Liberty All-Star Growth Fund (ASG) N-CSRCertified annual shareholder report (management investment company)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-04537

Liberty All-Star Growth Fund, Inc.
(Exact name of registrant as specified in charter)

1290 Broadway, Suite 1000, Denver, Colorado 80203
(Address of principal executive offices) (Zip code)

Sareena Khwaja-Dixon, Esq.
ALPS Fund Services, Inc.
1290 Broadway, Suite 1000
Denver, Colorado 80203
(Name and address of agent for service)

Registrant’s telephone number, including area code: 303-623-2577

Date of fiscal year end: December 31

Date of reporting period: January 1, 2022 - December 31, 2022

Item 1. Report to Stockholders.

(a)

Contents

A SINGLE INVESTMENT...

A DIVERSIFIED GROWTH PORTFOLIO

A single fund that offers:

LIBERTY ALL-STAR^® GROWTH FUND, INC.

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Negative macro forces overwhelmed generally good corporate and economic performance to propel equities downward in 2022. The sharpest increase in inflation in 40 years compelled the Federal Reserve to raise short-term interest rates seven times. The war in Ukraine unsettled the geopolitical environment and drove energy and agricultural commodity prices higher. The Chinese government’s strict response to the COVID pandemic disrupted global supply chains. In addition, fears of an outright recession in 2023 meant investors lacked conviction and remained cautious.

In the U.S., solid corporate earnings, strong employment and wage gains, and ample consumer spending—ordinarily factors that would support good outcomes in the equity market—were not enough to stem the tide. At times, investors interpreted what ordinarily would be good news as bad news when viewed through the lens of higher costs and rising interest rates.

By year end, the outcome for the S&P 500^® Index was a return of -18.11 percent, a middle ground bracketed by a -6.86 percent return for the Dow Jones Industrial Average (DJIA) and for the NASDAQ Composite Index—populated by many high growth companies that are negatively impacted by rising interest rates—a return of -32.54 percent. Among the 11 sectors comprising the S&P 500^®, all but energy and utilities posted declines for the year (energy was up 66.23 percent while utilities gained just 1.40 percent). The laggards were communication services (-40.25 percent), consumer discretionary (-37.07 percent), information technology (-27.96 percent) and real estate (-26.33 percent).

Although 2022 returns were the poorest in 14 years, the results did not equal the slides experienced in the two most recent bear markets. In the bursting of the dotcom bubble, the S&P 500^® declined 11.89 percent in 2001 and 22.10 percent in 2002 while in the 2008 financial crisis and great recession the index gave up 37.00 percent.

A factor that tended to moderate losses for stocks in 2022: the occasional rallies that materialized quickly only to fade away. For instance, the S&P 500^® was down as much as 12.26 percent in the first quarter but clawed back some of its losses on the strength of a 3.71 percent gain in March. Similar rallies occurred over the summer—in July, the S&P 500^® had its best month since November 2020. Expectations that the Federal Reserve would begin to back off its rate hike regime boosted stocks in the fourth quarter. The S&P 500^® advanced 7.56 percent and the DJIA rose a strong 16.01 percent; the NASDAQ Composite was negative but only down 0.79 percent. Consistent with the prevailing pattern, however, December ended the year by closing with losses.

Growth style stocks, as represented by Liberty All-Star^® Growth Fund, lagged their value counterparts for the year. The broad market Russell 3000^® Growth Index returned -28.97 percent versus -7.98 percent for its value counterpart (both were positive in the fourth quarter, the former returning 2.31 percent versus 12.18 percent for the latter). On a relative basis, value stocks maintained their return edge across the large-, mid- and small-cap spectrum (although all were negative for the year).

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Liberty All-Star^® Growth Fund

Liberty All-Star Growth Fund lagged key benchmarks in 2022 but posted positive results for the fourth quarter. For the full year, the Fund returned -30.98 percent with shares valued at net asset value (NAV) with dividends reinvested and -40.36 percent when shares are valued at market price with dividends reinvested. (Fund returns are net of expenses.) Measured by NAV return, the Fund was ahead of the -32.92 percent yearly return of its primary benchmark, the Lipper Multi-Cap Growth Mutual Fund Average. The Fund’s market price return lagged the benchmark, however, in general, premiums declined and discounts widened in the closed-end fund industry. The Fund was not immune to this trend as it traded at a premium to NAV of 9.1 percent at year end 2021, compared to a 5.7 percent discount at the close of 2022. Both measures of return were behind the -27.61 percent return of the Fund’s Russell Growth Benchmark. Fund returns lagged the S&P 500^® and the DJIA and were mixed against the NASDAQ Composite—the NAV return ahead but the market price return trailing.

In the fourth quarter, the Fund returned 5.82 percent when shares are valued at NAV with dividends reinvested and 1.56 percent when shares are valued at market price with dividends reinvested. The NAV return topped the 1.88 percent return of the Lipper Multi-Cap Growth benchmark and the 4.06 percent return of the Russell Growth Benchmark, but the Fund’s market price return lagged both. We are disappointed with three difficult quarters in 2022 but our focus has always been long term and viewed from that perspective the Fund has a strong track record. NAV-based returns have outperformed the Funds’ primary benchmark for the trailing three-, five- and 10-year periods ending December 31, 2022.

In accordance with the Fund’s distribution policy, the Fund paid a distribution of $0.10 to shareholders during the fourth quarter, bringing the total distributed to shareholders since 1997, when the distribution policy commenced, to $16.50 per share. The Fund’s distribution policy is a major component of the Fund’s total return, and we continue to emphasize that shareholders should include these distributions when determining the total return on their investment in the Fund.

