UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Item 1.  Reports to Stockholders.

LIBERTY ALL-STAR® GROWTH FUND, INC.

Periods Ending June 30, 2009 (Unaudited)

Figures shown for the Fund and the Lipper Multi-Cap Growth Mutual Fund Average are total returns, which include dividends, after deducting fund expenses. Figures shown for the unmanaged NASDAQ Composite Index, the Russell 3000 Growth Index 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 30.

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.

The Fund is a closed-end fund and does not continuously offer shares. The Fund trades in the secondary market, investors wishing to buy or sell shares need to place orders through an intermediary or broker. The share price of a closed-end fund is based on the market’s 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.

Fellow Shareholders:

Building on positive momentum that developed during the latter part of the first quarter, the stock market posted excellent returns in the second quarter. The S&P 500 Index rose 15.93 percent, which was not only its best quarter in more than a decade but also more than enough to erase the sharp losses incurred earlier in the year. The NASDAQ Composite posted an even stronger quarterly return—20.33 percent, benefiting from the strong advance in technology stocks, which comprise about half that index. Nevertheless, the specter of rising unemployment, weak business investment, higher energy prices and continued weakness in housing hung over the stock market. After the strong run-up, momentum faded late in the quarter on expectations that further market gains would require clearer insights into the future direction of the economy and corporate profits. On balance, however, the strong gains reversed the markets’ downward trend and brought a welcome sense of relief to investors that a 1930’s like scenario was less likely.

Real GDP for the first quarter of 2009 declined at an annualized rate of 6.4 percent. On the heels of the 5.4 percent annualized contraction during the fourth quarter of 2008, the six months ending March 31, 2009 represented the worst half-year of GDP growth since 1958. The state of labor markets remained weak, as the Commerce Department reported that non-farm payrolls declined another 467,000 in June and the unemployment rate ticked up to 9.5 percent. Job losses were widespread across most industry groups, with large declines in manufacturing, professional and business services, and construction.

In other indicators of economic weakness, retail sales in May came in 9.6 percent below May 2008. After a yearlong free fall in the American auto industry, the decline of sales slowed in June, offering some hope to automakers that the bottom had been reached. Sales were down 28 percent in June compared to the year-earlier month. Industrial production tumbled a larger-than-expected 1.1 percent in May as the recession crimped demand for a wide range of manufactured goods. It was also the seventh straight month of decline. Crude oil prices, which fell to the range of $45 per barrel earlier in the year, rallied into the range of $70 on signs of higher emerging market demand, particularly in China.

Turning to the Fund, the net asset value (NAV) rose 15.74 percent for the second quarter and 16.10 percent with shares valued at NAV with dividends reinvested. Shares valued at market price with dividends reinvested were up 15.32 percent. Comparative index results for the same period were 16.82 percent for the Russell 3000 Growth Index, 15.93 percent for the S&P 500 and 20.33 percent for the NASDAQ Composite Index. The Fund’s NAV reinvested results marginally lagged the Lipper Multi-Cap Growth Mutual Fund Average, the Fund’s primary benchmark.

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For the first half, the Fund’s NAV return increased 10.02 percent; shares valued at NAV with dividends reinvested was up 11.00 percent; and shares valued at market price with dividends reinvested rose 10.74 percent. Results for comparative benchmarks for the same period were 11.52 percent for the Russell 3000 Growth Index; 3.16 percent for the S&P 500; and 16.98 percent for the NASDAQ Composite Index. The Fund’s year-to-date results ranked in the 50th percentile of the Lipper Universe for the first half.

Results were generally in line with the benchmarks, the exception being the tech-laden NASDAQ, which benefited from its high concentration in technology stocks, as previously mentioned. While the Fund’s relative ranking slipped to median year-to-date from top one-third for 2008, we believe that will improve as the Fund remains well positioned for the current environment of slowing corporate profits, given its focus on quality, sustainable growth stocks.

I call your attention to this quarter’s manager interview, with David Scott of Chase Investment Counsel, and his comments about managing through the difficult environment of late 2008/ early 2009 as well as how he is positioning the portion of the Fund’s portfolio that he manages.

In sum, while we are encouraged by the second quarter’s results, we remain realistic in terms of expectations going forward, especially over the near term. Patience and diligence are the watchwords as we move into the second half. After such a sharp decline, economic recovery will take time. Building a solid base, including correcting excesses of the past, should prove to be a more enduring solution—and more rewarding for investors.

