0000786035
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N-CSRS
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LIBERTY ALL STAR GROWTH FUND INC.
0000786035
2023-01-01
2023-06-30
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
xbrli:pure
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-04537
Liberty All-Star Growth Fund, Inc.
(exact name of registrant as specified in
charter)
1290 Broadway, Suite 1000, Denver, Colorado
80203
(Address of principal executive offices)
(Zip code)
ALPS Fund Services, Inc.
1290 Broadway, Suite 1000
Denver, Colorado 80203
(Name and address of agent for service)
Registrant’s telephone number, including
area code: 303-623-2577
Date of fiscal year end: December
31
Date of reporting period: January
1, 2023 – June 30, 2023
Item 1. Reports to Stockholders.
(a)
Contents
1 |
President’s Letter |
5 |
Table of Distributions, Rights Offerings and Distribution Policy |
6 |
Stock Changes in the Quarter |
7 |
Top 20 Holdings and Economic Sectors |
8 |
Investment Managers/Portfolio Characteristics |
9 |
Manager Interview |
12 |
Schedule of Investments |
18 |
Statement of Assets and Liabilities |
19 |
Statement of Operations |
20 |
Statements of Changes in Net Assets |
22 |
Financial Highlights |
24 |
Notes to Financial Statements |
34 |
Description of Lipper Benchmark and Market Indices |
Inside Back Cover: Fund Information |
A SINGLE INVESTMENT...
A DIVERSIFIED GROWTH PORTFOLIO
A single fund that offers:
| ● | A diversified, multi-managed portfolio of small-, mid-
and large-cap growth stocks |
| ● | Exposure to many of the industries that make the U.S. economy
one of the world’s most dynamic |
| ● | Access to institutional quality investment managers |
| ● | Objective and ongoing manager evaluation |
| ● | Active portfolio rebalancing |
| ● | A quarterly fixed distribution policy |
| ● | Actively managed, exchange-traded, closed-end fund listed
on the New York Stock Exchange (ticker symbol: ASG) |
LIBERTY ALL-STAR® GROWTH FUND,
INC.
Liberty All-Star® Growth Fund |
President’s Letter |
(Unaudited)
Fellow Shareholders: |
July 2023 |
In April, upbeat earnings reports from
tech giants Alphabet, Amazon, Meta Platforms and Microsoft were fueled by surging interest in artificial intelligence (AI). Then,
just before Memorial Day, NVIDIA, a key AI player, supercharged the rally with strong earnings and a forecast that exceeded expectations.
With AI as the new catalyst, a small group of mega-cap stocks led the S&P 500® Index and the NASDAQ Composite Index, both
of which posted strong gains in the first quarter, to continued leadership of the market in the second quarter.
The chief beneficiary of the AI rally,
the NASDAQ Composite Index, ended the second quarter with a return of 13.05 percent and a first half return of 32.32 percent—its
best first half in 40 years. The S&P 500® Index returned 8.74 percent for the quarter and 16.89 percent for the first half.
The Dow Jones Industrial Average (DJIA) was the laggard; the index was void of many of the market leaders and returned 3.97 percent
for the quarter and 4.94 percent for the first half.
Returns through the half were at odds with
factors that would generally weigh on equity markets. Early in the second quarter, the Department of Labor reported that first
quarter GDP slowed more than expected—falling to 1.1 percent from 2.6 percent in 4Q22 (the 1.1 percent reading was revised
to 2.0 percent later in the quarter). Meanwhile, interest rates continued to rise. In May, the Federal Reserve increased the fed
funds rate by a quarter-point; the move took the rate to a range of 5.00 to 5.25 percent and was the Fed’s 10th consecutive
rate increase. While data indicated that inflation was moderating, the deceleration was not fast or sufficient enough to please
the Federal Reserve. Midway through the quarter, for example, data showed the personal consumption expenditures (PCE) price index,
the Fed’s preferred inflation gauge, rose a faster-than-expected 0.4 percent in April. From a year ago, the measure climbed
4.4 percent compared with 4.2 percent in March. Excluding food and energy, the core PCE index increased 0.4 percent from the prior
month and 4.7 percent from April 2022.
In June, the Fed paused its interest rate
increases, which was widely anticipated in the equity markets. At the same time, however, the Fed left the door open to future
increases, observing that decisions would be driven by fresh data as it is received. As the third quarter began, a growing consensus
favored the Fed resuming rate increases at its meeting in late July.
As it has been for months, the U.S. labor
market was a double-edged sword: a positive for the economy in that unemployment remained low and job creation high, while that
low unemployment along with a steady advance in wages was seen as a negative in the inflation fight (in the eyes of the Federal
Reserve). Conflicting signals in May, when payrolls surged along with joblessness, serve as an example. Nonfarm payrolls increased
339,000 in that month versus a median estimate of 195,000; at the same time the unemployment rate increased 0.3 percent to 3.7
percent.
First quarter earnings reports for S&P
500® companies generally exceeded analysts’ expectations in both their size and breadth (first quarter earnings being
reported during the second quarter). JPMorgan Chase agreed to acquire First Republic Bank in a government-led deal, putting to
rest one of the biggest troubled banks remaining after turmoil engulfed the banking industry in March. On June 1, the U.S. Senate
approved a bill that would allow the government to avoid a potentially disastrous default on its debt after an acrimonious battle
in the House of Representatives.
Semi-Annual Report (Unaudited) | June 30, 2023 |
1 |
Liberty All-Star® Growth Fund |
President’s Letter |
(Unaudited)
President Biden
signed the bill, granting final approval. On June 8, the stock market officially entered a bull market, as the S&P 500®
gained 20 percent since its October 2022 low. Surveys of consumer confidence were generally positive, e.g., late in the
half the Conference Board reported that its June survey rose to the highest level since early 2022. And AI—with its promises
and perils—was headline news. Some likened it to the dot.com bubble a quarter century ago. This time, however, it wasn’t
start-up and IPO valuations soaring, but the shares of some of the largest enterprises in the world.
Liberty All-Star® Growth
Fund
For Liberty All-Star Growth Fund, the “allocation
effect” served as a drag on relative performance in what otherwise were a reasonable second quarter and first half. The Fund’s
lower allocation to a narrow band of mega-cap technology stocks that produced exceptionally strong returns negatively impacted
relative returns.
For the second quarter the Fund returned
6.29 percent when shares are valued at net asset value (NAV) with dividends reinvested and 4.69 percent when shares are valued
at market price with dividends reinvested. (Fund returns are net of expenses.) Both returns lagged the 9.86 percent return of the
Fund’s primary benchmark, the Lipper Multi-Cap Growth Mutual Fund Average, as well as the Russell Growth Benchmark, which
returned 9.21 percent. Fund returns trailed the S&P 500® and the NASDAQ Composite but topped that of the DJIA.
For the first half the Fund returned 13.25
percent when shares are valued at NAV with dividends reinvested and 14.43 percent when shares are valued at market price with dividends
reinvested. First half returns lagged both the 22.60 percent return of the Lipper average and the 20.56 percent return of the Russell
benchmark. Similar to the quarter, returns for the half trailed the S&P 500® and the NASDAQ Composite but were ahead of
the DJIA.
In terms of performance attribution, as
noted, size was the overriding factor. This can be measured in several ways, but two points illustrate this: First, the Fund had
an underweight to the largest capitalization stocks in the Russell Growth Benchmark (as well as those in the S&P 500® and
NASDAQ Composite). As previously noted, it was these mega-cap stocks that produced the best returns in the quarter and the half.
Second, the weighted average market capitalization of stocks in the Russell Growth Benchmark (at quarter’s end) was far larger—$416
billion versus $151 billion for the Fund.
During the second quarter, Fund shares
traded at a discount to their underlying NAV ranging from -2.8 percent to -6.3 percent, little changed from the first quarter discount
of -2.8 percent to -5.8 percent.
In accordance with the Fund’s distribution
policy, the Fund paid a distribution of $0.11 to shareholders during the second quarter, bringing the total distributed to shareholders
since 1997, when the distribution policy commenced, to $16.72 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.