We traditionally use the opportunity afforded by the annual report to offer shareholders comments and analysis from the Fund’s three growth style managers—perspective that also represents the full capitalization spectrum of small-, mid- and large-cap stocks. This year’s Roundtable offers thoughts about 2022 as well as insights into the managers’ strategy and thinking. We invite shareholders to read this informative Q&A, which begins on page 13.

Turning to Fund news, after a 40-year career in investment management I will be retiring and, therefore, will step down as President of the Fund during the first quarter of 2023. My tenure as President began 24 years ago in April 1999. Throughout this period, I have always given my very best on behalf of Fund shareholders and have had the privilege of working with a highly capable and dedicated team of professionals here at ALPS Advisors. Two of our greatest strengths have been experience and continuity, and those attributes are evident once again as Mark Haley succeeds me as President. Mark’s tenure actually predates mine, as he has served the Fund since 1994, most recently as Senior Vice President. Having worked with Mark throughout these years, I am confident he will be an effective leader and advocate for shareholders’ best interests. Also, a recent staff addition, Robert Milas, was appointed Vice President of the Fund in December and will be working closely with Mark and the entire investment team.

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I would much prefer to sign my final shareholder letter by reporting strong performance in the equity markets. That was not to be in 2022. Over my tenure, however, we have experienced other difficult periods, principally the aforementioned bursting of the dotcom bubble in 2001 and the financial crisis of 2007 – 2009. Inflation, rising interest rates and geopolitical conflict thrust 2022 into that category. The Fund is not immune to such challenging periods, but on balance its focus on core principles and long-term investment objectives has been validated. I am confident shareholders will be well served in the future, and I am grateful for your support during my years with the Fund.

Sincerely,

William R. Parmentier, Jr.

President

Liberty All-Star^® Growth Fund, Inc.

The views expressed in the President’s Letter, Unique Fund Attributes and Manager Roundtable reflect the current views of the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and results may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions, and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for the Fund are based on numerous factors, may not be relied on as an indication of trading intent. References to specific company securities should not be construed as a recommendation or investment advice.

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FUND STATISTICS AND SHORT-TERM PERFORMANCE

PERIODS ENDED DECEMBER 31, 2022

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Performance returns for the Fund are calculated assuming all distributions are reinvested at actual reinvestment prices and all primary rights in the Fund's rights offerings were exercised. Returns are net of management fees and other Fund expenses.

The returns shown for the Lipper Multi-Cap Growth Mutual Fund Average are based on open-end mutual funds’ total returns, which include dividends, and are net of fund expenses. Returns for the unmanaged Dow Jones Industrial Average, NASDAQ Composite Index, the Russell Growth Benchmark and the S&P 500^® Index are total returns, including dividends. A description of the Lipper benchmark and the market indices can be found on page 62.

Past performance cannot predict future results. Performance will fluctuate with market conditions. Current performance may be lower or higher than the performance data shown. Performance information does not reflect the deduction of taxes that shareholders would pay on Fund distributions or the sale of Fund shares. An investment in the Fund involves risk, including loss of principal.

Closed-end funds raise money in an initial public offering and shares are listed and traded on an exchange. Open-end mutual funds continuously issue and redeem shares at net asset value. Shares of closed-end funds frequently trade at a discount to net asset value. The price of the Fund’s shares is determined by a number of factors, several of which are beyond the control of the Fund. Therefore, the Fund cannot predict whether its shares will trade at, below or above net asset value.

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UNIQUE ATTRIBUTES OF Liberty All-Star^® Growth Fund

Several attributes help to make the Fund a core equity holding for investors seeking a diversified growth portfolio, income and the potential for long-term appreciation.

	MULTI-MANAGEMENT FOR INDIVIDUAL INVESTORS
	Large institutional investors have traditionally employed multiple investment managers. With three investment managers investing across the full capitalization range of growth stocks, the Fund brings multi-management to individual investors.

	REAL-TIME TRADING AND LIQUIDITY
	The Fund has a fixed number of shares that trade on the New York Stock Exchange and other exchanges. Share pricing is continuous—not just end-of-day, as it is with open-end mutual funds. Fund shares offer immediate liquidity, there are no annual sales fees and can often be traded commission free.

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	ACCESS TO INSTITUTIONAL MANAGERS
	The Fund’s investment managers invest primarily for pension funds, endowments, foundations and other institutions. Because institutional managers are closely monitored by their clients, they tend to be more disciplined and consistent in their investment process.

	MONITORING AND REBALANCING
	ALPS Advisors continuously monitors these investment managers to ensure that they are performing as expected and adhering to their style and strategy, and will replace the managers when warranted. Periodic rebalancing maintains the Fund’s structural integrity and is a well-recognized investment discipline.

	ALIGNMENT AND OBJECTIVITY
	Alignment with shareholders’ best interests and objective decision-making help to ensure that the Fund is managed openly and equitably. In addition, the Fund is governed by a Board of Directors that is elected by and responsible to shareholders.

	DISTRIBUTION POLICY
	Since 1997, the Fund has followed a policy of paying annual distributions on its shares at a rate that approximates historical equity market returns. The current annual distribution rate is 8 percent of the Fund’s net asset value (paid quarterly at 2 percent per quarter), providing a systematic mechanism for distributing funds to shareholders.

