset Management Company, LLP, Pzena Investment Management, LLC,
Macquarie Investment Management, Aristotle Capital Management, LLC, Weatherbie Capital, LLC, TCW Investment Management Company
and Sustainable Growth Advisers, LP.
|
Annual Report | December 31, 2019
|
43
|
Liberty All-Star® Growth Fund
|
Directors and Officers
|
(Unaudited)
INTERESTED DIRECTOR
Name (Year of Birth)
and Address*
|
Position with
Growth Fund,
Term of Office
and Length
of Service
|
Principal
Occupation(s)
During Past
Five Years
|
Number of
Portfolios in
Fund Complex
Overseen
By Trustee**
|
Other
Directorships Held
|
Edmund J. Burke***
Year of Birth: 1961
|
Director
since 2006;
Term expires
2021
|
Mr. Burke joined ALPS in 1991 and served as the President and Director of ALPS Holdings, Inc., and ALPS Advisors, Inc., and Director of ALPS Distributors, Inc., ALPS Fund Services, Inc., and ALPS Portfolio Solutions Distributor, Inc. Mr. Burke retired from ALPS in June 2019. Mr. Burke is deemed an affiliate of the Fund as defined under the 1940 Act.
|
27
|
Trustee (since 2009) - Financial Investors Trust, Trustee (since 2004) - Clough Global Dividend and Income Fund, Trustee (since 2006) - Clough Global Equity Fund, Trustee - Clough Global Opportunities Fund, and Trustee - Clough Funds Trust (since 2015).
|
|
*
|
The address for all Directors is: c/o ALPS Fund Services,
Inc., 1290 Broadway, Suite 1000, Denver, CO 80203.
|
|
**
|
The Fund Complex for the Funds includes any registered
investment company advised by ALPS Advisors, Inc. or any registered investment company sub-advised by Congress Asset Management
Company, LLP, Pzena Investment Management, LLC, Macquarie Investment Management, Aristotle Capital Management, LLC, Weatherbie
Capital, LLC, TCW Investment Management Company and Sustainable Growth Advisers, LP.
|
|
***
|
Mr. Burke is an “interested person” of
the Funds under Section 2(a)(19) of the 1940 Act because he was formerly the CEO and President of ALPS Holdings, Inc.
|
Liberty All-Star® Growth Fund
|
Directors and Officers
|
(Unaudited)
OFFICERS
Name (Year of Birth)
and Address*
|
Position
with Fund**
|
Year First
Elected or
Appointed
to Office
|
Principal Occupation(s)
During Past Five Years
|
William R. Parmentier, Jr.
Year of Birth: 1952
|
President
|
1999
|
Chief Investment Officer, ALPS Advisors, Inc. (since 2006); President of the Liberty All-Star Funds (since April 1999); Senior Vice President, Banc of America Investment Advisors, Inc. (2005-2006). Mr. Parmentier is deemed an affiliate of the Funds as defined under the 1940 Act.
|
Mark T. Haley, CFA
Year of Birth: 1964
|
Senior Vice
President
|
1999
|
Senior Vice President of the Liberty All-Star Funds (since January 1999); Vice President, ALPS Advisors, Inc. (since 2006); Vice President, Banc of America Investment Advisors (1999-2006). Mr. Haley is deemed an affiliate of the Funds as defined under the 1940 Act.
|
Kimberly R. Storms
Year of Birth: 1972
|
Treasurer
|
2013
|
Director of Fund Administration and Senior Vice President of ALPS Fund Services, Inc. Ms. Storms is currently Treasurer of Liberty All-Star Equity Fund, Financial Investors Trust, and ALPS Series Trust. Ms. Storms is deemed an affiliate of the Funds as defined under the 1940 Act.
|
|
*
|
The address of each officer, other than Messrs. Parmentier and Haley is: c/o ALPS Fund Services,
Inc., 1290 Broadway, Suite 1000, Denver, CO 80203. The address of Messrs. Parmentier and Haley is c/o ALPS Advisors, Inc., One
Financial Center, 4th Floor, Boston, MA 02111.
|
|
**
|
Officers are elected annually and each officer will hold such office until a successor has been elected by the Board.
