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<SEC-DOCUMENT>0000898432-07-000751.txt : 20070821
<SEC-HEADER>0000898432-07-000751.hdr.sgml : 20070821
<ACCEPTANCE-DATETIME>20070821152650
ACCESSION NUMBER:		0000898432-07-000751
CONFORMED SUBMISSION TYPE:	N-2
PUBLIC DOCUMENT COUNT:		17
FILED AS OF DATE:		20070821
DATE AS OF CHANGE:		20070821

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			LIBERTY ALL STAR EQUITY FUND
		CENTRAL INDEX KEY:			0000799195
		IRS NUMBER:				042935840
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		N-2
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-04809
		FILM NUMBER:		071070657

	BUSINESS ADDRESS:	
		STREET 1:		C/O ALPS FUND SERVICES, INC.
		STREET 2:		P.O. BOX 328
		CITY:			DENVER
		STATE:			CO
		ZIP:			80201-0328
		BUSINESS PHONE:		303.623.2577

	MAIL ADDRESS:	
		STREET 1:		C/O ALPS FUND SERVICES, INC.
		STREET 2:		P.O. BOX 328
		CITY:			DENVER
		STATE:			CO
		ZIP:			80201-0328

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			LIBERTY ALL STAR EQUITY FUND
		CENTRAL INDEX KEY:			0000799195
		IRS NUMBER:				042935840
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		N-2
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-145600
		FILM NUMBER:		071070658

	BUSINESS ADDRESS:	
		STREET 1:		C/O ALPS FUND SERVICES, INC.
		STREET 2:		P.O. BOX 328
		CITY:			DENVER
		STATE:			CO
		ZIP:			80201-0328
		BUSINESS PHONE:		303.623.2577

	MAIL ADDRESS:	
		STREET 1:		C/O ALPS FUND SERVICES, INC.
		STREET 2:		P.O. BOX 328
		CITY:			DENVER
		STATE:			CO
		ZIP:			80201-0328
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-2
<SEQUENCE>1
<FILENAME>n2.txt
<TEXT>


    As filed with the Securities and Exchange Commission on August 21, 2007

                               1933 Act File No.
                           1940 Act File No. 811-4809

                    U. S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    Form N-2
                        (Check appropriate box or boxes)

[X]      REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ]      Pre-Effective Amendment No.

[ ]      Post-Effective Amendment No.

                                      and

[X]      REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[X]      Amendment No. 23

                          Liberty All-Star Equity Fund
              ---------------------------------------------------
               (Exact Name of Registrant as Specified in Charter)

                           1290 Broadway, Suite 1100
                             Denver, Colorado 80203
                   -----------------------------------------
                    (Address of Principal Executive Offices)
                    (Number, Street, City, State, Zip Code)

                                 (303) 623-2577
               --------------------------------------------------
               Registrant's Telephone Number, including Area Code


                          Clifford J. Alexander, Esq.
                 Kirkpatrick & Lockhart Preston Gates Ellis LLP
                               1601 K Street, NW
                              Washington, DC 20006

Approximate Date of Proposed Public Offering:  As soon as practicable after the
effective date of this Registration Statement.

If any of the securities being registered on this form are offered on a delayed
or continuous basis in reliance on Rule 415 under the Securities Act of 1933,
other than securities offered in connection with a dividend reinvestment plan,
check the following box. [ ]

<PAGE>

It is proposed that this filing will become effective (check appropriate box)

[X] when declared effective pursuant to section 8(c)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 486
[ ] on (date) pursuant to paragraph (b) of Rule 486
[ ] 60 days after filing pursuant to paragraph (a) of Rule 486
[_] on(date) pursuant to paragraph (a) of Rule 486

If appropriate, check the following box:

[_] This post-effective amendment designates a new effective date for a
previously filed registration statement.
[_] The Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act and the Securities Act registration
number of the earlier effective registration statement is _____.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES
ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH
DATES AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.

       CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
                                        PROPOSED
                                        MAXIMUM        PROPOSED MAXIMUM      AMOUNT OF
TITLE OF SECURITIES  AMOUNT BEING  OFFERING PRICE PER  AGGREGATE OFFERING  REGISTRATION
 BEING REGISTERED    REGISTERED(1)      UNIT(1)             PRICE(1)           FEE
<S>                     <C>              <C>               <C>               <C>
Shares of beneficial    131,062          $7.63             $1,000,000        $30.70
      interest
</TABLE>

(1) Estimated solely for the purpose of calculating the Registration fee in
accordance with Rule 457(c) under the Securities Act of 1933. Based on 95% of
the closing price ($8.03) reported on the New York Stock Exchange on August 20,
2007.

<PAGE>

                 SUBJECT TO COMPLETION, DATED [_________], 2007

                       [_______] RIGHTS FOR [_____] SHARES

                          LIBERTY ALL-STAR EQUITY FUND

                          SHARES OF BENEFICIAL INTEREST

     Liberty All-Star Equity Fund ("All-Star") is issuing non-transferable
rights ("Rights") to its shareholders (the "Offer"). These Rights will allow you
to subscribe for new shares of beneficial interest of All-Star ("Shares"). You
will receive one Right for each outstanding Share you own on [__________], 2007
(the "Record Date"). For every ten (10) Rights that you receive, you may buy one
new Share. Fractional Shares will not be issued upon the exercise of the Rights.
Accordingly, Shares may be purchased only pursuant to the exercise of the Rights
in integral multiples of ten. Also, shareholders of record may purchase Shares
not acquired by other shareholders in the Offer, subject to limitations
discussed in this prospectus. See "Over-Subscription Privilege". The Rights are
not transferable and, therefore, may not be purchased or sold. The Rights will
not be admitted for trading on the New York Stock Exchange (the "NYSE") or any
other stock exchange. See "The Offer". THE SUBSCRIPTION PRICE PER SHARE (THE
"SUBSCRIPTION PRICE") WILL BE 95% OF THE LOWER OF (i) THE LAST REPORTED SALES
PRICE OF A SHARE ON THE NYSE ON [__________], 2007 (THE "PRICING DATE"), OR (ii)
THE NET ASSET VALUE ("NAV") OF A SHARE ON THE PRICING DATE.

     THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [__________],
2007, (THE "EXPIRATION DATE") (THE PERIOD THROUGH THE EXPIRATION DATE IS THE
"SUBSCRIPTION PERIOD". SINCE THE CLOSE OF THE OFFERING ON THE EXPIRATION DATE
WILL BE PRIOR TO THE PRICING DATE, SHAREHOLDERS WHO CHOOSE TO EXERCISE THEIR
RIGHTS WILL NOT KNOW THE SUBSCRIPTION PRICE PER SHARE AT THE TIME THEY EXERCISE
SUCH RIGHTS.

     FOR ADDITIONAL INFORMATION, PLEASE CALL THE ALTMAN GROUP, INC. (THE
"INFORMATION AGENT") TOLL FREE AT 1-800-[__________].

     All-Star is a multi-managed diversified, closed-end management investment
company that allocates its portfolio assets on an approximately equal basis
among several independent investment organizations (currently five in number)
(each, a "Portfolio Manager") having different investment styles recommended and
monitored by ALPS Advisers, Inc. ("AAI"), All-Star's investment adviser.
All-Star's investment objective is to seek total investment return, comprised of
long-term capital appreciation and current income. Under normal market
conditions, All-Star seeks its investment objective through investing at least
80% of its net assets in a diversified portfolio of equity securities. An
investment in All-Star is not appropriate for all investors. No assurances can
be given that All-Star's investment objective will be achieved. INVESTING IN
SHARES OF ALL-STAR INVOLVES RISKS. FOR A DISCUSSION OF CERTAIN RISK FACTORS AND


                                       i
<PAGE>

SPECIAL CONSIDERATIONS WITH RESPECT TO OWNING SHARES OF ALL-STAR, SEE "SPECIAL
CONSIDERATIONS AND RISK FACTORS" AND "INVESTMENT OBJECTIVE, POLICIES AND RISKS"
ON PAGE [__].

     The address of All-Star is c/o ALPS Fund Services, Inc., 1290 Broadway,
Suite 1100, Denver, CO 80203 and its telephone number is 1-800-542-3863. The
Shares are listed on the NYSE under the symbol "USA".

     All-Star announced the terms of the Offer before the opening of trading on
the NYSE on August 7, 2007. The NAV per Share at the close of business on August
6, 2007 and [__________], 2007, the Record Date, was $8.71 and $[________],
respectively, and the last reported sales price of a Share on the NYSE on those
dates was $8.42 and $[________], respectively.

     NEITHER THE SECURITIES AND EXCHANGE COMMISSION ("SEC") NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED
IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIME.

                Subscription Price (1)    Sales Load   Proceeds to All-Star (2)

Per Share             $[______]              None              $[_____]
Total                 $[______]              None              $[_____]


     (1) Estimated based on an assumed Subscription Price of 95% of the last
reported sale price on the NYSE on [__________], 2007 (the "Estimated Purchase
Price"). The Estimated Purchase Price is presented solely for illustration
purposes. Shareholders wishing to exercise Rights must send the per Share amount
presented under "The Offer - Payment for Shares" on page [__].

     (2) Before deduction of expenses payable by All-Star, estimated at
$450,000.

     SHAREHOLDERS WHO DO NOT EXERCISE THEIR RIGHTS SHOULD EXPECT THAT THEY WILL,
AT THE COMPLETION OF THE OFFER, OWN A SMALLER PROPORTIONAL INTEREST IN ALL-STAR
THAN IF THEY EXERCISED THEIR RIGHTS. AS A RESULT OF THE OFFER, YOU MAY
EXPERIENCE AN IMMEDIATE DILUTION OF THE AGGREGATE NAV OF YOUR SHARES, WHICH
UNDER CERTAIN CIRCUMSTANCES, COULD BE SUBSTANTIAL. This is because the
Subscription Price per Share and/or the net proceeds to All-Star for each new
Share sold will be less than All-Star's NAV per Share on the Expiration Date.
All-Star cannot state precisely the extent of this dilution at this time because
it does not know what the NAV or market price per Share will be when the Offer
expires or what proportion of Rights will be exercised.

     THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION THAT A SHAREHOLDER
OUGHT TO KNOW BEFORE EXERCISING HIS OR HER RIGHTS. INVESTORS ARE ADVISED TO READ
AND RETAIN IT FOR FUTURE REFERENCE. A STATEMENT OF ADDITIONAL INFORMATION DATED
[________], 2007 HAS BEEN FILED WITH THE SEC AND IS INCORPORATED BY REFERENCE IN
ITS ENTIRETY INTO THIS PROSPECTUS. THE TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION APPEARS ON PAGE [_] OF THIS PROSPECTUS. INVESTORS MAY


                                       ii
<PAGE>

REQUEST A FREE COPY OF THE STATEMENT OF ADDITIONAL INFORMATION, A FREE COPY OF
ALL-STAR'S MOST RECENT ANNUAL OR SEMI-ANNUAL REPORT, AND ADDITIONAL INFORMATION
ABOUT ALL-STAR OR MAKE SHAREHOLDER INQUIRIES BY CALLING THE INFORMATION AGENT AT
1-800-[__________] OR WRITING TO THE ADDRESS PROVIDED ABOVE. INVESTORS MAY
ACCESS A COPY OF ALL-STAR'S SHAREHOLDER REPORTS AT WWW.ALL-STARFUNDS.COM. THE
SEC MAINTAINS AN INTERNET WEBSITE AT WWW.SEC.GOV THAT CONTAINS THE STATEMENT OF
ADDITIONAL INFORMATION AND OTHER INFORMATION REGARDING ALL-STAR.

     Investors should rely only on the information contained in or incorporated
by reference into this prospectus. All-Star has not authorized any other person
to provide you with different information. If anyone provides you with different
or inconsistent information, you should not rely on it. All-Star is not making
an offer to sell these securities in any state or jurisdiction where the offer
or sale is not permitted. The information appearing in this prospectus is given
as of the date of this prospectus. All-Star's business, financial condition,
results of operations and prospects may have changed since the date of this
prospectus. Neither the delivery of this prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that information
contained herein is correct as of any time subsequent to the date hereof.
However, if any material change occurs while this prospectus is required by law
to be delivered, this prospectus will be amended or supplemented accordingly.


The date of this prospectus is [________], 2007.

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SEC.
THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE
TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.


                                       iii
<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE

PROSPECTUS SUMMARY.............................................................1

EXPENSES......................................................................12

FINANCIAL HIGHLIGHTS..........................................................13

SHARE PRICE DATA..............................................................16

INVESTMENT PERFORMANCE........................................................16

THE OFFER.....................................................................17

SPECIAL CONSIDERATIONS AND RISK FACTORS.......................................27

USE OF PROCEEDS...............................................................28

THE MULTI-MANAGER METHODOLOGY.................................................29

INVESTMENT OBJECTIVE, POLICIES AND RISKS......................................30

MANAGEMENT OF ALL-STAR........................................................38

DESCRIPTION OF SHARES.........................................................41

DISTRIBUTIONS; AUTOMATIC DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN.........43

TAX MATTERS...................................................................45

GENERAL.......................................................................48

STATEMENT OF ADDITIONAL INFORMATION...........................................49

APPENDIX A:  INFORMATION ABOUT THE PORTFOLIO MANAGERS........................A-1



                                       iv
<PAGE>


                               PROSPECTUS SUMMARY

     This summary highlights some information that is described more fully
elsewhere in this prospectus. It may not contain all of the information that you
should consider before exercising the Rights offered hereby. To understand the
Offer fully, you should carefully review the more detailed information contained
in this prospectus and in the Statement of Additional Information.

PURPOSE OF THE OFFER

     The Board of Trustees of All-Star ("Board of Trustees") has determined that
it would be in the best interests of All-Star and its shareholders to increase
the assets of All-Star available for investment so that it may be in a better
position to take advantage of investment opportunities consistent with its
investment objective that may arise. The Offer seeks to reward existing
shareholders in All-Star by giving them the opportunity to purchase additional
Shares at a price below market and/or NAV and without incurring any brokerage
commissions. See "The Offer - Purpose of the Offer".

IMPORTANT TERMS OF THE OFFER

Total number of Shares available for         [___] Shares
primary subscription.....................

Number of Rights you will receive            One Right for every one Share
for each outstanding Share you own
on the Record Date.......................

Number of Shares you may purchase with       One Share for every ten Rights
your Rights at the Subscription
Price per Share..........................

Subscription Price.......................    95% of the lower of (i) the last
                                             reported sale price of a Share on
                                             the NYSE on the Pricing Date, or
                                             (ii) the NAV of a Share on the
                                             Pricing Date.


   SHAREHOLDERS' INQUIRIES SHOULD BE DIRECTED TO THEIR BROKER, BANK OR TRUST
                                COMPANY, OR TO:
                             THE ALTMAN GROUP, INC.
                               1-800-[__________]

OVER-SUBSCRIPTION PRIVILEGE

     The right to acquire during the Subscription Period at the Subscription
Price one additional Share for each ten Rights held is hereinafter referred to
as the "Primary Subscription". Shareholders on the Record Date who fully
exercise all Rights issued to them (other than those Rights which cannot be
exercised because they represent the right to acquire less than one Share) are


<PAGE>

entitled to subscribe for Shares that were not otherwise subscribed for by
others in the Primary Subscription (the "Over-Subscription Privilege"). For
purposes of determining the maximum number of Shares a shareholder may acquire
pursuant to the Offer, broker-dealers whose Shares are held of record by Cede &
Co., Inc. ("Cede"), nominee for Depository Trust Company, or by any other
depository or nominee will be deemed to be the holders of the Rights that are
issued to Cede or such other depository or nominee. If enough Shares are
available, all shareholder requests to buy Shares that were not bought by other
Record Date Shareholders will be honored in full. If the requests for Shares
exceed the Shares available, All-Star may, at its discretion, issue up to an
additional 25% of the Shares available pursuant to the Offer in order to honor
such over-subscriptions. All-Star may sell additional Shares to shareholders if
and to the extent that Shares issued through the Offer would not cause any undue
dilution (reduction) of the NAV of the Shares. Whether or not All-Star
determines to issue additional Shares to honor all over-subscriptions, Shares
will be allocated pro rata among those shareholders on the Record Date who
over-subscribe based on the number of Rights originally issued to them by
All-Star. Shares acquired pursuant to the Over-Subscription Privilege are
subject to allotment, which is more fully discussed under "The Offer -
Over-Subscription Privilege".

METHOD FOR EXERCISING RIGHTS

     Except as described below, subscription certificates evidencing the Rights
("Subscription Certificates") will be sent to shareholders on the Record Date
("Record Date Shareholders") or their nominees. If you wish to exercise your
Rights, you may do so in the following ways:

     (1) Complete and sign the Subscription Certificate. Mail it in the envelope
provided or otherwise deliver it, together with payment in full to Computershare
Shareholder Services, Inc. (the "Subscription Agent") at the address indicated
on the Subscription Certificate. Your completed and signed Subscription
Certificate and payment must be received by the Expiration Date.

     (2) Contact your broker, banker or trust company, which can arrange, on
your behalf, to guarantee delivery of payment and delivery of a properly
completed and executed Subscription Certificate pursuant to a notice of
guaranteed delivery ("Notice of Guaranteed Delivery") by the close of business
on the third business day after the Expiration Date. A fee may be charged for
this service. The Notice of Guaranteed Delivery must be received by the
Expiration Date.

     Since the Expiration Date will be prior to the Pricing Date, shareholders
who choose to exercise their Rights will not know the final Subscription Price
at the time they exercise such Rights. Shareholders will have no right to
rescind their subscription after receipt of their payment for Shares by the
Subscription Agent. See "The Offer - Method of Exercise of Rights" and "The
Offer - Payment for Shares". Subscription payments will be held by the
Subscription Agent pending completion of the processing of the subscription. No
interest thereon will be paid to subscribers.

     The Rights are not transferable. Therefore, only the underlying Shares, and
not the Rights, will be admitted for trading on the NYSE. Since fractional
Shares will not be issued on exercise of Rights, shareholders who receive, or

                                       2
<PAGE>

are left with, fewer than ten Rights will be unable to exercise such Rights and
will not be entitled to receive any cash in lieu of unexercised Rights.

   SHAREHOLDERS' INQUIRIES ABOUT THE OFFER SHOULD BE DIRECTED TO THEIR BROKER,
                         BANK OR TRUST COMPANY, OR TO:

                             The Altman Group, Inc.
                               1-800-[__________]

IMPORTANT DATES TO REMEMBER

     Please note that the dates in the table below, other than the Record Date,
may change if the Offer is extended.

EVENT                                                DATE

Record Date......................................    [__________], 2007

Subscription Period..............................    [__________], 2007
                                                     through [__________], 2007*

Expiration Date (Deadline for delivery of
Subscription Certificate together with payment of
Estimated Subscription Price (see "The Offer -
Payment for Shares") on page [_] of this prospectus)
or for delivery of Notice of Guaranteed Delivery)    [__________], 2007

Pricing Date.....................................    [__________], 2007

Deadline for payment of final Subscription Price
pursuant to Notice of Guaranteed Delivery........    [__________], 2007

Confirmation to Registered Shareholders...........   [__________],  2007

For Registered Shareholders' Subscriptions -
deadline for payment of unpaid balance if final
Subscription Price is higher than Estimated
Subscription Price................................   [__________], 2007

* Unless the Offer is extended.

OFFERING FEES AND EXPENSES

     Offering expenses incurred by All-Star are estimated to be $450,000.


                                       3
<PAGE>

FOREIGN RESTRICTIONS

     Record Date Shareholders whose record addresses are outside the United
States will receive written notice of the Offer; however, Subscription
Certificates will not be mailed to such shareholders. The Rights to which those
Subscription Certificates relate will be held by the Subscription Agent for such
foreign Record Date Shareholders' accounts until instructions are received in
writing with payment to exercise such Rights. If no such instructions are
received by the Expiration Date, such Rights will expire. See "Subscription
Agent".

INFORMATION ABOUT ALL-STAR

     All-Star is a multi-managed diversified, closed-end management investment
company registered under the Investment Company Act of 1940, as amended ("1940
Act"), that allocates its portfolio assets on an approximately equal basis among
several independent investment management organizations (currently five in
number) (each, a "Portfolio Manager") each having a different investment style.
See "The Multi-Manager Methodology". All-Star's investment objective is to seek
total investment return, comprised of long-term capital appreciation and current
income. Under normal market conditions, the Fund seeks its investment objective
through investing at least 80% of its net assets (plus any borrowings for
investment purposes) in a diversified portfolio of equity securities. The
portion of All-Star's portfolio not invested in equity securities (not more than
20% of its net assets under normal market conditions) is generally invested in
short-term money market instruments. See "Investment Objective, Policies and
Risks".

     All-Star is a Massachusetts business trust organized on August 20, 1986
that commenced investment operations in November 1986. Its Shares are listed and
traded on the NYSE (symbol "USA"). The average daily trading volume of the
Shares on the NYSE during the year ended December 31, 2006 was 321,344 Shares.
As of [__________], 2007, All-Star's net assets were [________] and [________]
Shares were issued and outstanding.

INFORMATION ABOUT ALPS ADVISERS, INC.

     AAI serves as the investment adviser to All-Star. Pursuant to a Fund
Management Agreement with All-Star, AAI implements and operates All-Star's
multi-manager methodology and has overall supervisory responsibility for the
general management and investment of All-Star's assets. AAI recommends to the
Board of Trustees the investment management firms for appointment as Portfolio
Managers of All-Star. See "Management of All-Star" for the fees paid by the Fund
to AAI and by AAI to the Portfolio Managers. Since the fees of AAI and the
Portfolio Managers are based on the average daily net assets of All-Star, AAI
and the Portfolio Managers will benefit from the Offer. See "Management of
All-Star". As of December 31, 2006, AAI managed over $1.5 billion in assets.

     ALPS Fund Services, Inc. ("AFS"), an affiliate of AAI, provides
administrative services to All-Star under an Administration, Bookkeeping and
Pricing Services Agreement with All-Star. AAI and AFS are wholly-owned
subsidiaries of ALPS Holdings, Inc. ("ALPS").

                                       4
<PAGE>

PORTFOLIO MANAGERS

     All-Star allocates its portfolio assets among a number of Portfolio
Managers each having a different investment style, as selected and recommended
by AAI and approved by the Board of Trustees. As of the date of this prospectus,
All-Star's Portfolio Managers are:

     o Chase Investment Counsel Corporation

     o Matrix Asset Advisors, Inc.

     o Pzena Investment Management, LLC

     o Schneider Capital Management Corporation

     o TCW Investment Management Company

The Portfolio Managers may be removed and additional Portfolio Managers may be
added from time to time. See Appendix A for more information about the current
Portfolio Managers.

SPECIAL CONSIDERATIONS AND RISK FACTORS

     The following summarizes some of the risks that you should consider before
subscribing for Shares through the Offer. A more detailed description of these
and other risks of investing in All-Star are described under "Special
Considerations and Risk Factors".