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DISTRIBUTION POLICY

The current policy is to pay distributions on its shares totaling approximately 8 percent of its net asset value per year, payable in four quarterly installments of 2 percent of the Fund’s net asset value at the close of the New York Stock Exchange on the Friday prior to each quarterly declaration date. Sources of distributions to shareholders may include ordinary dividends, long-term capital gains and return of capital. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during its fiscal year and may be subject to changes based on tax regulations. If a distribution includes anything other than net investment income, the Fund provides a Section 19(a) notice of the best estimate of its distribution sources at that time. These estimates may not match the final tax characterization (for the full year’s distributions) contained in shareholder 1099-DIV forms after the end of the year. If the Fund’s ordinary dividends and long-term capital gains for any year exceed the amount distributed under the distribution policy, the Fund may, in its discretion, retain and not distribute capital gains and pay income tax thereon to the extent of such excess.

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GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

The graph below illustrates the growth of a hypothetical $10,000 investment assuming the purchase of shares of common stock at the closing market price (NYSE: ASG) of $9.25 on December 31, 1996, and tracking its progress through December 31, 2022. For certain information, it also assumes that a shareholder exercised all primary rights in the Fund’s rights offerings (see below). This graph covers the period since the Fund commenced its distribution policy in 1997.

The growth of the investment assuming all distributions were received in cash and not reinvested back into the Fund. The value of the investment under this scenario grew to $23,168 (including the December 31, 2022 value of the original investment of $5,330, plus distributions during the period of $17,838).

The additional value realized through reinvestment of all distributions. The value of the investment under this scenario grew to $64,980.

The additional value realized by exercising all primary rights in the Fund’s rights offerings. The value of the investment under this scenario grew to $92,111 excluding the cost to exercise all primary rights in the rights offerings which was $82,340.

Past performance cannot predict future results. Performance will fluctuate with changes in market conditions. Current performance may be lower or higher than the performance data shown. Performance information does not reflect the deduction of taxes that shareholders would pay on Fund distributions or the sale of Fund shares. An investment in the Fund involves risk, including loss of principal.

December 31, 2022 (Unaudited)

The following are the largest ($2 million or more) stock changes - both purchases and sales - that were made in the Fund’s portfolio during the fourth quarter of 2022.

December 31, 2022 (Unaudited)

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THE FUND’S THREE GROWTH INVESTMENT MANAGERS

AND THE MARKET CAPITALIZATION ON WHICH EACH FOCUSES:

ALPS Advisors, Inc., the investment advisor to the Fund, has the ultimate authority (subject to oversight by the Board of Directors) to oversee the investment managers and recommend their hiring, termination and replacement.

MANAGERS’ DIFFERING INVESTMENT STRATEGIES ARE

REFLECTED IN PORTFOLIO CHARACTERISTICS

The portfolio characteristics table below is a regular feature of the Fund’s shareholder reports. It serves as a useful tool for understanding the value of the Fund’s multi-managed portfolio. The characteristics are different for each of the Fund’s three investment managers. These differences are a reflection of the fact that each has a different capitalization focus and investment strategy. The shaded column highlights the characteristics of the Fund as a whole, while the first three columns show portfolio characteristics for the Russell Smallcap, Midcap and Largecap Growth indices. See page 62 for a description of these indices.

				MARKET CAPITALIZATION SPECTRUM
PORTFOLIO CHARACTERISTICS				SMALL		LARGE
AS OF DECEMBER 31, 2022
	RUSSELL GROWTH:
	Smallcap Index	Midcap Index	Largecap Index	Weatherbie	Congress	Sustainable	Total Fund
Number of Holdings	1,109	401	512	50	40	29	118*
Percent of Holdings in Top 10	6%	12%	42%	49%	30%	44%	18%
Weighted Average Market Capitalization (billions)	$3.1	$23.9	$627.6	$3.2	$15.4	$299.1	$109.5
Average Five-Year Earnings Per Share Growth	18%	20%	22%	26%	23%	21%	23%
Average Five-Year Sales Per Share Growth	10%	13%	15%	10%	13%	13%	12%
Price/Earnings Ratio**	16x	23x	24x	32x	22x	30x	27x

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MANAGER ROUNDTABLE

The managers adhere to their style, strategy and investment process while adapting to a macro environment emerging as much different from an era shaped by declining interest rates, globalization and ‘the peace dividend.’

Liberty All-Star Growth Fund’s three investment managers have long experience, in-depth knowledge, proven track records and a commitment to growth style investing. But they operate in a world heavily influenced by external factors. Macro-issues—like inflation, geopolitics, globalization, the pandemic and the possibility of recession—made headlines in 2022. The challenge for the Fund’s managers: Balancing these macro factors against their focus on building portfolios one stock at a time based on their investment discipline. We asked the managers to take us inside their current thinking using the larger context of the current market environment as a backdrop. The Fund’s Investment Advisor, ALPS Advisors, serves as moderator of the roundtable. Participating investment management firms, the portfolio manager for each and their respective capitalization focus are:

CONGRESS ASSET MANAGEMENT COMPANY, LLP

Portfolio Manager/Todd Solomon, CFA

Senior Vice President/Portfolio Manager

Capitalization Focus/Mid-Cap Growth—Congress Asset Management’s mid-cap growth strategy focuses on established, high quality companies that are growing earnings and generating attractive levels of free cash flow. The firm also strives to construct portfolios with relatively low levels of volatility.

SUSTAINABLE GROWTH ADVISERS, LP

Portfolio Manager/Kishore D. Rao

Principal and Portfolio Manager

Capitalization Focus/Large-Cap Growth—Sustainable focuses on companies that have unique characteristics that lead to a high degree of predictability, strong profitability and above-average earnings and cash flow growth over the long term.

WEATHERBIE CAPITAL, LLC

Portfolio Manager/H. George Dai, Ph.D.