Liberty All-Star® Growth Fund |
President’s Letter |
(Unaudited)
The Fund is a diversified growth portfolio
with exposure to small-, mid- and large-capitalization stocks. While it may be tempting to chase the returns of a handful of mega-cap
stocks in the current environment, the Fund will maintain its discipline of diversification, including across capitalizations.
While the environment that existed in the equity market through the first half produced strong returns for most capitalization-weighted
benchmarks, investors should not overlook the fact that there were also periods of heightened volatility and risk still exists.
In that light, we will keep our focus on the long term and on the Fund’s multi-management discipline, which has proven effective
through the history of the Fund.
Sincerely,
Mark T. Haley, CFA
President
Liberty All-Star® Growth
Fund, Inc.
The views expressed in the President’s
letter and the Manager Interview reflect the views of the President and Manager as of July 2023 and may not reflect their views
on the date this report is first published or anytime thereafter. These views are not guarantees of future performance and involve
certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly
from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the
Fund disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment
decisions for the Fund are based on numerous factors, may not be relied on as an indication of trading intent.
Semi-Annual Report (Unaudited) | June 30, 2023 |
3 |
Liberty All-Star® Growth Fund |
President’s Letter |
(Unaudited)
Fund Statistics (Periods ended June 30, 2023) |
|
Net Asset Value (NAV) |
$5.68 |
Market Price |
$5.41 |
Discount |
-4.8% |
|
Quarter |
Year-to-Date |
Distributions* |
$0.11 |
$0.22 |
Market Price Trading Range |
$4.91 to $5.47 |
$4.90 to $5.62 |
Discount Range |
-2.8% to -6.3% |
-2.8% to -6.3% |
Performance (Periods ended June 30, 2023) |
|
|
Shares Valued at NAV with Dividends Reinvested |
6.29% |
13.25% |
Shares Valued at Market Price with Dividends Reinvested |
4.69% |
14.43% |
Dow Jones Industrial Average |
3.97% |
4.94% |
Lipper Multi-Cap Growth Mutual Fund Average |
9.86% |
22.60% |
NASDAQ Composite Index |
13.05% |
32.32% |
Russell Growth Benchmark |
9.21% |
20.56% |
S&P 500® Index |
8.74% |
16.89% |
| * | Sources of distributions to shareholders may include ordinary
dividends, long-term capital gains and return of capital. The final determination of the source of all distributions in 2023 for
tax reporting purposes will be made after year end. 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.
Based on current estimates a portion of the distributions consist of a return of capital. Pursuant to Section 852 of the Internal
Revenue Code, the taxability of these distributions will be reported on Form 1099-DIV for 2023. |
Performance returns for the Fund
are total returns, which include dividends. 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 34.
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.
Liberty All-Star® Growth Fund |
Table of Distributions
Rights Offerings and Distribution Policy |
(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 |
|
|
|
2020 |
0.63 |
March |
5 |
4.34 |
2021 |
1.02 |
June |
51 |
8.21 |
2022 |
0.50 |
|
|
|
2023 |
|
|
|
|
1st Quarter |
0.11 |
|
|
|
2nd Quarter |
0.11 |
|
|
|
Total |
$16.72 |
|
|
|
| 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
final determination of the source of all distributions in 2023 for tax reporting purposes will be made after year end. The actual
amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during the
remainder of 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.
Semi-Annual Report (Unaudited) | June 30, 2023 |
5 |
Liberty All-Star® Growth Fund |
Stock Changes in the Quarter |
(Unaudited)
The following are the largest ($2 million or more) stock
changes - both purchases and sales - that were made in the Fund’s portfolio during the second quarter of 2023.
|
SHARES |
Security
Name |
Purchases
(Sales) |
Held
as of 6/30/23 |
Purchases |
|
|
Bruker Corp. |
35,000 |
35,000 |
FactSet Research Systems, Inc. |
7,000 |
7,000 |
Hologic, Inc. |
32,500 |
32,500 |
NVIDIA Corp. |
5,610 |
5,610 |
|
|
|
Sales |
|
|
Masco Corp. |
(55,000) |
0 |
Neurocrine Biosciences, Inc. |
(22,500) |
0 |
Trimble, Inc. |
(50,000) |
0 |
Liberty All-Star® Growth Fund |
Top 20 Holdings & Economic Sectors |
June 30, 2023 (Unaudited)
Top 20 Holdings* |
Percent of Net Assets |
SPS Commerce, Inc. |
2.79% |
Amazon.com, Inc. |
1.97 |
Microsoft Corp. |
1.91 |
Visa, Inc. |
1.82 |
Progyny, Inc. |
1.77 |
FirstService Corp. |
1.76 |
Casella Waste Systems, Inc. |
1.66 |
Glaukos Corp. |
1.63 |
Deckers Outdoor Corp. |
1.60 |
SiteOne Landscape Supply, Inc. |
1.53 |
Flywire Corp. |
1.50 |
S&P Global, Inc. |
1.48 |
Aon PLC |
1.45 |
Workday, Inc. |
1.44 |
Novanta, Inc. |
1.38 |
Ecolab, Inc. |
1.30 |
UnitedHealth Group, Inc. |
1.28 |
Yum! Brands, Inc. |
1.25 |
Equinix, Inc. |
1.22 |
Danaher Corp. |
1.21 |
|
31.95% |
Economic Sectors* |
Percent of Net Assets |
Information Technology |
22.12% |
Health Care |
21.00 |
Consumer Discretionary |
14.02 |
Financials |
12.72 |
Industrials |
12.65 |
Materials |
3.91 |
Real Estate |
3.75 |
Communication Services |
2.98 |
Consumer Staples |
2.45 |
Energy |
1.78 |
Other Net Assets |
2.62 |
|
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. |
Semi-Annual Report (Unaudited) | June 30, 2023 |
7 |
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 34 for a description of these indices.
PORTFOLIO
CHARACTERISTICS As of June 30, 2023 (Unaudited)
|
|
Market
Capitalization Spectrum |
|
|
RUSSELL
GROWTH |
Small |
|
Large |
|
|
Smallcap
|
Midcap |
Largecap |
|
Total |
|
Index |
Index |
Index |
Weatherbie
|
Congress |
Sustainable |
Fund |
Number
of Holdings |
1,089 |
334 |
444 |
50 |
42 |
30 |
121* |
Percent
of Holdings in Top 10 |
6% |
13% |
51% |
53% |
30% |
44% |
19% |
Weighted
Average Market Capitalization (billions) |
$3.4 |
$25.4 |
$1,055.0 |
$4.1 |
$16.6 |
$406.2 |
$150.5 |
Average
Five-Year Earnings Per Share Growth |
18% |
16% |
20% |
21% |
22% |
17% |
20% |
Average
Five-Year Sales Per Share Growth |
10% |
15% |
16% |
9% |
13% |
14% |
12% |
Price/Earnings
Ratio** |
21x |
29x |
36x |
57x |
25x |
38x |
34x |
* | Certain
holdings are held by more than one manager. |
** | Excludes
negative earnings. |
Liberty
All-Star® Growth Fund |
Manager
Interview |
(Unaudited)
|
H.
George Dai, Ph.D.
Chief
Investment Officer and Senior Portfolio Manager
Weatherbie
Capital, LLC |
WHILE
INFLATION AND INTEREST RATES DOMINATED THE HEADLINES, WEATHERBIE CALLED ON DEEP RESEARCH AND EXPERIENCE TO FIND PROMISING SMALL-CAP
STOCKS
Weatherbie
Capital is the Fund’s small-cap growth manager. The firm focuses on high quality companies that demonstrate superior earnings
growth prospects yet are reasonably priced relative to their intrinsic value. Weatherbie seeks to provide superior returns relative
to small capitalization growth indices over a full market cycle. We recently had the opportunity to speak with the firm’s
Chief Investment Officer, H. George Dai. The Fund’s Investment Advisor, ALPS Advisors, Inc., conducted the interview.
Weatherbie
selects stocks from the ground up but perhaps you could give shareholders a brief macro tutorial: Historically, small cap stocks
have shown a tendency to outperform on a relative basis in periods of rising interest rates, such as we have experienced so far
in 2023 as well as in 2022. But history isn’t infallible … this year, small-cap indices have trailed large-cap benchmarks.
What is your experience and insight regarding small-cap stock performance in periods of high inflation and rising interest rates?