Dilution............................        Record Date Shareholders who do not
                                            fully exercise their Rights should
                                            expect that they will, at the
                                            completion of the Offer, own a
                                            smaller proportional interest in
                                            All-Star than they owned prior to
                                            the Offer. In addition, as a result
                                            of the Offer, all shareholders may
                                            experience an immediate dilution of
                                            the aggregate NAV of these Shares,
                                            which, under certain circumstances,
                                            may be substantial. This is because
                                            the Subscription Price per Share
                                            and/or the net proceeds to All-Star
                                            for each new Share sold will be less
                                            than All-Star's NAV per Share on the
                                            Pricing Date. Although it is not
                                            possible to state precisely the
                                            amount of such dilution, because it
                                            is not known at this time how many
                                            Shares will be subscribed for or
                                            what the NAV or market price per
                                            Share will be on the Pricing Date,
                                            All-Star estimates that such
                                            dilution should not be substantial.
                                            For example, if the Shares are
                                            trading at a discount from their NAV
                                            of 2.5% (the average discount for
                                            the six-month period ended June 30,
                                            2007), and assuming all Rights are
                                            exercised, the Subscription Price
                                            would be 7.4% below the NAV per
                                            Share, resulting in a reduction of
                                            such NAV of approximately $0.07 per
                                            Share, or less than 0.8%. Further,
                                            if you do not submit subscription
                                            requests pursuant to the
                                            Over-Subscription Privilege, you may
                                            experience dilution in your holdings
                                            if All-Star offers additional Shares
                                            for subscription. All-Star may sell


                                       5
<PAGE>

                                            additional Shares to shareholders if
                                            and to the extent that Shares issued
                                            through the Offer would not cause
                                            any undue dilution of the Shares.
                                            See "Special Considerations and Risk
                                            Factors - Dilution".

Closed-end Fund Discounts....               Shares of closed-end funds
                                            frequently trade at a market price
                                            that is less than the value of the
                                            net assets attributable to those
                                            shares. The possibility that Shares
                                            of All-Star will trade at a discount
                                            from NAV is a risk separate and
                                            distinct from the risk that
                                            All-Star's NAV will decrease. The
                                            risk of purchasing shares of a
                                            closed-end fund that might trade at
                                            a discount is more pronounced for
                                            investors who wish to sell their
                                            shares in a relatively short period
                                            of time because, for those
                                            investors, realization of a gain or
                                            loss on their investments is likely
                                            to be more dependent upon the
                                            existence of a premium or discount
                                            than upon portfolio performance. See
                                            "Share Price Data".

Investment and Market Risk....              An investment in Shares is subject
                                            to investment risk, including the
                                            possible loss of the entire amount
                                            that you invest. Your investment in
                                            Shares represents an indirect
                                            investment in the securities owned
                                            by All-Star, 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. Your Shares at any
                                            point in time may be worth less than
                                            your original investment, even after
                                            taking into account the reinvestment
                                            of dividends and other
                                            distributions.

Common Stock Risk............               All-Star 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 All-Star is
                                            equity risk. Equity risk is the risk
                                            that the market value of securities
                                            held by All-Star will fall due to
                                            general market or economic
                                            conditions, perceptions regarding
                                            the industries in which the issuers
                                            of securities held by All-Star
                                            participate, and the particular
                                            circumstances and performance of
                                            particular companies whose
                                            securities All-Star holds. In
                                            addition, common stock of an issuer
                                            in All-Star'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
                                            All-Star 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.


                                       6
<PAGE>

                                            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.

Preferred Securities Risk........           Preferred equity securities involve
                                            credit risk, which is the risk that
                                            a preferred equity security will
                                            decline in price, or fail to pay
                                            dividends when expected, because the
                                            issuer experiences a decline in its
                                            financial status. In addition to
                                            credit risk, investment in preferred
                                            equity securities involves certain
                                            other risks. Certain preferred
                                            equity securities contain provisions
                                            that allow an issuer under certain
                                            conditions to skip distributions (in
                                            the case of "non-cumulative"
                                            preferred equity securities) or
                                            defer distributions (in the case of
                                            "cumulative" preferred equity
                                            securities). Preferred equity
                                            securities often contain provisions
                                            that allow for redemption in the
                                            event of certain tax or legal
                                            changes or at the issuers' call. In
                                            the event of redemption, All-Star
                                            may not be able to reinvest the
                                            proceeds at comparable rates of
                                            return. Preferred equity securities
                                            typically do not provide any voting
                                            rights, except in cases when
                                            dividends are in arrears beyond a
                                            certain time period, which varies by
                                            issue. Preferred equity securities
                                            are subordinated to bonds and other
                                            debt instruments in a company's
                                            capital structure in terms of
                                            priority to corporate income and
                                            liquidation payments, and therefore
                                            will be subject to greater credit
                                            risk than those debt instruments.
                                            Preferred equity securities may be
                                            significantly less liquid than many
                                            other securities, such as U.S.
                                            government securities, corporate
                                            debt or common stock.

Convertible Security Risk.......            Convertible securities generally
                                            offer lower interest or dividend
                                            yields than non-convertible
                                            fixed-income securities of similar
                                            credit quality because of the
                                            potential for capital appreciation.
                                            The market values of convertible
                                            securities tend to decline as
                                            interest rates increase and,
                                            conversely, to increase as interest
                                            rates decline. However, a
                                            convertible security's market value
                                            also tends to reflect the market
                                            price of the common stock of the
                                            issuing company, particularly when
                                            the stock price is greater than the
                                            convertible security's conversion
                                            price. The conversion price is
                                            defined as the predetermined price
                                            or exchange ratio at which the
                                            convertible security can be
                                            converted or exchanged for the
                                            underlying common stock. As the
                                            market price of the underlying
                                            common stock declines below the
                                            conversion price, the price of the
                                            convertible security tends to be
                                            increasingly influenced more by the
                                            yield of the convertible security
                                            than by the market price of the
                                            underlying common stock. Thus, it
                                            may not decline in price to the same
                                            extent as the underlying common
                                            stock, and convertible securities
                                            generally have less potential for
                                            gain or loss than common stocks.
                                            However, mandatory convertible
                                            securities generally do not limit
                                            the potential for loss to the same
                                            extent as securities convertible at
                                            the option of the holder. In the
                                            event of a liquidation of the
                                            issuing company, holders of
                                            convertible securities would be paid
                                            before that company's common
                                            stockholders. Consequently, an
                                            issuer's convertible securities
                                            generally entail less risk than its
                                            common stock. However, convertible
                                            securities fall below debt
                                            obligations of the same issuer in
                                            order of preference or priority in
                                            the event of a liquidation and are
                                            typically unrated or rated lower
                                            than such debt obligations. In
                                            addition, contingent payment
                                            convertible securities allow the
                                            issuer to claim deductions based on
                                            its nonconvertible cost of debt,
                                            which generally will result in
                                            deductions in excess of the actual
                                            cash payments made on the securities
                                            (and accordingly, holders will
                                            recognize income in amounts in


                                       7
<PAGE>

                                            excess of the cash payments
                                            received). The convertible
                                            securities in which the Fund invests
                                            may be rated below investment grade.
                                            See "Risks of Below-Investment Grade
                                            Quality Securities".

Credit Risk........................         Credit risk is the risk that a
                                            security in All-Star's portfolio
                                            will decline in price or fail to
                                            make dividend or interest payments
                                            when due because the issuer of the
                                            security experiences a decline in
                                            its financial status. Preferred and
                                            convertible securities are typically
                                            subordinated to 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 credit risk
                                            than those debt instruments.

Management Risk................             All-Star is subject to management

                                            risk because it is an actively
                                            managed investment portfolio. AAI
                                            and the Portfolio Managers will
                                            apply investment techniques and risk
                                            analyses in selecting Portfolio
                                            Managers and making investment
                                            decisions for All-Star,
                                            respectively, but there can be no
                                            guarantee that these will produce
                                            the desired results.

Growth Stock Risk...............            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 value stocks or
                                            the stock market in general.

Value Stock Risk.................           Value stocks are stocks of companies
                                            that may have experienced adverse


                                       8
<PAGE>

                                            business or industry developments or
                                            may be subject to special risks that
                                            have caused the stocks to be out of
                                            favor and, in a Portfolio Manager's
                                            opinion, undervalued. If the
                                            Portfolio Manager's assessment of a
                                            company's prospects is wrong, the
                                            price of the company's stock may
                                            fall or may not approach the value
                                            the Portfolio Manager has placed on
                                            it.

Foreign Securities Risk..........           Investments in foreign securities
                                            involve risks in addition to those
                                            of investments in U.S. issuers.
                                            These risks include political and
                                            economic risks, currency
                                            fluctuations, higher transaction
                                            costs, less liquidity and greater
                                            volatility, delayed settlement,
                                            confiscatory taxation, withholding
                                            of taxes and less stringent investor
                                            protection and disclosure of
                                            standards in some foreign markets.
                                            These risks can make investments in
                                            foreign issuers more volatile and
                                            potentially less liquid than
                                            investments in U.S. issuers.

Tax Risk...........................         All-Star may invest in preferred
                                            securities, convertible securities,
                                            or other securities the federal
                                            income tax treatment of the income
                                            from which may not be clear or may
                                            be subject to recharacterization by
                                            the Internal Revenue Service
                                            ("IRS"). The tax treatment of
                                            distributions All-Star designates as
                                            "qualified dividend income" may be
                                            affected by IRS interpretations of
                                            the Internal Revenue Code of 1986,
                                            as amended (the "Code"), and future
                                            changes in the Code and the
                                            regulations thereunder. Moreover,
                                            unless legislative action is taken,
                                            the favorable tax treatment of
                                            qualified dividend income, as well
                                            as the 15% maximum federal income
                                            tax rate on individuals' net capital
                                            gain, will expire for taxable years
                                            commencing after December 31, 2010.
                                            See "Tax Matters". If All-Star has
                                            significant holdings in securities
                                            that generate qualified dividend
                                            income, its Share price may be
                                            volatile while Congress considers an
                                            extension of that favorable tax
                                            treatment, depending on the
                                            anticipated outcome of the
                                            legislation. There can be no
                                            assurance as to what portion, if
                                            any, of All-Star's distributions
                                            will constitute qualified dividend
                                            income.

Market Disruption Risk.........             Certain events have a disruptive
                                            effect on the securities markets,
                                            such as terrorist attacks (including
                                            the terrorist attacks in the United
                                            States on September 11, 2001), war
                                            and other geopolitical events.
                                            All-Star cannot predict the effects
                                            of similar events in the future on
                                            the U.S. economy.

Inflation Risk.....................         Inflation risk is the risk that the
                                            value of assets or income from
                                            investment will be worth less in the
                                            future as inflation decreases the


                                       9
<PAGE>

                                            value of money. As inflation
                                            increases, the real value of the
                                            shares and distributions can
                                            decline.

Deflation Risk.....................         Deflation risk is the risk that
                                            prices throughout the economy
                                            decline over time, which may have an
                                            adverse effect on the market
                                            valuation of companies, their assets
                                            and revenues. In addition, deflation
                                            may have an adverse effect on the
                                            creditworthiness of issuers and may
                                            make issuer default more likely,
                                            which may result in a decline in the
                                            value of All-Star's portfolio.

ANTI-TAKEOVER PROVISIONS

     All-Star's Declaration of Trust and By-Laws have provisions (commonly
referred to as "anti-takeover provisions") that are intended to have the effect
of limiting the ability of other entities or persons to acquire control of
All-Star, to cause it to engage in certain transactions, or to modify its
structure. For instance, the affirmative vote of 75 percent of the Shares of the
Fund is required to authorize All-Star's conversion from a closed-end to an
open-end investment company, unless such conversion is recommended by the Board
of Trustees, in which event such conversion would only require the majority vote
of the shareholders, as defined in the 1940 Act. A similar shareholder vote is
required to authorize a merger, sale of a substantial part of the assets or
similar transactions with persons beneficially owning five percent or more of
All-Star's Shares, unless approved by the Board of Trustees under certain
conditions. These provisions cannot be amended without a similar super-majority
vote. In addition, the Board of Trustees is divided into three classes, each of
which has a term of three years and only one of which is elected at each annual
meeting of shareholders. See "Description of Shares-Anti-takeover Provisions of
the Declaration of Trust; Super-Majority Vote Requirement for Conversion to
Open-End Status".

DISPOSITION OF SHARES

     You will be free to dispose of your Shares on the NYSE or other markets on
which the Shares may trade, but, because All-Star is a closed-end fund, you do
not have the right to redeem your Shares.

DISTRIBUTIONS

     All-Star currently has a policy of paying distributions on its Shares
totaling approximately 10% of its NAV per year, payable in four quarterly
distributions of 2.5% of its NAV at the close of the NYSE on the Friday prior to
each quarterly declaration date. These fixed distributions, which are not
necessarily related to All-Star's net investment income or net realized capital
gains or losses, are taxable in any taxable year, up to the amount of All-Star's
current and accumulated earnings and profits ("E&P"), as ordinary dividend
income (which includes not only net investment income but also the excess of
short-term capital gain over net long-term capital loss ("short-term gain")),
qualified dividend income (taxable at a maximum 15% federal income tax rate for
individuals), or long-term capital gain to the extent they are attributable to
such income or gain All-Star earned for that year. (See "Tax Matters"). If, for


                                       10
<PAGE>

any taxable year, the total distributions made under All-Star's distribution
policy exceed its E&P, the excess will be treated as a non-taxable return of
capital to each shareholder (up to the amount of the shareholder's basis in his
or her Shares) and thereafter as gain from the sale of Shares. The amount
treated as a non-taxable return of capital will reduce the shareholder's
adjusted basis in his or her Shares, thereby increasing potential gain or
reducing potential loss on the subsequent sale of those Shares.

     Subject to maintaining its status as a regulated investment company for
federal tax purposes ("RIC") (see "Tax Matters"), All-Star may, in the
discretion of the Board of Trustees, retain for reinvestment, and not
distribute, net investment income or net long-term capital gain in excess of net
short-term capital loss ("net capital gain") for any taxable year to the extent
that its net investment income and net realized gains exceed the amount to be
distributed for that year under its distribution policy. Retained net capital
gain will be taxed to All-Star and designated by it as long-term capital gains
within 60 days after the end of the taxable year in which the gains were
recognized. Under those circumstances, each shareholder will be required to
include in gross income a proportionate share of that gain but will be able to
claim a proportionate share of the federal income tax All-Star paid as a credit
against his or her own federal income tax liability and will be entitled to
increase the adjusted tax basis in his or her Shares by the difference between
the amount taxed and the credit.

     You should carefully consider your ability to assume the foregoing risks
before making an additional investment in All-Star. An investment in Shares of
All-Star is not appropriate for all investors.


                                       11
<PAGE>

                                    EXPENSES

     These are the expenses that an investor incurs when buying Shares, whether
pursuant to the Offer, in the open-market or through All-Star's Automatic
Dividend Reinvestment and Cash Purchase Plan, as amended ("Plan").

SHAREHOLDER TRANSACTION EXPENSES

Sales Load.....................................     None (1)

Automatic Dividend Reinvestment and
Cash Purchase Plan Fees........................     $1.25 per voluntary
                                                    cash investment

____________________

     (1)     No sales load or commission will be payable in connection with the
Offer. Purchases of Shares through brokers in secondary market transactions are
subject to brokers' commissions and charges.

ANNUAL EXPENSES (as a percentage of net assets attributable to Shares)

Management Fees......................................................    [0.71]%

Other Expenses.......................................................    [0.30]%

Total Annual Expenses................................................    [1.01]%



EXAMPLE: You would pay the following expenses on an investment (at NAV) of
$1,000, assuming a 5% annual return and reinvestment of all dividends and
distributions at NAV.

1 YEAR                3 YEARS                5 YEARS                10 YEARS

 $[103]                $[321]                 $[558]                 $[1,235]


     THE TABLES AND THE EXAMPLE ABOVE ARE INTENDED TO ASSIST INVESTORS IN
UNDERSTANDING THE VARIOUS COSTS AND EXPENSES THAT AN INVESTOR WILL BEAR DIRECTLY
AND INDIRECTLY IN PURCHASING AND OWNING SHARES. THE FIGURES IN THE EXAMPLE ARE
INTENDED TO ILLUSTRATE THE EFFECT OF ALL-STAR'S EXPENSES, WHICH MAY BE HIGHER OR
LOWER THAN THOSE SHOWN.

     The numbers shown under the Annual Expenses table are projections based on
All-Star's actual expenses for the year ended December 31, 2006, and on its
projected net assets assuming the Offer is fully subscribed for at the Estimated
Purchase Price of $[______] per Share. See "Financial Highlights" for All-Star's
actual ratio of expenses to average net assets for the year ended December 31,
2006.

                                       12
<PAGE>


                              FINANCIAL HIGHLIGHTS

     The financial highlights table is intended to help you understand
All-Star's financial performance. Information is shown for All-Star's last ten
fiscal years. Certain information reflects financial results from a single
Share. The information for the fiscal years ended December 31, 1999 through
December 31, 2006 has been audited by PricewaterhouseCoopers LLP, independent
registered public accounting firm. The information included in All-Star's
financial statements for periods prior to 1999 had been audited by other
independent auditors, whose report expressed an unqualified opinion on those
financial statements and financial highlights. The report of the independent
registered public accounting firm, together with the financial statements of
All-Star, are included in All-Star's December 31, 2006 Annual Report and are
incorporated by reference into the Statement of Additional Information (see
cover page).

                                       13
<PAGE>
<TABLE>
<CAPTION>
                                                                                FOR THE YEAR ENDED DECEMBER 31,
                                                                                -------------------------------
<S>                                                           <C>             <C>             <C>            <C>            <C>

PER SHARE OPERATING PERFORMANCE:                               2006            2005            2004           2003            2002

NAV at beginning of year...............................       $8.85           $9.30           $9.13           $7.14          $10.65
Income from Investment Operations:
       Net investment income...........................        0.04            0.02            0.02           0.01            0.01
       Net realized and unrealized gain (loss) on
          investments and foreign currency.............        0.75            0.40            1.09           2.76           (2.56)
Total from Investment Operations.......................        0.79            0.42            1.11           2.77           (2.55)

Less Distributions from:
       Net investment income...........................       (0.04)          (0.02)          (0.02)         (0.01)          (0.01)
       Realized capital gain...........................       (0.81)          (0.56)          (0.66)         (0.30)          (0.02)
       Paid in capital.................................       (0.03)          (0.29)          (0.21)         (0.47)          (0.85)

Total Distributions....................................       (0.88)          (0.87)          (0.89)         (0.78)          (0.88)

Change due to rights offering (a)......................        ----            ----           (0.05)          ----           (0.08)
Total Distributions and Rights
       Offering........................................       (0.88)          (0.87)          (0.94)         (0.78)          (0.96)
NAV at end of year.....................................       $8.76           $8.85           $9.30           $9.13          $7.14
Market price at end of year............................       $8.29           $8.28           $9.56           $9.46          $6.64

TOTAL INVESTMENT RETURN FOR SHAREHOLDERS: (b)
Based on NAV...........................................
Based on market price..................................       10.4%            5.0%           13.0%           40.7%         (25.0)%
                                                              11.7%           (4.4)%          12.1%           56.7%         (33.0)%

RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of year (millions)...................       $1,372          $1,368          $1,372         $1,153           $869
Ratio of expenses to average net assets (c)............       1.01%           0.99%           1.01%           1.04%          1.05%
Ratio of net investment income to average net
       assets (c)......................................       0.43%           0.20%           0.20%           0.11%          0.11%
Portfolio turnover rate................................        72%             46%             57%             64%            83%
____________________

(a)     Effect of All-Star's rights offerings for Shares at a price below NAV.

(b)     Calculated assuming all distributions reinvested at the actual reinvestment price and all rights offerings were fully
        subscribed under the terms of each offering.

(c)     The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than
        0.01%.
</TABLE>
                                                                 14
<PAGE>

<TABLE>
<CAPTION>

                                                                                 FOR THE YEAR ENDED DECEMBER 31,
                                                                                 -------------------------------
<S>                                                           <C>             <C>             <C>            <C>             <C>

PER SHARE OPERATING PERFORMANCE:                                2001            2000           1999            1998            1997

NAV at beginning of year...............................        $13.61          $14.02         $14.22          $13.32          $11.95
Income from Investment Operations:
       Net investment income...........................         0.03            0.05           0.05            0.05            0.05
       Net realized and unrealized gain (loss) on
          investments and foreign currency.............        (1.79)           0.96           1.22            2.35          3.01(a)
Total from Investment Operations.......................        (1.76)           1.01           1.27            2.40            2.70

Less Distributions from:
        Net investment income..........................        (0.03)          (0.06)         (0.05)          (0.05)          (0.05)
        Realized capital gain..........................        (1.17)          (1.36)         (1.34)          (1.35)          (1.28)

Total Distributions....................................        (1.20)          (1.42)         (1.39)          (1.40)          (1.33)

Change due to rights offering (b)......................         ----            ----           ----           (0.10)           ----
Impact of Shares issued in dividend reinvestment (c)...         ----            ----          (0.08)           ----            ----
Total Distributions, Reinvestments and Rights
       Offering........................................        (1.20)          (1.42)         (1.47)          (1.50)          (1.33)
NAV at end of year.....................................        $10.65          $13.61         $14.02          $14.22          $13.32
Market price at end of year............................        $11.09         $12.375         $11.063        $12.938         $13.313

TOTAL INVESTMENT RETURN FOR SHAREHOLDERS: (d)
Based on NAV...........................................       (12.7)%           8.8%           10.2%          19.8%           26.6%
Based on market price..................................         0.0%           25.4%          (4.4)%           9.1%           34.4%

RATIOS AND SUPPLEMENTAL DATA:

Net assets at end of year (millions)...................        $1,133          $1,376         $1,396          $1,351          $1,150
Ratio of expenses to average net assets (e)............        1.03%           0.96%           0.97%          1.00%           1.01%
Ratio of net investment income to average net
        assets (e).....................................        0.27%           0.37%           0.37%          0.39%           0.38%
Portfolio turnover rate................................         64%             83%             90%            76%             99%
___________________

(a)     Before provision for federal income tax

(b)     Effect of All-Star's rights offerings for Shares at a price below NAV.

(c)     Effect of payment of a portion of distributions in newly issued Shares valued at a discount from NAV.

(d)     Calculated assuming all distributions reinvested at the actual reinvestment price and all rights offerings were fully
        subscribed under the terms of each offering.

