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<SEC-DOCUMENT>0001047469-03-007858.txt : 20030306
<SEC-HEADER>0001047469-03-007858.hdr.sgml : 20030306
<ACCEPTANCE-DATETIME>20030306102121
ACCESSION NUMBER:		0001047469-03-007858
CONFORMED SUBMISSION TYPE:	N-30D
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20021231
FILED AS OF DATE:		20030306
EFFECTIVENESS DATE:		20030306

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			LIBERTY ALL STAR GROWTH FUND INC /MD/
		CENTRAL INDEX KEY:			0000786035
		IRS NUMBER:				521542208
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		N-30D
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-04537
		FILM NUMBER:		03593988

	BUSINESS ADDRESS:	
		STREET 1:		LIBERTY INVESTMENT SERVICES, INC
		STREET 2:		600 ATLANTIC AVE
		CITY:			BOSTON
		STATE:			MA
		ZIP:			02210-2214
		BUSINESS PHONE:		3019865866

	MAIL ADDRESS:	
		STREET 1:		LIBERTY INVESTMENT SERVICES INC
		STREET 2:		600 ATLANTIC AVE
		CITY:			BOSTON
		STATE:			MA
		ZIP:			02210

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	GROWTH STOCK OUTLOOK TRUST INC
		DATE OF NAME CHANGE:	19910807

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ALLMON CHARLES TRUST INC
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-30D
<SEQUENCE>1
<FILENAME>a2104710zn-30d.txt
<DESCRIPTION>N-30D
<TEXT>
<Page>

[GRAPHIC]

[ALL STAR GROWTH FUND LOGO]

ANNUAL REPORT 2002

A CLEARLY DEFINED PROCESS FOR GROWTH INVESTING

LIBERTY ALL-STAR GROWTH FUND

<Page>

[GRAPHIC]

A SINGLE INVESTMENT...

A DIVERSIFIED GROWTH PORTFOLIO

Only one mutual fund offers:

- -  A diversified, multi-managed portfolio of small, mid- and large cap growth
   stocks

- -  Exposure to the industry sectors that make the U.S. economy the world's most
   dynamic

- -  Access to institutional-quality investment managers

- -  Objective and ongoing manager evaluation

- -  Active portfolio rebalancing

- -  A quarterly fixed distribution policy

- -  Listing on the New York Stock Exchange (ticker symbol: ASG)

LIBERTY All-STAR GROWTH FUND, INC.

<Page>

                                                              PRESIDENT'S LETTER

FELLOW SHAREHOLDERS:                                               FEBRUARY 2003

To be perfectly candid, perhaps the best thing that can be said about 2002 is
that it is behind us. It was the third straight negative year for U.S. stocks -
the first time that has occurred since the period 1939 - 1941. Moreover, it was
the worst annual market decline since the bear market of 1973 - 1974. The table
below - about which I would like to share a number of comments - summarizes key
performance data for the fourth quarter, the full year and the three-year period
of 2000 - 2002, which is essentially the entire market decline. One point
shareholders should note is the Fund's consistent relative outperformance
through all three periods, which I believe confirms the soundness of the Fund's
multi-management investment approach.

<Table>
<Caption>
FUND STATISTICS
PERIODS ENDING DECEMBER 31, 2002                           4TH QUARTER               2002                3 YEARS
<S>                                                     <C>                   <C>                   <C>
LIBERTY ALL-STAR GROWTH FUND, INC.
Year End Net Asset Value (NAV)                                                $            5.44
Year End Market Price                                                         $            5.05
Year End Discount                                                                           7.2%
Distributions Declared                                       $ 0.14                $ 0.67                $ 2.93
Market Price Trading Range                              $ 4.38  to $ 5.85     $  4.38 to $ 8.78     $ 4.38  to $ 12.56
Premium/(Discount) Range                                   1.9% to  (10.2)%     10.0% to  (10.2)%     11.4% to   (23.9)%
</Table>

<Table>
<Caption>
PERFORMANCE SUMMARY
PERIODS ENDING DECEMBER 31, 2002                         4TH QUARTER             2002               3 YEARS*
<S>                                                          <C>                <C>                 <C>
LIBERTY ALL-STAR GROWTH FUND, INC.
Shares Valued at NAV                                         10.7%              (27.5)%             (17.8)%
Shares Valued at NAV with Dividends Reinvested               11.0%              (27.2)%             (17.0)%
Shares Valued at Market Price with Dividends Reinvested       2.5%              (32.6)%             (13.0)%
Lipper Multi-Cap Growth Mutual Fund Average                   5.4%              (29.9)%             (22.6)%
    Category Percentile Rank (1=best; 100=worst)             12th                39th                26th
Russell Growth Indices
    Largecap                                                  7.2%              (27.9)%             (23.6)%
    Midcap                                                    9.2%              (27.4)%             (20.0)%
    Smallcap                                                  7.5%              (30.3)%             (21.1)%
Nasdaq Composite Index                                       14.0%              (31.5)%             (31.0)%
</Table>

Figures shown for the Fund and the Lipper Multi-Cap Growth Mutual Fund Average
are total returns, which include dividends, after deducting fund expenses. The
Fund's reinvested returns assume all primary subscription rights in the Fund's
rights offering were exercised. Figures shown for the unmanaged Russell Indices
and the Nasdaq Composite Index are total returns, including income. Past
performance cannot predict future results.

*Average annual returns.

                              ALL-STAR GROWTH FUND

                                        1
<Page>

    After a flattish first quarter, the middle six months of 2002 took their
toll on all investors, with declines across all style (value and growth) and
capitalization ranges (small, mid- and large). It was, in many respects, the
stock market version of the movie "The Perfect Storm." The news from corporate
America was a combination of earnings disappointments and company malfeasance.
On the economic front, unemployment was rising and GDP growth appeared to be
waning. Globally, talk of war with Iraq (and other hot spots from India-Pakistan
to North Korea) combined with fears of terrorism at home and abroad kept
investors on edge. Many investors also viewed stocks as being overvalued, even
after several years of market declines. And the elusive turnaround in capital
spending always seemed to be pushed another quarter or two into the future.

    For all the bad news, there were some distinctly positive factors that
should have mitigated equity market declines - but didn't. Inflation was all but
nonexistent. Interest rates plunged to record lows, a fact not lost on
automobile and home buyers, the latter of whom kept the residential construction
industry perking along. Productivity continued to make gains and consumer
spending, despite a lackluster holiday season, held up.

    Granted, the bad news outweighed the good - but not to the extent to which
investors marked down stocks in 2002. Clearly, the buoyancy of the late 1990s
has morphed into the down and dour early 2000s, a complete reversal in investor
sentiment. The latter '90s had their measure of bad news, which investors
blithely overlooked. In the current environment, by contrast, even good news is
greeted skeptically. To be certain, this will change because I believe the
parallels to the 1930s are wide of the mark. During that time, the unemployment
rate was more than quadruple what it is today and the nation's GDP shrunk by
more than 40 percent. Economic conditions today bear no resemblance to what this
nation endured during the Depression, and there lies the disconnect.

    Turning to Liberty All-Star Growth Fund, the Fund posted a solid fourth
quarter in 2002, returning 11.0 percent (shares valued at NAV with dividends
reinvested). This more than doubled the return of the Lipper Multi-Cap Growth
Mutual Fund Average and ranked the Fund in the 12th percentile of all funds in
that Lipper category (in other words, ahead of 88 percent of comparable funds).
Moreover, that 11.0 percent return was well ahead of the relevant Russell growth
indices: Largecap (+7.2 percent), Midcap (+9.2 percent) and Smallcap (+7.5
percent).

    Earlier, I alluded to the Fund's consistent performance over time. As the
table on the previous page shows, the Fund outperformed for all of 2002 and for
the three-year bear market period as well. Again, comparing it to peer funds in
the Lipper Multi-Cap Growth Mutual Fund Average, the Fund ranks in the 39th
percentile for 2002 and for the three-year period in the 26th percentile.

    Returning momentarily to the fourth quarter of 2002, what is most promising
is how the Fund outperformed in a positive market environment. Through the first
three quarters of 2002, the Fund lagged the Lipper Multi-Cap Growth Mutual Fund
Average by about two percentage points. When the market turned, the Fund fully
participated - more

[SIDENOTE]

"In the current environment ... even good news is greeted skeptically. To be
certain, this will change because I believe the parallels to the 1930s are wide
of the mark."

                                        2
<Page>

than doubling the Lipper return, as I mentioned earlier. I believe that bodes
well for the Fund as market conditions improve and investors gain more
confidence.

    To touch on all the points in the performance table, the Fund did lag for
the fourth quarter and full year when its shares are valued at market price with
dividends reinvested. But, much of that lag can be attributed to a widening of
the Fund's discount relative to its net asset value. For example, in the fourth
quarter of 2001, the greatest discount was just 2.0 percent; in the fourth
quarter of 2002 it was 10.2 percent. This widening of the discount was not
unique to the Fund, as discounts widened in general for closed-end funds as the
year drew to a close. However, the ebb and flow of premiums and discounts tend
to even out over time, as evidenced by the fact that for the trailing three
years the Fund has outperformed the Lipper average and all the relevant Russell
capitalization growth indices when performance is measured based on market price
with dividends reinvested, just as the net asset value did.

    In summary, we at Liberty Asset Management Company (LAMCO) believe that the
Fund's structure, its current lineup of investment managers and our disciplined
approach to growth style investing have served Fund investors well on a relative
basis through a terribly difficult market environment. Moreover, these factors
position the Fund very favorably for when market conditions improve.

    I invite you to focus on two features of this Annual Report: an overview of
LAMCO's investment process, which begins on the next page, and our traditional
Manager Roundtable, which begins on page 11. I believe the investment process
feature illustrates how LAMCO adds value for shareholders, while the Manager
Roundtable takes you inside the thinking of the Fund's portfolio managers.

    On behalf of the entire LAMCO team, I would like to take this opportunity to
thank you for your patience and continuing support of the Fund. As always, we
will continue to work in the best long-term interests of All-Star Growth Fund
shareholders.

Sincerely,

/s/ William R. Parmentier, Jr.

William R. Parmentier, Jr.
President and Chief Executive Officer
Liberty All-Star Growth Fund, Inc.

                                        3
<Page>

LAMCO's Investment Process

Fund Objective

Liberty All-Star Growth Fund is designed as a diversified portfolio of small,
mid- and large cap growth stocks. In a single investment, the Fund provides
investors with access to a diversified growth portfolio utilizing an investment
approach called multi-management, which is widely practiced by large
institutional investors, such as endowments, foundations and pension plans.
Multi-management is intended to result in more consistent and less volatile
investment performance over changing market cycles than the use of a single
manager.

The Fund's Advisor, Liberty Asset Management Company (LAMCO), employs a rigorous
due diligence process to select independent institutional-quality investment
management firms that practice a distinct style and/or strategy for managing
equity portfolios. LAMCO can be totally objective about the managers it selects
because it has no affiliation or alliances with the investment managers selected
for the Fund. LAMCO's role is to identify and retain best-of-breed growth-style
investment managers and to blend their individual strategies and capitalization
focus to form an all-cap growth portfolio.