First,
we would point out that there have been no changes at Weatherbie--our growth strategy is managed by the same people and process,
and we are not changing our playbook in any way. The team has historically taken a longer investment horizon than the market;
we look for companies that we think will do well over the next three to five years, while the market has recently been much more
short-term focused, leading to uncertainty and volatility. We look to invest in companies that exhibit quality and growth and
that have strong profitability, positive free cash flow and earnings.
While
this year and last our smaller-cap growth portfolio has underperformed large-cap benchmarks, the majority of our 50 holdings remain
fundamentally strong, profitable companies. We believe the equity markets continue to be driven by duration—short-duration
versus long-duration equity with short duration currently leading the way. Long-duration equities are stocks that have valuations
predominantly determined by cash flows further in the future. These companies may have low or even negative margins now. Many
of these are smaller-capitalization companies with great long-term prospects and wide addressable markets. Long-duration stocks
performed very well in periods of flat to declining interest rates. However, rising inflation expectations and rising interest
rates caused this group to underperform across 2022 and in the first half of this year.
Semi-Annual Report (Unaudited)
| June 30, 2023 |
9 |
Liberty
All-Star® Growth Fund |
Manager
Interview |
(Unaudited)
Now
we see inflation moderating, the interest rate cycle entering a pause and—as this group has seen significant valuation multiple
compression increasing their attractiveness—several of our top positions, particularly those that are more profitable, are
performing well.
A
follow-on question about this year’s market: Small-cap and mid-cap stocks have lagged in comparison to a few mega-cap stocks
that have driven the returns of large-cap benchmarks. Do you recall the market ever being so concentrated? Much of the recent
gain has been driven by a rush to AI stocks; are segments of the small-cap universe positioned to participate in the rapidly emerging
AI industry?
During
the first half of 2023 market breadth has narrowed sharply around mega-tech—as your question points out, much of the
recent gain has been driven by a rush to mega-cap AI stocks. We agree that AI broadly is going to be incredibly impactful.
Generative AI more specifically will, in our opinion, create meaningful productivity gains for many of our owned companies as
software increasingly leverages artificial intelligence and drives higher efficiency throughout the economy. The positive
dynamic change that has been seen in just a few mega-cap companies is likely over time to spread across the market cap
spectrum with many smaller-cap companies already well positioned to excel, in our view.
“The
positive dynamic change [represented by AI] that has been seen in just a few mega-cap companies is likely over time to spread
… and many smaller-cap companies are already well positioned to excel.”
As
an example, we would point to Upstart Holdings, Inc. (UPST). Upstart Holdings is engaged in providing a cloud-based artificial
intelligence lending platform that aggregates consumer demand for loans and leverages this AI-enabled platform to provide its
client bank partners with an enhanced ability to evaluate the creditworthiness of a prospective borrower. This capability helps
level the playing field for smaller banks and credit unions to provide loans to customers with what we would argue is better speed
and accuracy when compared to large money-center banks. Upstart was our top contributing position across 2021; we exited the position
when Upstart’s market cap exceeded $15 billion on a sustained basis. However, we recently reestablished a position when
the company’s market cap dipped back into our range. We continue to monitor smaller-cap growth companies with an existing
AI advantage, like Upstart and others, poised to see the implementation of AI in their businesses.
To
your specific focus on quality, growth style stocks that are well positioned in attractive industries, has your experience shown
that they are, as a rule, better able to navigate through inflationary and/or rising rate environments?
Smaller-cap
growth stocks tend to be driven by disruption, innovation and competitive advantage. Smaller growth companies often debut with
a new process, device, application, service or enhancements that rapidly take market share from competitors. Industries or technologies
early in their life cycle may be less susceptible to economic volatility because of their potential for market share gains and
these types of companies have a secular driver that can propel them forward, even in a challenging macroeconomic environment.
Liberty
All-Star® Growth Fund |
Manager
Interview |
(Unaudited)
Two
examples illustrate this: the significant growth in PCs and smartphones during challenging economic periods. Through the recession
of the early 1990s while U.S. GDP declined by 1.5 percent the personal computer industry grew by more than 43 percent. Similarly,
during the financial crisis period of 2007 to 2009 U.S. GDP declined by 4.3 percent while the global smartphone subscriber index
grew by more than 335 percent. Even when economies languish there are opportunities in industries where innovation can flourish,
as we are seeing this year in generative AI.
Our
holdings, being leaders in their respective spaces, are more able than their peers to pass through cost increases to their customers.
They have pricing power and are better able to navigate through an inflationary/rising rate environment.
One
edge that small cap stocks offer: They are often under-researched. What are one or two names in the portion of the Liberty All-Star
Growth Fund that you manage that were overlooked by others but were uncovered by rigorous research on your part and went on to
meet or exceed expectations?
Weatherbie
has over 25 years of experience in finding quality growth companies in unexpected places—such as service-oriented businesses
in more mundane industries. These companies are often under-researched by both competitors and Wall Street sell-side research.
One
example is Transcat, Inc. (TRNS), a market leader in the U.S. in what some may perceive as a mundane, niche industry: calibration
of highly technical instruments. Transcat has spent the last decade transitioning from being primarily a distributor of test and
measurement equipment into the leading calibration services provider. Calibration services (CS) encompasses the testing and measuring
of equipment used in manufacturing processes to ensure accuracy and confirm equipment capabilities for temperature, pressure,
flow and electrical variables. We believe the CS market is ripe for consolidation with Transcat the only player of significance
having an active industry consolidation strategy, rapidly widening its sustainable advantage versus the competition.
The
largest industry weightings among the small-cap growth benchmarks are often health care and technology. While the Weatherbie team
is well-experienced at identifying quality growth stocks like Transcat in services industries, we also look for “hidden
gems” in the more traditional growth industries that I mentioned – health care and tech. A good example is Glaukos
Corp. (GKOS), an ophthalmic medical technology and pharmaceutical company that focuses on novel therapies for the treatment of
glaucoma, corneal disorders and retinal diseases.
The
Glaukos “iDose” product for glaucoma is among the first long-lasting implants for glaucoma. Nearly 50 percent of patients
with glaucoma are noncompliant with their existing eye drop medications, which accelerates their path to likely blindness. iDose
is a micro-implant into the eye that automatically and slowly elutes critical medication over a multi-year period, addressing
a major gap in care in a large market. We also believe Glaukos has a strong pipeline of related products that should drive additional
growth beyond iDose.
Thank
you for the insights and analysis. Smaller-capitalization benchmarks showed some positive movement late in the half, so we will
hope that continues.