Chief Investment Officer and Senior Portfolio Manager

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

Let’s focus on something positive about 2022: Despite it being a difficult year for equities, there were stocks that produced surprisingly good returns. Excluding the energy sector—which benefited from several macro factors—what is a stock in the portion of the Liberty All-Star Growth Fund portfolio that you manage that topped your expectations and what drove the good performance? Let’s ask Kishore Rao to start for Sustainable and then continue down the capitalization spectrum.

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Rao (Sustainable – Large-Cap Growth): UnitedHealth (UNH) was a strong performer in the portfolio in 2022 as the company continued to report good results at its Optum and UnitedHealth Care businesses while seeing solid medical enrollment figures, in line with our expectations, and lower than expected medical costs. The company benefited from positive net hiring by its clients, bringing more patients into its system, ongoing strength in its Medicare Advantage business, continued normalization of post-COVID care trends and effective deployment of capital with its acquisition of Change Healthcare, which is expected to be accretive to earnings in 2023. Over time, we continue to see UnitedHealth benefiting from the increasingly important focus of providing cost-effective health care to a broadening population.

Solomon (Congress–Mid-Cap Growth): Neocrine Biosciences (NBIX) outperformed our expectations. The company’s main drug, Ingrezza, treats tardive dyskinesia (TD), a movement disorder affecting the nervous system. During COVID, it was difficult to diagnose via telemedicine and doctors were unsure what they were allowed to prescribe without an in-person visit. We were optimistic that use of telemedicine would wane, pre-COVID prescribing trends would resume and the company could increase pricing; indeed, all three came to pass. Also, the company revamped its sales force with much success. We continue to hold NBIX and consider the TD market underdeveloped.

Dai (Weatherbie – Small-Cap Growth): On an absolute basis the top contributor to the portfolio in 2022 was Impinj (PI). Impinj engages in the development and sale of RAIN, a radio frequency identification solution. Its platform allows inventory management, patient safety, asset tracking and item authentication for the retail, health care, supply chain and logistics, hospitality, food and beverage, and industrial manufacturing industries. Throughout the year earnings reports for Impinj were broadly positive. While semiconductor chip incremental supply in the broad market is still falling short of demand, it has gradually improved across the quarter for Impinj and management expects it to further improve in 2023. Management’s improving supply outlook combined with robust secular demand should, in our opinion, drive continued sequential growth while profitability has inflected positive as well.

From either perspective, short or long term, the investment environment looks changed going forward. For 2023, some equity market pundits expect a gain of 25 percent while others see inflation and high interest rates enduring well into the second half and a recession likely at some point. In 2023 and beyond, it appears that the regime of easy money, low inflation and globalization has come to an end. How are you factoring these short- and long-term prospects into your portfolios? George Dai, lead off for Weatherbie, please.

Dai (Weatherbie – Small-Cap Growth): Our strategy is built on a bottom-up investment process that selects each of our 50 holdings based on company fundamentals, as opposed to picking stocks based on the macro environment. With that said, we do pay close attention to macro factors and how they impact each investment. Many smaller growth stocks in the broader index are valued on future market share gains and may have low or no earnings at present. Across 2022 many of these “longer duration” growth stocks fell as their discounted present value was impacted by ever higher interest rates. A key tenet of our investment process has always been finding quality smaller cap growth stocks in mundane industries. These “hidden gems” may often times be shorter duration growth stocks with strong earnings and free cash flow in the near term. Beginning in 2021 and through the second half of 2022 we increased the weighting in several of these positions and are likely to maintain this incremental focus on quality into the new year.

“A key tenet of our investment process has always been finding quality smaller cap growth stocks in mundane industries … these are ‘hidden gems.’”

—George Dai

(Weatherbie – Small-Cap Growth)

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Todd and Kishore, continue for Congress and Sustainable, please.

Solomon (Congress – Mid-Cap Growth): We continue to manage the portfolio with a “growth at a reasonable risk” focus. While interest rates, economic growth and currency movements are notoriously volatile, we aim to keep portfolio risk at low levels as consistent as possible. Companies with proven track records of growth and profitability tend to hold up best in uncertain times, but they are not immune from market downturns or recessions. Protecting capital in weak times provides a solid base for an inevitable return to better markets. Timing risk is as difficult as timing markets, so we tend to avoid such Sisyphean tasks and focus on our core investment tenets.

“Companies with proven track records of growth and profitability tend to hold up best in uncertain times … protecting capital in weak times provides a solid base for an inevitable return to better markets.”

—Todd Solomon

(Congress – Mid-Cap Growth)

Rao (Sustainable – Large-Cap Growth): Our valuation discipline and focus on cash flows available to shareholders (CFATS) have been key elements of our investment philosophy since the firm’s founding in 2003. While this often went unrewarded during the easy money era, we are now well prepared for any lasting monetary policy regime change as the Federal Reserve focuses on significantly reducing inflationary pressures in the U.S. In the near term, with both interest rates and oil prices higher but fiscal stimulus reduced, we expect GDP growth to slow and corporate earnings growth to be pressured. As such, we expect our strategy’s focus on more predictable, consistent, reliable generators of cash flows to perform better on a relative basis. Moreover, over the course of 2022, we actively hardened our portfolio in anticipation of slower economic growth and possible recession. More specifically, we sold positions in RingCental (RNG), Meta Platforms (META, Facebook’s parent), PayPal Holdings (PYPL) and Disney (DIS). We initiated new positions in Aon (AON), IQVIA (IQV), Starbucks (SBUX), Ecolab (ECL) and Sherwin-Williams (SHW), thereby upgrading business quality and expected sustainable growth.

“With both interest rates and oil prices higher but fiscal stimulus reduced, we expect GDP growth to slow and corporate earnings to be pressured … we expect our strategy’s focus on more predictable, consistent, reliable generators of cash flows to perform better on a relative basis.”