|
Annual Report | December 31, 2019
|
45
|
Liberty All-Star® Growth Fund
|
Directors and Officers
|
(Unaudited)
OFFICERS (continued)
Name (Year of Birth)
and Address*
|
Position
with Fund**
|
Year First
Elected or
Appointed
to Office
|
Principal Occupation(s)
During Past Five Years
|
Matthew Sutula
Year of Birth: 1985
|
Chief
Compliance
Officer
|
2019
|
Mr. Sutula joined ALPS in 2012 and currently serves as Chief Compliance Officer of ALPS Advisors, Inc. (“AAI”). Prior to his current role, Mr. Sutula served as Compliance Manager and Senior Compliance Analyst for AAI, as well as Compliance Analyst for ALPS Fund Services, Inc. Prior to joining ALPS, he spent seven years at Morningstar, Inc. in various analyst roles supporting the registered investment company databases. Because of his position with ALPS, Mr. Sutula is deemed an affiliate of the Trust as defined under the 1940 Act. Mr. Sutula is also Interim Chief Compliance Officer of Principal Real Estate Income Fund, ALPS Variable Investment Trust, RiverNorth Opportunities Fund, Inc. and Liberty All- Star Equity Fund.
|
Sareena Khwaja-Dixon
Year of Birth: 1980
|
Secretary
|
2016
|
Ms. Khwaja-Dixon joined ALPS in August 2015 and is currently Senior Counsel and Vice President of ALPS Fund Services, Inc. Prior to joining ALPS, Ms. Khwaja-Dixon served as a Senior Paralegal/Paralegal for Russell Investments (2011 – 2015). Ms. Khwaja-Dixon is also Secretary of Clough Dividend and Income Fund, Clough Global Opportunities Fund, Clough Global Equity Fund, Clough Funds Trust, and Assistant Secretary of Financial Investors Trust. Ms. Khwaja-Dixon is deemed an affiliate of the Funds as defined under the 1940 Act.
|
|
*
|
The address of each officer, other than Messrs. Parmentier and Haley is: c/o ALPS Fund Services,
Inc., 1290 Broadway, Suite 1000, Denver, CO 80203. The address of Messrs. Parmentier and Haley is c/o ALPS Advisors, Inc., One
Financial Center, 4th Floor, Boston, MA 02111.
|
|
**
|
Officers are elected annually and each officer will hold such office until a successor has been elected by the Board.
|
Liberty All-Star® Growth Fund
|
Directors and Officers
|
(Unaudited)
OFFICERS (continued)
Name (Year of Birth)
and Address*
|
Position
with Fund**
|
Year First
Elected or
Appointed
to Office
|
Principal Occupation(s)
During Past Five Years
|
Jennifer A. Craig
Year of Birth: 1973
|
Assistant
Secretary
|
2017
|
Ms. Craig joined ALPS in 2007 and is currently Assistant Vice President and Paralegal Manager of ALPS. Prior to joining ALPS, Ms. Craig was Legal Manager at Janus Capital Management LLC and served as Assistant Secretary of Janus Investment Fund, Janus Adviser Series and Janus Aspen Series. Ms. Craig is also Assistant Secretary of Financial Investors Trust, Clough Dividend and Income Fund, Clough Global Opportunities Fund and Clough Global Equity Fund.
|
|
*
|
The address of each officer, other than Messrs. Parmentier and Haley is: c/o ALPS Fund Services,
Inc., 1290 Broadway, Suite 1000, Denver, CO 80203. The address of Messrs. Parmentier and Haley is c/o ALPS Advisors, Inc., One
Financial Center, 4th Floor, Boston, MA 02111.
|
|
**
|
Officers are elected annually and each officer will hold such office until a successor has been elected by the Board.
|
Annual Report | December 31, 2019
|
47
|
|
|
|
Board Consideration
of the Renewal of the Fund
|
Liberty
All-Star® Growth
Fund
|
Management & Portfolio
Management Agreements
|
The
Investment Company Act of 1940 requires that the Board of Directors (“Board’) of the Liberty All-Star Growth Fund,
Inc. (“Fund”), including all of the Directors who are not “interested persons” of the Fund (“Independent
Directors”), annually review the Fund’s investment advisory agreements and consider whether to renew them for an additional
year. At its meeting on September 9, 2019, the Board, including a majority of the Independent Directors, conducted such a review
and approved the continuation of the Fund Management Agreement between the Fund and ALPS Advisors, Inc. (“AAI”) and
each separate Portfolio Management Agreement among the Fund, AAI and the following independent investment management firms: Congress
Asset Management Company, LLP (Congress”), Sustainable Growth Advisers, LP (“Sustainable”) and Weatherbie Capital,
LLC (“Weatherbie”). Congress, Sustainable, and Weatherbie collectively are referred to as “Portfolio Managers,”
and each as a “Portfolio Manager.”