(e)     The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than
        0.01%.
</TABLE>
                                                                 15
<PAGE>


                                SHARE PRICE DATA

     All-Star's Shares were listed on the NYSE on October 24, 1986. The Shares
are listed and traded on the NYSE under the symbol "USA". The following table
sets forth for the calendar quarters indicated: (i) the high and low sales
prices for Shares, as reported in the consolidated transaction reporting system;
(ii) the NAV per share on the day or days when the Shares traded at such high
and low sales prices; and (iii) the percentage by which the Shares traded at a
premium over, or discount from, All-Star's NAV per share on the day or days when
the Shares traded at such high and low sales prices.
<TABLE>
<CAPTION>

                       High                                                        Low
                    Sales Price          NAV         Premium (Discount)         Sales Price         NAV           Premium (Discount)
                    -----------          ---         ------------------         -----------         ---           ------------------
<S>                    <C>              <C>                <C>                     <C>              <C>                 <C>
2005
1st Quarter            9.65             9.21                4.8%                   8.64             8.60                 0.5%
2nd Quarter            9.15             8.71                5.1%                   8.50             8.27                 2.8%
3rd Quarter            9.57             9.13                4.8%                   8.77             8.61                 1.9%
4th Quarter            9.00             8.75                2.9%                   8.13             8.85                 -8.1%

2006
1st Quarter            8.77             9.07               -3.3%                   8.19             8.98                 -8.8%
2nd Quarter            8.44             8.93               -5.5%                   7.06             8.07                -12.5%
3rd Quarter            7.86             8.47               -7.2%                   7.11             8.02                -11.3%
4th Quarter            8.31             8.80               -5.6%                   7.76             8.46                 -8.3%

2007
1st Quarter            8.75             9.08               -3.6%                   8.07             8.29                 -2.7%
2nd Quarter            9.19             9.28               -1.0%                   8.48             9.08                 -6.6%
</TABLE>

     All-Star's Shares have traded in certain periods at a discount from their
NAV. Certain features of and steps taken by All-Star may have tended to reduce
the discount from NAV at which its Shares might otherwise have traded, although
All-Star is not able to determine what effect, if any, these various features
and steps may have had. All-Star's current 10% distribution policy (see
"Distributions; Automatic Dividend Reinvestment and Cash Purchase Plan - 10%
Distribution Policy"), begun in June 1988, may have contributed to this effect.
This trend may also have resulted in whole or in part from other factors, such
as All-Star's investment performance and increased attention directed to
All-Star by securities analysts and market letters.

     On [________], 2007 the NAV per share was $[_______] and the last reported
sales price was $[_________], representing a [discount from/premium to] NAV per
share of [__] %.


                             INVESTMENT PERFORMANCE

     The table below shows two measures of All-Star's return to investors for
the one, five, ten, fifteen and twenty year periods through June 30, 2007. No. 1
("All-Star") shows All-Star's investment performance based on a valuation of its
Shares at NAV. No. 2 ("All-Star Price") shows All-Star's investment performance
based on the market price of All-Star's Shares. Both measures assume

                                       16
<PAGE>

reinvestment of all of All-Star's dividends and distributions in additional
Shares pursuant to All-Star's Automatic Dividend Reinvestment and Cash Purchase
Plan (see "Distributions; Automatic Dividend Reinvestment and Cash Purchase
Plan"), and full participation in All-Star's 1992, 1993, 1994, 1998, 2002 and
2004 rights offerings under the terms of each offering.

     The Lipper Large-Cap Core Mutual Fund Average has been included so that
All-Star's results may be compared with an unweighted average of the total
return of open-end mutual funds classified as large-cap core funds (i.e., mutual
funds having investment objectives and policies comparable to All-Star)
published by Lipper, Inc. The Lipper Large-Cap Core Mutual Fund Average
information reflects the total return of the mutual funds included in the
average, in each case assuming reinvestment of dividends and distributions. The
record of the S&P 500 Index has also been included so that All-Star's results
may be compared with those of an unmanaged group of securities widely regarded
by investors as representative of the stock market in general. The S&P 500 Index
is a broad based capitalization-weighted index which reflects the total return
of the securities included in the index.
<TABLE>
<CAPTION>
- ---------------------------------- --------------- ---------------- ------------------------------ -------------
                                        NO. 1           NO. 2             LIPPER LARGE-CAP             S&P
                                    ALL-STAR NAV    ALL-STAR PRICE   CORE MUTUAL FUND AVERAGE       500 INDEX
- ---------------------------------- --------------- ---------------- ------------------------------ -------------
<S>                                <C>             <C>              <C>                            <C>
1 Year beginning July 1, 2006          20.7%            32.4%                   19.6%                 20.6%
- ---------------------------------- --------------- ---------------- ------------------------------ -------------
5 Years beginning July 1, 2002         12.3%            11.8%                   9.3%                  10.7%
- ---------------------------------- --------------- ---------------- ------------------------------ -------------
10 Years beginning                      7.4%             7.6%                   6.1%                   7.1%
July 1, 1997
- ---------------------------------- --------------- ---------------- ------------------------------ -------------
15 Years beginning                     10.7%            10.5%                   10.0%                 11.2%
July 1, 1992
- ---------------------------------- --------------- ---------------- ------------------------------ -------------
20 Years beginning                     10.7%            11.8%                   9.7%                  10.8%
July 1, 1987
- ---------------------------------- --------------- ---------------- ------------------------------ -------------
</TABLE>

     The returns shown are the average annual return for the period indicated to
June 30, 2007.

     The above results represent All-Star's past performance and are not
intended as a prediction of its future performance. The investment return, NAV
and market value of All-Star's Shares will fluctuate, so that such Shares when
sold may be worth more or less than their original cost.


                                    THE OFFER

TERMS OF THE OFFER

     All-Star is issuing to Record Date Shareholders non-transferable Rights to
subscribe for the additional Shares, without par value. Each Record Date
Shareholder is being issued one Right for each Share owned on the Record Date.
No Rights will be issued for fractional Shares. The Rights entitle the holder to
acquire in the Primary Subscription at the Subscription Price one Share for each
ten Rights held. Accordingly, Shares may be purchased only pursuant to the

                                       17
<PAGE>

exercise of Rights in integral multiples of ten. Rights may be exercised at any
time during the Subscription Period, which commences on [__________], 2007 and
ends at 5:00 p.m., New York City time, on [__________], 2007, the Expiration
Date.

     In addition, any Record Date Shareholder who fully exercises all Rights
issued to him or her in the Primary Subscription (other than those Rights that
cannot be exercised because they represent the right to acquire less than one
Share) will be entitled to subscribe for Shares that were not otherwise
subscribed for by others in the Primary Subscription. For purposes of
determining the number of Shares a Record Date Shareholder may acquire pursuant
to the Offer, broker-dealers whose Shares are held of record on the Record Date
by Cede or by any other depository or nominee will be deemed to be the holders
of the Rights that are issued to Cede or such other depository or nominee on
their behalf. If enough Shares are available, all Record Date Shareholder
requests to buy Shares that were not bought by other Record Date Shareholders
will be honored in full. If the requests for Shares exceed the Shares available,
All-Star may, at its discretion, issue up to an additional 25% of the Shares
available pursuant to the Offer in order to honor such over-subscriptions.
All-Star may sell additional Shares to Record Date Shareholders if and to the
extent that Shares issued through the Offer would not cause any undue dilution
(reduction) of the NAV of the Shares. Whether or not All-Star determines to
issue additional Shares to honor all over-subscriptions, Shares will be
allocated pro rata among those Record Date Shareholders who over-subscribe based
on the number of Rights originally issued to them by All-Star. Shares acquired
pursuant to the Over-Subscription Privilege are subject to allotment, which is
more fully discussed under "Over-Subscription Privilege".

     The Rights are not transferable. Therefore, only the underlying Shares, and
not the Rights, will be admitted for trading on the NYSE. Since fractional
Shares will not be issued, Record Date Shareholders who receive, or who are left
with, fewer than ten Rights will be unable to exercise such Rights and will not
be entitled to receive any cash in lieu thereof.

     The Rights will be evidenced by Subscription Certificates, which will be
mailed to Record Date Shareholders with addresses in the United States. See
"Foreign Restrictions". Rights may be exercised by completing a Subscription
Certificate and delivering it, together with payment by means of (i) a check or
money order, or (ii) a Notice of Guaranteed Delivery, to the Subscription Agent
during the Subscription Period. The method by which Rights may be exercised and
Shares paid for is set forth under "Method of Exercise of Rights" and "Payment
for Shares."

PURPOSE OF THE OFFER

     The Board of Trustees has determined that (i) it would be in the best
interests of All-Star and its shareholders to increase the assets of All-Star
available for investment, thereby permitting All-Star to be in a better position
to more fully take advantage of investment opportunities consistent with
All-Star's investment objective that may arise, and (ii) the potential benefits
of the Offer to All-Star and its shareholders will outweigh the dilution to
shareholders who do not fully exercise their Rights. The Board of Trustees voted
unanimously to approve the terms of the Offer as set forth in this prospectus.

                                       18
<PAGE>

     In reaching its decision, the Board of Trustees considered, among other
things, advice by AAI that the proceeds of the Offer will enable the Portfolio
Managers to take advantage of perceived investment opportunities without having
to sell existing portfolio holdings, which they otherwise would retain. The
Board of Trustees considered that the Offer seeks to reward investors by giving
existing Shareholders the opportunity to purchase additional Shares at a price
below market and/or NAV and without brokerage commissions. In addition, the
Board of Trustees considered that the Offer will enhance the likelihood that
All-Star will continue to have sufficient assets remaining after the
distributions called for by its current 10% distribution policy to permit
All-Star to maintain the current ratio of its fixed expenses to its net assets.

     Finally, the Board of Trustees considered that, because the Subscription
Price per Share may be less than the NAV per Share on the Pricing Date, the
Offer may result in dilution of All-Star's NAV per Share. The Board of Trustees
believes that the factors in favor of the Offer outweigh this possible dilution.
See "Special Considerations and Risk Factors - Dilution".

     AAI, AFS and the Portfolio Managers will benefit from the Offer because
their fees are based on the average daily net assets of All-Star. See
"Management of All-Star". It is not possible to state precisely the amount of
additional compensation they will receive as a result of the Offer because it is
not known how many Shares will be subscribed for and because the net proceeds of
the Offer will be invested in additional portfolio securities that will
fluctuate in value. One of All-Star's Trustees who voted to authorize the Offer
is an "interested person," within the meaning of the 1940 Act, of AAI, and
therefore could benefit indirectly from the Offer. The other six Trustees are
not "interested persons" of All-Star or AAI.

     All-Star may, in the future and at its discretion, choose to make
additional rights offerings from time to time for a number of Shares and on
terms which may or may not be similar to the Offer. Any such future rights
offering will be made in accordance with the then applicable requirements of the
1940 Act and the Securities Act of 1933, as amended. In 1992, All-Star completed
a rights offering to shareholders of 5,464,168 Shares at a subscription price of
$10.05 per Share, for proceeds to All-Star after expenses of approximately
$54,683,782. In 1993, All-Star completed a second rights offering to
shareholders of 4,227,570 Shares at a subscription price of $10.41 per Share,
for proceeds to All-Star after expenses of approximately $43,759,004. In 1994,
All-Star completed a third rights offering to shareholders of 4,704,931 Shares
at a subscription price of $9.14 per Share, for proceeds to All-Star after
expenses of approximately $42,793,069. In 1998, All-Star completed a fourth
rights offering to shareholders of 4,318,134 Shares at a subscription price of
$12.83 per Share, for proceeds to All-Star after expenses of approximately
$55,166,659. In 2002, All-Star completed a fifth rights offering to shareholders
of 10,688,506 Shares at a subscription price of $8.99 per Share, for proceeds to
All-Star after expenses of approximately $95,753,976. In 2004, All-Star
completed a sixth rights offering to shareholders of 15,841,927 Shares at a
subscription price of $8.34 per Share, for proceeds to All-Star after expenses
of approximately $131,705,875. All six rights offerings were oversubscribed.

OVER-SUBSCRIPTION PRIVILEGE

     If all of the Rights initially issued in the Primary Subscription are not
exercised, any Shares for which Subscriptions have not been received ("Excess
Shares") will be offered, by means of the Over-Subscription Privilege, to Record

                                       19
<PAGE>

Date Shareholders who have exercised all Rights initially issued to them and who
wish to acquire more than the number of Shares for which Rights issued to them
are exercisable. Record Date Shareholders who exercise all Rights initially
issued to them will have the opportunity to indicate on the Subscription
Certificate how many Shares they are willing to acquire pursuant to the
Over-Subscription Privilege. If sufficient Excess Shares remain, all
over-subscriptions will be honored in full. If sufficient Excess Shares are not
available to honor all over-subscriptions, All-Star may, at the discretion of
the Board of Trustees, issue up to an additional 25% of the Shares available
pursuant to the Primary Subscription, to satisfy over-subscription requests.
All-Star may sell additional Shares to Record Date Shareholders if and to the
extent that Shares issued through the Offer would not cause any undue dilution
(reduction) of the NAV of the Shares. Whether or not All-Star determines to
issue additional Shares to honor all over-subscriptions, available Excess Shares
will be allocated (subject to elimination of fractional Shares) among Record
Date Shareholders who over-subscribe based on the number of Rights originally
issued to them.

     The method by which Excess Shares will be distributed and allocated
pursuant to the Over-Subscription Privilege is as follows. Excess Shares will be
available for purchase pursuant to the Over-Subscription Privilege only to the
extent that the maximum number of Shares is not subscribed for through the
exercise of the Primary Subscription by the Expiration Date. If the Excess
Shares are not sufficient to satisfy all subscriptions pursuant to the
Over-Subscription Privilege, the Excess Shares will be allocated pro rata
(subject to the elimination of fractional Shares) among those Record Date
Shareholders exercising the Over-Subscription Privilege, in proportion, not to
the number of Shares requested pursuant to the Over-Subscription Privilege, but
to the number of Shares held on the Record Date; provided, however, that if this
pro rata allocation results in any Record Date Shareholders being allocated a
greater number of Excess Shares than the Record Date Shareholder subscribed for
pursuant to the exercise of such Record Date Shareholder's Over-Subscription
Privilege, then such Record Date Shareholder will be allocated only such number
of Excess Shares as such Record Date Shareholder subscribed for and the
remaining Excess Shares will be allocated among all other Record Date
Shareholders exercising Over-Subscription Privileges. The formula to be used in
allocating the Excess Shares is as follows:

RECORD DATE SHAREHOLDER'S RECORD DATE POSITION      X   EXCESS SHARES REMAINING
- ----------------------------------------------
TOTAL RECORD DATE POSITION OF ALL OVERSUBSCRIBERS

     The allocation process with regard to any additional Shares All-Star may
offer may involve a similar allocation process as to Excess Shares. All-Star
will not offer or sell any Shares that are not subscribed for under the Primary
Subscription or the Over-Subscription Privilege.

SUBSCRIPTION PRICE

     The Subscription Price for the Shares to be issued pursuant to the Offer
will be equal to 95% of the lower of (i) the last reported sale price of a Share
on the NYSE on the Pricing Date, or (ii) the NAV of a Share on the Pricing Date.
The Subscription Price will be lower than All-Star's then current NAV per share.

                                       20
<PAGE>

     All-Star announced the terms of the Offer before the opening of trading on
the NYSE on August 7, 2007. The NAV per Share at the close of business on August
6, 2007 and on [__________], 2007 was $8.71 and $[________], respectively, and
the last reported sale price of a Share on the NYSE on those dates was $8.42 and
$[_____], respectively, representing a 3.3% discount and a [__]%  [discount],
respectively, in relation to the NAV per Share at the close of business on those
dates.

EXPIRATION OF THE OFFER

     The Offer will expire at 5:00 p.m., New York City time, on [__________],
2007. Rights will expire on the Expiration Date and thereafter may not be
exercised, unless the Offer is extended. Since the Expiration Date is prior to
the Pricing Date, Record Date Shareholders who decide to acquire Shares in the
Primary Subscription or pursuant to the Over-Subscription Privilege will not
know, when they make such decision, what the final Subscription Price for such
Shares will be.

     Any extension, termination, or amendment of the Offer will be followed as
promptly as practicable by announcement thereof, such announcement in the case
of an extension to be issued no later than 9:00 a.m., New York City time, on the
next business day following the previously scheduled Expiration Date. Without
limiting the manner in which All-Star may choose to make such announcement,
All-Star will not, unless otherwise required by law, have any obligation to
publish, advertise, or otherwise communicate any such announcement other than by
making a release to the Dow Jones News Service or such other means of
announcement as All-Star deems appropriate.

SUBSCRIPTION AGENT

     The Subscription Agent is Computershare Trust Company, N.A., P.O. Box
859208, Braintree, Massachusetts 02185-9208. Computershare Trust Company, N.A.,
is also All-Star's dividend paying agent, transfer agent and registrar. The
Subscription Agent will receive from All-Star a fee estimated at approximately
[$100,000] plus reimbursements for its out-of-pocket expenses related to the
Offer.

INFORMATION AGENT

     Any questions or requests for assistance regarding the Offer may be
directed to the Information Agent at its telephone number and address listed
below:

THE ALTMAN GROUP, INC.
1200 WALL STREET WEST
LYNDHURST, NJ 07071

CALL TOLL FREE 1-800-[__________]

     The Information Agent will receive a fee from All-Star estimated at
approximately [$50,000] and reimbursement for its out-of-pocket expenses related
to the Offer.

                                       21
<PAGE>

METHOD OF EXERCISE OF RIGHTS

     Rights may be exercised by fully completing and signing the reverse side of
the Subscription Certificate and mailing it in the envelope provided, or
otherwise delivering the completed and signed Subscription Certificate to the
Subscription Agent, together with payment in full for the Shares as described
below under "Payment for Shares". Rights may also be exercised by a Record Date
Shareholder contacting his or her broker, bank or trust company, which can
arrange, on his or her behalf, to guarantee delivery of payment (using a "Notice
of Guaranteed Delivery") and of a properly completed and executed Subscription
Certificate. The broker, bank or trust company may charge a fee for this
service. Fractional Shares will not be issued. Record Date Shareholders who
receive, or who are left with, fewer than ten Rights will not be able to
exercise such Rights.

     Completed Subscription Certificates and related payments must be received
by the Subscription Agent prior to 5:00 p.m., New York City time, on the
Expiration Date (unless payment is effected by means of a Notice of Guaranteed
Delivery as described below under "Payment for Shares") at the offices of the
Subscription Agent at one of the addresses set forth below.

     The Subscription Certificate and payment should be sent to COMPUTERSHARE
TRUST COMPANY, N.A. by one of the following methods:

Subscription Certificate Delivery Method       ADDRESS
- ----------------------------------------       -------

If By Mail:                                    Computershare Trust Company, N.A.
                                               Attn:  Corporate Actions
                                               P.O. Box 859208
                                               Braintree, MA  02185-9208

If By Hand:                                    Computershare Trust Company, N.A.
                                               Attn:  Corporate Actions
                                               161 Bay State Drive
                                               Braintree, MA  02184

If By Overnight Courier or Express Mail:       Computershare Trust Company, N.A.
                                               Attn:  Corporate Actions
                                               161 Bay State Drive
                                               Braintree, MA  02184

By Broker-Dealer or other Nominee:             Record Date Shareholders whose
(Notice of Guaranteed Delivery)                Shares are held in a brokerage,
                                               bank or trust account may contact
                                               their broker or other nominee and
                                               instruct them to submit a Notice
                                               of Guaranteed Delivery and
                                               payment on their behalf.

                                       22
<PAGE>

Delivery by any method or to any address not listed above will not constitute
good delivery.

     All questions concerning the validity, form, eligibility (including times
of receipt and matters pertaining to beneficial ownership) and the acceptance of
Subscription Certificates and the Subscription Price will be determined by
All-Star, which determinations will be final and binding. No alternative,
conditional or contingent subscriptions will be accepted. All-Star reserves the
absolute right to reject any or all subscriptions not properly submitted or the
acceptance of which would, in the opinion of All-Star's counsel, be unlawful.
All-Star also reserves the right to waive any irregularities or conditions, and
All-Star's interpretations of the terms and conditions of the Offer shall be
final and binding. Any irregularities in connection with subscriptions must be
cured within such time, if any, as All-Star shall determine unless waived.
Neither All-Star nor the Subscription Agent shall be under any duty to give
notification of defects in such subscriptions or incur any liability for failure
to give such notification. Subscriptions will not be deemed to have been made
until such irregularities have been cured or waived.

PAYMENT FOR SHARES

     Record Date Shareholders who subscribe for Shares in the Primary
Subscription or pursuant to the Over-Subscription Privilege may choose between
the following methods of payment:

     (1)     A subscription will be accepted by the Subscription Agent if,
prior to 5:00 p.m., New York City time, on the Expiration Date, the Subscription
Agent shall have received a Notice of Guaranteed Delivery, by facsimile or
otherwise, from a bank or trust company or a NYSE or National Association of
Securities Dealers member firm, guaranteeing delivery of (a) payment of the full
Subscription Price for Shares subscribed for in the Primary Subscription and any
additional Shares subscribed for pursuant to the Over-Subscription Privilege and
(b) a properly completed and executed Subscription Certificate. The Subscription
Agent will not honor a Notice of Guaranteed Delivery if a properly completed and
executed Subscription Certificate and full payment for the Shares is not
received by the Subscription Agent by [__________], 2007. The Notice of
Guaranteed Delivery may be delivered to the Subscription Agent in the same
manner as Subscription Certificates at the addresses set forth above, or may be
transmitted to the Subscription Agent by facsimile transmission (telecopy number
(781) [__________]; telephone number to confirm receipt (781) [__________].

     (2)     Alternatively, a Record Date Shareholder can, together with the
Subscription Certificate, send payment for Shares subscribed for in the Primary
Subscription and any additional Shares subscribed for pursuant to the
Over-Subscription Privilege to the Subscription Agent based on the Estimated
Subscription Price of $[_______] per Share. Please note that the Estimated
Subscription Price differs from the Estimated Purchase Price, which is presented
for illustration purposes only, shown on the cover page of this prospectus. To
be accepted, such payment, together with the Subscription Certificate, must be
received by the Subscription Agent prior to 5:00 p.m., New York City time, on
the Expiration Date. The Subscription Agent will deposit all monies received by
it prior to the final payment date into a segregated interest-bearing account
(which interest will be paid to All-Star) pending proration and distribution of
the Shares. THE SUBSCRIPTION AGENT WILL NOT ACCEPT CASH AS A MEANS OF PAYMENT

                                       23
<PAGE>

FOR SHARES. A PAYMENT PURSUANT TO THIS METHOD MUST BE IN UNITED STATES DOLLARS
BY MONEY ORDER OR CERTIFIED OR CASHIER'S CHECK DRAWN ON A BANK LOCATED IN THE
CONTINENTAL UNITED STATES, MUST BE PAYABLE TO LIBERTY ALL-STAR EQUITY FUND, AND
MUST ACCOMPANY A PROPERLY COMPLETED AND EXECUTED SUBSCRIPTION CERTIFICATE TO BE
ACCEPTED.