The views expressed in the President’s letter and the Manager Interview reflect the views of the President and Manager as of July 2009 and may not reflect their views on the date this report is first published or anytime thereafter. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the Fund disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for the Fund are based on numerous factors, may not be relied on as an indication of trading intent.

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

MANAGERS’ DIFFERING INVESTMENT STRATEGIES ARE REFLECTED IN PORTFOLIO CHARACTERISTICS

The portfolio characteristics table below is a regular feature of the Fund’s shareholder reports. It serves as a useful tool for understanding the value of the Fund’s multi-managed portfolio. The characteristics are different for each of the Fund’s three investment managers. These differences are a reflection of the fact that each has a different capitalization focus and investment strategy. The shaded column highlights the characteristics of the Fund as a whole, while the first three columns show portfolio characteristics for the Russell Smallcap, Midcap and Largecap Growth indices. See page 30 for a description of these indices.

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*      Because the Fund is actively managed, there can be no guarantee that the Fund will continue to hold securities of the indicated issuers and sectors in the future.

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The following are the major ($750,000 or more) stock changes — both purchases and sales —-that were made in the Fund’s portfolio during the second quarter of 2009.

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David B. Scott, CFA, CIC

Chase Investment

Counsel Corporation

Chase shifts from defensive to a focus on quality growth stocks positioned for a mixed economy

Chase Investment Counsel Corp. is Liberty All-Star Growth Fund’s large-cap growth manager. Located in Charlottesville, Virginia, Chase approaches the growth style with a valuation orientation to its investment process in that it seeks to invest in quality growth stocks selling at reasonable prices. The firm’s investment process is characterized by a disciplined combination of fundamental, technical and quantitative research. We recently had the chance to speak with David Scott, CFA, CIC, Chase’s President and Chief Investment Officer. The Fund’s Investment Advisor, ALPS Advisors, Inc., moderated the interview.

Although 2008 was difficult for just about all investment managers, Chase performed well on a relative basis. In 2009, however, the firm’s returns lag the large-cap Russell 1000 Growth Index through the first half. What worked last year that hasn’t been as productive this year?

For stock selection at Chase we rely on our investment process. It’s the focal point of everything we do, and it worked well last year. It kept us in the right areas—the more stable, defensive sectors, if you will—and away from the financial and industrial sectors, which were devastated by the financial crisis and subsequent economic difficulties. This year, when the market turned beginning in March, the main driver behind that turn was what we refer to as a “mean reversion.” This simply means that the stocks that performed the poorest in the previous 12 months were the initial leaders in this spring’s rally.

May 8 was an important date in our work because it marks the conclusion of the initial mean reversion rally that started with the market’s close on March 9. During this period, March 9 to May 8, the market rebound was led by lower quality, more cyclical stocks. At Chase, we focus on stable growth and higher quality stocks. This kind of a reversion is a headwind for us. Just to put it into per-spective, in late 2002 when the market turned after declining sharply in 2000, 2001 and most of 2002, mean reversion explained about a quarter of the market’s gains. According to some calculations in which we have confidence, in the initial rally in 2009 the mean reversion effect was twice as powerful. So, essentially, we had a huge headwind in the first couple of months of this rally.

“...the portfolio today is less dependent on a weak market for its relative return and more dependent on good individual stock selection.”

Were you able to offset any of those factors?

Yes, but our process is not designed to fully participate when the market bounces off the bottom. Once the trend is better established and true leadership emerges, we do much better. Comparing the current rally to 2002-2003 we’re actually off to a better start. Since May 8 our overall performance has been better—not as good as we’d like, but we see the trend improving.

Currently, how have you positioned the portion of the Liberty All-Star Growth Fund portfolio that you manage?

Coming into 2009, we were in what one would consider to be a defensive posture with emphasis on health care and consumer staples and a relatively low emphasis on consumer discretionary and technology in the more economically sensitive areas. If we look at the portfolio today, the overweightings are in technology, consumer discretionary, energy and materials, and the underweightings are in health care and consumer staples. We also remain underweighted in industrials and financials. So, I don’t want to say that we have shifted to a more “economically sensitive” portfolio that would benefit from a better economy, but I would say that the portfolio today is less dependent on a weak market for its relative return and more dependent on good individual stock selection. It’s a portfolio that should do well in a neutral market environment, that is,

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it is well positioned if the market continues to gain from here but it should also do well if the market stays in a neutral trading range.