Prior
to the Board’s action, the Independent Directors met to consider management’s recommendations with respect to the
renewal of the Fund Management Agreement and the Portfolio Management Agreements (each, an “Agreement” and, collectively,
the Agreements”). In reaching its decision to renew each Agreement, the Board considered the overall fairness of each Agreement
and whether each Agreement was in the best interests of the Fund. The Board further considered factors it deemed relevant with
respect to the Fund, including: (1) the nature, extent and quality of services provided to the Fund by AAI, its affiliates and
each Portfolio Manager; (2) the performance of the Fund and the Portfolio Managers (3) the level of the Fund’s management
and portfolio management fees and expense ratios; (4) the costs of the services provided and profits realized by AAI and its affiliates
from their relationship with the Fund; (5) the extent to which economies of scale would be realized as the Fund grows and whether
fee levels will reflect economies of scale for the benefit of shareholders; (6) the “fall-out” benefits to AAI, each
Portfolio Manager and their respective affiliates (i.e., any direct or indirect benefits to be derived by AAI, each Portfolio
Manager and their respective affiliates from their relationships with the Fund); and (7) other general information about AAI and
each Portfolio Manager. In considering each Agreement, the Board did not identify any single factor or information as all-important
or controlling and each Independent Director may have attributed different weight to each factor.
The
Board considered these factors in the context of the Fund’s multi-manager methodology, which seeks to achieve more consistent
and less volatile performance over the long term than if a single Portfolio Manager was employed. The Fund allocates its portfolio
assets among Portfolio Managers recommended by AAI and approved by the Board, currently three for the Fund. The Board considered
that each Portfolio Manager employs a different investment style and/or strategy, and from time to time AAI rebalances the Fund’s
portfolio assets among the Portfolio Managers. The Board also took into account that AAI continuously analyzes and evaluates each
Portfolio Manager’s investment performance and portfolio composition and, from time to time recommends changes in the Portfolio
Managers.
In
connection with its deliberations, the Board considered information furnished throughout the year at regular Board meetings, as
well as information prepared specifically in connection with the annual renewal and approval process. Information furnished and
discussed throughout the year included AAI’s analyses of the Fund’s investment performance and related financial information
for the Fund, presentations given by the Fund’s Portfolio Managers, as well as periodic reports on legal, compliance, brokerage
commissions and execution and other services provided by AAI, the Portfolio Managers and their affiliates. Information furnished
specifically in connection with the renewal process included, among other things, a report of the Fund’s investment performance
over various time periods as compared to a peer universe and a market index and the Fund’s fees and expenses as compared
to comparable groups of closed-end funds and open-end multi-managed funds based, in part, on information prepared by AAI regarding
review of the Lipper peer groups. The information provided by AAI generally included information reflecting the Fund’s management
fees, expense ratios, investment performance and profitability, including AAI’s profitability with respect to the Fund.
|
|
|
Board Consideration
of the Renewal of the Fund
|
Liberty
All-Star® Growth Fund
|
Management & Portfolio
Management Agreements
|
As
part of the process to consider the Agreements, legal counsel to the Independent Directors requested information on behalf of
the Independent Directors from AAI and each Portfolio Manager. In response to these requests, the Independent Directors received
reports from AAI and each Portfolio Manager that addressed specific factors designed to inform the Independent Directors’
consideration of each Agreement. In addition, counsel also provided the Independent Directors and the Board with a memorandum
discussing the legal standards applicable to their consideration of the Agreements. In considering the proposed renewals, the
Board considered all factors they believed to be relevant, including those discussed below. The Board did not identify any one
factor as being dispositive.