—Kishore Rao

(Sustainable – Large-Cap Growth)

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Compared with value style investing, the growth style has produced better returns over the past decade. But between the two styles, value stocks were the steadier performers in 2022 (albeit on a relative basis). That said, there were periods when growth stocks rallied, and fairly strongly. Give us your 30-second elevator speech arguing the case for the growth style and, within it, your capitalization focus in 2023. Start us off, please, Todd.

Solomon (Congress – Mid-Cap Growth): Long-term trends suggest stock prices follow growth in revenue and earnings when they are high quality and consistent. These stocks also tend to exhibit less volatility. Most important is the consistency of a manager’s investment process and philosophy when times are challenging. Mid-cap growth stocks have shown enviable risk and return statistics versus other capitalization ranges over various periods. We believe that our demonstrated commitment to high quality mid-cap growth stocks will continue to serve our investors well.

Kishore and George, what’s your case for large-cap and small-cap growth?

Rao (Sustainable – Large-Cap Growth): As higher interest rates, higher energy prices, slower growth in China and the shift toward deglobalization negatively impact economic growth and in turn corporate profits, the more predictable and sustainable growth of our businesses— supported by stronger pricing power, recurring revenue streams and attractive free cash flow generation—should be rewarded. Higher interest rates are likely largely already factored into stock prices but the coming reduction in corporate profits is likely not, and that will be a key differentiating factor that should benefit our approach in 2023. Our focus on larger-cap growth companies should help the portfolio as earlier life-cycle companies with less predictable cash flows may face more difficulty in a weakening economic environment.

Dai (Weatherbie – Small-Cap Growth): The long-term history of the U.S. equity market is not one of sentiment or valuation—it is driven by earnings. Throughout the year approximately 80 percent of our 50 holdings met or beat earnings expectations. Versus historical levels, growth companies are trading at a discount relative to broader indices and those smaller growth stocks with “wide moats” have been hit particularly hard in this market downturn. Weatherbie growth stocks tend to be both more focused on the U.S. and differentiated; therefore, in our view, they control their own destiny to a greater extent than their peers. For these reasons, we’d expect our quality growth stocks to gain market share in tougher times and for that to be reflected over a multi-year period in earnings growth that surpasses expectations versus peers and price/earnings multiples that eventually reflect the more sustainable growth profile of these businesses.

We started on a positive note, so let’s end that way. Putting aside the challenges of 2022 and the mixed outlook for 2023, as you look out two to three years, what is an industry about which you are bullish and what is a stock within that industry that exemplifies your optimism?

Solomon (Congress – Mid-Cap Growth): Security of networks and data will continue to be important to companies and governments. Protection from internal and external threats is a never-ending cat and mouse game with bad actors constantly improving their acumen. Our investment in Qualys (QLYS) demonstrates our optimism about this trend. The company’s vulnerability solutions enable customers to respond to the growth in scope and complexity of cyber threats.

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Rao (Sustainable – Large-Cap Growth): Our investment approach is focused on identifying high quality growth companies expected to benefit over our three- to five-year investment horizon. We do not focus on the relative performance of industries. In some cases, however, there can be factors that impact a wide array of industry players. With COVID restrictions dropping and the U.S. and much of the world learning to live with COVID, we see an attractive growth runway for select health care stocks as procedures that have been put off for years begin to be done. This catch-up in procedures will benefit companies such as robotic surgery leader Intuitive Surgical (ISRG). In addition to the tailwind from renewed procedure growth, the company stands to benefit from continued long-term focus on providing health care in the most cost-effective manner possible.

Dai (Weatherbie – Small-Cap Growth): We have a long history of finding quality growth companies in unexpected places—like more mundane services stocks. In our opinion, one example of these “hidden gems” is Montrose Environmental Group (MEG). Montrose offers a wide variety of services, including environmental assessment and permitting, measurement and analysis, and remediation and reuse.

Per- and polyfluoroalkyl substances (PFAs) are a group of industrial chemicals. In recent years, these carcinogens have been spreading and one of the best steps we can take is to remove the source of the PFAs exposure from our environment. Of Montrose’s many business lines, PFA remediation is growing quickly. Approaching $100 million-plus in annualized revenues, this opportunity continues to build in the company’s favor with recent Environmental Protection Agency (EPA) proposals and state level regulations related to PFAs mentioned on the company’s earnings calls.

A great wrap-up and a great discussion, thank you all. In a very different investment environment than we have experienced in recent years, value generally delivered better relative returns than growth in 2022. But for investors with a long-term horizon, a focus on companies exhibiting financial strength, sound business models, reasonable valuation, long runways and solid positions in attractive industries has been proven itself in continually evolving markets.

December 31, 2022

See Notes to Financial Statements.

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See Notes to Financial Statements.

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See Notes to Financial Statements.

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See Notes to Financial Statements.

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See Notes to Financial Statements.

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See Notes to Financial Statements.

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See Notes to Financial Statements.

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See Notes to Financial Statements.

For the Year Ended December 31, 2022

See Notes to Financial Statements.

See Notes to Financial Statements.

Liberty All-Star^® Growth Fund

Financial Highlights

See Notes to Financial Statements.

Financial Highlights

December 31, 2022

NOTE 1. ORGANIZATION

Liberty All-Star^® Growth Fund, Inc. (the “Fund”) is a Maryland corporation registered under the Investment Company Act of 1940 (the “1940 Act”), as amended, as a diversified, closed-end management investment company.

Investment Goal

The Fund seeks long-term capital appreciation.