[GRAPHIC]

AS ADVISOR TO THE ALL-STAR GROWTH FUND, LIBERTY ASSET MANAGEMENT

                                        4
<Page>

Fund Structure

Liberty All-Star Growth Fund is a multi-managed fund in which three investment
managers practice the growth style of investing across the market capitalization
spectrum. Typically, growth managers focus on companies with high expected sales
and earnings growth in expanding sectors of the economy. But, as history has
demonstrated, investor sentiment rotates among investment strategies and
capitalization ranges (small, mid- and large), depending on a wide range of
economic and industry-specific factors. In light of these continuous shifts,
LAMCO employs its skills to blend three approaches to growth style investing,
seeking reduced volatility and greater consistency of returns over time than
comparable funds. In addition to being multi-managed, the Fund is closed-end,
meaning that it has a fixed number of shares that trade on the New York Stock
Exchange. This structure allows the investment managers to pursue long-term
goals without the distraction of daily sales and redemptions that can occur at
inopportune times.

[GRAPHIC]

COMPANY (LAMCO) ADDS VALUE FOR INVESTORS BY PRACTICING A WELL-

                                        5
<Page>

Manager Selection

Manager selection is a key element in our process. There are thousands of
investment managers to choose from. LAMCO calls on the expertise of its
professional staff, state-of-the-art analytical tools and years of experience in
the investment industry to select investment managers for the Fund. In many
cases, these are institutional investment managers not accessible to individual
investors. In selecting investment managers for the Fund, LAMCO conducts
in-depth research and rigorous due diligence. We focus on the "four Ps" ... that
is, each manager's philosophy, process, people and performance. We seek
investment management firms that have demonstrated a consistent application of
their particular growth style of investing and a clearly- articulated,
disciplined investment process. We also want to see a well-managed organization
and continuity among a firm's investment professionals.

[GRAPHIC]

DEFINED AND DISCIPLINED INVESTMENT MANAGEMENT PROCESS.

                                        6
<Page>

Manager Monitoring

Constant vigilance enables LAMCO to ensure that each investment manager is
performing up to expectations and that each is contributing to the Fund. Like
all businesses, investment management firms can change over time. Ownership and
key personnel can change. Market pressures may cause a firm to deviate from its
investment style and strategy. Often times, individual investors may have
difficulty knowing that the fund manager with whom they originally invested has
changed.

LAMCO's active monitoring guards against that. As investment managers analyze
stocks, we analyze the managers for the investment characteristics of their
holdings, consistent adherence to their style, investment performance and
continuity of key decision makers. When warranted, LAMCO replaces managers.

[GRAPHIC]

LAMCO BRINGS OBJECTIVITY, EXPERIENCE AND EXPERTISE TO

                                        7
<Page>

Portfolio Rebalancing

Portfolio rebalancing maintains the Fund's structural integrity through time and
is also a well-recognized risk management tool. Systematic rebalancing keeps the
Fund's assets equally divided among the three investment managers. Owing to
shifting market sentiment and their differing styles and strategies, the
managers will perform differently over time. This can unbalance the portfolio,
causing one or two investment managers to account for a larger share of the
portfolio than intended. When this happens, LAMCO takes assets from the
outperforming managers and gives it to those who have underperformed. While this
seems counterintuitive, it is really a case of taking money from today's winners
and redeploying it among tomorrow's. Once again, this is a practice that
individual investors may not discipline themselves to perform, but which LAMCO
practices consistently.

[GRAPHIC]

CONSTRUCTING AND MONITORING A MULTI-MANAGED PORTFOLIO, AND

                                        8
<Page>

DISTRIBUTION POLICY

Since 1997, LAMCO has followed a policy of making annual distributions on its
common stock at a rate of approximately 10 percent of the Fund's net asset value
(paid quarterly at 2.5 percent per quarter). Because a portion of the portfolio
is turned over when an investment manager is replaced (often generating realized
capital gains), the Fund's multi-management investment approach and payout
policy complement one another and provide a systematic mechanism for
distributing funds to shareholders.

DIVIDEND REINVESTMENT

LAMCO recognizes the diverse needs of the Fund's shareholders. Some investors
prefer their dividends in the form of cash. Others reinvest their dividends in
additional Fund shares, thus letting their dividends compound over time.

SHAREHOLDER SERVICES

LAMCO rounds out its process by providing a range of shareholder services, such
as the Web site www.all-starfunds.com and communications, including press
releases, monthly updates, quarterly reports and toll-free shareholder
assistance.

[GRAPHIC]

IS DEDICATED TO THE LONG-TERM SUCCESS OF FUND SHAREHOLDERS.

                                        9
<Page>

INVESTMENT MANAGERS/PORTFOLIO CHARACTERISTICS

THE FUND'S THREE GROWTH INVESTMENT MANAGERS AND THE MARKET CAPITALIZATION
ON WHICH EACH FOCUSES:

[GRAPHIC]

MID-CAP GROWTH

TCW INVESTMENT MANAGEMENT COMPANY
Companies with competitive advantages and superior business models that should
result in rapidly growing sales and earnings.

SMALL-CAP GROWTH

M.A. WEATHERBIE & CO., INC.
Companies with enduring competitive advantages and high, sustainable earnings
growth.

LARGE-CAP GROWTH

WILLIAM BLAIR & COMPANY, L.L.C.
Companies that have demonstrated consistently high rates of growth and
profitability.

MANAGERS' DIFFERING INVESTMENT STYLES ARE REFLECTED IN PORTFOLIO CHARACTERISTICS

The portfolio characteristics table below is a regular feature of the Fund's
shareholder reports. It serves as a useful tool for understanding the value of
the Fund's multi-managed portfolio. The characteristics are different for each
of the Fund's three investment managers. These differences are a reflection of
the fact that each pursues a different investment style. The shaded column
highlights the characteristics of the Fund as a whole, while the first three
columns show portfolio characteristics for the S&P/BARRA SmallCap, MidCap and
LargeCap Growth indices.

                         MARKET CAPITALIZATION SPECTRUM

                     SMALL                          LARGE

PORTFOLIO CHARACTERISTICS
AS OF DECEMBER 31, 2002
(UNAUDITED)

<Table>
<Caption>
                                      S&P/BARRA GROWTH:
                        ------------------------------------------
                          SMALLCAP        MIDCAP      LARGECAP        M.A.                        WILLIAM        TOTAL
                         600 INDEX      400 INDEX    500 INDEX     WEATHERBIE         TCW          BLAIR         FUND
<S>                        <C>            <C>         <C>             <C>            <C>          <C>           <C>
Number of Holdings           210            159           148            56             43            32           125
- ---------------------------------------------------------------------------------------------------------------------------
Weighted Average Market
Capitalization
(billions)                 $ 1.1          $ 3.0       $ 101.4         $ 2.2          $ 8.4        $ 60.0        $ 22.8
- ---------------------------------------------------------------------------------------------------------------------------
Average Five-Year
Earnings Per Share
Growth                        15%            13%           19%           19%            40%           19%           24%
- ---------------------------------------------------------------------------------------------------------------------------
Dividend Yield               0.7%           0.7%          1.7%          0.2%           0.2%          0.9%          0.4%
- ---------------------------------------------------------------------------------------------------------------------------
Price/Earnings Ratio          20x            22x           24x           23x            38x           25x           26x
- ---------------------------------------------------------------------------------------------------------------------------
Price/Book Value Ratio       3.0x           3.6x          5.5x          3.8x           5.5x          5.0x          4.7x
- ---------------------------------------------------------------------------------------------------------------------------
</Table>

                                       10
<Page>

                                                              MANAGER ROUNDTABLE

DESPITE A DIFFICULT ENVIRONMENT, THE MANAGERS REMAIN CONFIDENT IN THE COMPANIES
IN WHICH THEY HAVE INVESTED AND SEE THEIR QUALITY ULTIMATELY BEING RECOGNIZED

THE STORY FOR 2002 WAS QUALITY COMPANIES SUFFERING IN AN ENVIRONMENT THAT DIDN'T
DISCRIMINATE BETWEEN GOOD STOCKS AND BAD. ULTIMATELY, THE MANAGERS BELIEVE, THE
PREVAILING NEGATIVE SENTIMENT WILL RUN ITS COURSE AND GROWTH WILL RESUME.

THE VIEWS EXPRESSED IN THIS INTERVIEW REPRESENT THE MANAGERS' VIEWS AT THE TIME
OF THE DISCUSSION (JANUARY 2003) AND ARE SUBJECT TO CHANGE.

The Fund's manager, Liberty Asset Management Company (LAMCO), recently had the
opportunity to ask the three portfolio managers to look back at 2002 and ahead
at 2003. Reflective of the Fund's all-cap structure, their comments cover the
growth stock capitalization range - small-cap, mid-cap and large-cap. Each
manager's comments vary, of course, but a common thread is confidence in their
portfolios. Individually, the stocks held in the All-Star Growth Fund represent
high quality, competitively positioned companies with sound financials and
proven management. But all are faced with the headwinds of weak capital
spending, an uneven economy and continued geopolitical risk. As the environment
becomes friendlier, these are companies that should be positioned to benefit.
LAMCO serves as moderator for the Roundtable. The participating portfolio
managers and their investment styles are:

M. A. WEATHERBIE & CO., INC.
PORTFOLIO MANAGER/Matthew A. Weatherbie, CFA,
President and Founder

INVESTMENT STYLE/Small-Cap Growth - M.A. Weatherbie practices a small
capitalization growth investment style focusing on high quality companies that
demonstrate superior earnings growth prospects, yet are reasonably priced
relative to their intrinsic value. The firm seeks to provide superior returns
relative to small capitalization growth indices over a full market cycle.

TCW INVESTMENT MANAGEMENT COMPANY
PORTFOLIO MANAGER/Douglas S. Foreman, CFA,
Chief Investment Officer U.S. Equities

INVESTMENT STYLE/Mid-Cap Growth - TCW seeks capital appreciation through
investment in the securities of rapidly growing companies whose business
prospects, in TCW's view, are not properly perceived by consensus research.

WILLIAM BLAIR & COMPANY, L.L.C.
PORTFOLIO MANAGER/John F. Jostrand, CFA, Principal

INVESTMENT STYLE/Large-Cap Growth - William Blair emphasizes disciplined,
fundamental research to identify quality growth companies with the ability to
sustain their growth over long time periods. At the core of the firm is a group
of analysts, who perform research aimed at identifying companies that have the
opportunity to grow in a sustainable fashion for extended periods of time.

LAMCO: With 2002 in the history books, how would you recap the year for growth
stock investors? John Jostrand, start us off, please.

JOSTRAND (WILLIAM BLAIR - LARGE-CAP GROWTH): It was a very rough year for growth
investors. The recession in profits was far worse than GDP numbers correlate to.
A rough performance in the technology segment made the headlines again, but the
health care and business service sectors suffered from more than their fair
share of disappointments, fears or both.

LAMCO: Matt Weatherbie, what's your perspective?

Weatherbie (M.A. Weatherbie - Small-Cap Growth): The year 2002 was a very
difficult one for

                                       11
<Page>

growth stock investors, with the Russell growth indices (Largecap, Midcap and
Smallcap) all suffering declines in the range of 27 to 30 percent. In fact, 2002
was a miserable year for equity investors generally - the third consecutive year
of substantial stock price declines. No equity style, strategy or market cap was
immune, and U.S. and international stocks both experienced substantial declines.

LAMCO: Doug Foreman, what are your thoughts as you look back?