Based
on their evaluation of all material factors, the Board unanimously concluded that the terms of each Agreement were reasonable
and fair and that the renewal of each of the Agreements was in the best interests of the Fund and its shareholders. The following
is a summary of the Board’s considerations and conclusions during the full Board meeting and Executive Session regarding
these matters.
Nature,
Extent and Quality of the Services Provided
The
Board considered the nature, extent and quality of the portfolio manager selection, evaluation and monitoring services provided
by AAI, and the portfolio management services provided by each Portfolio Manager, in light of the investment objective of the
Fund. The Board also considered the nature, extent and quality of the administrative services provided to the Fund by ALPS Fund
Services, Inc., an affiliate of AAI. The Board considered the steps that AAI has taken to encourage strong performance, including
AAI’s willingness to recommend Portfolio Manager changes when necessary to address performance issues.
The
Board considered the background and experience of the personnel at AAI responsible for Portfolio Manager selection, evaluation
and monitoring for the Fund and the personnel at each Portfolio Manager responsible for managing the Fund’s portfolio. The
Board also considered the overall financial strength of AAI and each Portfolio Manager, the effect on the Fund of any turnover
in personnel at each Portfolio Manager, the insurance maintained by AAI and each Portfolio Manager and the compliance records
of AAI and each Portfolio Manager. The Board concluded that the nature, extent and quality of the services provided by AAI and
each Portfolio Manager up for renewal were appropriate and consistent with the terms of the Agreements and that the Fund was likely
to continue to benefit from services provided under the Agreements.
Annual Report | December
31, 2019
|
49
|
|
Board Consideration of the
Renewal of the Fund
|
Liberty
All-Star® Growth
Fund
|
Management & Portfolio Management Agreements
|
Investment
Performance
The
Board considered the long-term and short-term investment performance of the Fund over multiple periods, which generally included
annual total returns both on an absolute basis and relative to an appropriate benchmark and/or Lipper peer universe based on materials
showing the performance of the Lipper peer groups. The Board considered the Fund’s performance based on both net asset value
(“NAV”) and market price and, in general, considered long-term performance to be more important in its evaluation
than short-term performance. In addition, the Board considered the performance of the allocated portions of the Fund in the context
of the Portfolio Managers’ different investment strategies and styles and the contribution of each Portfolio Manager to
the Fund’s overall strategy and performance.
The
Board received information which indicated among other things that, based on NAV, the Fund outperformed the Lipper Multi-Cap Growth
Mutual Fund Average for the year-to-date, and for the one-, three-, five- and ten-year periods ending June 30, 2019.
In
addition to the performance of the Fund and each Portfolio Manager’s sleeve of the Fund, the Board considered management’s
and the Portfolio Managers’ explanations for the Fund’s performance and the relevant benchmarks and peer groups. The
Board accepted the explanations and determined that the performance information and explanations supported the renewal of the
Agreements.
Costs
of the Services Provided to The Fund
The
Board considered the fees paid by each Fund to AAI and the fees paid by AAI to the Portfolio Managers as well as information provided
by AAI about the management fees, overall expense ratio and expense reimbursement by AAI for selected closed-end funds and multi-manager
open- end equity funds.
The
Board considered that, the Fund’s total expense ratio was slightly higher than the median of a representative group of closed-end
funds selected by AAI, but the management and administrative fees were slightly lower than the median. They also considered that
the Fund’s expense ratio was close to the median for multi-manager open-end funds and its management and administration
fees were higher. The Board took into account that the Fund’s higher contractual management fees and expense ratios were
generally consistent with the higher costs and greater complexity associated with the management of a closed-end multi-manager
fund.