Semi-Annual Report (Unaudited)
| June 30, 2023 |
11 |
Liberty All-Star®
Growth Fund |
Schedule
of Investments |
June
30, 2023 (Unaudited)
| |
SHARES | | |
VALUE | |
COMMON STOCKS (97.38%) | |
| | | |
| | |
COMMUNICATION SERVICES (2.98%) | |
| | | |
| | |
Entertainment (1.79%) | |
| | | |
| | |
Netflix, Inc.(a) | |
| 6,725 | | |
$ | 2,962,295 | |
Take-Two Interactive Software, Inc.(a) | |
| 20,000 | | |
| 2,943,200 | |
| |
| | | |
| 5,905,495 | |
Interactive Media & Services (1.19%) | |
| | | |
| | |
Alphabet, Inc., Class C(a) | |
| 32,453 | | |
| 3,925,839 | |
| |
| | | |
| | |
Media (0.00%)(b) | |
| | | |
| | |
TechTarget, Inc.(a) | |
| 688 | | |
| 21,418 | |
| |
| | | |
| | |
CONSUMER DISCRETIONARY (14.02%) | |
| | | |
| | |
Broadline Retail (2.57%) | |
| | | |
| | |
Amazon.com, Inc.(a) | |
| 49,964 | | |
| 6,513,307 | |
Ollie's Bargain Outlet Holdings, Inc.(a) | |
| 33,967 | | |
| 1,967,708 | |
| |
| | | |
| 8,481,015 | |
Distributors (0.79%) | |
| | | |
| | |
Pool Corp. | |
| 7,000 | | |
| 2,622,480 | |
| |
| | | |
| | |
Hotels, Restaurants & Leisure (5.65%) | |
| | | |
| | |
Choice Hotels International, Inc. | |
| 22,500 | | |
| 2,644,200 | |
Darden Restaurants, Inc. | |
| 18,000 | | |
| 3,007,440 | |
Planet Fitness, Inc., Class A(a) | |
| 58,946 | | |
| 3,975,318 | |
Starbucks Corp. | |
| 34,021 | | |
| 3,370,120 | |
Wingstop, Inc. | |
| 6,240 | | |
| 1,248,999 | |
Xponential Fitness, Inc.(a) | |
| 17,465 | | |
| 301,271 | |
Yum! Brands, Inc. | |
| 29,892 | | |
| 4,141,537 | |
| |
| | | |
| 18,688,885 | |
Leisure Products (0.08%) | |
| | | |
| | |
Latham Group, Inc.(a) | |
| 73,068 | | |
| 271,082 | |
| |
| | | |
| | |
Specialty Retail (3.32%) | |
| | | |
| | |
Asbury Automotive Group, Inc.(a) | |
| 13,000 | | |
| 3,125,460 | |
Floor & Decor Holdings, Inc., Class A(a) | |
| 30,500 | | |
| 3,170,780 | |
MYT Netherlands Parent BV(a)(c)(d) | |
| 40,114 | | |
| 160,456 | |
National Vision Holdings, Inc.(a) | |
| 155 | | |
| 3,765 | |
Ulta Beauty, Inc.(a) | |
| 7,000 | | |
| 3,294,165 | |
Williams-Sonoma, Inc. | |
| 9,597 | | |
| 1,200,969 | |
| |
| | | |
| 10,955,595 | |
Textiles, Apparel & Luxury Goods (1.61%) | |
| | | |
| | |
Canada Goose Holdings, Inc.(a)(d) | |
| 3,115 | | |
| 55,447 | |
See
Notes to Financial Statements.
Liberty All-Star®
Growth Fund |
Schedule
of Investments |
June
30, 2023 (Unaudited)
| |
SHARES | | |
VALUE | |
COMMON STOCKS (continued) | |
| | | |
| | |
Textiles, Apparel & Luxury Goods (continued) | |
| | | |
| | |
Deckers Outdoor Corp.(a) | |
| 10,000 | | |
$ | 5,276,600 | |
| |
| | | |
| 5,332,047 | |
CONSUMER STAPLES (2.45%) | |
| | | |
| | |
Consumer Staples Distribution & Retail (1.54%) | |
| | | |
| | |
BJ's Wholesale Club Holdings, Inc.(a) | |
| 32,500 | | |
| 2,047,825 | |
Dollar General Corp. | |
| 17,893 | | |
| 3,037,873 | |
| |
| | | |
| 5,085,698 | |
Household Products (0.91%) | |
| | | |
| | |
Church & Dwight Co., Inc. | |
| 30,000 | | |
| 3,006,900 | |
| |
| | | |
| | |
ENERGY (1.78%) | |
| | | |
| | |
Energy Equipment & Services (1.78%) | |
| | | |
| | |
ChampionX Corp. | |
| 41,928 | | |
| 1,301,445 | |
Core Laboratories, Inc. | |
| 127,175 | | |
| 2,956,819 | |
Dril-Quip, Inc.(a) | |
| 70,199 | | |
| 1,633,530 | |
| |
| | | |
| 5,891,794 | |
FINANCIALS (12.72%) | |
| | | |
| | |
Banks (0.11%) | |
| | | |
| | |
Axos Financial, Inc.(a) | |
| 6,656 | | |
| 262,513 | |
Seacoast Banking Corp. of Florida | |
| 4,632 | | |
| 102,367 | |
| |
| | | |
| 364,880 | |
Capital Markets (5.89%) | |
| | | |
| | |
FactSet Research Systems, Inc. | |
| 7,000 | | |
| 2,804,550 | |
Hamilton Lane, Inc., Class A | |
| 35,091 | | |
| 2,806,578 | |
MSCI, Inc. | |
| 7,977 | | |
| 3,743,526 | |
Raymond James Financial, Inc. | |
| 22,500 | | |
| 2,334,825 | |
S&P Global, Inc. | |
| 12,187 | | |
| 4,885,647 | |
StepStone Group, Inc., Class A | |
| 117,019 | | |
| 2,903,241 | |
| |
| | | |
| 19,478,367 | |
Consumer Finance (1.01%) | |
| | | |
| | |
American Express Co. | |
| 17,090 | | |
| 2,977,078 | |
Upstart Holdings, Inc.(a)(d) | |
| 10,379 | | |
| 371,672 | |
| |
| | | |
| 3,348,750 | |
Financial Services (4.25%) | |
| | | |
| | |
FleetCor Technologies, Inc.(a) | |
| 12,196 | | |
| 3,062,172 | |
Flywire Corp.(a) | |
| 159,978 | | |
| 4,965,717 | |
Visa, Inc., Class A | |
| 25,315 | | |
| 6,011,806 | |
| |
| | | |
| 14,039,695 | |
See
Notes to Financial Statements.
Semi-Annual Report (Unaudited)
| June 30, 2023 |
|
|
13 |
Liberty All-Star®
Growth Fund |
Schedule
of Investments |
June
30, 2023 (Unaudited)
| |
SHARES | | |
VALUE | |
COMMON STOCKS (continued) | |
| | | |
| | |
Insurance (1.46%) | |
| | | |
| | |
Aon PLC, Class A | |
| 13,923 | | |
$ | 4,806,220 | |
| |
| | | |
| | |
HEALTH CARE (21.00%) | |
| | | |
| | |
Biotechnology (2.36%) | |
| | | |
| | |
ACADIA Pharmaceuticals, Inc.(a) | |
| 104,793 | | |
| 2,509,792 | |
Natera, Inc.(a) | |
| 22,678 | | |
| 1,103,511 | |
Regeneron Pharmaceuticals, Inc.(a) | |
| 3,737 | | |
| 2,685,184 | |
Ultragenyx Pharmaceutical, Inc.(a) | |
| 32,558 | | |
| 1,501,901 | |
| |
| | | |
| 7,800,388 | |
Health Care Equipment & Supplies (7.46%) | |
| | | |
| | |
Cooper Cos., Inc. | |
| 7,500 | | |
| 2,875,725 | |
Glaukos Corp.(a) | |
| 75,686 | | |
| 5,389,600 | |
Hologic, Inc.(a) | |
| 32,500 | | |
| 2,631,525 | |
Inmode, Ltd.(a) | |
| 19,951 | | |
| 745,170 | |
Inogen, Inc.(a) | |
| 49,267 | | |
| 569,034 | |
Inspire Medical Systems, Inc.(a) | |
| 8,622 | | |
| 2,799,046 | |
Intuitive Surgical, Inc.(a) | |
| 7,047 | | |
| 2,409,651 | |
Nevro Corp.(a) | |
| 50,217 | | |
| 1,276,516 | |
ResMed, Inc. | |
| 12,500 | | |
| 2,731,250 | |
STERIS PLC | |
| 14,000 | | |
| 3,149,720 | |
Tandem Diabetes Care, Inc.(a) | |
| 3,726 | | |
| 91,436 | |
| |
| | | |
| 24,668,673 | |
Health Care Providers & Services (4.43%) | |
| | | |
| | |
Agiliti, Inc.(a) | |
| 133,167 | | |
| 2,197,256 | |
NeoGenomics, Inc.(a) | |
| 45,034 | | |
| 723,696 | |
Progyny, Inc.(a) | |
| 148,828 | | |
| 5,854,894 | |
UnitedHealth Group, Inc. | |
| 8,774 | | |
| 4,217,135 | |
US Physical Therapy, Inc. | |
| 13,542 | | |
| 1,643,863 | |
| |
| | | |
| 14,636,844 | |
Health Care Technology (0.42%) | |
| | | |
| | |
Definitive Healthcare Corp.(a) | |
| 125,645 | | |
| 1,382,095 | |
| |
| | | |
| | |
Life Sciences Tools & Services (6.33%) | |
| | | |
| | |
Bruker Corp. | |
| 35,000 | | |
| 2,587,200 | |
Charles River Laboratories International, Inc.(a) | |
| 10,500 | | |
| 2,207,625 | |
Danaher Corp. | |
| 16,687 | | |
| 4,004,880 | |
IQVIA Holdings, Inc.(a) | |
| 13,863 | | |
| 3,115,987 | |
Mettler-Toledo International, Inc.(a) | |
| 1,700 | | |
| 2,229,788 | |
Thermo Fisher Scientific, Inc. | |
| 7,519 | | |
| 3,923,038 | |
West Pharmaceutical Services, Inc. | |
| 7,500 | | |
| 2,868,525 | |
| |
| | | |
| 20,937,043 | |
See
Notes to Financial Statements.