Chase focuses on companies with the capacity to generate growth, but that are reasonably priced. After the market sell-off, many stocks would appear to be reasonably priced ... but what about future growth? Are you finding companies that can grow through a slow global economy ... or do you feel the economy can recover more quickly than anticipated?

As a group, the stocks in the portfolio should be able to grow under most economic scenarios. But it would be unrealistic not to recognize the fact that we are probably going to be confronted by a slower global growth scenario given the major issues confronting financial institutions, the deleveraging consumer and economies throughout the world. The challenge is finding those companies that have the ability to grow through these difficulties, and we feel we can make that case for those companies in the portion of the Liberty All-Star Growth Fund portfolio that we manage.

Maybe the best way to make the point is some examples. What are two stocks in the portfolio whose prospects you finding appealing?

I’ll start with a large and well known name in the technology sector, Oracle Corp. This company has continued to report better-than-expected earnings throughout this very difficult environment. Oracle has built itself into a software juggernaut, if you will, by establishing its own enterprise and midware software, and then over the years acquiring a number of different companies—such as PeopleSoft and BEA Systems—to create today’s software industry leader. Recently, it made another acquisition—Sun Microsystems. While Oracle has successfully integrated its acquisitions and continued to move forward and report very good earnings, it trades at a reasonable price and looks strong from fundamental and technical persectives. From its current price of around $20 a share we believe it can trade into the high $20s within 12 months, and on a relative basis we believe that would be a good return, especially because Oracle is a comparatively low risk stock.

Tell us about the other portfolio holding, please.

The second is probably less well known—TJX Companies. TJX, in the consumer discretionary sector, is a leading off-price retailer of apparel and home fashions in the U.S. and worldwide. The company is much better known for its operating divisions, such as T.J. Maxx, Marshalls, HomeGoods and A.J. Wright in the U.S. In Canada, the company operates HomeSense and Winners, and in Europe it operates T. K. Maxx and HomeSense stores. The company has a huge number of outlets—over 800 T. J. Maxx and Marshalls stores in the U.S. and 135 A.J. Wright locations. In Canada, there are more than 70 HomeSense and over 200 Winners stores.

TJX does a very good job of offering off-price clothing, furniture, housewares, jewelry and other consumer products in the North American and European markets by acquiring inventory from other retailers and making it available at very reasonable prices. Of course, in today’s environment consumers are looking to spend fewer dollars or, at the least, be very careful about the dollars they do spend. TJX has been able to appeal to these consumers, and they continue to grow as a result. As a measure of that success, TJX has been able to report among the best same-store sales of all retailers, while taking share from other retailers. We believe the consumer’s newfound frugality is not just an aberration, but more of a secular change. The stock has done well but still trades at a reasonable price of around $30 a share. We think in a year it can reach the 40s, and on a relative basis that should make it a very nice performer.

“ ... it would be unrealistic not to recognize the fact that we are probably going to be confronted by a slower global growth scenario ...”

David, thank you for an interesting interview.

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*                 The number of shares offered was increased by an additional 25% to cover a portion of the over-subscription requests.

DISTRIBUTION POLICY

Liberty All-Star Growth Fund, Inc.’s current policy is to pay distributions on its shares totaling approximately 6 percent of its net asset value per year, payable in four quarterly installments of 1.5 percent of the Fund’s net asset value at the close of the New York Stock Exchange on the Friday prior to each quarterly declaration date. The fixed distributions are not related to the amount of the Fund’s net investment income or net realized capital gains or losses and may be taxed as ordinary income up to the amount of the Fund’s current and accumulated earnings and profits. If, for any calendar year, the total distributions made under the distribution policy exceed the Fund’s net investment income and net realized capital gains, the excess will generally be treated as a non-taxable return of capital, reducing the shareholder’s adjusted basis in his or her shares. If the Fund’s net investment income and net realized capital gains for any year exceed the amount distributed under the distribution policy, the Fund may, in its discretion, retain and not distribute net realized capital gains and pay income tax thereon to the extent of such excess.

DIVIDEND REINVESTMENT PLAN

The Fund’s Automatic Dividend Reinvestment and Direct Purchase Plan has been updated and a summary of the plan begins on page 28. For further detail please visit www.all-starfunds.com.

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LIBERTY ALL-STAR® GROWTH FUND

ScHEDULE OF INvESTmENTS

as of June 30, 2009 (Unaudited)

See Notes to Schedule of Investments and Financial Statements

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See Notes to Schedule of Investments and Financial Statements

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See Notes to Schedule of Investments and Financial Statements

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See Notes to Schedule of Investments and Financial Statements

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