The
Board considered that AAI currently does not have any institutional clients with investment objectives and strategies comparable
to those of the Fund. The Board considered the breakpoint schedule that lowers the management fee rate paid by the Fund as the
Fund’s assets increase. The Board also considered the management fees paid to the Portfolio Managers and the fee rates charged
by the Portfolio Managers to their other accounts, including institutional accounts. The Board considered that the Portfolio Managers
were paid by AAI, not the Fund. The Board also considered the differences in the level of services provided by and the differences
in responsibility of AAI and the Portfolio Managers to the Fund and to other accounts. The Board concluded that the management
fees payable by the Fund to AAI and the fees payable by AAI to the Portfolio Managers were reasonable in relation to the nature
and quality of the services provided, taking into account the management fees paid by selected closed-end funds and open-end equity
funds.
|
Board Consideration
of the Renewal of the Fund
|
Liberty
All-Star® Growth Fund
|
Management & Portfolio
Management Agreements
|
Profitability
and Costs of Services to AAI
The
Board considered the level of profits realized by AAI in connection with the operation of the Fund. The Board considered the profitability
information setting forth recent overall profitability of the Fund to AAI, as well as overall profitability information relating
to certain prior calendar years. In reviewing the information, attention was given to the methodology followed in allocating costs
to the Fund, it being recognized that allocation methodologies are inherently subjective and various allocation methodologies
may be reasonable while producing different results. The Board considered management’s ongoing costs and expenditures in
providing and improving services for the Fund as well as the ongoing need to meet regulatory and compliance requirements. In addition,
the Board considered information prepared by management comparing the profitability of AAI on an overall basis to other investment
company managers. The Board also considered the extent to which AAI and its affiliates might derive ancillary benefits from the
Fund, noting that an affiliate of AAI serves as the Fund’s administrator and receives compensation for acting in this capacity.
The
Board considered that AAI has advised the Board that it does not regard Portfolio Manager profitability as meaningful to an evaluation
of the Portfolio Manager Agreements because the willingness of the Portfolio Managers to serve in such capacity depends primarily
upon arm’s-length negotiations with AAI, AAI generally is aware of the fees charged by the Portfolio Managers to other
clients, and AAI believes that the fees agreed upon with the Portfolio Managers are reasonable in light of the quality of investment
advisory services rendered. The Board accepted AAI’s explanations in light of the Board’s findings as to the reasonableness
of the aggregate management fees paid by the Fund and the fact that each Portfolio Manager’s fee is paid by AAI and not
the Fund. The Board understood that, as a business matter, AAI was entitled to earn reasonable profits for its services to the
Fund. The Board determined that AAI’s profitability was reasonable in relation to the services provided and to the costs
of providing management services to the Fund and supported the renewal of the Agreements.
Extent
of Economies of Scale as The Fund Grows and Whether Fee Levels Reflect Economies of Scale
The
Board considered whether economies of scale are realized by AAI as the Fund grows larger and the extent to which this is reflected
in the level of management fees charged. The Board took into consideration the fee breakpoint schedules under the Agreements and
concluded that the schedules reflect economies of scale with respect to the selection, evaluation and monitoring of Portfolio
Managers and other services performed by AAI and the management of Fund assets by each Portfolio Manager.
The
Board also considered that, although the Fund is not currently at an asset level at which it can take advantage of the breakpoints
in its fee schedule, the schedule is structured so that when the Fund’s assets increase, economies of scale may be shared
for the benefit of shareholders. Based on the foregoing, the Board concluded that the breakpoint schedules in the Fund Agreement
could allow the Fund to realize economies of scale, which supports the renewal of the Agreements.
Annual Report | December
31, 2019
|
51
|
|
Board Consideration
of the Renewal of the Fund
|
Liberty
All-Star® Growth
Fund
|
Management & Portfolio
Management Agreements
|
Benefits
to be Derived from the Relationship with The Fund
The
Board also considered the potential ancillary, or “fall-out,” benefits that AAI or the Portfolio Managers might receive
in connection with their association with the Fund. In its consideration of the Agreements, the Board considered, among other
things, that AAI and the Portfolio Managers may derive ancillary benefits from the Fund’s operations. For example, under
the Agreements, although it is not currently doing so, AAI may request that transactions giving rise to brokerage commissions
be executed through brokers and dealers that provide brokerage or research services to the Fund or AAI. Each Portfolio Manager,
through its position as a Portfolio Manager to the Fund, also may engage in soft dollar transactions.
In
advance of the meeting, the Board received information regarding each Portfolio Manager’s procedures for executing portfolio
transactions for the allocated portion(s) of the Fund and each Portfolio Manager’s soft dollar policies and procedures.