Liberty
All-Star® Growth Fund |
Schedule
of Investments |
June
30, 2023 (Unaudited)
| |
SHARES | | |
VALUE | |
COMMON STOCKS (continued) | |
| | | |
| | |
INDUSTRIALS (12.65%) | |
| | | |
| | |
Aerospace & Defense (0.24%) | |
| | | |
| | |
Kratos Defense & Security Solutions, Inc.(a) | |
| 54,730 | | |
$ | 784,828 | |
| |
| | | |
| | |
Commercial Services & Supplies (3.72%) | |
| | | |
| | |
Casella Waste Systems, Inc., Class A(a) | |
| 60,689 | | |
| 5,489,320 | |
Copart, Inc.(a) | |
| 35,000 | | |
| 3,192,350 | |
Montrose Environmental Group, Inc.(a) | |
| 85,605 | | |
| 3,605,683 | |
| |
| | | |
| 12,287,353 | |
Construction & Engineering (1.66%) | |
| | | |
| | |
EMCOR Group, Inc. | |
| 15,500 | | |
| 2,864,090 | |
WillScot Mobile Mini Holdings Corp.(a) | |
| 55,000 | | |
| 2,628,450 | |
| |
| | | |
| 5,492,540 | |
Ground Transportation (1.33%) | |
| | | |
| | |
RXO, Inc.(a) | |
| 58,530 | | |
| 1,326,875 | |
Saia, Inc.(a) | |
| 9,000 | | |
| 3,081,690 | |
| |
| | | |
| 4,408,565 | |
Machinery (1.36%) | |
| | | |
| | |
Crane Co. | |
| 16,486 | | |
| 1,469,232 | |
IDEX Corp. | |
| 14,000 | | |
| 3,013,640 | |
| |
| | | |
| 4,482,872 | |
Professional Services (1.65%) | |
| | | |
| | |
Booz Allen Hamilton Holding Corp. | |
| 25,000 | | |
| 2,790,000 | |
NV5 Global, Inc.(a) | |
| 920 | | |
| 101,909 | |
Paycom Software, Inc. | |
| 8,000 | | |
| 2,569,920 | |
| |
| | | |
| 5,461,829 | |
Trading Companies & Distributors (2.69%) | |
| | | |
| | |
SiteOne Landscape Supply, Inc.(a) | |
| 30,217 | | |
| 5,057,117 | |
Transcat, Inc.(a) | |
| 38,662 | | |
| 3,298,255 | |
Xometry, Inc., Class A(a)(d) | |
| 25,859 | | |
| 547,694 | |
| |
| | | |
| 8,903,066 | |
INFORMATION TECHNOLOGY (22.12%) | |
| | | |
| | |
Communications Equipment (0.64%) | |
| | | |
| | |
Ciena Corp.(a) | |
| 50,000 | | |
| 2,124,500 | |
| |
| | | |
| | |
Electronic Equipment, Instruments & Components (2.95%) | |
| | | |
| | |
Keysight Technologies, Inc.(a) | |
| 15,000 | | |
| 2,511,750 | |
Novanta, Inc.(a) | |
| 24,801 | | |
| 4,565,864 | |
Teledyne Technologies, Inc.(a) | |
| 6,500 | | |
| 2,672,215 | |
| |
| | | |
| 9,749,829 | |
See
Notes to Financial Statements.
Semi-Annual Report (Unaudited)
| June 30, 2023 |
|
|
15 |
Liberty All-Star®
Growth Fund |
Schedule
of Investments |
June
30, 2023 (Unaudited)
| |
SHARES | | |
VALUE | |
COMMON STOCKS (continued) | |
| | | |
| | |
IT Services (1.21%) | |
| | | |
| | |
Akamai Technologies, Inc.(a) | |
| 32,000 | | |
$ | 2,875,840 | |
CI&T, Inc., Class A(a)(d) | |
| 74,288 | | |
| 465,786 | |
Globant SA(a) | |
| 3,598 | | |
| 646,632 | |
| |
| | | |
| 3,988,258 | |
Semiconductors & Semiconductor Equipment (4.10%) | |
| | | |
| | |
Diodes, Inc.(a) | |
| 30,000 | | |
| 2,774,700 | |
Entegris, Inc. | |
| 20,000 | | |
| 2,216,400 | |
Impinj, Inc.(a) | |
| 11,250 | | |
| 1,008,563 | |
Monolithic Power Systems, Inc. | |
| 5,500 | | |
| 2,971,265 | |
NVIDIA Corp. | |
| 5,610 | | |
| 2,373,142 | |
SiTime Corp.(a) | |
| 8,112 | | |
| 956,973 | |
Skyworks Solutions, Inc. | |
| 11,354 | | |
| 1,256,774 | |
| |
| | | |
| 13,557,817 | |
Software (13.22%) | |
| | | |
| | |
Adobe, Inc.(a) | |
| 4,610 | | |
| 2,254,244 | |
Autodesk, Inc.(a) | |
| 16,934 | | |
| 3,464,866 | |
Intuit, Inc. | |
| 7,851 | | |
| 3,597,250 | |
Microsoft Corp. | |
| 18,534 | | |
| 6,311,568 | |
nCino, Inc.(a) | |
| 19,572 | | |
| 589,509 | |
Qualys, Inc.(a) | |
| 19,000 | | |
| 2,454,230 | |
Rapid7, Inc.(a) | |
| 13,314 | | |
| 602,858 | |
Salesforce, Inc.(a) | |
| 15,845 | | |
| 3,347,415 | |
ServiceNow, Inc.(a) | |
| 6,156 | | |
| 3,459,487 | |
Sprout Social, Inc.(a) | |
| 871 | | |
| 40,205 | |
SPS Commerce, Inc.(a) | |
| 48,007 | | |
| 9,220,225 | |
Vertex, Inc., Class A(a) | |
| 183,950 | | |
| 3,587,025 | |
Workday, Inc., Class A(a) | |
| 21,034 | | |
| 4,751,370 | |
| |
| | | |
| 43,680,252 | |
MATERIALS (3.91%) | |
| | | |
| | |
Chemicals (2.28%) | |
| | | |
| | |
Ecolab, Inc. | |
| 23,049 | | |
| 4,303,018 | |
Sherwin-Williams Co. | |
| 12,167 | | |
| 3,230,582 | |
| |
| | | |
| 7,533,600 | |
Containers & Packaging (1.63%) | |
| | | |
| | |
Avery Dennison Corp. | |
| 15,000 | | |
| 2,577,000 | |
Ball Corp. | |
| 48,353 | | |
| 2,814,628 | |
| |
| | | |
| 5,391,628 | |
REAL ESTATE (3.75%) | |
| | | |
| | |
Real Estate Management & Development (1.76%) | |
| | | |
| | |
FirstService Corp. | |
| 37,671 | | |
| 5,804,725 | |
See
Notes to Financial Statements.