     Within ten business days following the Expiration Date (the "Confirmation
Date"), a confirmation will be sent by the Subscription Agent to each Record
Date Shareholder exercising his or her Rights (or, if the Shares on the Record
Date are held by Cede or any other depository or nominee, to Cede or such other
depository or nominee), showing (i) the number of Shares acquired pursuant to
the Primary Subscription; (ii) the number of Shares, if any, acquired pursuant
to the Over-Subscription Privilege; (iii) the per Share and total purchase price
for the Shares; and (iv) any additional amount payable by such Record Date
Shareholder to All-Star or any excess to be refunded by All-Star to such Record
Date Shareholder, in each case based on the Subscription Price as determined on
the Pricing Date. Any additional payment required from a Record Date Shareholder
must be received by the Subscription Agent prior to 5:00 p.m., New York City
time, on [__________], 2007, and any excess payment to be refunded by All-Star
to such Record Date Shareholder will be mailed by the Subscription Agent with
the confirmation. All payments by a Record Date Shareholder must be in United
States dollars by money order or check drawn on a bank located in the United
States of America and be payable to LIBERTY ALL-STAR EQUITY FUND. All payments
will be held by the Subscription Agent in a segregated interest-bearing account
pending completion of the processing of the subscription, and will then be paid
to All-Star. Any interest earned on such amounts will accrue to All-Star and
none will be paid to the subscriber.

     Whichever of the above two methods of payment is used, issuance and
delivery of the Shares subscribed for are subject to collection of checks and
actual payment pursuant to any Notice of Guaranteed Delivery.

     Record Date Shareholders will have no right to rescind their subscription
after receipt of their payment for Shares by the Subscription Agent.

     If a Record Date Shareholder who acquires Shares pursuant to the Primary
Subscription or the Over-Subscription Privilege does not make payment of any
amounts due, All-Star reserves the right to take any or all of the following
actions: (i) reallocate such subscribed and unpaid for Shares to Record Date
Shareholders exercising the Over-Subscription Privilege who did not receive the
full Over-Subscription requested; (ii) apply any payment actually received by it
toward the purchase of the greatest number of whole Shares which could be
acquired by such Record Date Shareholder upon exercise of the Primary
Subscription or the Over-Subscription Privilege; and (iii) exercise any and all
other rights or remedies to which it may be entitled, including, without
limitation, the right to set off against payments actually received by it with
respect to such subscribed Shares to enforce the relevant guaranty of payment or
monetary damages.

     Record Date Shareholders whose Shares are held by a broker-dealer, bank,
trust company, depository or other nominee should contact the nominee to
exercise their Rights and request the nominee to exercise their Rights in
accordance with their instructions.

                                       24
<PAGE>

     Brokers, banks, trust companies, depositories and other nominees who hold
Shares for the account of others should notify the respective beneficial owners
of such Shares as soon as possible to ascertain such beneficial owners'
intentions and to obtain instructions with respect to exercising the Rights. If
the beneficial owner so instructs, the record holder of such Rights should
complete Subscription Certificates and submit them to the Subscription Agent
with the proper payment.

     The instructions contained on the Subscription Certificate should be read
carefully and followed in detail. DO NOT SEND SUBSCRIPTION CERTIFICATES TO
ALL-STAR. (They should be sent to Computershare Trust Company, N.A. as indicated
above.)

     THE METHOD OF DELIVERY OF SUBSCRIPTION CERTIFICATES AND PAYMENT OF THE
SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION AND RISK OF
THE RECORD DATE SHAREHOLDERS, BUT IF SENT BY MAIL IT IS RECOMMENDED THAT
SUBSCRIPTION CERTIFICATES AND PAYMENTS BE SENT BY REGISTERED MAIL, PROPERLY
INSURED, WITH RETURN RECEIPT REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE
ALLOWED TO ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.

DELIVERY OF STOCK CERTIFICATES

     Participants in All-Star's Automatic Dividend Reinvestment and Cash
Purchase Plan who exercise the Rights issued on Shares held in their accounts in
the Plan will have their Shares acquired in the Primary Subscription and
pursuant to the Over-Subscription Privilege credited to their shareholder
dividend reinvestment accounts in the Plan. Record Date Shareholders whose
Shares are held of record by Cede or by any other depository or nominee on their
behalf or their broker-dealers' behalf will have their Shares acquired in the
Primary Subscription and pursuant to the Over-Subscription Privilege credited to
the account of Cede or such other depository or nominee. With respect to all
other Records Date Shareholders, stock certificates for all Shares acquired in
the Primary Subscription and pursuant to the Over-Subscription Privilege will be
delivered to subscribers who requested certificates, together with the
confirmation on or about [__________], 2007. A refund of the amount, if any,
paid in excess of the final Subscription Price will be mailed as soon as
practicable after the Confirmation Date. If the Record Date Shareholder's
confirmation shows that an additional amount is payable due to the final
Subscription Price exceeding the estimated Subscription Price, the stock
certificates will be mailed on or about [__________],  2007, provided that such
additional amount has been paid and payment for Shares subscribed for has
cleared, which clearance may take up to five days from the date of receipt of
the payment. If such payment does not clear within five business days from the
date of receipt, All-Star may exercise its rights in the event of nonpayment
under "Payment for Shares".

FOREIGN RESTRICTIONS

     Record Date Shareholders whose record addresses are outside the United
States will receive written notice of the Offer; however, Subscription
Certificates will not be mailed to such shareholders. The Rights to which those
Subscription Certificates relate will be held by the Subscription Agent for such

                                       25
<PAGE>

foreign Record Date Shareholders' accounts until instructions are received in
writing with payment to exercise the Rights. If no such instructions are
received by the Expiration Date, such Rights will expire. See "Subscription
Agent".

FEDERAL INCOME TAX CONSEQUENCES

     The following is a general summary of the significant federal income tax
consequences of the receipt of Rights by a Record Date Shareholder and a
subsequent lapse or exercise of Rights. The discussion is based on applicable
provisions of the Code, the Treasury Regulations promulgated thereunder and
other authorities currently in effect, all of which are subject to change,
possibly with a retroactive effect. The discussion does not purport to be
complete or to deal with all aspects of federal income taxation that may be
relevant to shareholders in light of their particular circumstances or to
shareholders subject to special treatment under the Code (such as insurance
companies, financial institutions, tax-exempt entities, employee benefit plans,
dealers in securities, foreign corporations and persons who are not U.S.
citizens or residents), and does not address any state, local or foreign tax
consequences. Accordingly, each Record Date Shareholder should consult his, her
or its own tax adviser with regard to the federal tax consequences of the Offer,
as well as the tax consequences arising under the laws of any state, foreign
country or other taxing jurisdiction.

     For federal income tax purposes, neither the receipt nor the exercise of
the Rights by Record Date Shareholders will result in taxable income to them,
and they will realize no loss with respect to any Rights that expire without
being exercised. All-Star will realize no gain or loss on the issuance, exercise
or expiration of the Rights.

     A Record Date Shareholder's holding period for a Share acquired on exercise
of Rights will begin with the date of exercise, and the shareholder's basis for
determining gain or loss on the sale of that Share will equal the sum of the
shareholder's basis in the Rights, if any, plus the Subscription Price for the
Share. A Record Date Shareholder's basis in exercised Rights will be zero unless
either (1) the Rights' fair market value on the date of distribution is 15% or
more of the fair market value on that date of the Shares with respect to which
the Rights were distributed, which All-Star considers to be unlikely, or (2) the
shareholder elects, on his, her or its federal income tax return for the taxable
year in which the Rights are received, to allocate part of the basis of those
Shares to the Rights. If either clause (1) or (2) applies, then if the Rights
are exercised, the shareholder will allocate his, her or its basis in the Shares
with respect to which the Rights were distributed between those Shares and the
Rights in proportion to their respective fair market values on the distribution
date. A Record Date Shareholder's gain or loss recognized on sale of a Share
acquired on the exercise of Rights will be a capital gain or loss (assuming the
Share was held as a capital asset at the time of sale) and will be long-term
capital gain or loss, taxable at a maximum federal income tax rate of 15% in the
case of a noncorporate shareholder, if the shareholder then holds the Share for
more than one year.

EMPLOYEE BENEFIT PLAN CONSIDERATIONS

     Shareholders that are employee benefit plans subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (including separate
profit sharing/retirement and savings plans, and plans for self-employed
individuals and their employees), and individual retirement accounts ("IRAs")

                                       26
<PAGE>

(collectively, "Retirement Plans") should be aware that additional contributions
of cash to a Retirement Plan (other than rollover contributions or
trustee-to-trustee transfers from other Retirement Plans) in order to exercise
Rights may, when taken together with contributions previously made, be treated
as excess or nondeductible contributions subject to excise taxes. In the case of
Retirement Plans qualified under section 401(a) of the Code, additional cash
contributions could cause violations of the maximum contribution limitations of
section 415 of the Code or other qualification rules. Retirement Plans in which
contributions are so limited should consider whether there is an additional
source of funds available within the Retirement Plan, including the liquidation
of assets, with which to exercise the Rights. Because the rules governing
Retirement Plans are extensive and complex, Retirement Plans contemplating the
exercise of Rights should consult with their counsel prior to such exercise.

     Retirement Plans and other tax-exempt entities, including governmental
plans, should also be aware that if they borrow to finance their exercise of
Right, they become subject to tax on unrelated business taxable income under
section 511 of the Code. If any portion of an IRA is used as security for a
loan, that portion will be treated as a distribution to the IRA owner.

     ERISA contains fiduciary responsibility requirements, and ERISA and the
Code contain prohibited transaction rules, that may impact the exercise of
Rights. Due to the complexity of these requirements and rules and the penalties
for non-compliance, Retirement Plans should consult with their counsel regarding
the consequences of their exercise of Rights under ERISA and the Code.


                     SPECIAL CONSIDERATIONS AND RISK FACTORS

     The following discusses certain matters that should be considered, among
others, in connection with the Offer.

DILUTION

     Record Date Shareholders who do not fully exercise their Rights will, upon
completion of the Offer, own a smaller proportional interest in All-Star than
they owned prior to the Offer. All-Star cannot tell you precisely how much
smaller the percentage of the Fund that you would own will be because All-Star
does not know how many Record Date Shareholders will exercise their Rights and
how many of their Rights they will exercise. Further, if you do not submit
subscription requests pursuant to the Over-Subscription Privilege, you may
experience dilution in your holdings if All-Star offers additional Shares for
subscription. All-Star may sell additional Shares to shareholders if and to the
extent that Shares issued through the Offer would not cause any undue dilution
of the NAV of the Shares.

     All shareholders will experience an immediate dilution of the aggregate of
Shares as a result of the completion of the Offer because (i) the Subscription
Price per Share will be less than All-Star's NAV per Share on the Expiration
Date, (ii) All-Star will incur expenses in connection with the Offer, and (iii)
the number of Shares outstanding after the Offer will increase in a greater
percentage than the increase in the size of All-Star's assets. This dilution
also will affect Record Date Shareholders to a greater extent if they do not
exercise their Rights in full. It is not possible to state precisely the amount
of any decreases in either NAV or in ownership interests, because it is not
known at this time what the NAV per Share will be at the Expiration Date or what
proportion of the Shares will be subscribed. Finally, there may be a dilution of

                                       27
<PAGE>

earnings per Share due to the increase in the number of Shares outstanding, but
only to the extent that investments of the proceeds of the Offer do not achieve
the same return as current investments held by All-Star. To the extent such
investments achieve a better return than current investments; earnings per Share
will experience appreciation.

     The following example assumes that all of the Shares are sold at the
Estimated Purchase Price of $[___________] and after deducting all expenses
related to the issuance of the Shares.

                                         NAV Per Share on     Dilution Per Share
                                         [________], 2007         in Dollars

Primary Subscription or [___] Shares       $ [________]          $[________]

MARKET VALUE AND NAV

     The shares of closed-end investment companies frequently trade at a
discount from NAV. This characteristic of shares of a closed-end fund is a risk
separate and distinct from the risk that All-Star's NAV may decrease. Since the
commencement of All-Star's operations, the Shares have traded in certain periods
in the market at a discount to NAV. The risk of purchasing shares of a
closed-end fund that might trade at a discount is more pronounced if you wish to
sell your shares in a relatively short period of time. If you do so, realization
of a gain or loss on your investment is likely to be more dependent upon the
existence of a premium or discount than upon portfolio performance. The Shares
are not subject to redemption. Investors desiring liquidity may, subject to
applicable securities laws, trade their Shares on any exchange where such Shares
are then trading at current market value, which may differ from the then current
NAV. Moreover, shareholders expecting to sell their Shares during the course of
the Offer should be aware that there is a greater risk that the potential
discount referred to above, which may increase during the Offer, will adversely
affect them. This increased risk is because, among other things, the market
price per Share may reflect the anticipated dilution that will result from this
Offer. All-Star cannot predict whether the Shares will trade at a discount or
premium to after completion of the Offer.

POSSIBLE SUSPENSION OF THE OFFER

     As required by the SEC's registration form, All-Star has undertaken to
suspend the Offer until it amends this prospectus if, subsequent to the
effective date of All-Star's Registration Statement, All-Star's NAV declines
more than 10% from its NAV as of such effective date. All-Star will notify
Record Date Shareholders of any such decline and suspension and thereby permit
them to cancel their exercise of Rights.


                                 USE OF PROCEEDS

     If all of the Rights are exercised in full for Shares sold at the Estimated
Purchase Price of $[________] per Share, the net proceeds to All-Star are
estimated to be approximately $[________], after deducting expenses related to
the Offer payable by All-Star estimated at $450,000. If All-Star increases the

                                       28
<PAGE>

number of Shares subject to the Offer by 25% in order to satisfy
Over-Subscriptions, the proceeds will be approximately $[________]. However,
there can be no assurance that all Rights will be exercised in full, and the
Subscription Price will not be determined until the following business day after
the Expiration Date. AAI has advised All-Star that net proceeds of the Offer
will be invested by the Portfolio Managers in portfolio securities in accordance
with All-Star's investment objective and policies. It is anticipated that
investment of such net proceeds under normal market conditions will take place
during a period of approximately 30 days from their receipt by All-Star, and
would in any event be completed within three months. Pending such investment,
the net proceeds will be invested in short-term money market instruments (see
"Investment Objective, Policies and Risks - Repurchase Agreements").


                          THE MULTI-MANAGER METHODOLOGY

     All-Star allocates its portfolio assets among a number of Portfolio
Managers, currently five in number, recommended by AAI and approved by the Board
of Trustees. Each Portfolio Manager employs a different investment style and/or
strategy, and from time to time AAI rebalances All-Star's portfolio among the
Portfolio Managers so as to maintain an approximately equal allocation of the
portfolio among them throughout all market cycles.

     In the opinion of AAI, the multi-manager methodology provides advantages
over the use of a single manager because of the following primary factors:

     (i)     most equity investment management firms consistently employ a
distinct investment style which causes them to emphasize stocks with particular
characteristics;

     (ii)    because of changing investor preferences and market fluctuations,
any given investment style will generally move into and out of market favor and
will result in better performance under certain market conditions but poorer
performance under other conditions;

     (iii)   by allocating All-Star's portfolio on an approximately equal basis
among Portfolio Managers employing different styles, the impact of any one such
style on investment performance may be diluted, and the investment performance
of the total portfolio may be more consistent and less volatile over the
long-term than if a single style was employed throughout the entire period; and

     (iv)    consistent performance at a given annual rate of return over time
generally produces a higher rate of return for the long term than more volatile
performance having the same average annual rate of return.

     AAI, based on the foregoing principles and on its analysis and evaluation
of information regarding the personnel and investment styles and performance of
a universe of numerous professional investment management firms, has selected
for appointment by All-Star a group of Portfolio Managers representing a
blending of different investment styles which, in its opinion, is appropriate to
All-Star's investment objective.

     AAI continuously monitors the performance and investment styles of the
Portfolio Managers and from time to time recommends changes of Portfolio
Managers based on factors such as changes in a Portfolio Manager's investment

                                       29
<PAGE>

style or a departure by a Portfolio Manager from the investment style for which
it had been selected, a deterioration in a Portfolio Manager's performance
relative to that of other investment management firms practicing a similar
style, or adverse changes in its ownership or personnel. Portfolio Manager
changes may also be made to change the mix of investment styles employed by the
Portfolio Managers. Since its inception, All-Star has had fourteen Portfolio
Manager changes.

     Portfolio Manager changes, as well as the periodic rebalancing of
All-Star's portfolio among the Portfolio Managers and the need to raise cash for
All-Star's quarterly distributions, may result in some portfolio turnover in
excess of what would otherwise be the case (see "Financial Highlights").
Increased portfolio turnover would cause increased brokerage commission costs to
All-Star, and may result in greater realization of capital gains, which are
taxable to shareholders.

     Under the terms of an exemptive order issued to All-Star and AAI by the
SEC, a portfolio management agreement with a new or additional Portfolio Manager
may be entered into in advance of shareholder approval, provided that the new
agreement is at a fee no higher than that provided in, and is on terms and
conditions substantially similar to, All-Star's agreements with its other
Portfolio Managers, and that its continuance is subject to approval by
shareholders at All-Star's next regularly scheduled annual shareholder meeting
(normally held in April) following the date of the new or additional portfolio
management agreement. Information about Portfolio Manager changes or additions
made in advance of shareholder approval will be announced to the press following
Board of Trustees action and will be included in the next report to
shareholders.

     All-Star's current Portfolio Managers are:

     o     Chase Investment Counsel Corporation

     o     Matrix Asset Advisors, Inc.

     o     Pzena Investment Management, LLC

     o     Schneider Capital Management Corporation

     o     TCW Investment Management Company

     See Appendix A for information about these Portfolio Managers, including
the employees primarily responsible for the day-to-day management of the portion
of All-Star's portfolio allocated to each.


                    INVESTMENT OBJECTIVE, POLICIES AND RISKS

     All-Star's investment objective is to seek total investment return,
comprised of long-term capital appreciation and current income. It seeks its
investment objective through investment primarily in a diversified portfolio of
equity securities.

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<PAGE>

     Under normal market conditions, All-Star invests at least 80% of its net
assets (plus any borrowings for investment purposes) in equity securities,
defined as common stocks and securities convertible into common stocks such as
bonds and preferred stocks, and securities having common stock characteristics
such as warrants and rights to purchase equity securities (although, as a
non-fundamental policy, not more than 20% of the value of All-Star's total
assets may be invested in rights and warrants). The 80% component of this policy
only may be changed following provision of at least 60 days prior notice to
shareholders. All-Star may lend its portfolio securities, write covered call and
put options and engage in options and futures strategies (see "Investment
Practices").

     Although under normal market conditions All-Star will remain substantially
fully invested in equity securities, up to 20% of the value of All-Star's net
assets may generally be invested in short-term money market instruments,
including certificates of deposit (negotiable certificates issued against bank
deposits), other interest-bearing bank deposits such as savings and money market
accounts, and bankers' acceptances (short-term bank-guaranteed credit
instruments used to finance transactions in goods) of domestic branches of U.S.
banks having assets of not less than $1 billion, obligations issued or
guaranteed by the U.S. Government and its agencies and instrumentalities ("U.S.
Government Securities"), commercial paper (unsecured short-term promissory notes
issued by corporations) rated not lower than A-1 by Standard & Poor's, a
division of the McGraw-Hill Companies, Inc. ("S&P"), or Prime-1 by Moody's
Investors Service, Inc. ("Moody's"), short-term corporate debt securities rated
not lower than AA by S&P or AA by Moody's, and repurchase agreements with
respect to the foregoing (collectively, "Short-Term Money Market Instruments").
All-Star may temporarily invest without limit in Short-Term Money Market
Instruments for defensive purposes when AAI or the Portfolio Managers deem that
market conditions are such that a more conservative approach to investment is
desirable. Taking a temporary defensive position may prevent All-Star from
achieving its investment objective.

     All-Star's investment objective of seeking total investment return and its
policy of investing under normal market conditions at least 80% of the value of
its net assets (plus borrowings for investment purposes) in equity securities,
as well as certain of its investment restrictions referred to under "Reducing
Investment Risk" and in the Statement of Additional Information, are fundamental
and may not be changed without a majority vote of All-Star's outstanding Shares.
Under the 1940 Act, a "majority vote" means the vote of the lesser of (a) 67% of
the Shares of All-Star represented at a meeting at which the holders of more
than 50% of the outstanding Shares of All-Star are present or represented, or
(b) more than 50% of the outstanding Shares of All-Star. Non-fundamental
policies may be changed by vote of the Board of Trustees.

INVESTMENT PRACTICES

     The following describes certain of the investment practices in which one or
more of the Portfolio Managers may engage, each of which may involve certain
special risks.

     LENDING OF PORTFOLIO SECURITIES. Although All-Star has not to date engaged
in securities lending, consistent with applicable regulatory requirements,
All-Star, in order to generate additional income, may lend its portfolio
securities (principally to broker-dealers) where such loans are callable at any

                                       31
<PAGE>

time and are continuously secured by collateral (cash or U.S. Government
Securities) equal to not less than the market value, determined daily, of the
securities loaned. All-Star would receive amounts equal to the interest on the
securities loaned. It would also be paid for having made the loan. Any cash
collateral pursuant to these loans would be invested in Short-Term Money Market
Instruments. All-Star could be subjected to delays in recovering the loaned
securities in the event of default or bankruptcy of the borrower. All-Star will
limit such lending to not more than 30% of the value of All-Star's total assets.
All-Star may pay fees to its custodian bank or others for administrative
services in connection with securities loans.

     REPURCHASE AGREEMENTS. All-Star may enter into repurchase agreements with
banks or broker-dealer firms whereby such institutions sell U.S. Government
Securities or other securities in which it may invest to All-Star and agree at
the time of sale to repurchase them at a mutually agreed upon time and price.
The resale price is greater than the purchase price, reflecting an agreed-upon
interest rate that is effective during the time between the purchase and resale
and is not related to the stated interest rate on the purchased securities.
All-Star requires the seller of the securities to maintain on deposit with
All-Star's custodian bank securities in an amount at all times equal to or in
excess of the value of the repurchase agreement. In the event that the seller of
the securities defaults on its repurchase obligation or becomes bankrupt,
All-Star could receive less than the repurchase price on the sale of the
securities to another party or could be subjected to delays in selling the
securities. Under normal market conditions, not more than 20% of All-Star's net
assets will be invested in Short-Term Money Market Instruments, including
repurchase agreements, and not more than 10% of All-Star's net assets will be
invested in repurchase agreements maturing in more than seven days.

     SECURITIES OF OTHER INVESTMENT COMPANIES. All-Star may invest in the
securities of other investment companies, including open-end mutual funds,
closed-end funds, unit investment trusts, private investment companies and
offshore investment companies. An investment in an investment company involves
risks similar to those of investing directly in the investment company's
portfolio securities, including the risk that the value of the portfolio
securities may fluctuate in accordance with changes in the financial condition
of their issuers, the value of stocks and other securities generally, and other
market factors.