In addition, the Board considered that a Portfolio Manager may be affiliated with registered broker-dealers who may, from time
to time, receive brokerage commissions from the Fund in connection with the purchase and sale of portfolio securities; provided,
however, that those transactions, among other things, must be consistent with seeking best execution. The Board determined that
the foregoing ancillary benefits were consistent with the renewal of the Agreements.
Based
on its evaluation of all material factors, the Board unanimously concluded that the terms of each Agreement were reasonable and
fair and that the renewal of each Agreement was in the best interests of the Fund and its shareholders.
Liberty All-Star®
Growth Fund
|
Privacy
Policy
|
FACTS
|
WHAT DO THE LIBERTY ALL-STAR
FUNDS DO WITH YOUR PERSONAL INFORMATION?
|
WHY?
|
Financial companies choose how they
share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also
requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to
understand what we do.
|
WHAT?
|
The types of personal information
we collect and share depend on the product or service you have with us. This information can include:
|
|
Social Security number
|
Purchase History
|
|
Assets
|
Account Balances
|
|
Retirement Assets
|
Account Transactions
|
|
Transaction History
|
Wire Transfer Instructions
|
|
Checking Account Information
|
|
|
When you are no longer our
customer, we continue to share your information as described in this notice.
|
HOW?
|
All financial companies need to
share customers’ personal information to run their everyday business. In the section below, we list the reasons financial
companies can share their customers’ personal information; the reasons the Liberty All-Star Funds choose to share; and
whether you can limit this sharing.
|
REASONS WE CAN SHARE YOUR
PERSONAL INFORMATION
|
DO
THE LIBERTY
ALL-STAR FUNDS
SHARE?
|
CAN
YOU LIMIT
THIS SHARING?
|
For our everyday
business purposes –
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report
to credit bureaus
|
Yes
|
No
|
For our marketing
purposes –
to offer our products and services to you
|
No
|
We don’t share
|
For joint marketing
with other financial companies
|
No
|
We don’t share
|
For our affiliates’
everyday business purposes –
information about your transactions and experiences
|
No
|
We don’t share
|
For our affiliates’
everyday business purposes –
information about your creditworthiness
|
No
|
We don’t share
|
For non-affiliates
to market to you
|
No
|
We don’t share
|
QUESTIONS?
|
Call 1-800-241-1850
|
Annual Report | December
31, 2019
|
53
|
Liberty All-Star®
Growth Fund
|
Privacy
Policy
|
WHO WE ARE
|
|
Who is providing this notice?
|
Liberty All-Star Funds
|
WHAT WE DO
|
|
How do the Liberty All-Star Funds
protect my personal information?
|
To
protect your personal information from unauthorized access and use, we use security measures that comply with federal
law. These measures include computer safeguards and secured files and buildings.
Our
service providers are held accountable for adhering to strict policies and procedures to prevent any misuse of your nonpublic
personal information.
|
How do the Liberty All-Star Funds
collect my personal information?
|
We
collect your personal information, for example, when you
● Open
an account
● Provide
account information
● Give
us your contact information
● Make
deposits or withdrawals from your account
● Make
a wire transfer
● Tell
us where to send the money
● Tells
us who receives the money
● Show
your government-issued ID
● Show
your driver’s license
We
also collect your personal information from other companies.
|
Why can’t I limit all sharing?
|
Federal
law gives you the right to limit only:
● Sharing
for affiliates’ everyday business purposes – information about your creditworthiness
● Affiliates
from using your information to market to you
● Sharing
for non-affiliates to market to you
State
laws and individual companies may give you additional rights to limit sharing.
|
DEFINITIONS
|
|
Affiliates
|
Companies
related by common ownership or control. They can be financial and nonfinancial companies.
● The
Liberty All-Star Funds do not share with our affiliates for marketing purposes.
|
Non-affiliates
|
Companies
not related by common ownership or control. They can be financial and nonfinancial companies.
● The
Liberty All-Star Funds do not share with non-affiliates so they can market to you.
|
Joint marketing
|
A formal agreement between non-affiliated financial companies that together market financial products or services to you.
● The
Liberty All-Star Funds don’t jointly market.
|
|
Description
of Lipper
|
Liberty All-Star® Growth Fund
|
Benchmark and Market
Indices
|
Dow
Jones Industrial Average
A
price-weighted measure of 30 U.S. blue-chip companies.