Liberty
All-Star® Growth Fund |
Schedule
of Investments |
June
30, 2023 (Unaudited)
| |
SHARES | | |
VALUE | |
COMMON STOCKS (continued) | |
| | | |
| | |
Residential REITs (0.77%) | |
| | | |
| | |
Sun Communities, Inc. | |
| 19,500 | | |
$ | 2,543,970 | |
| |
| | | |
| | |
Specialized REITs (1.22%) | |
| | | |
| | |
Equinix, Inc. | |
| 5,145 | | |
| 4,033,371 | |
| |
| | | |
| | |
TOTAL COMMON STOCKS | |
| | | |
| | |
(COST OF $236,760,540) | |
| | | |
| 321,880,206 | |
| |
| | | |
| | |
SHORT TERM INVESTMENTS (2.75%) | |
| | | |
| | |
MONEY MARKET FUND (2.43%) | |
| | | |
| | |
State Street Institutional US Government Money Market Fund, 5.02%(e) | |
| | | |
| | |
(COST OF $8,030,213) | |
| 8,030,213 | | |
| 8,030,213 | |
| |
| | | |
| | |
INVESTMENTS PURCHASED WITH COLLATERAL FROM SECURITIES LOANED (0.32%) | |
| | | |
| | |
State Street Navigator Securities Lending Government Money Market Portfolio, 5.11% | |
| | | |
| | |
(COST OF $1,059,561) | |
| 1,059,561 | | |
| 1,059,561 | |
| |
| | | |
| | |
TOTAL SHORT TERM INVESTMENTS | |
| | | |
| | |
(COST OF $9,089,774) | |
| | | |
| 9,089,774 | |
| |
| | | |
| | |
TOTAL INVESTMENTS (100.13%) | |
| | | |
| | |
(COST OF $245,850,314) | |
| | | |
| 330,969,980 | |
| |
| | | |
| | |
LIABILITIES IN EXCESS OF OTHER ASSETS (-0.13%) | |
| | | |
| (419,424 | ) |
| |
| | | |
| | |
NET ASSETS (100.00%) | |
| | | |
$ | 330,550,556 | |
| |
| | | |
| | |
NET ASSET VALUE PER SHARE | |
| | | |
| | |
(58,237,048 SHARES OUTSTANDING) | |
| | | |
$ | 5.68 | |
(a) | Non-income
producing security. |
(b) | Amount
represents less than 0.005% of net assets. |
(c) | American
Depositary Receipt. |
(d) | Security,
or a portion of the security position, is currently on loan. The total market value of
securities on loan is $1,033,012. |
(e) | Rate
reflects seven-day effective yield on June 30, 2023. |
See
Notes to Financial Statements.
Semi-Annual Report (Unaudited)
| June 30, 2023 |
17 |
Liberty All-Star® Growth Fund |
Statement of Assets and Liabilities |
June 30, 2023 (Unaudited)
ASSETS: | |
| |
Investments at value (Cost $245,850,314)(a) | |
$ | 330,969,980 | |
Receivable for investment securities sold | |
| 3,924,175 | |
Dividends and interest receivable | |
| 109,561 | |
Tax reclaim receivable | |
| 17,101 | |
Prepaid and other assets | |
| 19,025 | |
TOTAL ASSETS | |
| 335,039,842 | |
| |
| | |
LIABILITIES: | |
| | |
Payable for investments purchased | |
| 3,044,615 | |
Investment advisory fee payable | |
| 209,857 | |
Payable for administration, pricing and bookkeeping fees | |
| 59,888 | |
Payable for collateral upon return of securities loaned | |
| 1,059,561 | |
Accrued expenses | |
| 115,365 | |
TOTAL LIABILITIES | |
| 4,489,286 | |
NET ASSETS | |
$ | 330,550,556 | |
| |
| | |
NET ASSETS REPRESENTED BY: | |
| | |
Paid-in capital | |
$ | 295,824,108 | |
Total distributable earnings | |
| 34,726,448 | |
NET ASSETS | |
$ | 330,550,556 | |
| |
| | |
Shares of common stock outstanding (authorized 200,000,000 shares at $0.10 Par) | |
| 58,237,048 | |
NET ASSET VALUE PER SHARE | |
$ | 5.68 | |
| (a) | Includes securities on loan
of $1,033,012. |
See Notes to Financial Statements.
Liberty All-Star® Growth Fund |
Statement of Operations |
For the Six Months Ended June 30, 2023
(Unaudited)
INVESTMENT INCOME: | |
| |
Dividends (Net of foreign taxes withheld at source which amounted to $2,924) | |
$ | 991,807 | |
Securities lending income | |
| 16,866 | |
TOTAL INVESTMENT INCOME | |
| 1,008,673 | |
| |
| | |
EXPENSES: | |
| | |
Investment advisory fee | |
| 1,233,254 | |
Administration, pricing and bookkeeping fees | |
| 311,278 | |
Audit fee | |
| 9,468 | |
Custodian fee | |
| 18,273 | |
Directors' fees and expenses | |
| 63,126 | |
Insurance expense | |
| 5,308 | |
Legal fees | |
| 16,183 | |
NYSE fee | |
| 30,858 | |
Proxy fees | |
| 17,069 | |
Shareholder communication expenses | |
| 13,909 | |
Transfer agent fees | |
| 39,321 | |
Miscellaneous expenses | |
| 5,088 | |
TOTAL EXPENSES | |
| 1,763,135 | |
NET INVESTMENT LOSS | |
| (754,462 | ) |
| |
| | |
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: | |
| | |
Net realized loss on investments | |
| (10,755,148 | ) |
Net change in unrealized appreciation on investments | |
| 50,414,700 | |
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS | |
| 39,659,552 | |
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | |
$ | 38,905,090 | |
See Notes to Financial Statements.
Semi-Annual Report (Unaudited) | June 30, 2023 |
19 |
Liberty All-Star® Growth Fund |
Statements of Changes in Net Assets |
| |
For the Six | | |
| |
| |
Months Ended | | |
For the | |
| |
June 30, 2023 | | |
Year Ended | |
| |
(Unaudited) | | |
December 31, 2022 | |
FROM OPERATIONS: | |
| | | |
| | |
Net investment loss | |
$ | (754,462 | ) | |
$ | (2,001,172 | ) |
Net realized loss on investments | |
| (10,755,148 | ) | |
| (19,749,593 | ) |
Net change in unrealized appreciation/(depreciation) on investments | |
| 50,414,700 | | |
| (118,492,798 | ) |
Net Increase/(Decrease) in Net Assets From Operations | |
| 38,905,090 | | |
| (140,243,563 | ) |
| |
| | | |
| | |
DISTRIBUTIONS TO SHAREHOLDERS: | |
| | | |
| | |
From distributable earnings | |
| (12,640,986 | ) | |
| (27,962,642 | ) |
Total Distributions | |
| (12,640,986 | ) | |
| (27,962,642 | ) |
| |
| | | |
| | |
CAPITAL SHARE TRANSACTIONS: | |
| | | |
| | |
Dividend reinvestments | |
| 5,334,717 | | |
| 11,196,747 | |
Net increase resulting from Capital Share Transactions | |
| 5,334,717 | | |
| 11,196,747 | |
Total Increase/(Decrease) in Net Assets | |
| 31,598,821 | | |
| (157,009,458 | ) |
| |
| | | |
| | |
NET ASSETS: | |
| | | |
| | |
Beginning of period | |
| 298,951,735 | | |
| 455,961,193 | |
End of period | |
$ | 330,550,556 | | |
$ | 298,951,735 | |
See Notes to Financial Statements.