FOREMAN (TCW - MID-CAP GROWTH): The fourth quarter of 2002 saw more of the
worries and volatility that have gripped the market for the past two years. As
we entered the fourth quarter, the market was in the throes of near-panic
selling, breaking through the lows set in the July sell-off. Fears of a
double-dip recession and global deflation were rampant. By October 10, both the
S&P 500 and Dow Jones Industrial Average had set new five-year lows and the
Nasdaq Composite had fallen to levels not seen since 1996. October brought the
release of third quarter profits for corporate America and a raft of economic
data, the sum total of which showed that while profits and the economy were
limping along, the situation was hardly as dire as the stock prices of early
October were discounting. After hopes of an economic recovery led the markets
higher through the end of November, December saw the major indices give back
some of their gains as it became clear the consumer would be weak this
Christmas. We closed the year with the major indices off for a third year in a
row, a dubious record not seen in over 60 years.

LAMCO: As Matt Weatherbie noted, the Russell growth indices (Largecap, Midcap
and Smallcap) all suffered declines in the range of 27 to 30 percent last year.
But, the economy grew (albeit modestly), interest rates were at record lows,
inflation was subdued and unemployment, while higher, remained at a manageable 6
percent. In other words, the environment didn't appear to warrant such steep
declines. So, why were growth stocks so severely punished? Matt Weatherbie, how
do you analyze it?

WEATHERBIE (M.A. WEATHERBIE - SMALL-CAP GROWTH): In hindsight, the strong stock
market rally in the fourth quarter of 2001 established unduly optimistic
expectations for earnings growth in 2002. While the economy grew modestly - 2.5
to 3 percent real GDP growth - this was insufficient to meet the high earnings
expectations for growth stocks in general. In particular, technology stocks,
whose growth depends on robust corporate capital spending, showed generally
disappointing results because business people remained so cautious in their
capital spending decisions.

LAMCO: Doug Foreman and John Jostrand, what are your views on the difficult year
for growth stocks despite a moderate economy?

FOREMAN (TCW - MID-CAP GROWTH): Arguably, the extraordinary decline in the value
of major U.S. growth indices over the past three years can be attributed to the
convergence of three forces: contracting valuations, operating leverage and
financial leverage. While it is impossible to predict the short-term direction
of the market, we believe all three of these forces have played themselves out.
Valuations look attractive, especially

[SIDE NOTE]

"TO UNDERSTAND 2002, YOU HAVE TO LOOK AT HOW EXPECTATIONS CHANGED. AT THE
OUTSET, CONSENSUS ESTIMATES FOR S&P 500 EARNINGS WERE $60 PER SHARE ... ACTUAL
RESULTS TURNED OUT TO BE ABOUT $47 PER SHARE."

                                           JOHN JOSTRAND, WILLIAM BLAIR

[SIDE NOTE]

"IN HINDSIGHT, THE STRONG STOCK MARKET RALLY IN THE FOURTH QUARTER OF 2001
ESTABLISHED UNDULY OPTIMISTIC EXPECTATIONS FOR EARNINGS GROWTH IN 2002."

                                           MATT WEATHERBIE,
                                           M.A. WEATHERBIE

                                       12
<Page>

relative to the historically low level of interest rates and the cyclically
depressed level of earnings on which these valuations are based. Compared to
other equity and non-equity asset classes, growth stocks still look like an
attractive relative value. Contributing to the unprecedented decline in
corporate earnings in 2001 was the impact of operating leverage, as companies
saw their revenues fall faster than they could reduce costs. With costs now
brought in line, corporate margins look to expand - even with very moderate
revenue growth - leading to attractive earnings growth. Finally, corporate
America is beginning to work down the debt accumulated during its late `90s
spending spree. Corporate dependence on short-term borrowings has been declining
in recent months and corporate debt spreads have narrowed significantly.
Admittedly, digging out from under this debt may be a multi-year process for
many companies.

JOSTRAND (WILLIAM BLAIR - LARGE-CAP GROWTH):
To understand 2002, you have to look at how expectations changed over the year.
At the outset, consensus estimates for S&P 500 earnings were $60 per share and
the index was about 1150, implying a price/earnings ratio of 19x. Actual results
for the year turned out to be about $47 per share. That should not happen when
interest rates fall, but the interest rates that fell were Treasuries. Corporate
rates were actually up through midyear, before backing off amid the equity
markets' swoon. Furthermore, gold, oil and other commodities all advanced
strongly during the year. Consistent with those commodity price changes, the
dollar declined over the year. While commentators were fearful of imported
deflation from China, the markets were actually looking at the aggressive policy
attempts at reflation - primarily from the Federal Reserve. International
markets noted the aggressive monetary ease with a drop in the U.S. dollar
futures index from 117 to 102. So, the market put a little extra inflation
premium back into valuation.

LAMCO: What's going to turn the market around for growth stocks? Doug Foreman,
why don't you lead off and then let's hear from John Jostrand and Matt
Weatherbie.

FOREMAN (TCW - MID-CAP GROWTH): As always, we make no effort to predict the
direction of the economy. We do, however, speak on a regular basis to scores of
senior executives at the companies in which we invest. While the mood among them
is hardly euphoric, almost across the board we get the sense that business
conditions have remained fairly constant for the past several months. Such
stabilization is an important first step on the road to a profit recovery and if
it continues should give corporate managers the confidence to again begin
investing in growing their companies. In certain industries that we consider to
be good leading indicators, such as media and semiconductors, there are early
signs of improvement. On a macroeconomic level, the data is certainly mixed. To
us, this is not unlike previous recessions. Economic recoveries are not marked
by every economic indicator simultaneously turning upwards. Instead, as we saw
in the early 1990s, some sectors of the economy start to improve while others
are still trying to find bottom. Importantly, both corporate earnings and
corporate investment levels expanded during much of 2002. In 1991, as now,
America was also facing the uncertainties of war. We should remember, however,

[SIDENOTE]

"WITH COSTS NOW BROUGHT IN LINE, CORPORATE MARGINS LOOK TO EXPAND [AND]
CORPORATE AMERICA IS BEGINNING TO WORK DOWN THE DEBT ACCUMULATED DURING ITS LATE
`90S SPENDING SPREE."

                                           DOUG FOREMAN, TCW"

[SIDE NOTE]

"WHAT GIVES ME THE MOST CAUSE FOR OPTIMISM IS THE INDIVIDUAL STRENGTHS, COMPANY
BY COMPANY, OF THE SMALL CAP GROWTH STOCKS WE ARE INVESTED IN."

                                           MATT WEATHERBIE,
                                           M.A. WEATHERBIE

                                       13
<Page>

that in 1991 the start of a market recovery began with the initiation of
hostilities, not their conclusion.

JOSTRAND (WILLIAM BLAIR - LARGE-CAP GROWTH): We believe businesses have been
under-investing, or using up, the capital investment made during the so-called
bubble years. Profits are clearly rebounding now, which provides the means to
invest. The need will arise as bottlenecks develop, which should appear this
year. Earnings growth and stock prices should follow.

WEATHERBIE (M.A. WEATHERBIE - SMALL-CAP GROWTH): We believe the President's
proposed economic stimulus plan should be positive for stocks. In addition,
stock market history suggests better times lie ahead. It is highly unusual that
the stock market has declined for three consecutive years; the last time this
happened was 1939 - 41. Interestingly, 1942, in the wake of Pearl Harbor, was an
up year for stocks. Also, the third year of the U.S. President's four-year term
is typically good for stocks. The last time that stocks failed to rise in the
third year of a presidential term was 1939. While there are undeniable
geopolitical uncertainties now, in addition to legitimate economic concerns,
these issues always seem more intractable at market lows.

LAMCO: Looking at 2003, insofar as the investment outlook is concerned, what
causes you the most concern and what gives you the most cause for optimism? Matt
Weatherbie, let's stay with you on this.

WEATHERBIE (M.A. WEATHERBIE - SMALL-CAP GROWTH): My biggest concern for 2003 is
that business people will remain very stingy in making capital investments,
despite the fact that capital spending has been down significantly for the last
two years and corporate profits are beginning to recover. A second major concern
is the undeniable geopolitical uncertainties and what impact they could have on
consumer, business and investor confidence. What gives me the most cause for
optimism is the individual strengths, company by company, of the small cap
growth stocks we are invested in. Collectively, they have leading market
positions, superior growth prospects, high returns on capital, strong balance
sheets and excellent management.

LAMCO: John Jostrand and Doug Foreman, what are your thoughts on positives and
negatives for 2003?

JOSTRAND (WILLIAM BLAIR - LARGE-CAP GROWTH):
I guess I'm concerned about too much governmental stimulus. In the 1970s we went
through a period of "stagflation" - stagnant real economic growth together with
inflationary prices. If business investment does not pick up, that stimulus
could find its way into price inflation, which corrodes valuations, even as
earnings grow. I believe that investment spending will pick up and that job
growth will resume in the latter half of the year. As a result, valuations
should rebound and we should be on our way to a positive double-digit return for
equity markets.

FOREMAN (TCW - MID-CAP GROWTH): As we exited 2002, one could not help feeling a
bit of deja vu. Just as the markets ended 2000 and 2001 worried about the
paucity of corporate capital spending and weak profits, New Year's Eve 2002
brought continued questions about the prospects for profit growth in 2003 and
whether or not corporate CFOs would open up their capital spending budgets
enough to offset recent weaknesses in consumer spending. Two thousand two
managed to heap its own concerns on the markets. Just as we exited 2001 fearing
additional terrorist attacks and mendacious corporate executives, the country
rang out 2002 with conflicts looming with not only Iraq, but North Korea as
well.

     On the other hand, we are pleased with the portfolio's

[SIDENOTE]

"I BELIEVE THAT INVESTMENT SPENDING WILL PICK UP AND THAT JOB GROWTH WILL RESUME
IN THE LATTER HALF OF THE YEAR. AS A RESULT, VALUATIONS SHOULD REBOUND..."

                                           JOHN JOSTRAND, WILLIAM BLAIR

                                       14
<Page>

strong returns relative to the benchmarks in the fourth quarter, as it performed
as we would have expected under the circumstances. By virtue of owning the
shares of fast-growing companies, our strategy has historically underperformed
in difficult growth markets. In a market recovery, however, investors typically
return first to high quality companies with the best prospects for earnings
growth. We are gratified by the portfolio's performance in the fourth quarter,
especially following a third quarter when we held our own against the benchmarks
in a very difficult market. This adds confidence to our belief that we own the
right growth companies.

LAMCO: From the perspective of your capitalization focus, what will you be
concentrating on in the year ahead? Let's go in capitalization order from small
to large.

WEATHERBIE (M.A. WEATHERBIE - SMALL-CAP GROWTH): From the perspective of our
small cap focus, I will be concentrating on investing in companies with the
characteristics I cited earlier - leading market positions, superior growth
prospects, high returns on capital, strong balance sheets and excellent
management. These are companies that can do well in a 2003 economy that grows,
but perhaps not much more than it did in 2002. While this is a batting average
business, I believe that, overall, we are invested across the board in these
types of companies at present.

FOREMAN (TCW - MID-CAP GROWTH): In the face of many challenges, we continue to
adhere to our discipline of owning aggressive growth stocks. While this has been
about the worst possible macroeconomic and market backdrop for this strategy, we
remain optimistic for 2003. We firmly believe that our investors will be
rewarded for their patience in an economic and market recovery. When we examine
the performance of many competing growth managers, it seems many have abandoned
growth stocks. We believe this will prove to be a mistake. We remain convinced
aggressive growth stocks will be one of the most attractive asset classes over
the next market cycle.