     In addition, investing in other investment companies involves certain other
risks, costs, and expenses for All-Star. If All-Star invests in another
investment company, All-Star will be charged its proportionate share of the
advisory fees and other operating expenses of such investment company, which are
in addition to the advisory fees and other operational expenses charged to
All-Star. In addition, All-Star could incur a sales charge in connection with
purchasing an investment company security or a redemption fee upon the
redemption of such security. An investment in the shares of a closed-end
investment company may also involve the payment of a substantial premium over,
while sales of such shares may be made at a substantial discount from, the NAV
of the issuers' portfolio securities. Investments in securities of other
investment companies will be made in compliance with applicable 1940 Act
limitations. To the extent that All-Star invests in the securities of other
investment companies, All-Star's shareholders will indirectly bear a pro rata
share of the investment company's expenses in addition to the expenses
associated with an investment in All-Star. All-Star may invest in investment
companies managed by AAI or other affiliates of AAI.

                                       32
<PAGE>

     EXCHANGE-TRADED FUNDS. All-Star may invest in exchange traded funds
("ETFs"). ETFs are ownership interests in unit investment trusts, depositary
receipts, and other pooled investment vehicles that are traded on an exchange
and that hold a portfolio of securities or stocks (the "Underlying Securities").
The Underlying Securities are typically selected to correspond to the stocks or
other securities that comprise a particular broad based, sector or international
index, or that are otherwise representative of a particular industry sector. An
investment in an ETF involves risks similar to investing directly in each of the
Underlying Securities, including the risk that the value of the Underlying
Securities may fluctuate in accordance with changes in the financial condition
of their issuers, the value of stocks and other securities generally, and other
market factors.

     The performance of an ETF will be reduced by transaction and other
expenses, including fees paid by the ETF to service providers. Investors in ETFs
are eligible to receive their portion of dividends, if any, accumulated on the
securities held in the portfolio, less fees and expenses of the ETF. Typically,
ETFs are investment companies. However, the term is used in the industry in a
broad way to include securities issued by entities that are not investment
companies. To the extent an ETF is an investment company, the limitations
applicable to All-Star's ability to purchase securities issued by other
investment companies will apply.

     OPTIONS AND FUTURES STRATEGIES. All-Star may seek to increase the current
return of All-Star's portfolio by writing covered call or put options with
respect to the types of securities in which All-Star is permitted to invest.
Call options written by All-Star give the purchaser the right for a stated
period to buy the underlying securities from All-Star at a stated price; put
options written by All-Star give the purchaser the right for a stated period to
sell the underlying securities to All-Star at a stated price. By writing a call
option, All-Star limits its opportunity to profit from any increase in the
market value of the underlying security above the exercise price of the option;
by writing a put option, All-Star assumes the risk that it may be required to
purchase the underlying security at a price in excess of its current market
value.

     All-Star may purchase put options to protect its portfolio holdings in the
underlying security against a decline in market value. It may purchase call
options to hedge against an increase in the prices of portfolio securities that
it plans to purchase. By purchasing put or call options, All-Star, for the
premium paid, acquires the right (but not the obligation) to sell (in the case
of a put option) or purchase (in the case of a call option) the underlying
security at the option exercise price, regardless of the then current market
price.

     All-Star may also seek to hedge against declines in the value of securities
owned by it or increases in the price of securities it plans to purchase, or to
gain or maintain market exposure, through the purchase of stock index futures
and related options. For example, All-Star may purchase stock index futures and
related options to enable a newly appointed Portfolio Manager to gain immediate
exposure to underlying securities markets pending the investment of the portion
of All-Star's portfolio assigned to it. A stock index future is an agreement in
which one party agrees to deliver to the other an amount of cash equal to a
specific dollar amount times the difference between the value of the specific
stock index at the close of the last trading day of the contract and the price
at which the agreement is made.

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<PAGE>

     Expenses and losses incurred as a result of the hedging strategies
described above will reduce All-Star's current return.

     Transactions in options and futures contracts may not achieve the intended
goals of protecting portfolio holdings against market declines or gaining or
maintaining market exposure, as applicable, to the extent that there is an
imperfect correlation between the price movements of the options and futures
contracts and those of the securities to be hedged. In addition, if a Portfolio
Manager's prediction on stock market movements is inaccurate, All-Star may be
worse off than if it had not engaged in such options or futures transactions.

     See the Statement of Additional Information for additional information
concerning options and futures transactions and the risks thereof.

RISKS

     All-Star is a diversified, multi-managed closed-end management investment
company designed primarily as a long-term investment and not as a trading
vehicle. All-Star is not intended to be a complete investment program and there
can be no assurance that All-Star will achieve its investment objective.

INVESTMENT AND MARKET RISK

     An investment in All-Star's Shares is subject to investment risk, including
the possible loss of the entire amount that you invest. Your investment in
Shares represents an indirect investment in the securities owned by All-Star,
most of which are 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. Your
Shares at any point in time may be worth less than your original investment,
even after taking into account the reinvestment of dividends and other
distributions.

MARKET DISCOUNT RISK

     In addition, shares of closed-end management investment companies such as
All-Star frequently trade at a discount from their NAV. The Shares were designed
primarily for long-term investors, and investors in Shares should not view
All-Star as a vehicle for trading purposes. This risk is separate and distinct
from the risk that All-Star's NAV may decline. See "Share Price Data" for
information about the market price and NAV of All-Star's Shares since January 1,
2005.

COMMON STOCK RISK

     All-Star 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 All-Star is equity risk. Equity risk is the risk that the market
value of securities held by All-Star will fall due to general market or economic
conditions, perceptions regarding the industries in which the issuers of
securities held by All-Star participate, and the particular circumstances and
performance of particular companies whose securities All-Star holds. For
example: an adverse event, such as an unfavorable earnings report, may depress
the value of equity securities of an issuer held by All-Star; the price of
common stock of an issuer may be particularly sensitive to general movements in

                                       34
<PAGE>

the stock market; or a drop in the stock market may depress the price of most or
all of the common stocks and other equity securities held by All-Star. In
addition, common stock of an issuer in All-Star'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 All-Star 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
those returns.

PREFERRED SECURITIES RISK

     Preferred equity securities involve credit risk, which is the risk that a
preferred equity security will decline in price, or fail to pay dividends when
expected, because the issuer experiences a decline in its financial status. In
addition to credit risk, investment in preferred equity securities involves
certain other risks. Certain preferred equity securities contain provisions that
allow an issuer under certain conditions to skip distributions (in the case of
"non-cumulative" preferred equity securities) or defer distributions (in the
case of "cumulative" preferred equity securities). Preferred equity securities
often contain provisions that allow for redemption in the event of certain tax
or legal changes or at the issuer's call. In the event of redemption, All-Star
may not be able to reinvest the proceeds at comparable rates of return.
Preferred equity securities typically do not provide any voting rights, except
in cases when dividends are in arrears beyond a certain time period, which
varies by issue. Preferred equity securities are subordinated to bonds and other
debt instruments in a company's capital structure in terms of priority to
corporate income and liquidation payments, and therefore will be subject to
greater credit risk than those debt instruments. Preferred equity securities may
be significantly less liquid than many other securities, such as U.S. Government
Securities, corporate debt or common stock.

CONVERTIBLE SECURITY RISK

     Convertible securities generally offer lower interest or dividend yields
than non-convertible fixed-income securities of similar credit quality because
of the potential for capital appreciation. The market values of convertible
securities tend to decline as interest rates increase and, conversely, to
increase as interest rates decline. However, a convertible security's market
value also tends to reflect the market price of the common stock of the issuing
company, particularly when the stock price is greater than the convertible
security's conversion price. The conversion price is defined as the
predetermined price or exchange ratio at which the convertible security can be
converted or exchanged for the underlying common stock. As the market price of
the underlying common stock declines below the conversion price, the price of
the convertible security tends to be increasingly influenced more by the yield
of the convertible security than by the market price of the underlying common
stock. Thus, it may not decline in price to the same extent as the underlying
common stock, and convertible securities generally have less potential for gain
or loss than common stocks. However, mandatory convertible securities (as

                                       35
<PAGE>

discussed below) generally do not limit the potential for loss to the same
extent as securities convertible at the option of the holder. In the event of a
liquidation of the issuing company, holders of convertible securities would be
paid before that company's common stockholders. Consequently, an issuer's
convertible securities generally entail less risk than its common stock.
However, convertible securities fall below debt obligations of the same issuer
in order of preference or priority in the event of a liquidation and are
typically unrated or rated lower than such debt obligations. In addition,
contingent payment convertible securities allow the issuer to claim deductions
based on its nonconvertible cost of debt, which generally will result in
deductions in excess of the actual cash payments made on the securities (and
accordingly, holders will recognize income in amounts in excess of the cash
payments received). The convertible securities in which All-Star invests may be
rated below investment grade. See "Risks of Below-Investment Grade Quality
Securities".

CREDIT RISK

     Credit risk is the risk that a security in All-Star's portfolio will
decline in price or fail to make dividend or interest payments when due because
the issuer of the security experiences a decline in its financial status.
Preferred and convertible securities are typically subordinated to 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 credit risk than
those debt instruments.

MANAGEMENT RISK

     All-Star is subject to management risk because it is an actively managed
investment portfolio. AAI and the Portfolio Managers will apply investment
techniques and risk analyses in selecting Portfolio Managers and making
investment decisions for All-Star, respectively, but there can be no guarantee
that these will produce the desired results.

GROWTH STOCK RISK

     Currently, approximately 40% of All-Star's net assets are allocated to
Portfolio Managers that utilize a "growth" approach to investing. Over time,
depending on market conditions, this allocation may increase or decrease. Growth
stocks are stocks of companies believed to have above-average potential for
growth in revenue and earnings. Prices of growth stocks may be more sensitive to
changes in current or expected earnings than the prices of other stocks. In
certain market conditions, growth stocks may not perform as well as value stocks
or the stock market in general.

VALUE STOCK RISE

     Currently, approximately 60% of All-Star's net assets are allocated to
Portfolio Managers that utilize a "value" approach to investing. Over time,
depending on market conditions, this allocation may increase or decrease. Value
stocks are stocks of companies that may have experienced adverse business or
industry developments or may be subject to special risks that have caused the
stocks to be out of favor and, in a Portfolio Manager's opinion, undervalued. If
the Portfolio Manager's assessment of a company's prospects is wrong, the price
of the company's stock may fall or may not approach the value the Portfolio
Manager has placed on it.

                                       36
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FOREIGN SECURITIES RISK

     Investments in foreign securities involve risks in addition to those of
investments in securities of U.S. issuers. These risks include political and
economic risks, currency fluctuations, higher transaction costs, less liquidity
and greater volatility, delayed settlement, confiscatory taxation, withholding
of taxes and less stringent investor protection and disclosure of standards in
some foreign markets. These risks can make investments in foreign issuers more
volatile and potentially less liquid than investments in U.S. issuers.

TAX RISK

     All-Star may invest in preferred securities, convertible securities or
other securities the federal income tax treatment of the income from which may
not be clear or may be subject to recharacterization by the IRS.

     The tax treatment of distributions All-Star designates as "qualified
dividend income" may be affected by IRS interpretations of the Code and future
changes in the Code and the regulations thereunder. Moreover, unless legislative
action is taken, the favorable tax treatment of qualified dividend income, as
well as the 15% maximum federal income tax rate on individuals' net capital
gain, will expire for taxable years commencing after December 31, 2010. See "Tax
Matters". If All-Star has significant holdings in securities that generate
qualified dividend income, its Share price may be volatile while Congress
considers an extension of that favorable tax treatment, depending on the
anticipated outcome of the legislation. There can be no assurance as to what
portion, if any, of All-Star's distributions will constitute qualified dividend
income.

MARKET DISRUPTION RISK

     Certain events have a disruptive effect on the securities markets, such as
terrorist attacks (including the terrorist attacks in the United States on
September 11, 2001), war and other geopolitical events. All-Star cannot predict
the effects of similar events in the future on the U.S. economy.

INFLATION RISK

     Inflation risk is the risk that the value of assets or income from
investment will be worth less in the future as inflation decreases the value of
money. As inflation increases, the real value of All-Star's shares and
distributions can decline.

DEFLATION RISK

     Deflation risk is the risk that prices throughout the economy decline over
time, which may have an adverse effect on the market valuation of companies,
their assets and revenues. In addition, deflation may have an adverse effect on
the creditworthiness of issuers and may make issuer default more likely, which
may result in a decline in the value of All-Star's portfolio.

                                       37
<PAGE>

                             MANAGEMENT OF ALL-STAR

TRUSTEES AND OFFICERS

     The Board of Trustees is responsible for the general oversight of
All-Star's operations, including the general oversight of AAI's and the
Portfolio Managers' management of All-Star. The names and business addresses of
the Trustees and officers of All-Star and their principal occupations during the
past five years are set forth under "Trustees and Officers" in the Statement of
Additional Information.

AAI

     AAI, 1290 Broadway, Suite 1100, Denver, CO 80203, is the Fund's investment
adviser. AAI acts as the investment adviser to registered investment companies
with aggregate assets of approximately $1.5 billion as of December 31, 2006. AAI
is a wholly-owned subsidiary of ALPS, a Denver, Colorado-based company that
provides a wide range of fund services, including fund administration, fund
distribution and fund accounting. ALPS and its affiliates provide fund
administration services to funds with assets in excess of $13 billion and
distribution services to funds with assets in excess of $120 billion.

THE PORTFOLIO MANAGERS

     See Appendix A for information about All-Star's current Portfolio Managers,
including the employees who are primarily responsible for the day-to-day
management of All-Star's portfolio. The Statement of Additional Information
contains additional information about these individuals, including their
compensations, other accounts managed by them and their ownership of securities
in All-Star.

THE FUND MANAGEMENT AGREEMENT AND THE PORTFOLIO MANAGEMENT AGREEMENTS

     All-Star has a Fund Management Agreement with AAI pursuant to which AAI
implements and operates the Fund's multi-manager methodology and has overall
supervisory responsibility for the general management and investment of the
Fund's assets, subject to the Fund's investment objectives and policies and any
directions of the Board of Trustees. AAI recommends to the Board of Trustees the
investment management firms (currently five) for appointment as Portfolio
Managers of All-Star. (See "The Multi-Manager Methodology "). No single
individual at AAI is responsible for AAI's decisions with respect to the
retention or replacement of the Portfolio Managers.

     Under All-Star's Portfolio Management Agreements with each of its Portfolio
Managers and AAI, each Portfolio Manager has discretionary authority (including
for the selection of brokers and dealers for the execution of All-Star's
portfolio transactions) with respect to the portion of All-Star's assets
allocated to it by AAI from time to time, subject to All-Star's investment
objective and policies, to the supervision and control of the Board of Trustees,
and to instructions from AAI. As described under the section entitled "The
Multi-Manager Methodology," AAI from time to time reallocates All-Star's
portfolio assets in order to maintain an approximately equal allocation among
the Portfolio Managers and to preserve an approximately equal weighting among
the different investment styles practiced by the Portfolio Managers. Although

                                       38
<PAGE>

the Portfolio Managers' activities are subject to general oversight by AAI, the
Board of Trustees and officers of All-Star, none of AAI, the Board of Trustees
or officers evaluate the investment merits of the Portfolio Managers' selections
of individual securities. See Appendix A for a description of the Portfolio
Managers.

     Although All-Star does not permit a Portfolio Manager to act or have a
broker-dealer affiliate act as broker for All-Star's portfolio transactions
initiated by it, the Portfolio Managers are permitted to place portfolio
transactions initiated by them with another Portfolio Manager or its
broker-dealer affiliate for execution on an agency basis, provided the
commission does not exceed the usual and customary broker's commission being
paid to other brokers for comparable transactions and is otherwise in accordance
with All-Star's procedures adopted under Rule 17e-1 under the 1940 Act.

     Under All-Star's Fund Management Agreement with AAI and its Portfolio
Management Agreements with the Portfolio Managers, All-Star pays AAI a fund
management fee, and AAI in turn pays the fees of the Portfolio Managers from the
fund management fees paid to it. The annual fees that are paid under the current
agreements are shown below (fees are payable monthly based on the indicated
percentage of All-Star's average daily net assets during the prior month).

                                   Fund Management Fee Paid to AAI and Portfolio
Average Daily NAV                  Management Fee Paid to Portfolio Managers
- -----------------                  -----------------------------------------

First $400 million                 0.800% (0.400% to Portfolio Managers)

Next $400 million                  0.720% (0.360% to Portfolio Managers)

Next $400 million                  0.648% (0.324% to Portfolio Managers)

Over $1.2 billion                  0.584% (0.292% to Portfolio Managers)

     A discussion regarding the basis for the Board of Trustees approving the
Fund Management Agreement and the Portfolio Management Agreements is available
in All-Star's annual report for the year ended December 31, 2006.

CUSTODIAN, TRANSFER AGENT AND ADMINISTRATOR, PRICING AND BOOKKEEPING AGENT

     State Street Bank & Trust Company, One Lincoln Street, Boston,
Massachusetts 02111, is All-Star's custodian. Computershare Trust Company, N.A.,
P.O. Box 43078, Providence, Rhode Island 02940 is All-Star's transfer and
dividend disbursing agent and registrar.

     AFS, 1290 Broadway, Suite 1100 Denver, Colorado 80203 provides
administrative services to All-Star under an Administration, Bookkeeping and
Pricing Services Agreement with All-Star. AFS is an affiliate of AAI and a
wholly owned subsidiary of ALPS.

     Under All-Star's Fund Administration Agreement with AFS, All-Star pays AFS
an administrative fee. The annual fee that is paid under the current agreement

                                       39
<PAGE>

is shown below (fees are payable monthly based on the indicated percentage of
All-Star's average daily net assets during the prior month).

Average Daily NAV                            Fund Administrative Fee Paid to AFS
- -----------------                            -----------------------------------

First $400 million                           0.200%

Next $400 million                            0.180%

Next $400 million                            0.162%

Over $1.2 billiion                           0.146%

     Under All-Star's Pricing and Bookkeeping agreement with AFS, AFS receives
from the Fund an annual fee consisting of: (i) $38,000 paid monthly plus an
additional monthly fee based on the level of average daily net assets for the
month; and (ii) a multi-manager fee based on the number of portfolio managers;
provided that during any 12-month period, the aggregate amount of (i) shall not
exceed $140,000 (exclusive of out-of-pocket expenses and charges). All-Star also
reimburses AFS 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 AFS in connection with providing fund accounting oversight and
monitoring and certain other services.

EXPENSES OF THE FUND

     AAI provides the Portfolio Manager selection, evaluation, monitoring and
rebalancing services, pays the compensation of and furnishes office space for
the officers of All-Star who are affiliated with AAI, and pays the management
fees of the Portfolio Managers. All-Star pays all its expenses, other than those
expressly assumed by AAI. The expenses payable by All-Star include: management
fees payable to AAI; administrative, bookkeeping and pricing fees payable to
AFS; fees and expenses of the independent registered public accounting firm;
fees for transfer agent and registrar, dividend disbursing, custodian and
portfolio recordkeeping services; expenses in connection with the Automatic
Dividend Reinvestment and Cash Purchase Plan; expenses in connection with
obtaining quotations for calculating the value of All-Star's net assets; taxes
(if any) and the preparation of All-Star's tax returns; brokerage fees and
commissions; interest; costs of trustee and shareholder meetings (including
expenses of printing and mailing proxy material therefor); expenses of printing
and mailing reports to shareholders; fees for filing reports with regulatory
bodies and the maintenance of All-Star's existence; membership dues for
investment company industry trade associations; legal fees; stock exchange
listing fees and expenses; fees to federal and state authorities for the
registration of Shares; fees and expenses of Trustees who are not trustees,
officers, employees or stockholders of AAI or its affiliates; insurance and
fidelity bond premiums; and any extraordinary expenses of a non-recurring
nature.

                                       40
<PAGE>

                              DESCRIPTION OF SHARES

GENERAL

     All-Star's authorized capitalization consists of an unlimited number of
Shares of beneficial interest without par value, of which [ ] Shares were issued
and outstanding on the date of this prospectus. The currently outstanding Shares
are, and the Shares offered hereby when issued and paid for pursuant to the
terms of the Offer will be, fully paid and non-assessable. Shareholders would be
entitled to share pro rata in the net assets of All-Star available for
distribution to shareholders upon liquidation of All-Star.

     Shareholders are entitled to one vote for each Share held. All-Star's
Shares do not have cumulative voting rights, which means that the holders of
more than 50% of the Shares voting for the election of Trustees can elect all
the Trustees standing for election, and, in such event, the holders of the
remaining Shares will not be able to elect any of such Trustees.

REPURCHASE OF SHARES

     All-Star is a closed-end investment company and as such its shareholders do
not have the right to cause All-Star to redeem their Shares. All-Star, however,
is authorized to repurchase its Shares on the open market when its Shares are
trading at a discount from their NAV. All-Star has no current plans to
repurchase its Shares.

ANTI-TAKEOVER PROVISIONS OF THE DECLARATION OF TRUST; SUPER-MAJORITY VOTE
REQUIREMENT FOR CONVERSION TO OPEN-END STATUS

     All-Star's Declaration of Trust contains provisions (commonly referred to
as "anti-takeover" provisions) which are intended to have the effect of limiting
the ability of other entities or persons to acquire control of All-Star, to
cause it to engage in certain transactions, or to modify its structure. The
Board of Trustees is divided into three classes, each having a term of three
years. On the date of the annual meeting of shareholders in each year the term
of one class expires. This provision could delay for up to three years the
replacement of a majority of the Board of Trustees. The affirmative vote of 75%
of the Shares will be required to authorize All-Star's conversion from a
closed-end to an open-end investment company, unless such conversion is
recommended by the Board of Trustees, in which event such conversion would only
require the majority vote of All-Star's shareholders (as defined under
"Investment Objective, Policies and Risks" above).

     In addition, the affirmative vote of the holders of 75% of the Shares of
the Fund will be required generally to authorize any of the following
transactions:

     (i)     All-Star's merger or consolidation with or into any other
             corporation;

     (ii)    the issuance of any securities of All-Star to any person or entity
             for cash;

     (iii)   the sale, lease or exchange of all or any substantial part of
             All-Star's assets to any entity or person (except assets having an
             aggregate fair market value of less than $1,000,000); or

                                       41
<PAGE>

     (iv)    the sale, lease or exchange to All-Star, in exchange for securities
             of All-Star, of any assets of any entity or person (except assets
             having an aggregate fair market value of less than $1,000,000);

if such corporation, person or entity is directly, or indirectly through
affiliates, the beneficial owner of 5% or more of the outstanding Shares of
All-Star. (A 66 2/3% vote would otherwise be required for a merger or
consolidation or a sale, lease or exchange of all or substantially all of
All-Star's assets unless recommended by the Board of Trustees, in which case
only a majority vote would be required). However, such 75% vote will not be
required with respect to the transactions listed in (i) through (iv) above where
the Board of Trustees under certain conditions approves the transaction.
However, depending upon the transaction, a different shareholder vote may
nevertheless be required under Massachusetts law.