Intentionally Left Blank
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 investment income |
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 Six Months Ended June 30, 2023 | | |
For the Year Ended December 31, | |
(Unaudited) | | |
2022 | | |
2021 | | |
2020 | | |
2019 | | |
2018 | |
| | |
| | |
| | |
| | |
| | |
| |
$ | 5.23 | | |
$ | 8.25 | | |
$ | 7.98 | | |
$ | 6.19 | | |
$ | 4.94 | | |
$ | 5.67 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| (0.01 | ) | |
| (0.04 | ) | |
| (0.06 | ) | |
| (0.05 | ) | |
| (0.03 | ) | |
| (0.03 | ) |
| 0.68 | | |
| (2.48 | ) | |
| 1.46 | | |
| 2.51 | | |
| 1.74 | | |
| (0.01 | ) |
| 0.67 | | |
| (2.52 | ) | |
| 1.40 | | |
| 2.46 | | |
| 1.71 | | |
| (0.04 | ) |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| (0.22 | ) | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
| – | | |
| (0.50 | ) | |
| (1.02 | ) | |
| (0.63 | ) | |
| (0.46 | ) | |
| (0.46 | ) |
| (0.22 | ) | |
| (0.50 | ) | |
| (1.02 | ) | |
| (0.63 | ) | |
| (0.46 | ) | |
| (0.46 | ) |
| – | | |
| – | | |
| (0.11 | ) | |
| (0.04 | ) | |
| – | | |
| (0.23 | ) |
$ | 5.68 | | |
$ | 5.23 | | |
$ | 8.25 | | |
$ | 7.98 | | |
$ | 6.19 | | |
$ | 4.94 | |
$ | 5.41 | | |
$ | 4.93 | | |
$ | 9.00 | | |
$ | 8.20 | | |
$ | 6.50 | | |
$ | 4.39 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| 13.3 | %(d) | |
| (31.0 | %) | |
| 18.1 | % | |
| 42.4 | % | |
| 35.8 | % | |
| (1.0 | %) |
| 14.4 | %(d) | |
| (40.4 | %) | |
| 25.4 | % | |
| 39.4 | % | |
| 60.5 | % | |
| (9.9 | %) |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
$ | 331 | | |
$ | 299 | | |
$ | 456 | | |
$ | 338 | | |
$ | 235 | | |
$ | 183 | |
| 1.14 | %(e) | |
| 1.14 | % | |
| 1.12 | % | |
| 1.20 | % | |
| 1.22 | % | |
| 1.25 | % |
| (0.49 | %)(e) | |
| (0.60 | %) | |
| (0.66 | %) | |
| (0.69 | %) | |
| (0.57 | %) | |
| (0.47 | %) |
| 19 | %(d) | |
| 31 | % | |
| 42 | % | |
| 55 | % | |
| 34 | % | |
| 49 | % |
Semi-Annual Report (Unaudited) | June 30, 2023 |
23 |
Liberty All-Star® Growth Fund |
Notes to Financial Statements |
June 30, 2023 (Unaudited)
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 200,000,000 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 Financial Services - Investment Companies.
Use of Estimates
The preparation of financial statements
in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases
and decreases in net assets from operations during the reporting period. 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 ("NAV") 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"). The Board has designated ALPS Advisors, Inc. (the “Advisor”)
as the Fund’s Valuation Designee. The Valuation Designee is responsible for determining fair value in good faith for all
Fund investments, subject to oversight by 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 security will be valued by the Advisor's Valuation Committee, using
fair valuation procedures established by the Valuation Designee. Examples of potentially significant events that could materially impact a Fund’s
net asset value 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, 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 June 30, 2023, the Fund held no securities that were fair valued.
Liberty All-Star® Growth Fund |
Notes to Financial Statements |
June 30, 2023 (Unaudited)
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 are recorded on the ex-date.
Dividend income is recognized on the ex-dividend
date, or for certain foreign securities, as soon as information is available to the Fund. Withholding taxes on foreign dividends
are paid (a portion of which may be reclaimable) or provided for in accordance with the applicable country’s tax rules and
rates and are disclosed in the Statements of Operations.
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 Schedule
of Investments 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.
Semi-Annual Report (Unaudited) | June 30, 2023 |
25 |
Liberty All-Star® Growth Fund |
Notes to Financial Statements |
June 30, 2023 (Unaudited)
The following is a summary of the Fund's
securities lending positions and related cash and non-cash collateral received as of June 30, 2023:
Market Value of Securities on Loan | | |
Cash Collateral Received | | |
Non-Cash Collateral Received | | |
Total Collateral Received | |
$ | 1,033,012 | | |
$ | 1,059,561 | | |
$ | – | | |
$ | 1,059,561 | |
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 June 30, 2023:
| |
|
| | |
Remaining contractual maturity of the agreements | |
| |
| |
|
| | |
| |
| |
Securities Lending Transactions | |
Overnight & Continuous |
| | Up to 30 days | |
30-90 days | | |
Greater than 90 days | | |
Total | |
State Street Navigator | |
$ | 1,059,561 |
| | $ |
– | |
$ | – | | |
$ | – | | |
$ | 1,059,561 | |
Total Borrowings | |
| |
| | |
| |
| | | |
| | | |
$ | 1,059,561 | |
Gross amount of recognized liabilities for securities lending (collateral received) | | |
$ | 1,059,561 | |
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.
Liberty All-Star® Growth Fund |
Notes to Financial Statements |
June 30, 2023 (Unaudited)
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.
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 June 30, 2023:
Investments in Securities at | |
Valuation Inputs | | |
| | |
Value | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Common Stocks* | |
$ | 321,880,206 | | |
$ | – | | |
$ | – | | |
$ | 321,880,206 | |
Short Term Investments | |
| 9,089,774 | | |
| – | | |
| – | | |
| 9,089,774 | |
Total | |
$ | 330,969,980 | | |
$ | – | | |
$ | – | | |
$ | 330,969,980 | |
| * | 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. There were no transfers into or out
of Level 3 during the six months ended June 30, 2023.
Semi-Annual Report (Unaudited) | June 30, 2023 |
27 |
Liberty All-Star® Growth Fund |
Notes to Financial Statements |
June 30, 2023 (Unaudited)
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.
NOTE 3. RISKS
Investment and Market Risk
An investment in shares is subject to investment
risk, including the possible loss of the entire amount invested. An investment in shares represents an indirect investment in the
securities owned by the Fund, most of which are anticipated to be traded on a national securities exchange or in the over-the-counter
markets. The value of these securities, like other market investments, may move up or down, sometimes rapidly and unpredictably.
Shares at any point in time may be worth less than their original cost, even after taking into account the reinvestment of dividends
and other distributions.
Common Stock Risk
The Fund is not limited in the percentage
of its assets that may be invested in common stocks and other equity securities, and therefore a risk of investing in the Fund
is common stock or equity risk. Equity risk is the risk that the market value of securities held by the Fund will fall due to general
market or economic conditions, perceptions regarding the industries in which the issuers of securities held by the Fund participate,
and the particular circumstances and performance of particular companies whose securities the Fund holds. In addition, common stock
of an issuer in the Fund’s portfolio may decline in price if the issuer fails to make anticipated dividend payments because,
among other reasons, the issuer of the security experiences a decline in its financial condition. Common equity securities in which
the Fund will invest are structurally subordinated to preferred stocks, bonds and other debt instruments in a company’s capital
structure, in terms of priority to corporate income, and therefore will be subject to greater payment risk than preferred stocks
or debt instruments of such issuers. In addition, while broad market measures of common stocks have historically generated higher
average returns than fixed income securities, common stocks have also experienced significantly more volatility in their returns.
Growth stocks are stocks of companies believed
to have above-average potential for growth in revenue and earnings. In certain market conditions, prices of growth stocks may be
more sensitive to changes in current or expected earnings than the prices of other stocks. Growth stocks may not perform as well
as the stock market in general.
Foreign Currency Risk
Investment securities and other assets
and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and
sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts
on the respective dates of such transactions. The Portfolios do not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities
held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized
foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes
recorded on the Portfolios books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the fair values of assets and liabilities, other than investments insecurities
at fiscal period end, resulting from changes in exchange rates.
Liberty All-Star® Growth Fund |
Notes to Financial Statements |
June 30, 2023 (Unaudited)
Market Disruption and Geopolitical
Risk
Social, political, and economic events,
such as natural disasters and health emergencies (e.g., epidemics and pandemics, such as the recent COVID-19 outbreak), ongoing
U.S military activities and political developments, as well as the threat of terrorist attacks, could have significant adverse
effects on the U.S. economy, the stock market, world economies and markets generally, and may lead to volatility in the value of
the Fund’s investments. These types of events may develop quickly and unexpectedly and could significantly impact issuers,
industries, governments and other systems, including financial markets. Global systems are increasingly interconnected, and an
event in one area of the world may have adverse effects in other economies and financial markets. It is difficult to predict the
timing or duration of an event, or its impact on the Fund and its shareholders.
NOTE 4. 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. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statements
of Operations.
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 June 30, 2023.
Semi-Annual Report (Unaudited) | June 30, 2023 |
29 |
Liberty All-Star® Growth Fund |
Notes to Financial Statements |
June 30, 2023 (Unaudited)
The tax character of distributions paid during the year ended
December 31, 2022 were as follows:
Distributions Paid From: | |
December 31, 2022 | |
Ordinary Income | |
$ | – | |
Long-term capital gains | |
| 23,490,602 | |
Total | |
$ | 23,490,602 | |
The Fund declared a distribution
of $5,671,988 with an ex-date in 2022 that was paid in 2023. $4,472,040 of this amount is not included above, and the tax character
of such distributions will be determined at the end of 2023.