JOSTRAND (WILLIAM BLAIR - LARGE-CAP GROWTH): We will be refocusing on
technology. That may seem a little unusual, since innovation and price
elasticity are the normal drivers. However, we see under-investment as the
initial spark in technology. Telecom companies are spending about 15 percent of
sales on capital equipment, when normal is 20 to 22 percent. Network
utilization, another determinant is difficult to ascertain, but we believe it is
rising. Computer hardware is aging in the corporate world, as well. Our
preferred way to invest is through leading semiconductor companies, but we also
recently purchased Dell Computer.

LAMCO: Thank you all very much, and let's hope for a return to normalcy in
2003.

[SIDENOTE]

"WHEN WE EXAMINE THE PERFORMANCE OF MANY COMPETING GROWTH MANAGERS, IT SEEMS
MANY HAVE ABANDONED GROWTH STOCKS. WE BELIEVE THIS WILL PROVE TO BE A MISTAKE."

                                           DOUG FOREMAN, TCW

                                       15
<Page>

TABLE OF PER-SHARE VALUES, DISTRIBUTIONS AND REINVESTMENTS

<Table>
<Caption>
                                      SHARES      SHARES
           SHARES                    PURCHASED   ACQUIRED    SHARES     NAV(2)             MARKET PRICE  TOTAL MARKET
          OWNED AT                   THROUGH      THROUGH    OWNED   PER SHARE  TOTAL NAV    PER SHARE      PRICE OF
         BEGINNING    PER SHARE    REINVESTMENT   RIGHTS     AT END   AT END    OF SHARES     AT END        SHARES
 YEAR     OF YEAR   DISTRIBUTIONS     PROGRAM    OFFERING   OF YEAR   OF YEAR     OWNED       OF YEAR       OWNED
<S>        <C>        <C>             <C>         <C>        <C>      <C>        <C>        <C>          <C>
1996(1)    1.000      $ 1.02          0.107            -     1.107    $ 11.27    $ 12.48    $   9.25     $  10.24
1997       1.107        1.24          0.125            -     1.232      12.89      15.88      11.938        14.71
1998       1.232        1.35          0.159        0.130(3)  1.521      13.03      19.82      11.438        17.40
1999       1.521        1.23          0.188            -     1.709      13.44      22.97      10.813        18.48
2000       1.709        1.34          0.214            -     1.923      10.86      20.88       9.438        18.15
2001       1.923        0.92          0.235        0.239(3)  2.397       8.31      19.92        8.33        19.97
2002       2.397        0.67          0.271           -      2.668       5.44      14.51        5.05        13.47
</Table>

1.  Represents the first full year that Liberty Asset Management Company assumed
    complete management responsibility for the Fund.
2.  Net Asset Value.
3.  1998: Rights offering completed in July 1998. One share offered at $12.41
    for every 10 shares owned.
    2001: Rights offering completed in September 2001. One share offered at
    $6.64 for every 8 shares owned.

DISTRIBUTION POLICY

Liberty All-Star Growth Fund, Inc.'s current policy, in effect since 1997, is to
pay distributions on its shares totaling approximately 10 percent of its net
asset value per year, payable in four quarterly installments of 2.5 percent of
the Fund's net asset value at the close of the New York Stock Exchange on the
Friday prior to each quarterly declaration date. THE FIXED DISTRIBUTIONS ARE NOT
RELATED TO THE AMOUNT OF THE FUND'S NET INVESTMENT INCOME OR NET REALIZED
CAPITAL GAINS OR LOSSES. If, for any calendar year, the total distributions made
under the 10 percent pay-out policy exceed the Fund's net investment income and
net realized capital gains, the excess will generally be treated as a
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 10 percent pay-out
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.

                                       16
<Page>

                                                                 TOP 50 HOLDINGS

<Table>
<Caption>
     RANK AS        RANK AS                                                              MARKET           PERCENT OF
   of 12/31/02    of 9/30/02          SECURITY NAME                                   value ($000)        NET ASSETS
       <S>          <C>               <C>                                               <C>                   <C>
        1             2               Westwood One, Inc.                                $ 3,650               3.3%
        2             1               Bed Bath & Beyond, Inc.                             3,218               2.9
        3             3               Paychex, Inc.                                       3,027               2.7
        4             4               eBay, Inc.                                          2,862               2.6
        5             5               Fastenal Co.                                        2,481               2.2
        6             7               Microchip Technology, Inc.                          2,369               2.1
        7             8               Microsoft Corp.                                     2,306               2.1
        8            16               Maxim Integrated Products, Inc.                     2,075               1.8
        9            11               Family Dollar Stores, Inc.                          2,061               1.8
       10             9               Concord EFS, Inc.                                   1,877               1.7
       11            13               Clear Channel Communications, Inc.                  1,842               1.6
       12            27               National Instruments Corp.                          1,822               1.6
       13            22               Xilinx, Inc.                                        1,765               1.6
       14            12               State Street Corp.                                  1,755               1.6
       15             6               Medtronic, Inc.                                     1,744               1.6
       16            33               Getty Images, Inc.                                  1,737               1.5
       17            14               Genentech, Inc.                                     1,728               1.5
       18            17               American International Group, Inc.                  1,643               1.5
       19            18               Pfizer, Inc.                                        1,600               1.4
       20            19               Dollar Tree Stores, Inc.                            1,595               1.4
       21            29               99 Cents Only Stores                                1,591               1.4
       22            30               EchoStar Communications Corp., Class A              1,556               1.4
       23            40               Vodafone Group PLC, ADR                             1,495               1.3
       24           New               Cox Communications, Inc., Class A                   1,480               1.3
       25            20               Gilead Sciences, Inc.                               1,448               1.3
       26            21               Walgreen Co.                                        1,315               1.2
       27            35               Zebra Technologies Corp., Class A                   1,292               1.2
       28            10               Financial Federal Corp.                             1,263               1.1
       29            37               Overture Services, Inc.                             1,259               1.1
       30            34               Univision Communications, Inc.                      1,235               1.1
       31            38               PolyMedica Corp.                                    1,220               1.1
       32            32               UnitedHealth Group, Inc.                            1,171               1.0
       33            42               Eli Lilly and Co.                                   1,160               1.0
       34            39               Outback Steakhouse, Inc.                            1,148               1.0
       35            44               Omnicom Group, Inc.                                 1,121               1.0
       36            25               Investors Financial Services Corp.                  1,119               1.0
       37            31               Baxter International, Inc.                          1,104               1.0
       38            26               Patterson Dental Co.                                1,097               1.0
       39            36               Charles River Laboratories International, Inc.      1,085               1.0
       40            41               Cintas Corp.                                        1,082               1.0
       41            45               Automatic Data Processing, Inc.                     1,062               0.9
       42            46               PepsiCo, Inc.                                         988               0.9
       43            48               Amgen, Inc.                                           981               0.9
       44            53               Linear Technology Corp.                               935               0.8
       45            49               Cytyc Corp.                                           930               0.8
       46            43               International Speedway Corp., Class A                 908               0.8
       47            68               Yahoo!, Inc.                                          886               0.8
       48            23               Investment Technology Group, Inc.                     882               0.8
       49            15               Lincare Holdings, Inc.                                868               0.8
       50            60               Expedia, Inc.                                         830               0.7
</Table>

                                       17
<Page>

MAJOR STOCK CHANGES IN THE FOURTH QUARTER

The following are the major ($500,000 or more) stock changes--both purchases and
sales--that were made in the Fund's portfolio during the fourth quarter of 2002.

<Table>
<Caption>
SECURITY NAME                     PURCHASES (SALES)      SHARES AS OF 12/31/02
<S>                                   <C>                     <C>
PURCHASES

Avid Technology, Inc.                  35,116                   35,116

The Cheesecake Factory, Inc.           19,250                   19,250

Cox Communications, Inc.               52,100                   52,100

Dell Computer Corp.                    20,500                   20,500

SALES

Bed Bath & Beyond, Inc.               (31,300)                  93,200

The Home Depot, Inc.                  (25,000)                       0

Intuit, Inc.                          (11,400)                  16,000

Lincare Holdings, Inc.                (25,360)                  27,450
</Table>

                                       18
<Page>

                                 SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2002

<Table>
<Caption>
COMMON STOCKS (98.8%)                                           SHARES     MARKET VALUE
<S>                                                              <C>      <C>
CONSUMER DISCRETIONARY (28.1%)

HOTELS, RESTAURANTS & LEISURE (3.4%)
The Cheesecake Factory, Inc. (a)                                 19,250   $     695,887
International Speedway Corp., Class A                            24,360         908,384
Outback Steakhouse, Inc. (a)                                     33,330       1,147,885
Panera Bread Co., Class A (a)                                    18,250         635,283
Sonic Corp. (a)                                                  19,900         407,751
                                                                          -------------
                                                                              3,795,190
                                                                          -------------
INTERNET & CATALOG RETAIL (3.2%)
Amazon.com, Inc. (a)                                             36,600         691,374
eBay, Inc. (a)                                                   42,200       2,862,004
                                                                          -------------
                                                                              3,553,378
                                                                          -------------
MEDIA (13.8%)
Cablevision Systems Corp., Class A (a)                           29,951         501,380
Catalina Marketing Corp. (a)                                     21,950         406,075
Clear Channel Communications, Inc. (a)                           49,400       1,842,126
Cox Communications, Inc., Class A (a)                            52,100       1,479,640
Cox Radio, Inc., Class A (a)                                     31,300         713,953
EchoStar Communications Corp., Class A (a)                       69,900       1,555,974
Getty Images, Inc. (a)                                           56,870       1,737,378
Hispanic Broadcasting Corp. (a)                                  22,700         466,485
Mediacom Communications Corp. (a)                                85,100         749,731
Omnicom Group, Inc.                                              17,360       1,121,456
Univision Communications, Inc., Class A (a)                      50,400       1,234,800
Westwood One, Inc. (a)                                           97,700       3,650,072
                                                                          -------------
                                                                             15,459,070
                                                                          -------------
MULTI-LINE RETAIL (4.7%)
Dollar Tree Stores, Inc. (a)                                     64,905       1,594,716
Family Dollar Stores, Inc.                                       66,025       2,060,640
99 Cents Only Stores (a)                                         59,218       1,590,595
                                                                          -------------
                                                                              5,245,951
                                                                          -------------
SPECIALTY RETAIL (3.0%)
Bed Bath & Beyond, Inc. (a)                                      93,200       3,218,196
The Children's Place Retail Stores, Inc. (a)                     16,670         177,369
                                                                          -------------
                                                                              3,395,565
                                                                          -------------
</Table>

See Notes to Schedule of Investments.