     The foregoing super-majority vote requirements may not be amended except
with a similar supermajority vote of the shareholders.

     These provisions will make more difficult a change in All-Star's structure
or management or consummation of the foregoing transactions without the Board of
Trustees' approval. The anti-takeover provisions could have the effect of
depriving shareholders of an opportunity to sell their Shares at a premium over
prevailing market prices by discouraging a third party from seeking to obtain
control of All-Star in a tender offer or similar transaction. However, the Board
of Trustees continues to believe that the anti-takeover provisions are in the
best interests of All-Star and its shareholders because they provide the
advantage of potentially requiring persons seeking control of All-Star to
negotiate with its management regarding the price to be paid and facilitating
the continuity of All-Star's management and its continuing application of the
multi-manager concept.

     The Board of Trustees also believes that the super-majority vote
requirement for conversion to an open-end investment company is in the best
interest of All-Star and its shareholders because it will allow All-Star to
continue to benefit from the advantages of its closed-end structure until such
time that, based on relevant factors including the then current relationship of
the market price of the Shares to their NAV, the Board of Trustees determines to
recommend to shareholders All-Star's conversion to an open-end investment
company.

     In accordance with the Declaration of Trust, the question of conversion to
an open-end investment company was submitted to the vote of shareholders at
All-Star's 1993 annual meeting held on April 6, 1993, such conversion then
requiring only the affirmative vote of a majority of All-Star's Shares (as
defined in the 1940 Act). In accordance with the Board of Trustees'
recommendation, shareholders, by a substantial majority, rejected the conversion
proposal and approved an amendment to All-Star's Declaration of Trust
instituting the 75% super-majority vote referred to above for any future
conversion to open-end status.

                                       42
<PAGE>

                        DISTRIBUTIONS; AUTOMATIC DIVIDEND
                       REINVESTMENT AND CASH PURCHASE PLAN

10% DISTRIBUTION POLICY

     All-Star currently has a policy of paying distributions on its Shares
totaling approximately 10% of its NAV per year, payable in four quarterly
distributions of 2.5% of its NAV at the close of the NYSE on the Friday prior to
each quarterly declaration date. These fixed distributions, which are not
necessarily related to All-Star's net investment income or net realized capital
gains or losses, are taxable in any taxable year, up to the amount of All-Star's
E&P as ordinary dividend income (which includes not only net investment income
but also short-term gains), "qualified dividend income" (taxable at a maximum
15% federal income tax rate for individuals), or long term capital gain to the
extent they are attributable to such income or gain All-Star earned for that
year. (See "Tax Matters"). If, for any taxable year, the total distributions
made under All-Star's distribution policy exceed its E&P, the excess will be
treated as a non-taxable return of capital to each shareholder (up to the amount
of the shareholder's basis in his or her shares) and thereafter as gain from the
sale of Shares. The amount treated as a non-taxable return of capital will
reduce the shareholder's adjusted basis in his or her Shares, thereby increasing
his or her potential gain or reducing his or her potential loss on the
subsequent sale of those Shares. In any given year, the Board of Trustees may
decide to distribute more than 10% of All-Star's net assets if necessary for tax
purposes. Shareholders should read any written disclosure accompanying a
distribution carefully and should not assume that the source of any distribution
from the Fund is net profit.

     To the extent All-Star's distribution policy results in distributions in
excess of its net investment income and net realized capital gains, such
distributions will decrease its total assets and increase its expense ratio to a
greater extent than would have been the case without the distribution policy. In
addition, in order to make distributions under the distribution policy, All-Star
may have to sell portfolio securities at times when the particular investment
styles of its Portfolio Managers would dictate not doing so.

     Subject to maintaining its status as a RIC (See "Tax Matters"), All-Star
may, in the discretion of the Board of Trustees, retain for reinvestment, and
not distribute net investment income or net capital gain for any taxable year to
the extent that its net investment income and net realized gains exceed the
amount to be distributed for that year under the distribution policy. Retained
net capital gain will be taxed to All-Star and designated by it as long-term
capital gains within 60 days after the end of the taxable year in which the
gains were recognized. Under these circumstances, each shareholder will be
required to include in gross income a proportionate share of the gain but will
be able to claim a proportionate share of the federal income tax paid by
All-Star as a credit against his or her own federal income tax liability and
will be entitled to increase the adjusted tax basis in his or her shares by the
difference between the amount taxed and the credit.

     All-Star intends to pay all or a substantial portion of its distributions
in each year in the form of newly issued Shares (plus cash in lieu of any
fractional Shares that would otherwise be issuable) to all Shareholders, except
as otherwise noted below.

                                       43
<PAGE>

     The number of Shares to be issued to a shareholder in payment of a
distribution declared payable in Shares will be determined by dividing the total
dollar amount of the distribution by the lower of the market value or the NAV
per Share on the valuation date for the distribution (but not at a discount of
more than 5% from the market value). Market value per Share for this purpose
will be the last sales price on the NYSE on the valuation date or, if there are
no sales on that day, the mean between the closing bid and closing asked
quotations for that date.

     You should consult a tax adviser about state, local and foreign taxes on
your distributions from All-Star.

AUTOMATIC DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN

     Under the Plan, shareholders whose Shares are registered in their own name
may elect to participate in the Plan and have all distributions automatically
reinvested by Computershare Trust Company, N.A., as agent for participants in
the Plan (the "Plan Agent"), in additional Shares. Shareholders who do not elect
to participate in the Plan will receive all distributions (other than those
declared payable in Shares as described above) in cash.

     Under the Plan, 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 the market value or the
NAV per Share on the valuation date for the distribution (but not a discount of
more than 5% from the market value). 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, on the NYSE or elsewhere, at
prevailing market prices (if Shares are trading at a discount to their NAV) or
in newly issued shares (if Shares are trading at or above their NAV). Dividends
and distributions are subject to taxation, whether received in cash or in
Shares. See "Tax Matters".

     Participants in the Plan have the option of making additional cash payments
in any amount on a monthly basis for investment in Shares purchased on the open
market. These voluntary cash payments will be invested on or about the 15th day
of each month, and voluntary payments should be sent so as to be received by the
Plan Agent no later than ten business 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.

     In the case of banks, brokers or nominees that hold Shares for others who
are the beneficial owners, the Plan Agent will administer the Plan on the basis
of the number of Shares certified from time to time by the record shareholder as
representing the total amount registered in the record shareholder's name and
held for the account of beneficial owners who participate in the Plan.

                                       44
<PAGE>

     There is no charge to participants for reinvesting distributions payable in
either Shares or cash. The Plan Agent's fees for handling the reinvestment of
such distributions are paid by All-Star. There are no brokerage charges with
respect to Shares issued directly by All-Star as a result of distributions
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
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.

     The automatic reinvestment of dividends and other distributions will not
relieve plan participants of any income tax that may be payable thereon. See
"Tax Matters".

     A participant may elect to withdraw from the Plan at any time by notifying
the Plan Agent in writing. There will be no penalty for withdrawal from the
Plan, and shareholders who have previously withdrawn from the Plan may rejoin it
at any time. A withdrawal will be effective only for subsequent distributions
with a record date at least ten days after the notice of withdrawal is received
by the Plan Agent.

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

                                   TAX MATTERS

     The following discussion briefly summarizes the general rules applicable to
taxation of All-Star and its shareholders. Shareholders are urged to consult
with their own tax advisers concerning the tax consequences of their continued
investment in All-Star and of their receipt and exercise of the Rights.

     All-Star has elected to be, and intends to continue to qualify each year
for federal income tax treatment as a regulated investment company ("RIC"). As a
result, it is expected that All-Star will be relieved of federal income tax on
its net investment income and net realized capital gains to the extent it
distributes them to its shareholders. (See "Distributions; Automatic Dividend
Reinvestment and Cash Purchase Plan--10% Distribution Policy" regarding
All-Star's authority to retain and pay taxes on net investment income and net
capital gain).

     To avoid incurring a 4% federal excise tax, All-Star must distribute (or be
deemed to have distributed) by December 31 of each calendar year an amount at
least equal to the sum of (i) 98% of its ordinary income for such year plus (ii)
98% of its capital gain net income (which is the excess of its realized capital
gain over its realized capital loss), generally computed on the basis of the
one-year period ending on October 31 of such year, after reduction by any
available capital loss carryforwards, plus 100% of any ordinary income and
capital gain net income from the prior year (as so computed) that were not paid
out during such year and on which All-Star paid no federal income tax. All-Star
also expects to make sufficient annual distributions to avoid being subject to

                                       45
<PAGE>

that excise tax. Under current law, provided that All-Star qualifies as a RIC
for federal tax purposes, All-Star should not be liable for any income,
corporate excise or franchise tax in the Commonwealth of Massachusetts.

     If All-Star fails to qualify for treatment as a RIC in any taxable year, it
would incur federal corporate income tax on the full amount of its taxable
income for that year (even if it distributed that income to its shareholders),
and its distributions (including distributions of net capital gain) would be
taxable as ordinary dividend income to the shareholders to the extent of its
E&P. In addition, All-Star could be required to recognize unrealized gains, pay
substantial taxes and interest and make substantial distributions before
requalifying for treatment as a RIC.

     Distributions by All-Star from net investment income and net realized
capital gains are subject to taxation whether received by shareholders in cash
or in Shares. Shareholders receiving a dividend or other distribution in the
form of newly issued Shares will be treated for federal income tax purposes as
receiving a distribution in an amount equal to the fair market value, determined
as of the distribution date, of the Shares received. Such shareholders will have
a cost basis in each newly issued Share equal to the fair market value of a
Share on the distribution date. Distributions are generally taken into account
for tax purposes when paid, except that distributions paid in January but
declared in the last quarter of the preceding calendar year may be taken into
account as if paid on December 31 of such preceding calendar year. A portion of
All-Star's net investment income paid to corporate shareholders that is
attributable to dividends from domestic corporations may be eligible for the 70%
dividends-received deduction available to corporations. Availability of the
deduction for particular corporate shareholders is subject to certain
limitations, and deducted amounts may be subject to the federal alternative
minimum tax or result in certain basis adjustments. Distributions from net
capital gain are taxable as long-term capital gains, regardless of how long the
shareholder has held the Shares, and are not eligible for the dividends-received
deduction.

     The U.S. federal income tax rate on net capital gain recognized by
individuals is currently 15% (or 5% for individuals in the 10% or 15% tax
brackets). Certain income dividends paid by All-Star to individual taxpayers
will also be taxed at these reduced rates if the shareholder satisfies certain
holding period and other requirements with respect to the shareholder's Shares
and the dividends are attributable to qualified dividend income received by
All-Star. For this purpose, "qualified dividend income" means dividends received
by All-Star from U.S. corporations and "qualified foreign corporations," (as
described below), provided that All-Star satisfies certain holding period and
other requirements with respect to the stock of such corporations. In the case
of securities lending transactions, payments in lieu of dividends are not
qualified dividend income. Dividends received by All-Star from real estate
investment trusts are qualified dividends only in limited circumstances. These
special rules relating to the taxation of dividends of qualified dividend income
from RICs generally apply to taxable years beginning before January 1, 2011.
Thereafter, All-Star's dividends, other than capital gain dividends, will be
fully taxable at ordinary income tax rates unless further Congressional action
is taken.

     A dividend will not be treated as qualified dividend income (whether
received by All-Star or paid by All-Star to a shareholder) if (1) the dividend
is received with respect to any share held for fewer than 61 days during the
121-day period beginning on the date that is 60 days before the date on which
such share becomes ex-dividend with respect to such dividend or, in the case of

                                       46
<PAGE>

certain preferred shares, 91 days during the 181-day period beginning 90 days
before such ex-dividend date, (2) to the extent that the recipient is under an
obligation (whether pursuant to a short sale or otherwise) to make related
payments with respect to positions in substantially similar or related property,
or (3) if the recipient elects to have the dividend treated as investment income
for purposes of the limitation on deductibility of investment interest.

     Subject to certain exceptions, a "qualified foreign corporation" is any
foreign corporation that is either (1) incorporated in a possession of the
United States (the "possessions test") or (2) eligible for benefits of a
comprehensive income tax treaty with the United States, that the Secretary of
the Treasury determines is satisfactory for these purposes and that includes an
exchange of information program (the "treaty test"). The Secretary of the
Treasury has identified a substantial number of tax treaties between the United
States and other countries that satisfy the treaty test.

     Subject to the same exceptions, a foreign corporation that does not satisfy
either the possessions test or the treaty test will still be considered a
"qualified foreign corporation" with respect to any dividend it pays if the
stock with respect to which such dividend is paid is readily tradable on an
established securities market in the United States ("readily taxable"). The
Treasury Department has issued a notice stating that common or ordinary stock,
or an American Depositary Receipt in respect of such stock, is considered
readily tradable if it is listed on a national securities exchange that is
registered under section 6 of the Securities Exchange Act of 1934, as amended,
or on the NASDAQ Stock Market.

     A qualified foreign corporation does not include any foreign corporation
that, for its taxable year in which the dividend is paid or the preceding
taxable year, is a passive foreign investment company.

     The benefits of the reduced tax rates applicable to net capital gain and
qualified dividend income may be impacted by the application of the alternative
minimum tax to individual shareholders.

     If a Shareholder holds Shares for six months or less, any loss on the sale
of the Shares will be treated as a long-term capital loss to the extent of any
amount reportable by the shareholder as long-term capital gain with respect to
such Shares. Any loss realized on a disposition of Shares may also be disallowed
under rules relating to wash sales.

     Dividends and other distributions on Shares are generally subject to
federal income tax as described herein to the extent they do not exceed
All-Star's E&P, even though such distributions may economically represent a
return of a particular shareholder's investment. Such distributions are likely
to occur with respect to Shares purchased when All-Star's NAV reflects gains
that are either unrealized, or realized but not distributed. Such realized gains
may be required to be distributed even when All-Star's NAV also reflects
unrealized losses. As of June 30, 2007 All-Star's investments had net unrealized
gains of $185,011,855

     Certain distributions All-Star makes after the close of its taxable year
may be "spilled back" and treated as paid by All-Star (except for purposes of

                                       47
<PAGE>

the 4% excise tax) during such taxable year. In such case, shareholders will be
treated as having received such distributions in the taxable year in which they
were actually made.

     Individuals and certain other non-corporate All-Star shareholders may be
subject to 28% withholding on reportable dividends and capital gain
distributions ("backup withholding"). Generally, shareholders subject to backup
withholding will be those for whom a taxpayer identification number and certain
required certifications are not on file with All-Star or who, to All-Star's
knowledge, have furnished an incorrect number. In addition, All-Star is required
to withhold distributions to any shareholder who does not certify to All-Star
that the shareholder is not subject to backup withholding due to notification by
the Internal Revenue Service that the shareholder has under-reported interest or
dividend income.

     Dividends All-Star pays to a foreign shareholder other than a foreign
shareholder whose ownership of shares is effectively connected with a U.S. trade
or business the shareholder carries on and capital gain distributions paid to a
nonresident alien individual who is physically present in the United States for
no more than 182 days during the taxable year generally will be subject to a
federal withholding tax of 30% (or lower treaty rate). The American Jobs
Creation Act of 2004, however, established two categories of dividends,
"short-term capital gain dividends" and "interest-related dividends," that, if
properly designated by All-Star, will be exempt from that tax. "Short-term
capital gain dividends" are dividends that are attributable to short-term
capital gain, computed with certain adjustments. "Interest-related dividends"
are dividends that are attributable to "qualified net interest income"
("qualified interest income" less allocable deductions), which generally
consists of certain original issue discount, interest on obligations "in
registered form," and interest on deposits. The exemption from withholding tax
will apply to short-term capital gain dividends and interest-related dividends
All-Star pays to foreign investors, with certain exceptions, with respect to its
taxable years beginning after December 31, 2004, and before January 1, 2008.

     Information concerning the federal income tax status of All-Star dividends
and other distributions is mailed to shareholders annually.

     Distributions and the transactions referred to in the preceding paragraphs
may be subject to state and local income taxes, and the treatment thereof may
differ from the federal income tax consequences discussed herein. Shareholders
are advised to consult with their tax advisers concerning the application of
state and local taxes.

     See "The Offer--Federal Income Tax Consequences" for a discussion of the
federal income tax consequences regarding the Rights.

                                     GENERAL

     Under the Fund Management Agreement between All-Star and AAI, All-Star may
use the name "Liberty All-Star" or "All-Star" only so long as the Fund
Management Agreement remains in effect. If the Fund Management Agreement is no
longer in effect, All-Star is obligated (to the extent it lawfully can) to cease
using such name or any other name indicating that it is advised by or otherwise
connected with AAI. In addition, AAI may grant the non-exclusive right to use

                                       48
<PAGE>

the name "Liberty All-Star" or "All-Star" to any other entity, including any
other investment company of which AAI or any of its affiliates is the investment
adviser or distributor.

                       STATEMENT OF ADDITIONAL INFORMATION

     Additional information about All-Star is contained in the Statement of
Additional Information, a copy of which is available at no charge by calling the
Information Agent at the telephone number indicated on the cover of this
prospectus. Set forth below is the Table of Contents of the Statement of
Additional Information.

                                       49
<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE

INVESTMENT OBJECTIVE AND POLICIES..............................................1

INVESTMENT RESTRICTIONS.......................................................11

INVESTMENT ADVISORY AND OTHER SERVICES........................................13

PROXY VOTING..................................................................15

TRUSTEES AND OFFICERS.........................................................15

PORTFOLIO SECURITY TRANSACTIONS...............................................35

TAXES.........................................................................36

PRINCIPAL SHAREHOLDERS........................................................39

FINANCIAL STATEMENTS..........................................................39

APPENDIX A:  PROXY VOTING GUIDELINES.........................................A-1

                                       50
<PAGE>

              APPENDIX A: INFORMATION ABOUT THE PORTFOLIO MANAGERS

                 CHASE INVESTMENT COUNSEL CORPORATION ("CHASE")

                          300 PRESTON AVENUE, SUITE 403
                            CHARLOTTESVILLE, VA 22902

     The portion of All-Star allocated to Chase is managed by a team of
investment professionals directed by David B. Scott, Senior Vice President and
Chief Investment Officer.

     Mr. Scott earned his BA in 1977 and a MBA with Honors in 1980 from the
College of William and Mary. Before joining Chase in 1994, he had 15 years of
experience as an analyst and portfolio manager. He has earned the right to use
the CFA Institute Chartered Financial Analyst designation and is a member of the
Richmond Society of Financial Analysts.



                     MATRIX ASSET ADVISORS, INC. ("MATRIX")

                                747 THIRD AVENUE
                               NEW YORK, NY 10017

     The portion of All-Star allocated to Matrix is managed by David A. Katz,
Head of the Investment Policy Committee. Mr. Katz, CFA, graduated summa cum
laude from Union College with a Bachelor of Arts degree in Economics. He
received a Master of Business Administration degree, with a concentration in
Finance, from New York University Graduate School of Business in 1987,
graduating with distinction. His numerous works on Value Investing have earned
him various awards and distinctions at the undergraduate and graduate levels.
Mr. Katz has earned the right to use the CFA Institute Chartered Financial
Analyst designation. After initially working at Management Asset Corporation
(Westport, CT), Mr. Katz co-founded Value Matrix Management with John M. Gates
in 1986. He served as the firm's Senior Vice President and Chief Investment
Officer and was Head of the Investment Policy Committee. In 1990 he merged the
Value Matrix Management organization into Matrix Asset Advisors. Mr. Katz is the
firm's President and Chief Investment Officer, chairs the Investment Policy
Committee and is a Portfolio Manager/Analyst.

                   PZENA INVESTMENT MANAGEMENT, LLC ("PZENA")

                        120 WEST 45TH STREET, 20TH FLOOR
                               NEW YORK, NY 10036

     The portion of All-Star allocated to Pzena is managed by a team of
portfolio managers. For All-Star, Richard Pzena, John Goetz, and Antonio
DeSpirito III have joint decision-making responsibility and "veto authority"
over any portfolio management decision.

                                       A-1
<PAGE>

     Mr. Pzena is the Founder, Managing Principal, Chief Executive Officer and
Co-Chief Investment Officer of the firm. Prior to forming Pzena Investment
Management in 1995, Mr. Pzena was the Director of U.S. Equity Investments and
Chief Research Officer for Sanford C. Bernstein & Company. He joined Bernstein
in 1986 as an oil industry analyst and was named to the Institutional Investor
All America Research Team from 1988-1990. During 1990 and 1991, Mr. Pzena served
as Chief Investment Officer, Small Cap Equities, and assumed his broader
domestic equity role in 1991. Prior to joining Bernstein, Mr. Pzena worked for
the Amoco Corporation in various financial and planning roles. He earned a B.S.
summa cum laude and an M.B.A. from the Wharton School of the University of
Pennsylvania in 1979 and 1980, respectively.

     Mr. Goetz is a Managing Principal and Co-Chief Investment Officer at the
firm. Prior to joining Pzena Investment Management in 1996, Mr. Goetz held a
range of key positions at Amoco Corporation for over 14 years, most recently as
the Global Business Manager for Amoco's $1 billion polypropylene business where
he had bottom line responsibility for operations and development worldwide.
Prior positions included strategic planning, joint venture investments and
project financing in various oil and chemical businesses. Prior to joining
Amoco, Mr. Goetz had been employed by The Northern Trust Company and Bank of
America. He earned a B.A. summa cum laude in Mathematics and Economics from
Wheaton College in 1979 and an M.B.A. from the Kellogg School at Northwestern
University in 1982.

     Mr. DeSpirito is a Principal and Portfolio Manager of Large Cap Value.
Previously, Mr. DeSpirito was one of the Portfolio Managers of Pzena Investment
Management's Small Cap Value service. Prior to joining Pzena Investment
Management in 1996, Mr. DeSpirito was an Associate in the Corporate Department
at the Boston based law firm of Ropes & Gray. At Ropes & Gray, he advised
clients in the direct television, financial services, fitness, packaging films,
retail, software, and wire and cable industries. Mr. DeSpirito earned a B.S.
summa cum laude from the Wharton School of the University of Pennsylvania in
1990 and a J.D. magna cum laude from Harvard Law School in 1993.

             SCHNEIDER CAPITAL MANAGEMENT CORPORATION ("SCHNEIDER")

                            450 EAST SWEDESFORD ROAD
                                 WAYNE, PA 19087

     The portion All-Star allocated to Schneider is managed by Arnold C.
Schneider III, CFA. Mr. Schneider serves as President and Chief Investment
Officer and manages the portion of All-Star allocated to Schneider. Prior to
founding Schneider, Mr. Schneider was a Senior Vice President and Partner of the
Wellington Management Company. He has earned the right to use the CFA Institute
Chartered Financial Analyst designation. Mr. Schneider received a B.S. in
Finance from the McIntire School of Commerce of the University of Virginia.