Fund Shares

The Fund may issue 200,000,000 shares of common stock at $0.10 par.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The Fund is considered an investment company under U.S. generally accepted accounting principles (“GAAP”) and follows the accounting and reporting guidance applicable to investment companies in the Financial Accounting Standards Board Accounting Standards Codification Topic 946 Financial Services - Investment Companies.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from these estimates.

Security Valuation

Equity securities are valued at the last sale price at the close of the principal exchange on which they trade, except for securities listed on the NASDAQ Stock Market LLC (“NASDAQ”), which are valued at the NASDAQ official closing price. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets.

Cash collateral from securities lending activity is reinvested in the State Street Navigator Securities Lending Government Money Market Portfolio (“State Street Navigator”), a registered investment company under the 1940 Act, which operates as a money market fund in compliance with Rule 2a-7 under the 1940 Act. Shares of registered investment companies are valued daily at that investment company’s net asset value ("NAV") per share.

The Fund’s investments are valued at market value or, in the absence of market value with respect to any portfolio securities, at fair value according to procedures adopted by the Fund's Board of Directors (the "Board"). Effective September 8, 2022, the Board approved changes to the Fund’s valuation policy to comply with Rule 2a-5 and designated ALPS Advisors, Inc. (the “Advisor”) as the Fund’s Valuation Designee (as defined in the rule). The Valuation Designee will be responsible for determining fair value in good faith for all Fund investments, subject to oversight by the Board. When market quotations are not readily available, or in management’s judgment they do not accurately reflect fair value of a security, or an event occurs after the market close but before the Fund is priced that materially affects the value of a security, the security will be valued by the Advisor's Valuation Committee, using fair valuation procedures established by the Valuation Designee. Examples of potentially significant events that could materially impact a Fund’s net asset value include, but are not limited to: single issuer events such as corporate actions, reorganizations, mergers, spin-offs, liquidations, acquisitions and buyouts; corporate announcements on earnings or product offerings; regulatory news; and litigation and multiple issuer events such as governmental actions; natural disasters or armed conflicts that affect a country or a region; or significant market fluctuations. Potential significant events are monitored by the Advisor, Sub-Advisers and/or the Valuation Committee through independent reviews of market indicators, general news sources and communications from the Fund’s custodian. As of December 31, 2022, the Fund held no securities that were fair valued.

December 31, 2022

Security Transactions

Security transactions are recorded on trade date. Cost is determined and gains/(losses) are based upon the specific identification method for both financial statement and federal income tax purposes.

Income Recognition

Interest income is recorded on the accrual basis. Corporate actions are recorded on the ex-date.

Dividend income is recognized on the ex-dividend date, or for certain foreign securities, as soon as information is available to the Fund. Withholding taxes on foreign dividends are paid (a portion of which may be reclaimable) or provided for in accordance with the applicable country’s tax rules and rates and are disclosed in the Statements of Operations.

The Fund estimates components of distributions from real estate investment trusts (“REITs”). Distributions received in excess of income are recorded as a reduction of the cost of the related investments. Once the REIT reports annually the tax character of its distributions, the Fund revises its estimates. If the Fund no longer owns the applicable securities, any distributions received in excess of income are recorded as realized gains.

Lending of Portfolio Securities

The Fund may lend its portfolio securities only to borrowers that are approved by the Fund’s securities lending agent, State Street Bank & Trust Co. (“SSB”). The Fund will limit such lending to not more than 20% of the value of its total assets. The borrower pledges and maintains with the Fund collateral consisting of cash (U.S. Dollar only), securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, or by irrevocable bank letters of credit issued by a person other than the borrower or an affiliate of the borrower. The initial collateral received by the Fund is required to have a value of no less than 102% of the market value of the loaned securities for securities traded on U.S. exchanges and a value of no less than 105% of the market value for all other securities. The collateral is maintained thereafter, at a market value equal to no less than 100% of the current value of the securities on loan. The market value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

December 31, 2022

Any cash collateral received is reinvested in State Street Navigator. Non-cash collateral, in the form of securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, is not disclosed in the Fund’s Schedule of Investments as it is held by the lending agent on behalf of the Fund, and the Fund does not have the ability to re-hypothecate these securities. Income earned by the Fund from securities lending activity is disclosed in the Statement of Operations.

The following is a summary of the Fund's securities lending positions and related cash and non-cash collateral received as of December 31, 2022:

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by SSB. SSB’s indemnity allows for full replacement of securities lent wherein SSB will purchase the unreturned loaned securities on the open market by applying the proceeds of the collateral or to the extent such proceeds are insufficient or the collateral is unavailable, SSB will purchase the unreturned loan securities at SSB’s expense. However, the Fund could suffer a loss if the value of the investments purchased with cash collateral falls below the value of the cash collateral received.

The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged or securities loaned, and the remaining contractual maturity of those transactions as of December 31, 2022:

Fair Value Measurements

The Fund discloses the classification of its fair value measurements following a three-tier hierarchy based on the inputs used to measure fair value. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability that are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability that are developed based on the best information available.

December 31, 2022

Valuation techniques used to value the Fund's investments by major category are as follows:

Equity securities that are valued based on unadjusted quoted prices in active markets are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the mean of the most recent quoted bid and ask prices on such day and are generally categorized as Level 2 in the hierarchy. Investments in open-end mutual funds are valued at their closing NAV each business day and are categorized as Level 1 in the hierarchy.

Various inputs are used in determining the value of the Fund’s investments as of the end of the reporting period. When inputs used fall into different levels of the fair value hierarchy, the level in the hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The designated input levels are not necessarily an indication of the risk or liquidity associated with these investments.