                                       19
<Page>

<Table>
<Caption>
COMMON STOCKS (CONTINUED)                                       SHARES    MARKET VALUE
<S>                                                              <C>      <C>
CONSUMER STAPLES (2.4%)

BEVERAGES (0.9%)
PepsiCo, Inc.                                                    23,400   $    987,948
                                                                          ------------
FOOD & DRUG RETAILING (1.2%)
Walgreen Co.                                                     45,050      1,315,010
                                                                          ------------
HOUSEHOLD PRODUCTS (0.3%)
The Yankee Candle Co., Inc. (a)                                  23,850        381,600
                                                                          ------------
ENERGY (1.7%)

Energy Equipment & Services (1.1%)
Patterson - UTI Energy, Inc. (a)                                 23,940        722,270
Pride International, Inc. (a)                                    37,345        556,441
                                                                          ------------
                                                                             1,278,711
                                                                          ------------
OIL & GAS (0.6%)
Tidewater, Inc.                                                  22,130        688,243
                                                                          ------------
FINANCIALS (8.5%)

BANKS (1.0%)
Investors Financial Services Corp.                               40,861      1,119,183
                                                                          ------------
DIVERSIFIED FINANCIALS (5.5%)
Affiliated Managers Group, Inc. (a)                               9,050        455,215
The Chicago Mercantile Exchange (a)                                 800         34,928
Financial Federal Corp. (a)                                      50,252      1,262,833
Household International, Inc.                                    28,100        781,461
MBNA Corp.                                                       37,575        714,676
SEI Investments Co.                                              18,300        497,394
State Street Corp.                                               45,000      1,755,000
T. Rowe Price Group, Inc.                                        21,900        597,432
                                                                          ------------
                                                                             6,098,939
                                                                          ------------
INSURANCE (2.0%)
American International Group, Inc.                               28,400      1,642,940
Brown & Brown, Inc.                                               6,900        223,008
Cincinnati Financial Corp.                                        4,600        172,730
Platinum Underwriters Holdings, Ltd. (a)                          9,582        252,486
                                                                          ------------
                                                                             2,291,164
                                                                          ------------
</Table>

                                           See Notes to Schedule of Investments.

                                       20
<Page>

<Table>
<Caption>
COMMON STOCKS (CONTINUED)                                       SHARES    MARKET VALUE
<S>                                                              <C>      <C>
HEALTH CARE (17.7%)

BIOTECHNOLOGY (6.1%)
Amgen, Inc. (a)                                                  20,300   $    981,302
Charles River Laboratories International, Inc. (a)               28,195      1,084,944
Genentech, Inc. (a)                                              52,100      1,727,636
Gilead Sciences, Inc. (a)                                        42,600      1,448,400
Martek Biosciences Corp. (a)                                     19,540        491,626
MedImmune, Inc. (a)                                              16,000        434,720
QLT, Inc. (a)                                                    54,317        463,759
Vertex Pharmaceuticals, Inc. (a)                                 11,100        175,935
                                                                          ------------
                                                                             6,808,322
                                                                          ------------
HEALTH CARE EQUIPMENT & SUPPLIES (5.0%)
Baxter International, Inc.                                       39,438      1,104,264
Cytyc Corp. (a)                                                  91,145        929,679
Medtronic, Inc.                                                  38,250      1,744,200
PolyMedica Corp. (a)                                             39,550      1,219,722
ResMed, Inc. (a)                                                 20,195        617,361
                                                                          ------------
                                                                             5,615,226
                                                                          ------------
HEALTH CARE PROVIDERS & SERVICES (4.0%)
Andrx Group (a)                                                  23,300        341,811
Express Scripts, Inc., Class A (a)                               11,800        566,872
Inveresk Research Group, Inc. (a)                                22,410        483,609
Lincare Holdings, Inc. (a)                                       27,450        867,969
Patterson Dental Co. (a)                                         25,080      1,096,999
UnitedHealth Group, Inc.                                         14,020      1,170,670
                                                                          ------------
                                                                             4,527,930
                                                                          ------------
PHARMACEUTICALS (2.6%)
Eli Lilly and Co.                                                18,275      1,160,462
InterMune, Inc. (a)                                               7,185        183,289
Pfizer, Inc.                                                     52,330      1,599,728
                                                                          ------------
                                                                             2,943,479
                                                                          ------------
INDUSTRIALS (12.7%)

AIR FREIGHT & COURIERS (0.2%)
UTI Worldwide, Inc.                                               9,420        247,275
                                                                          ------------
COMMERCIAL SERVICES & SUPPLIES (9.6%)
Automatic Data Processing, Inc.                                  27,050      1,061,713
</Table>

See Notes to Schedule of Investments.

                                       21
<Page>

<Table>
<Caption>
COMMON STOCKS (CONTINUED)                                       SHARES    MARKET VALUE
<S>                                                             <C>       <C>
COMMERCIAL SERVICES & SUPPLIES (CONTINUED)
CheckFree Corp. (a)                                              31,000   $    496,031
Cintas Corp.                                                     23,650      1,081,987
Concord EFS, Inc. (a)                                           119,250      1,876,995
Education Management Corp. (a)                                   11,780        442,928
Expedia, Inc., Class A (a)                                       12,400        829,934
FreeMarkets, Inc. (a)                                            39,160        252,151
Hotel Reservations Network, Inc., Class A (a)                     7,000        382,410
Paychex, Inc.                                                   108,500      3,027,150
Robert Half International, Inc. (a)                              50,460        812,911
West Corp. (a)                                                   29,330        486,878
                                                                          ------------
                                                                            10,751,088
                                                                          ------------
MACHINERY (0.7%)
Danaher Corp.                                                    12,600        827,820
                                                                          ------------
TRADING COMPANIES & DISTRIBUTORS (2.2%)
Fastenal Co.                                                     66,360      2,481,200
                                                                          ------------
INFORMATION TECHNOLOGY (26.0%)

COMMUNICATIONS EQUIPMENT (2.7%)
Avid Technology, Inc. (a)                                        35,116        805,912
Black Box Corp. (a)                                              14,660        656,768
Cisco Systems, Inc. (a)                                          25,000        327,500
Juniper Networks, Inc. (a)                                       73,500        499,800
Nokia Oyj (b)                                                    24,800        384,400
Packeteer, Inc. (a)                                              58,623        402,154
                                                                          ------------
                                                                             3,076,534
                                                                          ------------
COMPUTERS & PERIPHERALS (1.0%)
Dell Computer Corp. (a)                                          20,500        548,170
EMC Corp. (a)                                                    26,100        160,254
Network Appliance, Inc. (a)                                      43,400        434,000
                                                                          ------------
                                                                             1,142,424
                                                                          ------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.8%)
Cognex Corp. (a)                                                 38,155        703,197
CTS Corp.                                                        17,460        135,315
                                                                          ------------
                                                                               838,512
                                                                          ------------
INTERNET SOFTWARE & SERVICES (3.1%)
Agile Software Corp. (a)                                         48,400        374,616
BEA Systems, Inc. (a)                                            46,900        537,943
</Table>

                                           See Notes to Schedule of Investments.

                                       22
<Page>

<Table>
<Caption>
COMMON STOCKS (CONTINUED)                                       SHARES    MARKET VALUE
<S>                                                              <C>      <C>
INTERNET SOFTWARE & SERVICES (CONTINUED)
Interwoven, Inc. (a)                                             87,590   $    227,734
Overture Services, Inc. (a)                                      46,100      1,258,991
Retek, Inc. (a)                                                  70,732        192,391
Yahoo!, Inc. (a)                                                 54,200        886,170
                                                                          ------------
                                                                             3,477,845
                                                                          ------------
IT CONSULTING & SERVICES (1.5%)
Investment Technology Group, Inc. (a)                            39,442        881,923
SunGard Data Systems, Inc. (a)                                   35,000        824,600
                                                                          ------------
                                                                             1,706,523
                                                                          ------------
OFFICE ELECTRONICS (1.2%)
Zebra Technologies Corp., Class A (a)                            22,545      1,291,829
                                                                          ------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS (9.6%)
Altera Corp. (a)                                                 27,600        340,308
Applied Micro Circuits Corp. (a)                                 78,200        288,558
Axcelis Technologies, Inc. (a)                                   52,580        294,921
Intel Corp.                                                      42,100        655,497
Intersil Corp., Class A (a)                                      17,856        248,913
Linear Technology Corp.                                          36,350        934,922
Maxim Integrated Products, Inc. (a)                              62,800      2,074,912
Micrel, Inc. (a)                                                 24,159        216,948
Microchip Technology, Inc. (a)                                   96,887      2,368,887
Novellus Systems, Inc. (a)                                       15,400        432,432
Pericom Semiconductor Corp. (a)                                  28,034        232,962
Semtech Corp. (a)                                                18,460        201,583
Texas Instruments, Inc.                                          48,000        720,480
Xilinx, Inc. (a)                                                 85,700      1,765,420
                                                                          ------------
                                                                            10,776,743
                                                                          ------------
SOFTWARE (6.1%)
Advent Software, Inc. (a)                                         8,030        109,449
E.piphany, Inc. (a)                                              62,810        261,918
Intuit, Inc. (a)                                                 16,000        750,720
Micromuse, Inc. (a)                                              57,520        219,726
Microsoft Corp. (a)                                              44,600      2,305,820
National Instruments Corp. (a)                                   56,090      1,822,364
Rational Software Corp. (a)                                      23,200        241,048
Siebel Systems, Inc. (a)                                         86,600        647,768
Symantec Corp. (a)                                               12,800        518,528
                                                                          ------------
                                                                             6,877,341
                                                                          ------------
</Table>

See Notes to Schedule of Investments.

                                       23
<Page>

<Table>
<Caption>
COMMON STOCKS (CONTINUED)                                       SHARES    MARKET VALUE
<S>                                                              <C>      <C>
TELECOMMUNICATION SERVICES (1.7%)

WIRELESS TELECOMMUNICATION SERVICES (1.7%)
Sprint Corp. (PCS Group) (a)                                     86,500   $    378,870
Vodafone Group PLC (b)                                           82,500      1,494,900
                                                                          ------------
                                                                             1,873,770
                                                                          ------------
TOTAL COMMON STOCKS (COST OF $119,306,796)                                 110,873,813
                                                                          ============

<Caption>
WARRANTS (0.1%)                                                  UNITS
<S>                                                              <C>            <C>
INDUSTRIAL (0.1%)

COMMERCIAL SERVICES & SUPPLIES (0.1%)
Expedia, Inc., Expiration Date 02/04/09 (Cost of $20,691) (a)     1,459         52,261
                                                                           -----------

<Caption>
SHORT-TERM INVESTMENT (2.0%)                                  PAR VALUE
<S>                                                           <C>         <C>
REPURCHASE AGREEMENT (2.0%)

Repurchase agreement with State Street Bank & Trust Co.,
dated 12/31/02, at 1.18% due on 01/02/03, collateralized by
U.S Treasury Bonds and Notes with maturities to 2012,
current market value of $2,313,933
(repurchase proceeds $2,261,148) (Cost of $2,261,000)         2,261,000      2,261,000
                                                                          ------------
TOTAL INVESTMENTS (100.9%) (COST OF $121,588,487) (C)                      113,187,074

OTHER ASSETS AND LIABILITIES, NET (-0.9%)                                     (966,346)
                                                                          ------------
NET ASSETS (100.0%)                                                       $ 12,220,728
                                                                          ------------
NET ASSET VALUE PER SHARE (20,618,488 SHARES OUTSTANDING)                 $       5.44
                                                                          ============
</Table>
NOTES TO SCHEDULE OF INVESTMENTS:

     (a) Non-income producing security.
     (b) Represents an American Depositary Receipt.
     (c) Cost of investments for federal income tax purposes is $122,640,367.
           Gross unrealized appreciation and depreciation of investments at
             December 31, 2002 is as follows:
                 Gross unrealized appreciation     $  25,309,857
                  Gross unrealized depreciation      (34,763,150)
                                                   -------------
                    Net unrealized depreciation    $  (9,453,293)
                                                   =============

                                              See Notes to Financial Statements.