     Schneider employs a five-point investment process based on new idea
generation, independent analysis, a ranking system, portfolio construction, and
a rigorous sell discipline. Utilizing a wide range of information sources,
Schneider focuses on identifying promising new investment opportunities.
Database screening is used on a limited basis, and high-priority companies are
sent to Schneider's analysts for in-depth investigation. Schneider's analysis of
investment opportunities includes the construction of comprehensive financial

                                       A-2
<PAGE>

models, the identification of drivers for positive change, contacting management
as necessary and developing objective earnings and valuation estimates. The
output of Schneider's analysis is a target price and expected return for each
company under consideration. Schneider determines a target price for current
holdings and ranks expected returns from high to low. New purchases must rank
above the median in appreciation potential to merit inclusion in the portfolio.

     Schneider constructs a value portfolio with the intent that the best
companies will have a meaningful performance impact. However, Schneider also
employs a rigorous sell discipline to capitalize on success and minimize damage
from mistakes. Sales are most often triggered when a stock approaches its
pre-determined price target.

                    TCW INVESTMENT MANAGEMENT COMPANY ("TCW")

                            865 SOUTH FIGUEROA STREET
                              LOS ANGELES, CA 90017

     The portion of All-Star allocated to TCW is managed by Craig C. Blum, CFA,
Portfolio Manager, Managing Director, US Equities and Stephen A. Burlingame,
Portfolio Manager, Managing Director, US Equities.

     Mr. Blum is Co-Portfolio Manager of the Concentrated Core and Select
Equities investment strategies. He joined TCW in 1999. Prior to joining TCW, Mr.
Blum was a Senior Analyst with FMAC and Capital Markets. Prior to that, he
worked in institutional sales and mortgage-backed securities analysis at Paine
Webber. Mr. Blum began his investment career in 1994 at Merrill Lynch. Mr. Blum
received his Bachelor of Science in Applied Mathematics and Computer Science
from the University of California at Los Angeles (UCLA) in 1993, and his MBA in
Finance from the UCLA Anderson Graduate School of Management in 1999. Mr. Blum
has earned the right to use the CFA Institute Chartered Financial Analyst
designation.

     Mr. Burlingame is Co-Portfolio Manager of the Concentrated Core and Select
Equities investment strategies at TCW. Previously, Mr. Burlingame was a member
of the Concentrated Core/ Select Equities team, having joined TCW in 2000 as a
health care analyst in the US Equity Research group. Prior to joining TCW, Mr.
Burlingame was an analyst with Brandywine Asset Management from 1999 to 2000.
Between 1996 and 1999, Mr. Burlingame completed internships at two different
asset management firms. Mr. Burlingame graduated cum laude from Claremont
McKenna College in 1999 with a Bachelor of Arts degree in Economics and a minor
in Spanish.

                                       A-3
<PAGE>

                                     [LOGO]

                                     LIBERTY
                                    ALL-STAR
                                   EQUITY FUND
                       A MULTI-MANAGED INVESTMENT COMPANY

                                 [__] SHARES OF
                               BENEFICIAL INTEREST
                             ISSUABLE UPON EXERCISE
                             OF RIGHTS TO SUBSCRIBE
                                 FOR SUCH SHARES

                         ------------------------------

                                   PROSPECTUS

                                [________], 2007

<PAGE>



                 SUBJECT TO COMPLETION, DATED [         ], 2007
                                               ---------

                          LIBERTY ALL-STAR EQUITY FUND

                      STATEMENT OF ADDITIONAL INFORMATION

                             [               ], 2007
                              ---------------

      This Statement of Additional Information ("SAI") is not a prospectus, and
should be read in conjunction with the Prospectus of Liberty All-Star Equity
Fund ("All-Star") dated [        ], 2007.  You may obtain copy of the Prospectus
free of charge, by writing to All-Star c/o ALPS Fund Services, Inc., 1290
Broadway, Suite 1100, Denver, CO  80203, or by calling 1-800-542-3863.

                               TABLE OF CONTENTS

                                                                            PAGE

INVESTMENT OBJECTIVE AND POLICIES............................................. 1

INVESTMENT RESTRICTIONS.......................................................11

INVESTMENT ADVISORY AND OTHER SERVICES........................................13

PROXY VOTING..................................................................15

TRUSTEES AND OFFICERS.........................................................15

PORTFOLIO SECURITY TRANSACTIONS...............................................35

TAXES.........................................................................37

PRINCIPAL SHAREHOLDERS........................................................39

FINANCIAL STATEMENTS..........................................................39


NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION ("SEC") NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS SAI IS TRUTHFUL OR COMPLETE.  ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.  A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SEC.
THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE
TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE.  THIS SAI SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.


<PAGE>


                       INVESTMENT OBJECTIVE AND POLICIES

      A description of the investment objective of All-Star and the types of
securities in which it may invest is contained in the Prospectus under
"Investment Objective, Policies and Risks."  What follows is additional
information regarding securities in which All-Star may invest and investment
practices in which it may engage, and additional risks relating thereto.

OPTIONS AND FUTURES STRATEGIES
- ------------------------------

      The effective use of options and future strategies is dependent, among
other things, on All-Star's ability to terminate options and futures positions
at times when it or its Portfolio Managers deem it desirable to do so. Although
All-Star will not enter into an option or futures position unless it believes
that a liquid secondary market exists for such option or future, there is no
assurance that All-Star will be able to effect closing transactions at any
particular time or at an acceptable price. All-Star generally expects that its
options and futures transactions will be conducted on recognized securities
exchanges. In certain instances, however, All-Star may purchase and sell options
in the over-the-counter market. All-Star's ability to terminate option positions
established in the over-the-counter market may be more limited than in the case
of exchange-traded options and may also involve the risk that securities dealers
participating in such transactions would fail to meet their obligations to All-
Star. All-Star may not purchase or sell future contracts and related options if
immediately thereafter the sum of the amount of initial margin deposits on All-
Star's existing futures and premiums paid for such related options would exceed
5% of the market value of All-Star's net assets. Such limitation, however, will
not limit All-Star's loss on such contracts and options, which is potentially
unlimited.

WRITING COVERED PUT AND CALL OPTIONS ON SECURITIES
- --------------------------------------------------

      All-Star may write covered call options and covered put options on
optionable securities of the types in which it is permitted to invest from time-
to-time as its respective Portfolio Managers determine is appropriate in seeking
to attain its objectives. Call options written by All-Star give the holder the
right to buy the underlying securities from All-Star at a stated exercise price;
put options give the holder the right to sell the underlying security to All-
Star at a stated price.

      All-Star may write only covered options, which means that, so long as All-
Star is obligated as the writer of a call option, it will own the underlying
securities subject to the option (or comparable securities satisfying the cover
requirements of securities exchanges). In the case of put options, All-Star will
maintain in a separate account cash or short-term U.S. Government Securities
with a value equal to or greater than the exercise price of the underlying
securities. All-Star may also write combinations or covered puts and calls on
the same underlying security.

      All-Star will receive a premium from writing a put or call option, which
increases All-Star's return in the event the option expires unexercised or is
closed out at a profit. The amount of the premium will reflect, among other
things, the relationship of the market price of the underlying security to the
exercise price of the option, the term of the option and the volatility of the
market price of the underlying security. By writing a call option, All-Star
limits its opportunity to profit from any increase in the market value of the
underlying security above the exercise price of the option. By writing a put

<PAGE>

option, All-Star assumes the risk that it may be required to purchase the
underlying security for an exercise price higher than its then current market
value, resulting in a potential capital loss if the purchase price exceeds the
market value plus the amount of the premium received, unless the security
subsequently appreciates in value.

      All-Star may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it purchases
an option having the same terms as the option written. All-Star will realize a
profit or loss from such transaction if the cost of such transaction is less or
more than the premium received from the writing of the option. In the case of a
put option, any loss so incurred may be partially or entirely offset by the
premium received from a simultaneous or subsequent sale of a different put
option. Because increases in the market price of a call option will generally
reflect increases in the market price of the underlying security, any loss
resulting from the repurchase of a call option is likely to be offset in whole
or in part by unrealized appreciation of the underlying security owned by All-
Star.

PURCHASING PUT AND CALL OPTIONS ON SECURITIES
- ---------------------------------------------

      All-Star may purchase put options to protect its portfolio holdings in an
underlying security against a decline in market value. Such hedge protection is
provided during the use of the put options since All-Star, as holder of the put
option, is able to sell the underlying security at the put exercise price
regardless of any decline in the underlying security's market price. In order
for a put option to be profitable, the market price of the underlying security
must decline sufficiently below the exercise price to cover the premium and
transaction costs. By using put options in this manner, All-Star will reduce any
profit it might otherwise have realized in its underlying security by the
premium paid for the put option and by transaction costs.

      All-Star may also purchase call options to hedge against an increase in
prices of securities that it wants ultimately to buy. Such hedge protection is
provided during the life of the call option since All-Star, as holder of the
call option, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs. By using call options in this manner, All-Star will reduce
any profit it might have realized had it bought the underlying security at the
time it purchased the call option by the premium paid for the call option and by
transaction costs.

PURCHASE AND SALE OF OPTIONS AND FUTURES ON STOCK INDICES
- ---------------------------------------------------------

      All-Star may purchase and sell options on stock indices and stock index
futures as a hedge against movements in the equity markets.

      Options on stock indices are similar to options on specific securities
except that, rather than the right to take or make delivery of the specific
security at a specified price, an option on a stock index gives the holder the
right to receive, upon exercise of the option, an amount of cash if the closing
level of that stock index is greater than, in the case of a call, or less than,
in the case of a put, the exercise price of the option. This amount of cash is
equal to such difference between the closing price of the index and the exercise
price of the option expressed in dollars times a specified multiple. The writer


                                       2
<PAGE>

of the option is obligated, in return for the premium received, to make delivery
of this amount. Unlike options on specific securities, all settlements of
options on stock indices are in cash and gain or loss depends on general
movements in the stocks included in the index rather than price movements in
particular stocks.

      A stock index futures contract is an agreement in which one party agrees
to deliver to the other an amount of cash equal to a specific dollar amount
times the difference between the value of a specific stock index at the close of
the last trading day of the contract and the price at which the agreement is
made. No physical delivery of securities is made.

      If a Portfolio Manager of All-Star expects general stock market prices to
rise, it might purchase a call option on a stock index or a futures contract on
that index as a hedge against an increase in prices of particular equity
securities it wants ultimately to buy. If in fact the stock index does rise, the
price of the particular equity securities intended to be purchased may also
increase, but that increase would be offset in part by the increase in the value
of All-Star's index option or futures contract resulting from the increase in
the index. If, on the other hand, the Portfolio Manager expects general stock
market prices to decline, it might purchase a put option or sell a futures
contract on the index. If that index does in fact decline, the value of some or
all of the equity securities in All-Star's portfolio may also be expected to
decline, but that decrease would be offset in part by the increase in the value
of All-Star's position in such put option or future. All-Star may purchase call
options on a stock index or a futures contracts on that index to enable a newly
appointed Portfolio Manager to gain immediate exposure to the underlying
securities market pending the investment in individual securities of the portion
of All-Star's portfolio assigned to it.

      In connection with transactions in stock index options, futures and
related options, All-Star will be required to deposit as "initial margin" an
amount of cash and short-term U.S. Government Securities equal to from 5% to 8%
of the contract amount. Thereafter, subsequent payments (referred to as
"variation margin") are made to and from the broker to reflect changes in the
value of the futures contract.

OPTIONS ON STOCK INDEX FUTURES CONTRACTS
- ----------------------------------------

      All-Star may purchase and write call and put options on stock index
futures contracts. All-Star may use such options on futures contracts in
connection with its hedging strategies in lieu of purchasing and writing options
directly on the underlying securities or stock indices or purchasing and selling
the underlying futures. For example, All-Star may purchase put options or write
call options on stock index futures, rather than selling futures contracts, in
anticipation of a decline in general stock market prices, or purchase call
options or write put options on stock index futures, rather than purchasing such
futures, to hedge against possible increases in the price of equity securities
which All-Star intends to purchase.

RISK FACTORS IN OPTIONS AND FUTURES TRANSACTIONS
- ------------------------------------------------

      The effective use of options and futures strategies is dependent, among
other things, on All-Star's ability to terminate options and futures positions
at times when its respective Portfolio Managers deem it desirable to do so.
Although All-Star will not enter into an option or futures position unless its


                                       3
<PAGE>

Portfolio Managers believe that a liquid secondary market exists for such option
or future, there is no assurance that All-Star will be able to effect closing
transactions at any particular time or at an acceptable price. All-Star
generally expects that its option and futures transactions will be conducted on
recognized securities exchanges. In certain instances, however, All-Star may
purchase and sell options in the over-the-counter market. All-Star's ability to
terminate option positions established in the over-the-counter market may be
more limited than in the case of exchange-traded options and may also involve
the risk that securities dealers participating in such transactions would fail
to meet their obligations to All-Star.

      The use of options and futures involves the risk of imperfect correlation
between movements in options and future prices and movements in the price of
securities which are the subject of the hedge. Such correlation, particularly
with respect to options on stock indices and stock index futures, is imperfect,
and such risk increases as the composition of All-Star's portfolio diverges from
the composition of the relevant index. The successful use of these strategies
also depends on the ability of the Portfolio Manager to correctly forecast
interest rate or general stock market price movements.

REGULATORY MATTERS
- ------------------

      All-Star will conduct its purchases and sales of futures contracts and
writing of related options transactions in accordance with the rules,
regulations and any exemptions promulgated by the Commodity Futures Trading
Commission ("CFTC") and the SEC with respect to such transactions.

BANK OBLIGATIONS
- ----------------

      Bank obligations in which All-Star may invest include certificates of
deposit, bankers' acceptances, and fixed time deposits. Certificates of deposit
are negotiable certificates issued against funds deposited in a commercial bank
for a definite period of time and earning a specified return. Bankers'
acceptances are negotiable drafts or bills of exchange, normally drawn by an
importer or exporter to pay for specific merchandise, which are "accepted" by a
bank, meaning, in effect, that the bank unconditionally agrees to pay the face
value of the instrument on maturity. Fixed time deposits are bank obligations
payable at a stated maturity date and bearing interest at a fixed rate. Fixed
time deposits may be withdrawn on demand by the investor but may be subject to
early withdrawal penalties, which vary depending upon market conditions and on
the right to transfer a beneficial interest in a fixed time deposit to a third
party, although there is no market for such deposits.

      Bank obligations include foreign bank obligations, including Eurodollar
and Yankee obligations. Eurodollar bank obligations are dollar certificates of
deposits and time deposits issued outside the U.S. capital markets by foreign
branches of U.S. banks and by foreign banks. Yankee obligations are dollar-
denominated obligations issued in the U.S. capital markets by foreign banks.
Foreign bank obligations are subject to the same risks that pertain to domestic
issues, notably credit risk and interest rate risk. Additionally, foreign bank
obligations are subject to many of the same risks as investments in foreign
securities (see "Foreign Equity Securities" below). Obligations of foreign banks
involve somewhat different investment risks than those affecting obligations of
U.S. banks, including the possibilities that their liquidity could be impaired


                                       4
<PAGE>

because of future political and economic developments of the foreign bank's
country, that their obligations may be less marketable than comparable
obligations of U.S. banks, that a foreign jurisdiction might impose withholding
taxes on interest income payable on those obligations, that foreign deposits may
be seized or nationalized, that foreign governmental restrictions such as
exchange controls may be adopted, which might adversely affect the payment of
principal and interest on those obligations and that the selection of those
obligations may be more difficult because there may be less publicly available
information concerning foreign banks or the accounting, auditing and financial
reporting standards, practices and requirements applicable to foreign banks may
differ from those applicable to U.S. banks. Foreign banks are not generally
subject to examination by any U.S. Government agency or instrumentality.

COMMERCIAL PAPER
- ----------------

      A1 and Prime 1 are the highest commercial paper ratings issued by Standard
& Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), and Moody's
Investors Service, Inc. ("Moody's"), respectively. Commercial paper rated A1 by
S&P has the following characteristics: (1) liquidity ratios are adequate to meet
cash requirements; (2) long-term senior debt is rated A or better; (3) the
issuer has access to at least two additional channels of borrowing; (4) basic
earnings and cash flow have an upward trend with an allowance made for unusual
circumstances; (5) typically, the issuer's industry is well established and the
issuer has a strong position within the industry; and (6) the reliability and
quality of management are unquestioned.

      Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6)  trend of earnings over
a period of 10 years; (7) financial strength of a parent company and the
relationships that exist with the issuer; and (8) recognition by the management
of obligations that may be present or may arise as a result of public interest
questions and preparation to meet such obligations.

GOVERNMENT SECURITIES
- ---------------------

      Government securities may be either direct obligations of the U.S.
Treasury or may be the obligations of an agency or instrumentality of the United
States.

      TREASURY OBLIGATIONS. The U.S. Treasury issues a variety of marketable
securities that are direct obligations of the U.S. Government. These securities
fall into three categories - bills, notes, and bonds - distinguished primarily
by their maturity at time of issuance. Treasury bills have maturities of one
year or less at the time of issuance, while Treasury notes currently have
maturities of one to 10 years. Treasury bonds can be issued with any maturity of
more than 10 years.

      OBLIGATIONS OF AGENCIES AND INSTRUMENTALITIES. Agencies and
instrumentalities of the U.S. Government are created to fill specific
governmental roles. Their activities are primarily financed through securities
whose issuance has been authorized by Congress. Agencies and instrumentalities
include the Export Import Bank, Federal Housing Administration, Government


                                       5
<PAGE>

National Mortgage Association, Tennessee Valley Authority, Banks for
Cooperatives, Farmers Home Administration, Federal Home Loan Banks, Federal
Intermediate Credit Banks, Federal Land Banks, Federal National Mortgage
Association, Federal Home Loan Mortgage Corp., U.S. Postal System, and Federal
Finance Bank. Although obligations of "agencies" and "instrumentalities" are not
direct obligations of the U.S. Treasury, payment of the interest or principal on
these obligations is generally backed directly or indirectly by the U.S.
Government. This support can range from backing by the full faith and credit of
the United States or U.S. Treasury guarantees to the backing solely of the
issuing instrumentality itself.

FOREIGN EQUITY SECURITIES
- -------------------------

      Foreign equity securities include common stock and preferred stock,
including securities convertible into equity securities, issued by foreign
companies, American Depositary Receipts ("ADRs") and Global Depositary Receipts
("GDRs"). In determining whether a company is foreign, ALPS Advisers, Inc.
("AAI") will consider various factors, including where the company is
headquartered, where the company's principal operations are located, where the
company's revenues are derived, where the principal trading market is located
and the country in which the company was legally organized. The weight given to
each of these factors will vary depending upon the circumstances.

      Foreign equity securities, which are generally denominated in foreign
currencies, involve risks not typically associated with investing in domestic
securities. Foreign securities may be subject to foreign taxes that would reduce
their effective yield. Certain foreign governments levy withholding taxes
against dividend and interest income. Although in some countries a portion of
these taxes is recoverable, the unrecovered portion of any foreign withholding
taxes would reduce the income All-Star receives from its foreign investments.

      Foreign investments involve other risks, including possible political or
economic instability of the country of the issuer, the difficulty of predicting
international trade patterns, and the possibility of currency exchange controls.
Foreign securities may also be subject to greater fluctuations in price than
domestic securities. There may be less publicly available information about a
foreign company than about a domestic company. Foreign companies generally are
not subject to uniform accounting, auditing, and financial reporting standards
comparable to those of domestic companies.

      There is generally less government regulation of stock exchanges, brokers,
and listed companies abroad than in the United States. In addition, with respect
to certain foreign countries, there is a possibility of the adoption of a policy
to withhold (or increase existing withholding) taxes on dividends at the source,
or of expropriation, nationalization, confiscatory taxation, or diplomatic
developments that could affect investments in those countries. Finally, in the
event of default on a foreign debt obligation, it may be more difficult for All-
Star to obtain or enforce a judgment against the issuers of the obligation. All-
Star will normally execute its portfolio securities transactions on the
principal stock exchange on which the security is traded.

      The considerations noted above regarding the risk of investing in foreign
securities are generally more significant for investments in emerging or
developing countries, such as countries in Eastern Europe, Latin America, South
America or Southeast Asia. These countries may have relatively unstable


                                       6
<PAGE>

governments and securities markets in which only a small number of securities
trade. Markets of developing or emerging countries may generally be more
volatile than markets of developed countries. Investment in these markets may
involve significantly greater risks, as well as the potential for greater gains.

      ADRs in registered form are dollar-denominated securities designed for use
in the U.S. securities markets. ADRs are sponsored and issued by domestic banks
and represent and may be converted into underlying foreign securities deposited
with the domestic bank or a correspondent bank. ADRs do not eliminate the risks
inherent in investing in the securities of foreign issuers. By investing in ADRs
rather than directly in the foreign security, however, All-Star may avoid
currency risks during the settlement period for either purchases or sales. There
is a large, liquid market in the United States for most ADRs. GDRs are receipts
representing an arrangement with a major foreign bank similar to that for ADRs.
GDRs are not necessarily denominated in the currency of the underlying security.
While ADRs and GDRs will generally be considered foreign securities for purposes
of calculation of any investment limitation placed on All-Star's exposure to
foreign securities, these securities, along with the securities of foreign
companies traded on the NASDAQ Stock Market will not be subject to any of the
restrictions placed on All-Star's ability to invest in emerging market
securities.

      Additional costs may be incurred in connection with All-Star's foreign
investments. Foreign brokerage commissions are generally higher than those in
the United States. Expenses may also be incurred on currency conversions when
All-Star moves investments from one country to another. Increased custodian
costs as well as administrative difficulties may be experienced in connection
with maintaining assets in foreign jurisdictions.

FOREIGN FIXED INCOME SECURITIES
- -------------------------------

      Foreign fixed income securities include debt securities of foreign
corporate issuers, certain foreign bank obligations (see "Bank Obligations"),
obligations of foreign governments or their subdivisions, agencies and
instrumentalities, and obligations of supranational entities such as the World
Bank, the European Investment Bank, and the Asian Development Bank. Any of these
securities may be denominated in foreign currency or U.S. dollars, or may be
traded in U.S. dollars in the United States although the underlying security is
usually denominated in a foreign currency.