These inputs are categorized in the following hierarchy under applicable financial accounting standards:

The following is a summary of the inputs used to value the Fund’s investments as of December 31, 2022:

The Fund did not have any securities that used significant unobservable inputs (Level 3) in determining fair value during the period. There were no transfers into or out of Level 3 during the year ended December 31, 2022.

Distributions to Shareholders

The Fund currently has a policy of paying distributions on its common shares totaling approximately 8% of its net asset value per year. The distributions are payable in four quarterly distributions of 2% of the Fund’s net asset value at the close of the New York Stock Exchange on the Friday prior to each quarterly declaration date. Distributions to shareholders are recorded on ex-date.

December 31, 2022

NOTE 3. RISKS

Investment and Market Risk

An investment in shares is subject to investment risk, including the possible loss of the entire amount invested. An investment in shares represents an indirect investment in the securities owned by the Fund, most of which are anticipated to be traded on a national securities exchange or in the over-the-counter markets. The value of these securities, like other market investments, may move up or down, sometimes rapidly and unpredictably. Shares at any point in time may be worth less than their original cost, even after taking into account the reinvestment of dividends and other distributions.

Common Stock Risk

The Fund is not limited in the percentage of its assets that may be invested in common stocks and other equity securities, and therefore a risk of investing in the Fund is common stock or equity risk. Equity risk is the risk that the market value of securities held by the Fund will fall due to general market or economic conditions, perceptions regarding the industries in which the issuers of securities held by the Fund participate, and the particular circumstances and performance of particular companies whose securities the Fund holds. In addition, common stock of an issuer in the Fund’s portfolio may decline in price if the issuer fails to make anticipated dividend payments because, among other reasons, the issuer of the security experiences a decline in its financial condition. Common equity securities in which the Fund will invest are structurally subordinated to preferred stocks, bonds and other debt instruments in a company’s capital structure, in terms of priority to corporate income, and therefore will be subject to greater payment risk than preferred stocks or debt instruments of such issuers. In addition, while broad market measures of common stocks have historically generated higher average returns than fixed income securities, common stocks have also experienced significantly more volatility in their returns.

Growth stocks are stocks of companies believed to have above-average potential for growth in revenue and earnings. In certain market conditions, prices of growth stocks may be more sensitive to changes in current or expected earnings than the prices of other stocks. Growth stocks may not perform as well as the stock market in general.

Foreign Currency Risk

Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Portfolios do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Portfolios books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities, other than investments insecurities at fiscal period end, resulting from changes in exchange rates.

December 31, 2022

Market Disruption and Geopolitical Risk

Social, political, and economic events, such as natural disasters and health emergencies (e.g., epidemics and pandemics, such as the recent COVID-19 outbreak), ongoing U.S military activities and political developments, as well as the threat of terrorist attacks, could have significant adverse effects on the U.S. economy, the stock market, world economies and markets generally, and may lead to volatility in the value of the Fund’s investments. These types of events may develop quickly and unexpectedly and could significantly impact issuers, industries, governments and other systems, including financial markets. Global systems are increasingly interconnected, and an event in one area of the world may have adverse effects in other economies and financial markets. It is difficult to predict the timing or duration of an event, or its impact on the Fund and its shareholders.

NOTE 4. FEDERAL TAX INFORMATION

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. If, for any calendar year, the total distributions made under the distribution policy exceed the Fund’s net investment income and net realized capital gains, the excess will generally be treated as a non-taxable return of capital, reducing the shareholder’s adjusted basis in his or her shares. If the Fund’s net investment income and net realized capital gains for any year exceed the amount distributed under the distribution policy, the Fund may, in its discretion, retain and not distribute net realized capital gains and pay income tax thereon to the extent of such excess. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statements of Operations.

Classification of Distributions to Shareholders

Net investment income/(loss) and net realized gain/(loss) may differ for financial statement and tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Fund. The amounts and characteristics of tax basis distributions and composition of distributable earnings/(accumulated losses) are determined at the time in which distributions are paid, which may occur after the fiscal year end.

The tax character of distributions paid during the years ended December 31, 2022 and December 31, 2021 were as follows:

The Fund declared a distribution of $5,671,988 with an ex-date in 2022 that was paid in 2023. $4,472,040 of this amount is not included above, and the tax character of such distributions will be determined at the end of 2023.

December 31, 2022

As of December 31, 2022, the components of distributable earnings on a tax basis were as follows:

For the year ended December 31, 2022, permanent book and tax basis differences resulting primarily from net operating loss offset to Paid-in Capital was identified and reclassified among the components of the Fund’s net assets as follows:

As of December 31, 2022, the cost of investments for federal income tax purposes and accumulated net unrealized appreciation/(depreciation) on investments was as follows:

The differences between book-basis and tax-basis are primarily due to deferral of losses from wash sales and the differing treatment of certain other investments.

Under current law, capital losses maintain their character as short-term or long-term and are carried forward to the next tax year without expiration. As of the current fiscal year end, the following amounts are available as carry forwards to the next tax year:

The Fund elects to defer to the period ending December 31, 2023, capital losses recognized during the period November 1, 2022 through December 31, 2022 in the amount of $669,007.

Federal Income Tax Status

For federal income tax purposes, the Fund currently qualifies, and intends to remain qualified, as a regulated investment company under the provisions of Subchapter M of the Internal Revenue Code of 1986, as amended, by distributing substantially all of its investment company taxable net income including realized gain, not offset by capital loss carryforwards, if any, to its shareholders. Accordingly, no provision for federal income or excise taxes has been made.

As of and during the year ended December 31, 2022, the Fund did not have a liability for any unrecognized tax benefits. The Fund files U.S. federal, state, and local tax returns as required. The Fund’s tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return. Tax returns for open years have incorporated no uncertain tax positions that require a provision for income taxes.