                                                                              24
<Page>

                                                            FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2002

<Table>
<Caption>
<S>                                                                             <C>
ASSETS:
  Investments at market value (identified cost $121,588,487)                    $  113,187,074
  Receivable for investments sold                                                      847,342
  Dividends and interest receivable                                                     73,461
  Cash                                                                                   3,632
  Other assets                                                                           8,480
                                                                                --------------
    TOTAL ASSETS                                                                   114,119,989
                                                                                ==============
LIABILITIES:
  Payable for investments purchased                                                    111,628
  Distributions payable to shareholders                                              1,351,186
  Management, administrative and bookkeeping/pricing fees payable                      289,019
  Accrued expenses                                                                     147,428
                                                                                --------------
    TOTAL LIABILITIES                                                                1,899,261
                                                                                --------------
NET ASSETS                                                                      $  112,220,728
                                                                                ==============
NET ASSETS REPRESENTED BY:
  Paid-in capital (authorized 60,000,000 shares at $0.10 Par;
    20,618,488 shares outstanding)                                              $  145,859,540
  Accumulated net realized loss on investments                                     (25,237,399)
  Net unrealized depreciation on investments                                        (8,401,413)
                                                                                --------------
TOTAL NET ASSETS APPLICABLE TO OUTSTANDING SHARES
OF COMMON STOCK ($5.44 PER SHARE)                                               $  112,220,728
                                                                                ==============
</Table>

See Notes to Financial Statements.

                                       25
<Page>

STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2002

<Table>
<S>                                                                          <C>              <C>
INVESTMENT INCOME:
   Dividends                                                                                  $      366,526
   Interest                                                                                           43,300
                                                                                              --------------
      TOTAL INVESTMENT INCOME (NET OF FOREIGN TAXES
           WITHHELD AT SOURCE WHICH AMOUNTED TO $4,489)                                              409,826

EXPENSES:
   Management fee                                                            $    1,052,818
   Administrative fee                                                               262,929
   Bookkeeping and pricing fees                                                      32,888
   Custodian fees                                                                    28,278
   Transfer agent fees                                                               99,587
   Shareholder communication expenses                                               178,709
   Directors' fees and expenses                                                      39,056
   NYSE fee                                                                          45,714
   Miscellaneous expense                                                             74,132
                                                                             --------------
      TOTAL EXPENSES                                                                               1,814,111
                                                                                              --------------
      CUSTODY EARNINGS CREDIT                                                                           (103)
                                                                                              --------------
      NET EXPENSES                                                                                 1,814,008
                                                                                              --------------
NET INVESTMENT LOSS                                                                               (1,404,182)

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions:
   Proceeds from sales                                                           40,907,006
   Cost of investments sold                                                      49,829,074
                                                                             --------------
      Net realized loss on investment transactions                                                (8,922,068)

Net unrealized appreciation (depreciation) on investments:
   Beginning of year                                                             25,133,280
   End of year                                                                   (8,401,413)
      Change in unrealized appreciation-net                                                      (33,534,693)
                                                                                              --------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS                                          $  (43,860,943)
                                                                                              --------------
</Table>

                                              See Notes to Financial Statements.

                                       26
<Page>

<Table>
<Caption>
                                                                     YEAR ENDED DECEMBER 31,
                                                                  -----------------------------
STATEMENT OF CHANGES IN NET ASSETS                                     2002           2001
<S>                                                               <C>             <C>
OPERATIONS:
   Net investment loss                                            $  (1,404,182)  $  (1,706,286)
   Net realized loss on investment transactions                      (8,922,068)    (14,243,505)
   Change in unrealized appreciation-net                            (33,534,693)     (6,319,926)
                                                                  -------------   -------------
   Net decrease in net assets resulting from operations             (43,860,943)    (22,269,717)
                                                                  -------------   -------------
DISTRIBUTIONS DECLARED FROM:
   Paid-in capital                                                  (13,398,589)    (15,906,792)
                                                                  -------------   -------------
   Total distributions                                              (13,398,589)    (15,906,792)
                                                                  -------------   -------------
CAPITAL TRANSACTIONS:
   Proceeds from rights offering                                             --      13,908,810
   Dividend reinvestments                                             6,185,822       7,254,347
                                                                  -------------   -------------
   Increase in net assets from capital share transactions             6,185,822      21,163,157
                                                                  -------------   -------------
   Total decrease in net assets                                     (51,073,710)    (17,013,352)

NET ASSETS:
   Beginning of year                                                163,294,438     180,307,790
                                                                  -------------   -------------
   End of year                                                    $ 112,220,728   $ 163,294,438
                                                                  =============   =============
</Table>

See Notes to Financial Statements.

                                       27
<Page>

FINANCIAL HIGHLIGHTS

<Table>
<Caption>
                                                              YEAR ENDED DECEMBER 31,
                                                     -----------------------------------------
                                                       2002       2001       2000       1999
<S>                                                  <C>        <C>        <C>        <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of year                 $   8.31   $  10.86   $  13.44   $  13.03
                                                     --------   --------   --------   --------
Income from Investment Operations:
      Net investment income (loss)                      (0.07)     (0.09)     (0.09)     (0.05)
      Net realized and unrealized gain
            (loss) on investments                       (2.13)     (1.50)     (1.15)      1.83
                                                     --------   --------   --------   --------
TOTAL FROM INVESTMENT OPERATIONS                        (2.20)     (1.59)     (1.24)      1.78
                                                     --------   --------   --------   --------
Less Distributions from:
      Net investment income                                --         --         --         --
      Paid-in capital                                   (0.67)     (0.92)     (0.05)        --
      Realized capital gain                                --         --      (1.22)     (1.23)
      In excess of realized capital gain                   --         --      (0.07)        --
                                                     --------   --------   --------   --------
Total Distributions                                     (0.67)     (0.92)     (1.34)     (1.23)
                                                     --------   --------   --------   --------
Change due to rights offering (a)                          --      (0.04)        --         --
Impact of shares issued
      in dividend reinvestment (b)                         --         --         --      (0.14)
                                                     --------   --------   --------   --------
Total Distributions, Reinvestments
      and Rights Offering                               (0.67)     (0.96)     (1.34)     (1.37)
                                                     --------   --------   --------   --------
Net asset value at end of year                       $   5.44   $   8.31   $  10.86   $  13.44
                                                     ========   ========   ========   ========
Market price at end of year                          $   5.05   $   8.33   $  9.438   $ 10.813
                                                     ========   ========   ========   ========
TOTAL INVESTMENT RETURN FOR SHAREHOLDERS: (c)
Based on net asset value                                (27.2)%    (13.7)%     (9.1)%     15.9%
Based on market price                                   (32.6)%     (0.5)%     (1.8)%      6.2%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of year (millions)                 $    112   $    163   $    180   $    219
Ratio of expenses to average net assets (d)              1.38%      1.41%      1.21%      1.20%
Ratio of net investment income (loss)
      to average net assets (d)                         (1.07)%    (1.12)%    (0.71)%    (0.37)%
Portfolio turnover rate                                    25%        41%        62%        71%
</Table>

(a)  Effect of Fund's rights offerings for shares at a price below net asset
     value.
(b)  Effect of payment of a portion of distributions in newly issued shares at a
     discount from net asset value.
(c)  Calculated assuming all distributions reinvested at actual reinvestment
     price and all primary rights exercised.

                                              See Notes to Financial Statements.

                                       28
<Page>

<Table>
<Caption>
                                                                           YEAR ENDED DECEMBER 31,
                                                     ---------------------------------------------------------------
                                                       1998       1997       1996      1995(e)     1994       1993
<S>                                                  <C>        <C>        <C>        <C>        <C>        <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of year                 $  12.89   $  11.27   $  10.55   $   9.95   $  10.54   $  10.28
                                                     --------   --------   --------   --------   --------   --------
Income from Investment Operations:
      Net investment income (loss)                      (0.03)     (0.02)      0.01       0.31       0.23       0.18
      Net realized and unrealized gain
            (loss) on investments                        1.73       2.88       1.86       1.05      (0.24)      0.56
                                                     --------   --------   --------   --------   --------   --------
TOTAL FROM INVESTMENT OPERATIONS                         1.70       2.86       1.87       1.36      (0.01)      0.74
                                                     --------   --------   --------   --------   --------   --------
Less Distributions from:
      Net investment income                                --         --      (0.01)     (0.31)     (0.23)     (0.18)
      Paid-in capital                                   (0.83)        --         --         --         --         --
      Realized capital gain                             (0.52)     (1.24)     (1.01)     (0.45)     (0.35)     (0.30)
      In excess of realized capital gain                   --         --         --         --         --         --
                                                     --------   --------   --------   --------   --------   --------
Total Distributions                                     (1.35)     (1.24)     (1.02)     (0.76)     (0.58)     (0.48)
                                                     --------   --------   --------   --------   --------   --------
Change due to rights offering (a)                       (0.21)        --         --         --         --         --
Impact of shares issued
      in dividend reinvestment (b)                         --         --      (0.13)        --         --         --
                                                     --------   --------   --------   --------   --------   --------
Total Distributions, Reinvestments
      and Rights Offering                               (1.56)     (1.24)     (1.15)     (0.76)     (0.58)     (0.48)
                                                     --------   --------   --------   --------   --------   --------
Net asset value at end of year                       $  13.03   $  12.89   $  11.27   $  10.55   $   9.95   $  10.54
                                                     ========   ========   ========   ========   ========   ========
Market price at end of year                          $ 11.438   $ 11.938   $  9.250   $  9.375   $  8.500   $ 10.250
                                                     ========   ========   ========   ========   ========   ========
TOTAL INVESTMENT RETURN FOR SHAREHOLDERS: (c)
Based on net asset value                                 15.3%      27.3%      18.3%      14.6%       0.5%       7.2%
Based on market price                                     9.3%      43.6%       9.3%      19.3%     (11.7)%      7.2%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of year (millions)                 $    199   $    167   $    137   $    120   $    113   $    125
Ratio of expenses to average net assets (d)              1.22%      1.20%      1.35%      1.42%      1.51%      1.35%
Ratio of net investment income (loss)
      to average net assets (d)                         (0.22)%    (0.18)%     0.06%      2.87%      2.12%      1.71%
Portfolio turnover rate                                    33%        57%        51%        82%        50%        47%
</Table>

(d)  The benefits derived from custody credits and directed brokerage
     arrangements, if applicable, had an impact of less than 0.01%.
(e)  Liberty Asset Management Company assumed complete management
     responsibilities of the Fund in November 1995.

See Notes to Financial Statements.

                                       29
<Page>

NOTES TO FINANCIAL STATEMENTS December 31, 2002

NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES
Liberty All-Star Growth Fund, Inc. (the "Fund"), is registered under the
Investment Company Act of 1940, as amended, as a closed-end, diversified
management investment company and commenced operations on March 14, 1986. The
Fund's investment goal is to seek long term capital appreciation. The Fund is
managed by Liberty Asset Management Company (the "Manager").

     The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

VALUATION OF INVESTMENTS - Portfolio securities listed on an exchange and
over-the-counter securities quoted on the NASDAQ system are valued on the basis
of the last sale on the date as of which the valuation is made, or, lacking any
sales, at the mean of the closing bid and asked quotations on that date.
Over-the-counter securities not quoted on the NASDAQ system are valued at the
most recent bid prices on that date. Securities for which reliable quotations
are not readily available are valued at fair value, as determined in good faith
and pursuant to procedures established by the Board of Directors ("Directors").
Short-term instruments maturing in more than 60 days for which market quotations
are readily available are valued at current market value. Short-term instruments
with remaining maturities of 60 days or less are valued at amortized cost,
unless the Directors determine that this does not represent fair value. These
securities will be valued at their fair value as determined in good faith by or
under the supervision of the Directors.