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
above-average characteristics 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 lower book-to-price-ratios and higher 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
3000® Value Index
Measures
the performance of those Russell 3000® companies with higher book-to-price-ratios and lower growth values.
Russell
Top 200® Growth Index
Measures
the performance of those Russell Top 200® companies with lower book-to-price-ratios and higher growth values. The
Russell Top 200® Index measures the performance of the 200 largest companies in the Russell 3000®
Index.
Russell
1000® Growth Index (Largecap)
Measures
the performance of those Russell 1000® companies with lower book-to-price-ratios and higher 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 lower book-to-price-ratios and higher 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 lower book-to-price-ratios and higher growth values. The
Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000®
Index.
Russell
Growth Benchmark
The
average of the Russell Top 200®, Midcap® and 2000® Growth Indices.
S&P
500® Index
A
large cap U.S. equities index that includes 500 leading companies and captures approximately 80% coverage of available market
capitalization.
An
investor cannot invest directly in an index.
Annual Report | December
31, 2019
|
55
|
|
|
|
|
|
|
INVESTMENT ADVISOR
|
LEGAL COUNSEL
|
ALPS Advisors,
Inc.
|
K&L Gates LLP
|
1290 Broadway,
Suite 1000
|
1601 K Street, NW
|
Denver, Colorado
80203
|
Washington, DC 20006
|
303-623-2577
|
|
www.all-starfunds.com
|
DIRECTORS
|
|
Thomas W. Brock*, Chairman
|
INDEPENDENT
REGISTERED
|
Edmund J. Burke
|
PUBLIC ACCOUNTING
FIRM
|
George R. Gaspari*
|
Deloitte &
Touche LLP
|
Milton M. Irvin*
|
1601 Wewatta Street,
Suite 400
|
Dr. John J. Neuhauser*
|
Denver, Colorado
80202
|
Maureen K. Usifer*
|
|
|
CUSTODIAN
|
OFFICERS
|
State Street Bank
& Trust Company
|
William R. Parmentier, Jr., President
|
One Lincoln Street
|
Mark T. Haley, CFA, Senior Vice President
|
Boston, Massachusetts
02111
|
Kimberly R. Storms, Treasurer
|
|
Sareena Khwaja-Dixon, Secretary
|
INVESTOR ASSISTANCE,
|
Jennifer A. Craig, Assistant Secretary
|
TRANSFER &
DIVIDEND
|
Matthew Sutula, Chief Compliance Officer
|
DISBURSING AGENT
& REGISTRAR
|
|
Computershare Trust
Company, N.A.
|
*Member of Audit Committee
|
P.O. Box 505000
|
|
Louisville, Kentucky
40233
|
|
1-800-LIB-FUND
(1-800-542-3863)
|
|
www.computershare.com
|
|
|
|
Annual
Certifications — As required, on September 20, 2019, the Fund submitted to the New York Stock Exchange
(“NYSE”) the annual certification of the Fund’s Chief Executive Officer certifying that, as of such date,
he was not aware of any violation of the NYSE’s Corporate Governance listing standards. The Fund also has included the
certifications of the Fund’s Chief Executive Officer and Chief Financial Officer required by Section 302 of the
Sarbanes- Oxley Act of 2002 as exhibits to reports filed with the Securities and Exchange Commission (“SEC”) on a
quarterly basis on Form N-CSR and Form N-Q.
A
description of the Fund’s proxy voting policies and procedures is available (i) on the SEC’s website at www.sec.gov,
and (ii) without charge, upon request, by calling 1-800-542-3863. Information regarding how the Fund voted proxies relating to
portfolio securities during the 12-month period ended June 30th is available from the SEC’s website at www.sec.gov.
The
Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year
in Form N-Q or Form N-PORT (beginning March 31, 2019). The Fund’s Form N-Qs and Form N-PORTs are/will be available on
the SEC’s website at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington,
DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Notice
is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that the Fund may purchase at market prices
from time to time shares of its own common stock in the open market.
This
report is transmitted to shareholders of Liberty All-Star® Growth Fund, Inc. for their information. It is not
a prospectus or other document intended for use in the purchase of Fund shares.