December 31, 2022

NOTE 5. FEES AND COMPENSATION PAID TO AFFILIATES

Investment Advisory Fee

AAI serves as the investment advisor to the Fund. AAI receives a monthly investment advisory fee based on the Fund’s average daily net assets at the following annual rates:

Investment Advisory Fees for the year ended December 31, 2022 are reported on the Statement of Operations.

AAI retains multiple Portfolio Managers to manage the Fund’s investments in various asset classes. AAI pays each Portfolio Manager a portfolio management fee based on the assets of the investment portfolio that they manage. The portfolio management fee is paid from the investment advisory fees collected by AAI and is based on the Fund’s average daily net assets at the following annual rates:

Administration, Bookkeeping and Pricing Services

ALPS Fund Services, Inc. (“ALPS”), an affiliate of AAI, serves as the administrator to the Fund and the Fund has agreed to pay expenses incurred in connection with this service. Pursuant to an Administrative, Bookkeeping and Pricing Services Agreement, ALPS provides operational services to the Fund including, but not limited to, fund accounting and fund administration and generally assists in the Fund’s operations. The Fund’s administration fee is accrued on a daily basis and paid monthly. Administration, Pricing and Bookkeeping fees paid by the Fund for the year ended December 31, 2022 are disclosed in the Statement of Operations.

The Fund also reimburses ALPS for out-of-pocket expenses and charges, including fees payable to third parties for pricing the Fund’s portfolio securities and direct internal costs incurred by ALPS in connection with providing fund accounting oversight and monitoring and certain other services.

Fees Paid to Officers

All officers of the Fund, including the Fund’s Chief Compliance Officer, are employees of AAI or its affiliates, and receive no compensation from the Fund. The Board of Directors has appointed a Chief Compliance Officer to the Fund in accordance with federal securities regulations.

December 31, 2022

NOTE 6. PORTFOLIO INFORMATION

Purchases and Sales of Securities

For the year ended December 31, 2022, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $104,519,257 and $114,617,851 respectively.

NOTE 7. CAPITAL TRANSACTIONS

In a rights offering, which expired on June 28, 2021, shareholders exercised rights to purchase 10,660,771 shares at a subscription price of $8.21 per share for proceeds, net of expenses of $257,071, of $87,267,859. If the shares would have been issued at the NAV the proceeds would have been $92,171,814, net of expenses.

During the years ended December 31, 2022 and December 31, 2021, distributions in the amounts of $11,196,747 and $18,689,426, respectively, were paid in newly issued shares valued at market value or net asset value, but not less than 95% of market value. Such distributions resulted in the issuance of 1,934,241 and of 2,240,208 shares, respectively.

Under the Fund’s Automatic Dividend Reinvestment and Direct Purchase Plan (the “Plan”), shareholders automatically participate and have all their Fund dividends and distributions reinvested. Under the Plan, all dividends and distributions will be reinvested in additional shares of the Fund. Distributions declared payable in cash will be reinvested for the accounts of participants in the Plan in additional shares purchased by the Plan Agent on the open market at prevailing market prices, subject to certain limitations as described more fully in the Plan. Distributions declared payable in shares are paid to participants in the Plan entirely in newly issued full and fractional shares valued at the lower of market value or net asset value per share on the valuation date for the distribution (but not at a discount of more than 5 percent from market price). Dividends and distributions are subject to taxation, whether received in cash or in shares.

NOTE 8. INDEMNIFICATION

In the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnities. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims against the Fund. Also, under the Fund’s organizational documents and by contract, the Directors and Officers of the Fund are indemnified against certain liabilities that may arise out of their duties to the Fund. However, based on experience, the Fund expects the risk of loss due to these warranties and indemnities to be minimal.

NOTE 9. OTHER MATTERS

Maryland Statutes

By resolution of the Board of Directors, the Fund has opted into the Maryland Control Share Acquisition Act and the Maryland Business Combination Act. In general, the Maryland Control Share Acquisition Act provides that “control shares” of a Maryland corporation acquired in a control share acquisition may not be voted except to the extent approved by shareholders at a meeting by a vote of two-thirds of the votes entitled to be cast on the matter (excluding shares owned by the acquirer and by officers or directors who are employees of the corporation). “Control shares” are voting shares of stock which, if aggregated with all other shares of stock owned by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within certain statutorily defined ranges (one-tenth but less than one-third, one-third but less than a majority, and more than a majority of the voting power). In general, the Maryland Business Combination Act prohibits an interested shareholder (a shareholder that holds 10% or more of the voting power of the outstanding stock of the corporation) of a Maryland corporation from engaging in a business combination (generally defined to include a merger, consolidation, share exchange, sale of a substantial amount of assets, a transfer of the corporation’s securities and similar transactions to or with the interested shareholder or an entity affiliated with the interested shareholder) with the corporation for a period of five years after the most recent date on which the interested shareholder became an interested shareholder. At the time of adoption, March 19, 2009, the Board and the Fund were not aware of any shareholder that held control shares or that was an interested shareholder under the statutes. A January 2023 Memorandum of Decision and Order issued by a Massachusetts Superior Court judge has held that a by-laws provision limiting the ability of shareholders to vote shares in excess of a specified amount is not permissible under the Investment Company Act of 1940. As a result of this decision, there is some uncertainty whether a registered investment company such as the Fund may rely on the Maryland Business Control Share Acquisition Act.

December 31, 2022

NOTE 10. SUBSEQUENT EVENTS

Subsequent events, if any, after the date of the Statement of Assets and Liabilities have been evaluated through the date the financial statements are issued. Management has determined that there were no subsequent events to report through the issuance of these financial statements.