PROVISION FOR FEDERAL INCOME TAX - Consistent with the Fund's policy to qualify
as a regulated investment company and to distribute all of its taxable income to
shareholders, no federal income tax has been accrued.

DISTRIBUTIONS TO SHAREHOLDERS - The Fund currently has a policy of paying
distributions on its common shares totaling approximately 10% of its net asset
value per year, payable in four quarterly distributions of 2.5% 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 the ex-dividend date.

OTHER - Security transactions are accounted for on the trade date. Interest
income and expenses are recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date.

NOTE 2. FEDERAL TAX INFORMATION
Income and capital gain distributions are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
deferral of losses from wash sales, net operating losses, distributions payable,
capital loss carryforwards and post-October losses. Reclassifications are made
to the Fund's capital accounts to reflect income and gains available for
distribution (or available capital loss carryforwards) under income tax
regulations.

     For the year ended December 31, 2002, permanent items identified and
reclassified among the components of net assets are as follows:

<Table>
<Caption>
          UNDISTRIBUTED
          NET INVESTMENT                PAID-IN
              INCOME                    CAPITAL
          --------------             -------------
            <S>                      <C>
            $ 1,404,182              $ (1,404,182)
</Table>

Net investment income, net realized gains (losses) and net assets were not
affected by this reclassification.

     The tax character of distributions paid during 2002 and 2001 was as
follows:

<Table>
<Caption>
                                 2002            2001
                                 ----            ----
<S>                         <C>            <C>
Distributions paid from:
Ordinary income             $         --   $         --
Long-term capital gain                --             --
                            ------------   ------------
                                      --             --
Return of capital             14,239,710     15,906,792
                            ------------   ------------
                            $ 14,239,710   $ 15,906,792
</Table>

As of December 31, 2002, the components of distributable earnings on a tax basis
were as follows:

<Table>
<Caption>
   UNDISTRIBUTED        UNDISTRIBUTED
     ORDINARY             LONG-TERM           UNREALIZED
      INCOME            CAPITAL GAINS        DEPRECIATION*
        <S>                  <C>             <C>
        --                   --              $ 9,453,293
</Table>

*   The difference between book-basis and tax-basis unrealized appreciation
    (depreciation) is attributable primarily to the tax deferral of losses of
    wash sales.

                                       30
<Page>

The following capital loss carryforwards are available to reduce taxable income
arising from future net realized gains on investments, if any, to the extent
permitted by the Internal Revenue Code:

<Table>
<Caption>
              YEAR OF                CAPITAL LOSS
            EXPIRATION               CARRYFORWARD
            ----------               ------------
               <S>                   <C>
               2009                  $ 12,880,379
               2010                    11,242,729
                                     ------------
                            Total    $ 24,123,108
                                     ------------
</Table>

Future realized gains offset by the loss carryforwards are not required to be
distributed to shareholders. However, under the Fund's distribution policy, as
discussed in Note 1, such gains may be distributed to shareholders in the year
the gains are realized. Any such gains distributed may be taxable to
shareholders as ordinary income. Under current tax rules, certain capital losses
realized after October 31 may be deferred and treated as occurring on the first
day of the following fiscal year. As of December 31, 2002 for federal income tax
purposes, post-October losses of $62,410 attributable to security transactions
were deferred to January 1, 2003.

NOTE 3. FEES PAID TO AFFILIATES
Under the Fund's Management and Portfolio Management Agreements, the Fund pays
the Manager a management fee for its investment management services at an annual
rate of 0.80% of the Fund's average weekly net assets. The Manager pays each
Portfolio Manager a portfolio management fee at an annual rate of 0.40% of the
average weekly net assets of the investment portfolio managed by it. The Fund
also pays the Manager a fee for its administrative services at an annual rate of
0.20% of the Fund's average weekly net assets. The annual fund management and
administrative fees are reduced to 0.72% and 0.18%, respectively, on average
weekly net assets in excess of $300 million. The aggregate annual fees payable
by the Manager to the Portfolio Managers are reduced to 0.36% of the Fund's
average weekly net assets in excess of $300 million. The Manager is responsible
for providing pricing and bookkeeping services to the Fund under a Pricing and
Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"),
the Manager has delegated those functions to State Street Bank and Trust Company
("State Street"). The Manager pays fees to State Street under the Outsourcing
Agreement.

     Under its pricing and bookkeeping agreement with the Fund, the Manager
receives from the Fund an annual flat fee of $10,000, paid monthly, and in any
month that the Fund's average weekly net assets are more than $50 million, a
monthly fee equal to the average weekly net assets of the Fund for that month
multiplied by a fee rate that is calculated by taking into account the fees
payable to State Street under the Outsourcing Agreement. For the year ended
December 31, 2002, the annualized net asset based fee was 0.023%. The Fund also
pays out-of-pocket costs for pricing services.

OTHER - The Fund pays no compensation to its officers, all of whom are employees
of the Manager or its affiliates. The Fund had an agreement with its custodian
bank under which $103 of custody fees were reduced by balance credits applied
during the year ended December 31, 2002. The Fund could have invested a portion
of the assets utilized in connection with the expense offset arrangement in an
income producing asset if it had not entered into such an agreement.

NOTE 4. CAPITAL TRANSACTIONS
In a rights offering commencing August 10, 2001, shareholders exercised rights
to purchase 2,117,781 shares at $6.64 per share for proceeds, net of expenses,
of $13,908,810. During the year ended December 31, 2002 and the year ended
December 31, 2001, distributions in the amounts of $6,185,822 and $7,254,347,
respectively, were paid in newly issued shares valued at market value or net
asset value, but not less than 95% of market value, resulting in the issuance of
964,320 and 929,648 shares, respectively.

NOTE 5. SECURITIES TRANSACTIONS
Realized gains and losses are recorded on the identified cost basis for both
financial reporting and federal income tax purposes. The cost of investments
purchased and the proceeds from investments sold excluding short-term debt
obligations for the year ended December 31, 2002 were $32,148,969 and
$40,907,006, respectively.

     The Fund may enter into repurchase agreements and require the seller of the
instrument to maintain on deposit with the Fund's custodian bank or in the
Federal Reserve Book-Entry System securities in the amount at all times equal to
or in excess of the value of the repurchase agreement plus accrued interest. The
Fund may experience costs and delays in liquidating the collateral if the issuer
defaults or enters bankruptcy.

                                       31
<Page>

REPORT OF INDEPENDENT ACCOUNTANTS

TO THE SHAREHOLDERS AND THE BOARD OF DIRECTORS OF LIBERTY ALL-STAR GROWTH FUND,
INC.

In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and changes
in net assets and the financial highlights present fairly, in all material
respects, the financial position of Liberty All-Star Growth Fund, Inc. (the
"Fund") at December 31, 2002, and the results of its operations, the changes in
its net assets and the financial highlights for the periods indicated, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with auditing standards generally accepted in the United States of
America which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2002 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion. The financial highlights of the Fund for periods prior to January
1, 1999 were audited by other independent accountants whose report dated
February 12, 1999 expressed an unqualified opinion on those statements.

PricewaterhouseCoopers LLP
Boston, Massachusetts
February 5, 2003

                                       32
<Page>

                            AUTOMATIC DIVIDEND REINVESTMENT & CASH PURCHASE PLAN

Each shareholder of the Fund will automatically be a participant in the Fund's
Automatic Dividend Reinvestment and Cash Purchase Plan as amended June 30, 1996
(the "Plan"), unless the shareholder specifically elects other- wise by writing
to the agent for participants in the Plan, EquiServe Trust Company, N.A. (the
"Plan Agent"), P.O. Box 43011, Providence, RI 02940-3011 or by calling
1-800-LIB-FUND (1-800-542-3863). Shareholders whose shares are held in the name
of a brokerage firm, bank or other nominee must notify their brokerage firm,
bank or nominee if they do not wish to participate in the Plan.

     Under the Plan, all dividends and other distributions on shares of the Fund
are automatically reinvested by the Plan Agent in additional shares of the Fund.
Distributions declared payable in shares or cash at the option of shareholders
are paid to participants in the Plan entirely in newly issued full and
fractional shares valued at the lower of market value or net asset value per
share on the valuation date for the distribution (but not a discount of more
than 5 percent from market price). Distributions declared payable only in cash
will be reinvested for the accounts of participants in the Plan in additional
shares purchased by the Plan Agent on the open market at prevailing market
prices. If, prior to the Plan Agent's completion of such open market purchases,
the market price of a share equals or exceeds its net asset value, the remainder
of the distribution will be paid in newly issued shares valued at net asset
value (but not at a discount of more than 5 percent from market price).
Dividends and distributions are subject to taxation, whether received in cash or
in shares.

     Participants in the Plan have the option of making additional cash payments
in any amount from $100 to $3,000 on a monthly basis for investment in shares of
the Fund purchased on the open market. These voluntary cash payments will be
invested on or about the 15th day of each calendar month, and voluntary payments
should be sent so as to be received by the Plan Agent no later than 10 days
before the next investment date. Barring suspension of trading, voluntary cash
payments will be invested within 45 days of receipt. A participant may withdraw
a voluntary cash payment by written notice received by the Plan Agent at least
48 hours before such payment is to be invested.

     The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in the account, including information
needed by shareholders for tax records. Shares in the account of each Plan
participant will be held by the Plan Agent in non-certificated form in the name
of the participant, and each shareholder's proxy will include those shares
purchased or received pursuant to the Plan.

    There is no charge to participants for reinvesting distributions pursuant to
the Plan. The Plan Agent's fees are paid by the Fund. There are no brokerage
charges with respect to shares issued directly by the Fund as a result of
dividends or distributions declared payable in shares or in cash. However, each
participant bears a pro rata share of brokerage commissions incurred with
respect to the Plan Agent's open market purchases in connection with the
reinvestment of distributions declared payable only in cash.

    With respect to purchases from voluntary cash payments, the Plan Agent will
charge $1.25 for each such purchase for a participant, plus a pro rata share of
the brokerage commissions. Brokerage charges for purchasing small amounts of
shares for individual accounts through the Plan are expected to be less than the
usual brokerage charges for such transactions, as the Plan Agent will be
purchasing shares for all participants in blocks and prorating the lower
commission thus attainable.

    Shareholders whose shares are held in the name of a brokerage firm, bank or
other nominee will be able to participate in the Plan only if their brokerage
firm, bank or nominee is able to do so on their behalf. Shareholders
participating in the Plan through a brokerage firm may not be able to transfer
their shares to another brokerage firm and continue to participate in the Plan.

    Shareholders may terminate their participation in the Plan by written notice
to the Plan Agent, EquiServe Trust Company, N.A., P.O. Box 43011, Providence, RI
02940-3011. Such termination will be effective immediately if received not less
than 10 days prior to the record date for a dividend or distribution; otherwise
it will be effective on the first business day after the payment date of such
dividend or distribution. On termination, participants may either have
certificates for the Fund shares in their Plan accounts delivered to them or
have the Plan Agent sell such shares in the open market and deliver the
proceeds, less a $2.50 fee plus brokerage commissions, to the participant.

     Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan.

                                       33
<Page>

TAX INFORMATION (UNAUDITED)

All 2002 distributions whether received in cash or shares of the Fund consist of
return of capital. Below is a table that details the breakdown of each 2002
distribution for federal income tax purposes.

TAX STATUS OF 2002 DISTRIBUTIONS

<Table>
<Caption>
                                                 ORDINARY INCOME
                                           ---------------------------
                                               NET          SHORT-TERM      LONG-TERM
                         AMOUNT            INVESTMENT         CAPITAL        CAPITAL       RETURN OF
    DATE PAID           PER SHARE            INCOME            GAINS          GAINS         CAPITAL
    <S>                  <C>                   <C>              <C>            <C>           <C>
    01/02/02             $ 0.19                --               --             --            100%*

    03/18/02             $ 0.20                --               --             --            100%

    07/01/02             $ 0.19                --               --             --            100%

    09/16/02             $ 0.14                --               --             --            100%

    01/02/03             $ 0.14                --               --             --             **
</Table>

*    Pursuant to section 852 of the Internal Revenue Code, the taxability of
     this distribution will be reported on the Form 1099-DIV for 2002.

**   Pursuant to section 852 of the Internal Revenue Code, the taxability of
     this distribution will be reported on the Form 1099-DIV for 2003.

                                       34
<Page>

                                                          DIRECTORS AND OFFICERS

The names of the Directors and officers of the Liberty All-Star Growth Fund,
Inc., the date each was first elected or appointed to office, their term of
office, their principal business occupations and other directorships they have
held during at least the last five years, are shown below.

<Table>
<Caption>
       NAME                  POSITION       TERM OF                PRINCIPAL             PORTFOLIOS IN
      (AGE)                WITH LIBERTY   OFFICE AND             OCCUPATION(S)           FUND COMPLEX        OTHER
       AND                   ALL-STAR      LENGTH OF              DURING PAST              OVERSEEN       DIRECTORSHIPS
     ADDRESS               GROWTH FUND      SERVICE                FIVE YEARS             BY DIRECTOR         HELD
<S>                          <C>         <C>             <C>                                  <C>      <C>
DISINTERESTED DIRECTOR(S)

John A. Benning              Director    Director        Retired since December, 1999;        2        TT International USA
(Age 68)                                 Since 2002      Senior Vice President, General                (investment company) and ICI
c/o Liberty Asset                                        Counsel and Secretary, Liberty                Mutual Insurance Co. (D&O/E&O
Management Company                                       Financial Companies Inc.                      Insurance)
One Financial Center                                     (July, 1985 to December,
Boston, MA 02111                                         1999); Vice President,
                                                         Secretary and Director,
                                                         Liberty Asset Management
                                                         Company (August, 1985 to
                                                         December, 1999).

Robert J. Birnbaum           Director    Director Since  Retired since January 1994;          2        Dresdner RCM Europe Fund
(Age 74)                                 1994; Term      Special Counsel, Dechert,                     (investment company) and
c/o Liberty Asset                        Expires 2003    Price & Rhoads (September 1988                Chicago Options Exchange
Management Company                                       to December 1993); President                  Board
One Financial Center                                     and Chief Operating Officer,
Boston, MA 02111                                         New York Stock Exchange, Inc.
                                                         (May 1985 to June 1988)

James E. Grinnell            Director    Director Since  Private investor since               2        None
(Age 73)                                 1994; Term      November 1988; President and
c/o Liberty Asset                        Expires 2003    Chief Executive Officer,
Management Company                                       Distribution Management
One Financial Center                                     Systems, Inc. (1983 to May
Boston, MA 02111                                         1986); Senior Vice President,
                                                         Operations, The Rockport
                                                         Company (importer and
                                                         distributor of shoes) (May
                                                         1986 to November 1988).
</Table>

                                       35
<Page>

<Table>
<Caption>
       NAME                  POSITION       TERM OF               PRINCIPAL              PORTFOLIOS IN
      (AGE)                WITH LIBERTY   OFFICE AND             OCCUPATION(S)           FUND COMPLEX         OTHER
       AND                   ALL-STAR      LENGTH OF              DURING PAST              OVERSEEN         DIRECTORSHIPS
     ADDRESS               GROWTH FUND      SERVICE                FIVE YEARS             BY DIRECTOR          HELD
<S>                          <C>         <C>             <C>                                  <C>       <C>
DISINTERESTED DIRECTORS
 (CONTINUED)

Richard W. Lowry             Director    Director Since  Private Investor since 1987          105       None
(Age 66)                                 1994; Term      (formerly Chairman and Chief
c/o Liberty Asset                        Expires 2004    Executive Officer, U.S.
Management Company                                       Plywood Corporation) (building
One Financial Center                                     products manufacturer).
Boston, MA 02111

John J. Neuhauser            Director    Director Since  Academic Vice President and          105       Saucony, Inc.
(Age 58)                                 1998; Term      Dean of Faculties since August                 (athletic footwear)
c/o Liberty Asset                        Expires 2003    1999, Boston College (formerly                 and SkillSoft Corp.
Management Company                                       Dean, Boston College School of                 (e-learning)
One Financial Center                                     Management from September 1977
Boston, MA 02111                                         to September 1999).

INTERESTED DIRECTOR

William E. Mayer*            Director    Director Since  Managing Partner, Park Avenue        105       Lee Enterprises (print
(Age 62)                                 1998; Term      Equity Partners (private                       media); WR Hambrecht & Co
c/o Liberty Asset                        Expires 2005    equity) since February 1999                    (financial service
Management Company                                       (formerly Founding Partner,                    provider); First Health
One Financial Center                                     Development Capital, LLC from                  (healthcare).
Boston, MA 02111                                         November 1996 to February
                                                         1999; Dean and Professor,
                                                         College of Business and
                                                         Management, University of
                                                         Maryland from October, 1992 to
                                                         November 1996).
</Table>

* A Director who is an "interested person" (as defined in the Investment Company
  Act of 1940 ("1940 Act")) of Liberty All-Star Growth Fund, Inc. or LAMCO.
  Mr. Mayer is an interested person by reason of his affiliation with
  WR Hambrecht + Co.

                                       36
<Page>

<Table>
<Caption>
                                   POSITION    YEAR FIRST
                                 WITH LIBERTY  ELECTED OR
                                  ALL-STAR     APPOINTED                      PRINCIPAL OCCUPATION(S) DURING
   NAME (AGE) AND ADDRESS        GROWTH FUND   TO OFFICE                            PAST FIVE YEARS
<S>                            <C>                <C>      <C>
OFFICERS

William R. Parmentier, Jr.        President       1998     President (since June 1998) and Chief Investment Officer (since April
(Age 50)                          and Chief                1995), Senior Vice President (May 1995 to June 1998), Liberty Asset
Liberty Asset                     Executive                Management.
Management Company                 Officer
One Financial Center
Boston, MA 02111

Mark T. Haley, CFA             Vice President     1999     Vice President-Investments (since January 1999), Director of
(Age 38)                                                   Investment Analysis (December 1996 to December 1998), Investment
Liberty Asset                                              Analyst (January 1994 to November 1996), Liberty Asset Management.
Management Company
One Financial Center
Boston, MA 02111

J. Kevin Connaughton (Age 38)     Treasurer       2000     Treasurer of the Liberty Funds and of the Liberty All-Star Funds since
One Financial Center                                       December 2000 (formerly Controller of the Liberty Funds and of the
Boston, MA 02111                                           Liberty All-Star Funds from February 1998 to October 2000); Treasurer
                                                           of the Stein Roe Funds since February, 2001 (formerly Controller from
                                                           May 2000 to February 2001); Treasurer of the Galaxy Funds since
                                                           September 2002 (formerly Vice President of Colonial Management
                                                           Associates, Inc. from February 1998 to October 2000; Senior Tax
                                                           Manager, Coopers & Lybrand, LLP from April 1996 to January 1998).
</Table>

                                       37
<Page>

<Table>
<Caption>
                                   POSITION    YEAR FIRST
                                 WITH LIBERTY  ELECTED OR
                                  ALL-STAR     APPOINTED       PRINCIPAL OCCUPATION(S) DURING
   NAME (AGE) AND ADDRESS        GROWTH FUND    TO OFFICE        PAST FIVE YEARS
<S>                             <C>             <C>        <C>
OFFICERS (CONTINUED)

Vicki Benjamin (Age 41)           Chief         2001       Controller of the Liberty Funds and Liberty All-Star Funds since June
One Financial Center             Accounting                2002; Chief Accounting Officer of the Liberty Funds and Liberty
Boston, MA 02111                Officer and                All-Star Funds since June 2001; Controller and Chief Accounting
                                 Controller                Officer of the Galaxy Funds since September 2002 (formerly Vice
                                                           President, Corporate Audit, State Street Bank and Trust Company from
                                                           May 1998 to April 2001; Audit Manager from July 1994 to June 1997,
                                                           Senior Audit Manager from July 1997 to May 1998, Coopers & Lybrand
                                                           LLP).

Jean S. Loewenberg (Age 57)      Secretary      2002       Secretary of the Liberty Funds and of the Liberty All-Star Funds since
One Financial Center                                       February 2002; General Counsel of Columbia Management Group since
Boston, MA 02111                                           December 2001; Senior Vice President since November 1996; Assistant
                                                           General Counsel of Fleet National Bank since September 2002 (formerly
                                                           Senior Vice President and Group Senior Counsel of Fleet National Bank
                                                           from November 1996 to September 2002).
</Table>

                                       38
<Page>

                                                                           NOTES

                                       39
<Page>

NOTES

                                       40
<Page>

[ALL STAR GROWTH FUND LOGO]

FUND MANAGER
Liberty Asset Management Company
One Financial Center
Boston, Massachusetts 02111
617-772-3626
www.all-starfunds.com

INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers, LLP
160 Federal Street
Boston, Massachusetts 02110

CUSTODIAN
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110

INVESTOR ASSISTANCE,
TRANSFER & DIVIDEND
DISBURSING AGENT & REGISTRAR
EquiServe Trust Company, N.A.
P.O. Box 43011, Providence, Rhode Island 02940-3011
1-800-LIB-FUND (1-800-542-3863)
www.equiserve.com

LEGAL COUNSEL
Kirkpatrick and Lockhart LLP
1800 Massachusetts Avenue, NW
Washington, DC 20036-1800

DIRECTORS
John A. Benning*
Robert J. Birnbaum*
James E. Grinnell*
Richard W. Lowry*
William E. Mayer
Dr. John J. Neuhauser*

OFFICERS
William R. Parmentier, Jr., President and Chief Executive Officer
Mark T. Haley, CFA, Vice President
J. Kevin Connaughton, Treasurer
Vicki L. Benjamin, Chief Accounting Officer and Controller
Jean S. Loewenberg, Secretary

* Member of the audit committee.

[ASG LISTED NYSE LOGO]


<Page>

[GRAPHIC]

[ALL STAR GROWTH FUND LOGO]

LIBERTY ASSET MANAGEMENT COMPANY
FUND MANAGER
ONE FINANCIAL CENTER
BOSTON, MASSACHUSETTS 02111
617-772-3626
www.all-starfunds.com

[ASG NYSE LOGO]
[CLOSED-END FUND ASSOCIATION LOGO]

A CLEARLY DEFINED PROCESS FOR GROWTH INVESTING

LIBERTY ALL-STAR GROWTH FUND





</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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