As of June 30, 2023, 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 | |
$ | 248,339,018 | | |
$ | 97,921,827 | | |
$ | (15,290,865 | ) | |
$ | 82,630,962 | |
The differences between book-basis
and tax-basis are primarily due to deferral of losses from wash sales. In addition, certain tax cost basis adjustments are finalized
at fiscal year-end and therefore have not been determined as of June 30, 2023.
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 six months
ended June 30, 2023, 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 5. 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% |
Liberty All-Star® Growth Fund |
Notes to Financial Statements |
June 30, 2023 (Unaudited)
Investment Advisory Fees for the six months
ended June 30, 2023 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% |
Administration, Bookkeeping and Pricing
Services
ALPS Fund Services, Inc. (“ALPS”),
an affiliate of AAI, 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.
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 six months ended June 30, 2023 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 6. PORTFOLIO INFORMATION
Purchases and Sales of Securities
For the six month period ended June 30,
2023, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $58,051,049 and $68,810,590
respectively.
NOTE 7. CAPITAL TRANSACTIONS
During the six months ended June 30, 2023
and the year ended December 31, 2022, distributions in the amounts of $5,334,717 and $11,196,747, 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 1,026,763 and of 1,934,241 shares, respectively.
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. 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, subject to certain limitations as described more fully in the
Plan. Distributions declared payable in shares 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.
Semi-Annual Report (Unaudited) | June 30, 2023 |
31 |
Liberty All-Star® Growth Fund |
Notes to Financial Statements |
June 30, 2023 (Unaudited)
NOTE 8. 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.
NOTE 9. 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. A January 2023 Memorandum of Decision and Order issued by a Massachusetts Superior
Court judge has held that a by-laws provision limiting the ability of shareholders to vote shares in excess of a specified amount
is not permissible under the Investment Company Act of 1940. As a result of this decision, there is some uncertainty whether a
registered investment company such as the Fund may rely on the Maryland Business Control Share Acquisition Act.
Liberty All-Star® Growth Fund |
Notes to Financial Statements |
June 30, 2023 (Unaudited)
NOTE 10. SUBSEQUENT EVENTS
Subsequent events, if any, after the date
of the Statement of Assets and Liabilities have been evaluated through the date the financial statements are issued. Management
has determined that there were no subsequent events to report through the issuance of these financial statements.
Semi-Annual Report (Unaudited) | June 30, 2023 |
33 |
Liberty All-Star® Growth Fund |
Description
of Lipper
Benchmark
and Market Indices |
(Unaudited)
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 96% of the investable
U.S. equity market.
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 represents approximately 80% of the total domestic U.S. equity market capitalization.
An investor cannot invest directly in an index.
(b) Not applicable.
Item 2. Code of Ethics.
Not applicable to this report.
Item 3. Audit Committee Financial Expert.
Not applicable to this report.
Item 4. Principal Accountant Fees and Services.
Not applicable to this report.
Item 5. Audit Committee of Listed Registrants.
Not applicable to this report.
Item 6. Schedule.
(a) Schedule of Investments is included as part of the Report
to Stockholders filed under Item 1 of this Form N-CSR.
(b) Not applicable to registrant.
Item 7. Disclosure of Proxy Voting Policies and Procedures
for Closed-End Management Investment Companies.
Not applicable to this report.
Item 8. Portfolio Managers of Closed-End Management Investment
Companies.
(a) Not applicable to semi-annual report.
(b) As of the date of this filing, there have been no changes
in any of the portfolio managers identified in the most recent annual report on Form N-CSR.
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
During the six months ended June 30, 2023, there were no purchases
made by or on behalf of the registrant or any “affiliated purchaser”, as defined in Rule 10b-18(a)(3) under the Securities
Exchange Act of 1934 (“Exchange Act”), of shares or other units of any class of the registrant’s equity securities
that are registered by the registrant pursuant to Section 12 of the Exchange Act.
Item 10. Submission of Matters to a Vote of Security Holders.
There have not been any material changes to the procedures by
which shareholders may recommend nominees to the registrant’s board of directors.
Item 11. Controls and Procedures.
(a) The Registrant’s Principal
Executive Officer and Principal Financial Officer have concluded that the Registrant’s disclosure controls and procedures
(as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective based on their evaluation of these
controls and procedures as of a date within 90 days of the filing date of this document.
(b) There were no changes in the registrant’s
internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) that
occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for
Closed-End Management Investment Companies.
Not applicable to the semi-annual report.
Item 13. Exhibits.
(a)(1) Not applicable to this report.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 attached hereto as Exhibit 99.302CERT.
(a)(3) Not applicable.
(a)(4) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
LIBERTY ALL-STAR GROWTH FUND, INC.
By: |
/s/ Mark Haley |
|
|
Mark Haley |
|
|
President (Principal Executive Officer) |
|
|
|
|
Date: |
September 6, 2023 |
|
Pursuant to the requirements of the Securities Exchange Act
of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
LIBERTY ALL-STAR GROWTH FUND, INC.
By: |
/s/ Mark Haley |
|
|
Mark Haley |
|
|
President (Principal Executive Officer) |
|
|
|
|
Date: |
September 6, 2023 |
|
By: |
/s/ Erich Rettinger |
|
|
Erich Rettinger |
|
|
Treasurer (Principal Financial Officer) |
|
|
|
|
Date: |
September 6, 2023 |
|
Ex. 99.302Cert
I, Mark Haley, President and Principal Executive Officer of
the Liberty All-Star Growth Fund, Inc. (the “registrant”) certify that:
| 1. | I have reviewed this report on Form N-CSR of the registrant; |
| 2. | Based on my knowledge, this report does not
contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements,
and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows)
of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s)
and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared; |
| (b) | Designed such internal control over financial
reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s
disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the
registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s)
and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions): |
| (a) | All significant deficiencies and material
weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect
the registrant’s ability to record, process, summarize, and report financial information; and |
| (b) | Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: |
/s/ Mark Haley |
|
|
Mark Haley |
|
|
President (Principal Executive Officer) |
|
|
|
|
Date: |
September 6, 2023 |
|
I, Erich Rettinger, Treasurer and Principal Financial Officer
of the Liberty All-Star Growth Fund, Inc. (the “registrant”) certify that:
| 1. | I have reviewed this report on Form N-CSR of the registrant; |
| 2. | Based on my knowledge, this report does not
contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements,
and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows)
of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s)
and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared; |
| (b) | Designed such internal control over financial
reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s
disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the
registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s)
and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions): |
| (a) | All significant deficiencies and material
weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect
the registrant’s ability to record, process, summarize, and report financial information; and |
| (b) | Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: |
/s/ Erich Rettinger |
|
|
Erich Rettinger |
|
|
Treasurer (Principal Financial Officer) |
|
|
|
|
Date: |
September 6, 2023 |
|
Exhibit 99.906Cert
This certification is furnished pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1350, and accompanies the report on Form N-CSR for the period ended June 30, 2023
(the “Report”) of the Liberty All-Star Growth Fund, Inc. (the “Company”).
I, Mark Haley, the President and Principal Executive Officer
of the Company, certify that:
| (i) | the Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange
Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
| (ii) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company. |
Dated: |
September 6, 2023 |
|
|
|
|
By: |
/s/ Mark Haley |
|
|
Mark Haley |
|
|
President (Principal Executive Officer) |
|
This certification is furnished pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1350, and accompanies the report on Form N-CSR for the period ended June 30, 2023
(the “Report”) of the Liberty All-Star Growth Fund, Inc. (the “Company”).
I, Erich Rettinger, the Treasurer and Principal Financial Officer
of the Company, certify that:
| (i) | the Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable of the Securities Exchange
Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
| (ii) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company. |
Dated: |
September 6, 2023 |
|
|
|
|
By: |
/s/ Erich Rettinger |
|
|
Erich Rettinger |
|
|
Treasurer (Principal Financial Officer) |
|
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Grafico Azioni Liberty All Star Growth (NYSE:ASG)
Storico
Da Ago 2024 a Set 2024
Grafico Azioni Liberty All Star Growth (NYSE:ASG)
Storico
Da Set 2023 a Set 2024