      The risk of investing in foreign fixed income securities is the same as
the risks of investing in foreign equity securities. Additionally, investment in
sovereign debt (debt issued by governments and their agencies and
instrumentality) can involve a high degree of risk. The governmental entity that
controls the repayment of sovereign debt may not be available or willing to
repay the principal and/or interest when due in accordance with the terms of the
debt. A governmental entity's willingness or ability to repay principal and
interest due in a timely manner may be affected by, among other factors, its
cash flow situation, the extent of its foreign reserves, the availability of
sufficient foreign exchange on the date a payment is due, the relative size of
the debt service burden to the economy as a whole, the governmental entity's
policy toward the International Monetary Fund, and the political constraints to
which a governmental entity may be subject. Governmental entities may also
depend on expected disbursements from foreign governments, multilateral agencies
and others to reduce principal and interest arrearages on their debt. The


                                       7
<PAGE>

commitment on the part of these governments, agencies and others to make such
disbursements may be conditioned on a governmental entity's implementation of
economic reforms and/or economic performance and the timely service of such
debtor's obligations. Failure to implement such reforms, achieve such levels of
economic performance or repay principal or interest when due may result in the
cancellation of such third parties' commitments to lend funds to the
governmental entity, which may further impair such debtor's ability or
willingness to service its debts in a timely manner. Consequently, governmental
entities may default on their sovereign debt. Holders of sovereign debt
(including All-Star) may be requested to participate in the rescheduling of such
debt and to the extent further loans to governmental entities. There is no
bankruptcy proceeding by which sovereign debt on which governmental entities
have defaulted may be collected in whole or in part.

CURRENCY CONTRACTS
- ------------------

      The value of All-Star's investments in foreign securities will fluctuate
as a result of changes in the exchange rates between the U.S. dollar and the
currencies in which the foreign securities or bank deposits held by All-Star are
denominated. To reduce or limit exposure to changes in currency exchange rates
(referred to as "hedging") All-Star may enter into forward currency exchange
contracts that, in effect, lock in a rate of exchange during the period of the
forward contracts. Forward contracts are usually entered into with currency
traders, are not traded on securities exchanges, and usually have a term of less
than one year, but can be renewed. A default on a forward contract would deprive
All-Star of unrealized profits or force All-Star to cover its commitments for
purchase or sale of currency, if any, at the market price. All-Star will enter
into forward contracts only for hedging purposes and not for speculation. If
required by the Investment Company Act of 1940, as amended (the "1940 Act"), or
the SEC, All-Star may "cover" its commitment under forward contracts by
segregating cash or liquid securities with All-Star's custodian in an amount not
less than the current value of its total assets committed to the consummation of
the contracts. Under normal market conditions, no more than 25% of All-Star's
assets may be committed to the consummation of currency exchange contracts.

      All-Star may also purchase or sell foreign currencies on a "spot" (cash)
basis or on a forward basis to lock in the U.S. dollar value of a transaction at
the exchange rate or rates then prevailing. All-Star will use this hedging
technique in an attempt to insulate itself against possible losses resulting
from a change in the relationship between the U.S. dollar and the relevant
foreign currency during the period between the date a security is purchased or
sold and the date on which payment is made or received.

      Hedging against adverse changes in exchange rates will not eliminate
fluctuation in the prices of All-Star's portfolio securities or prevent loss if
the prices of those securities decline. In addition, the use of forward
contracts may limit potential gains from an appreciation in the U.S. dollar
value of a foreign currency. Forecasting short-term currency market movements is
very difficult, and there is no assurance that short-term hedging strategies
used by All-Star will be successful.


                                       8
<PAGE>

REPURCHASE AGREEMENTS
- ---------------------

      All-Star may invest in repurchase agreements, which are agreements by
which All-Star purchases a security and simultaneously commits to resell that
security to the seller (a commercial bank or securities dealer) at a stated
price within a number of days (usually not more than seven) from the date of
purchase. The resale price reflects the purchase price plus a rate of interest
that is unrelated to the coupon rate or maturity of the purchased security.
Repurchase agreements may be considered loans by All-Star collateralized by the
underlying security. The obligation of the seller to pay the stated price is in
effect secured by the underlying security. The seller will be required to
maintain the value of the collateral underlying any repurchase agreement at a
level at least equal to the price of the repurchase agreement. In the case of
default by the seller, All-Star could incur a loss. In the event of a bankruptcy
proceeding commenced against the seller, All-Star may incur costs and delays in
realizing upon the collateral. All-Star will enter into repurchase agreements
only with those banks or securities dealers that are deemed creditworthy
pursuant to criteria adopted by AAI. There is no limit on the portion of
All-Star's assets that may be invested in repurchase agreements with maturities
of seven days or less. Not more than 10% of All-Star's net assets will be
invested in repurchase agreements maturing in more than seven days.

BORROWING
- ---------

      All-Star may borrow from banks for temporary administrative purposes.
All-Star also may enter into certain transactions, including reverse repurchase
agreements, mortgage dollar rolls, and sale-buybacks, that can be viewed as
constituting a form of borrowing or financing transaction by All-Star. To the
extent All-Star covers its commitment under such transactions (or economically
similar transaction) by the segregation of assets determined in accordance with
procedures adopted by All-Star's Board of Trustees ("Board of Trustees"), equal
in value to the amount of All-Star's commitment to repurchase, such an agreement
will not be considered a "senior security" by All-Star and therefore will not be
subject to the 300% asset coverage requirement otherwise applicable to
borrowings by All-Star. Borrowing will tend to exaggerate the effect on net
asset value of any increase or decrease in the market value of All-Star's
portfolio. Money borrowed will be subject to interest costs that may or may not
be recovered by appreciation of the securities purchased. All-Star also may be
required to maintain minimum average balances in connection with such borrowing
or to pay a commitment or other fee to maintain a line of credit; either of
these requirements would increase the cost of borrowing over the stated interest
rate.

ILLIQUID SECURITIES
- -------------------

      Illiquid securities are securities that may not be sold or disposed of in
the ordinary course of business within seven days at approximately the price
used to determine All-Star's net asset value. Under current interpretations of
the Staff of the SEC, the following instruments in which All-Star may invest
will be considered illiquid: (1) repurchase agreements maturing in more than
seven days; (2) restricted securities (securities whose public resale is subject
to legal restrictions, except as described in the following paragraph); (3)
options, with respect to specific securities, not traded on a national
securities exchange that are not readily marketable; and (4) any other
securities in which All-Star may invest that are not readily marketable.


                                       9
<PAGE>

      All-Star may also purchase without limit certain restricted securities
that can be resold to qualifying institutions pursuant to a regulatory exemption
under Rule 144A ("Rule 144A securities"). If a dealer or institutional trading
market exists for Rule 144A securities, such securities are deemed to be liquid.

PREFERRED STOCK
- ---------------

      All-Star may invest in preferred stock. Unlike interest payments on debt
securities, dividends on preferred stock are generally payable at the discretion
of the issuer's board of directors. Preferred shareholders may have certain
rights if dividends are not paid but generally have no legal recourse against
the issuer. Shareholders may suffer a loss of value if dividends are not paid.
The market prices of preferred stocks are generally more sensitive to changes in
the issuer's creditworthiness than are the prices of debt securities.

CONVERTIBLE SECURITIES AND WARRANTS
- -----------------------------------

      Convertible debentures are interest-bearing debt securities, typically
unsecured, that represent an obligation of the issuer providing the owner with
claims to the issuer's earnings and assets before common and preferred stock
owners, generally on par with unsecured creditors. If unsecured, claims of
convertible debenture owners would be inferior to claims of secured debt
holders. Convertible preferred stocks are securities that represent an ownership
interest in a corporation providing the owner with claims to the corporation's
earnings and assets before common stock owners, but after bond owners.
Investments by All-Star in convertible debentures or convertible preferred stock
would be a substitute for an investment in the common stock into which the
debentures or preferred stock are convertible if available in quantities
necessary to satisfy All-Star's investment needs (for example, in the case of a
new issuance of convertible securities) or where, because of financial market
conditions, the conversion price of the convertible security is comparable to
the price of the underlying common stock, in which case a preferred position
with respect to the corporation's earnings and assets may be preferable to
holding common stock.

      Warrants are options to buy a stated number of underlying securities at a
specified price any time during the life of the warrants. The securities
underlying these warrants will be the same types of securities that All-Star
will invest in to achieve its investment objective of capital appreciation. The
purchaser of a warrant expects the market price of the underlying security will
exceed the purchase price of the warrant plus the exercise price of the warrant,
thus resulting in a profit. If the market price never exceeds the purchase price
plus the exercise price of the warrant before the expiration date of the
warrant, the purchaser will suffer a loss equal to the purchase price of the
warrant.

INVESTMENTS IN SMALL AND UNSEASONED COMPANIES
- ---------------------------------------------

      An unseasoned company is an entity with a limited operating history.
Unseasoned and small companies may have unprofitable operating histories,
limited financial resources, and inexperienced management. In addition, they
often face competition from larger or more established firms that have greater
resources. Securities of small and unseasoned companies are frequently traded in
the over-the-counter market or on regional exchanges where low trading volumes


                                       10
<PAGE>

may result in erratic or abrupt price movements. To dispose of these securities,
All-Star may need to sell them over an extended period or below the original
purchase price. Investments by All-Star in these small or unseasoned companies
may be regarded as speculative.

ZERO-COUPON AND PAY-IN-KIND SECURITIES
- --------------------------------------

      A zero-coupon security has no cash coupon payments. Instead, the issuer
sells the security at a substantial discount from its maturity value. The
interest equivalent received by the investor from holding this security to
maturity is the difference between the maturity value and the purchase price.
Pay-in-kind securities are securities that pay interest in either cash or
additional securities, at the issuer's option, for a specified period. The price
of pay-in-kind securities is expected to reflect the market value of the
underlying accrued interest since the last payment. Zero-coupon and pay-in-kind
securities are more volatile than cash pay securities. All-Star accrues income
on these securities prior to the receipt of cash payments. All-Star intends to
distribute substantially all of its income to its shareholders to qualify for
pass-through treatment under the tax laws and may, therefore, need to use its
cash reserves to satisfy distribution requirements.

                            INVESTMENT RESTRICTIONS

      Except as indicated otherwise, the following investment restrictions have
been adopted for All-Star as fundamental policies and may be changed only by a
majority vote (as defined under "Investment Objective, Policies and Risks" in
the Prospectus) of All-Star's outstanding shares. Non fundamental policies may
be changed by the Board of Trustees without shareholder approval.

All-Star may not:

      (1)   Issue senior securities, except as permitted by (2) below.

      (2)   Borrow money, except that it may borrow in an amount not exceeding
7% of its total assets (including the amount borrowed) taken at market value at
the time of such borrowing, and except that it may make borrowings in amounts up
to an additional 5% of its total assets (including the amount borrowed) taken at
market value at the time of such borrowing to finance the repurchase of its
shares, to obtain such short-term credits as are necessary for the clearance of
securities transactions, or for temporary or emergency purposes, and may
maintain and renew any of the foregoing borrowings, provided that All-Star
maintains asset coverage of 300% with respect to all such borrowings. As a non-
fundamental policy, All-Star will not borrow in an amount in excess of 5% of its
total assets (including the amount borrowed).

      (3)   Pledge, mortgage or hypothecate its assets, except to secure
indebtedness permitted by paragraph (2) above and then only if such pledging,
mortgaging or hypothecating does not exceed 12% of All-Star's total assets taken
at market value at the time of such pledge, mortgage or hypothecation. The
deposit in escrow of securities in connection with the writing of put and call
options and collateral arrangements with respect to margin for futures contracts
are not deemed to be pledges or hypothecation for this purpose.



                                       11
<PAGE>

      (4)   Act as an underwriter of securities of other issuers, except to the
extent that, in connection with the disposition of portfolio securities, All-
Star may be deemed to be an underwriter for purposes of the Securities Act of
1933.

      (5)   Purchase or sell real estate or any interest therein, except that
All-Star may invest in securities issued or guaranteed by corporate or
governmental entities secured by real estate or interests therein, such as
mortgage pass-throughs and collateralized mortgage obligations, or issued by
companies that invest in real estate or interests therein.

      (6)   Make loans to other persons except for loans of portfolio securities
(up to 30% of total assets) and except through the use of repurchase agreements,
the purchase of commercial paper or the purchase of all or a portion of an issue
of debt securities in accordance with its investment objective, policies and
restrictions, and provided that not more than 10% of All-Star's net assets will
be invested in repurchase agreements maturing in more than seven days.

      (7)   Invest in commodities or in commodity contracts (except stock index
futures and options).

      (8)   Purchase securities on margin (except to the extent that the
purchase of options and futures may involve margin and except that it may obtain
such short-term credits as may be necessary for the clearance of purchases or
sales of securities), or make short sales of securities.

      (9)   Purchase the securities of issuers conducting their principal
business activity in the same industry (other than securities issued or
guaranteed by the United States, its agencies and instrumentalities) if,
immediately after such purchase, the value of its investments in such industry
would comprise 25% or more of the value of its total assets taken at market
value at the time of each investment.

      (10)  Purchase securities of any one issuer, if (a) more than 5% of All-
Star's total assets taken at market value would at the time be invested in the
securities of such issuer, except that such restriction does not apply to
securities issued or guaranteed by the United States Government or its agencies
or instrumentalities or corporations sponsored thereby, and except that up to
25% or All-Star's total assets may be invested without regard to this
limitation; or (b) such purchase would at the time result in more than 10% of
the outstanding voting securities of such issuer being held by All-Star, except
that up to 25% of All-Star's total assets may be invested without regard to this
limitation.

      (11)  Invest in securities of another registered investment company,
except (i) as permitted by the Investment Company Act of 1940, as amended from
time to time, or any rule or order thereunder, or (ii) in connection with a
merger, consolidation, acquisition or reorganization.

      (12)  Purchase any security, including any repurchase agreement maturing
in more than seven days, which is subject to legal or contractual delays in or
restrictions on resale (including unregistered securities that are eligible for
resale pursuant to Rule 144A under the Securities Act of 1933), or which is not
readily marketable, if more than 10% of the net assets of All-Star, taken at
market value, would be invested in such securities.



                                       12
<PAGE>

      (13)  Invest for the purpose of exercising control over or management of
any company.

      (14)  Purchase securities unless the issuer thereof or any company on
whose credit the purchase was based, together with its predecessors, has a
record of at least three years' continuous operations prior to the purchase,
except for investments which, in the aggregate, taken at cost do not exceed 5%
of All-Star's total assets.

      If a percentage restriction on investment or utilization of assets as set
forth above is adhered to at the time an investment is made, a later change in
percentage resulting from a change in the market values of All-Star's assets
will not be considered a violation of the restriction.

                     INVESTMENT ADVISORY AND OTHER SERVICES

      As stated under "Management of All-Star" in the prospectus, ALPS Advisers,
Inc., 1290 Broadway, Suite 1100, Denver, CO 80203, is All-Star's investment
adviser.  Pursuant to its Fund Management Agreements with All-Star, AAI
implements and operates All-Star's multi-manager methodology and has overall
supervisory responsibility for the general management and investment of All-
Star's assets, subject to All Star's investment objectives and policies and any
directions of the Board of Trustees. AAI recommends to the Board of Trustees the
investment management firms (currently five) for appointment as Portfolio
Managers of All-Star.  ALPS Fund Services, Inc. ("AFS"), 1290 Broadway, Suite
1100, Denver, Colorado, 80203, an affiliate of AAI, provides administrative
services to All-Star under an Administration, Bookkeeping and Pricing Services
Agreement with All-Star.

      The names and addresses of All-Star's current Portfolio Managers are as
follows:

Chase Investment Counsel Corporation
300 Preston Avenue
Charlottesville, VA  22902-5091

Matrix Asset Advisors, Inc.
747 Third Avenue
New York, NY 10017

Pzena Investment Management, LLC
120 West 45th Street
New York, NY 10036

Schneider Capital Management Corporation
460 East Swedesford Road
Wayne, PA 19087

TCW Investment Management Company
865 South Figueroa Street
Los Angeles, CA 90017

                                       13
<PAGE>

AAI
- ---

      As described under "Management of All-Star" in the Prospectus, All-Star
pays AAI a fund management fee for its investment management services (from
which AAI pays the Portfolio Managers' fee).

      Prior to December 18, 2006, All-Star was managed by Banc of America
Investment Advisors, Inc. ("BAIA").  For the period ended December 18, 2006 and
the years ended December 31, 2005 and 2004 the total fund management fees paid
to BAIA were $[9,078,397], $[9,339,478] and $[8,664,829], respectively, of which
an aggregate of $[4,539,199], $[4,669,739] and $[4,332,415], respectively, was
paid to the Portfolio Managers.

      For the period December 18, 2006 to December 30, 2006, the total fund
management fees paid to AAI were  $[421,854] of which an aggregate of
$[210,927] was paid to the Portfolio Managers

      All-Star's current Fund Management Agreement and Portfolio Management
Agreements provides that they will continue in effect until December 2008 and
will continue in effect thereafter so long as such continuance is specifically
approved annually by (a) the Board of Trustees or (b) the majority vote of All-
Star's outstanding shares (as defined under "Investment Objective, Policies and
Risks" in the Prospectus), provided that, in either event, the continuance is
also approved by a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of All-Star (the "Disinterested Trustees"), AAI or the
Portfolio Managers by a vote cast in person at a meeting called for the purpose
of voting on such approval.  All-Star's Management Agreement may be terminated
on 60 days written notice by either party, and the Portfolio Management
Agreements may be terminated on 30 days' notice by any party, and any such
agreements will terminate automatically if assigned.

      All-Star, AAI and the Portfolio Managers have adopted Codes of Ethics
pursuant to the requirements of the 1940 Act.  These Codes of Ethics permit
personnel subject to the Codes to invest in securities, including securities
that may be purchased or held by All-Star.  Copies of the Codes of Ethics of
All-Star and AAI can be reviewed and copied at the SEC's Public Reference Room
in Washington, D.C.  Information on the operation of the Public Reference Room
may be obtained by calling the SEC at 1-202-942-8090.  The Codes of Ethics are
also available on the EDGAR database on the SEC's Internet site at www.sec.gov,
or may be obtained, after paying a duplicating fee, by electronic request at
publicinfo@sec.gov, or by writing the SEC's Public Reference Section,
Washington, D.C. 20549-0102.

CUSTODIAN; ADMINISTRATION, BOOKKEEPING, AND PRICING AGENT
- ---------------------------------------------------------

      State Street Bank and Trust Company (the "Custodian"), One Lincoln Street,
Boston, Massachusetts 02111, is the custodian of the portfolio securities and
cash of All-Star. As such, the Custodian holds All-Star's portfolio securities
and cash in separate accounts on All-Star's behalf and receives and delivers
portfolio securities and cash in connection with portfolio transactions
initiated by All-Star's Portfolio Managers, collects income due on the portfolio
securities and disburses funds in connection with the payment of distributions
and expenses.


                                       14
<PAGE>

      AFS, an affiliate of AAI, performs administrative, bookkeeping and pricing
services for All-Star.  Prior to December 18, 2006, Columbia Management
Advisors, LLC ("Columbia") an affiliate of BAIA provided administrative,
bookkeeping and pricing services to All-Star.  For the period ended December 18,
2006, and the years ended December 31, 2005 and 2004, All-Star paid
administrative, bookkeeping and pricing fees to Columbia of  $[2,425,303],
$[2,537,584] and $[2,378,612] respectively.

      For the period December 18, 2006 to December 30, 2006, All-Star paid
administrative, bookkeeping and pricing fees to AFS of  $[116,712].

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- ---------------------------------------------

      PricewaterhouseCoopers LLP, 125 High Street, Boston, Massachusetts 02110,
serves as the independent registered public accounting firm of All-Star. The
independent registered public accounting firm provides audit services, audit-
related services, tax services and/or other services to All-Star.

                                  PROXY VOTING

      All-Star has delegated to AAI (and not the Portfolio Managers) the
responsibility to vote proxies relating to portfolio securities held by All-
Star. In deciding to delegate this responsibility, the Board of Trustees
reviewed and approved the policies and procedures adopted by AAI. These include
the procedures that AAI follows when a vote presents a conflict between the
interests of All-Star and its shareholders and AAI, its affiliates, its other
clients, or other persons.

      The proxy voting guidelines and procedures applicable to All-Star are
included in this Statement of Additional Information as Appendix A.  Information
regarding how All-Star voted proxies relating to portfolio securities during the
12-month period ending June 30, 2006 is available without charge, upon request,
by calling 1-800-542-3863 and on the SEC website at http://www.sec.gov.

                             TRUSTEES AND OFFICERS

      The names of the Trustees and Officers of All-Star, 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.

DISINTERESTED TRUSTEES
- ----------------------

<TABLE>
<CAPTION>
                                                                                         NUMBER OF
                        POSITION WITH                                                    PORTFOLIOS
                         EQUITY FUND,                                                     IN FUND
                           TERM OF                                                        COMPLEX
                          OFFICE AND                                                     OVERSEEN               OTHER
NAME AND                  LENGTH OF               PRINCIPAL OCCUPATION(S)                   BY              DIRECTORSHIPS
ADDRESS*                   SERVICE                DURING PAST FIVE YEARS                  TRUSTEE                HELD
- ----------------   --------------------      ------------------------------------      ------------       -------------------
<S>                <C>                       <C>                                              <C>         <C>

John A. Benning    Trustee                   Retired since December, 1999;                    2           Director, Liberty
(Age 72)           Since 2002; Term          Senior Vice President, General                               All-Star Growth


                                       15

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                                         NUMBER OF
                        POSITION WITH                                                    PORTFOLIOS
                         EQUITY FUND,                                                     IN FUND
                           TERM OF                                                        COMPLEX
                          OFFICE AND                                                     OVERSEEN               OTHER
NAME AND                  LENGTH OF               PRINCIPAL OCCUPATION(S)                   BY              DIRECTORSHIPS
ADDRESS*                   SERVICE                DURING PAST FIVE YEARS                  TRUSTEE                HELD
- ----------------   --------------------      ------------------------------------      ------------       -------------------
<S>                <C>                       <C>                                              <C>         <C>
                   expires 2009              Counsel and Secretary, Liberty                               Fund (since 2002).
                                             Financial Companies Inc. (July, 1985
                                             to December, 1999); Vice President,
                                             Secretary and Director, Liberty Asset
                                             Management Company (August,
                                             1985 to December, 1999).

Thomas W. Brock    Trustee                   CEO, StoneHarbor Investment                      2           Director,
(Age 59)           Since 2005; Term          Partners LP (since April 2006);                              Liberty
                   expires 2008              Adjunct Professor, Columbia                                  All-Star Growth
                                             University Graduate School of                                Fund (since
                                             Business (since September, 1998).                            2005);
                                                                                                          Trustee, Stone
                                                                                                          Harbor Local
                                                                                                          Markets Income
                                                                                                          Fund (closed end
                                                                                                          fund) (since
                                                                                                          2007);
                                                                                                          Trustee, Stone
                                                                                                          Harbor
                                                                                                          Investment
                                                                                                          Funds (2
                                                                                                          Portfolios)
                                                                                                          (since 2007);
                                                                                                          Director,
                                                                                                          Columbia
                                                                                                          Management
                                                                                                          Multi-
                                                                                                          Strategy Fund
                                                                                                          LLC
                                                                                                          (Hedge Fund);
                                                                                                          Manager, BACAP
                                                                                                          Alternative
                                                                                                          Multi-
                                                                                                          Strategy Fund,
                                                                                                          LLC

George R. Gaspari  Trustee                   Financial Services Consultant                    2           Trustee and
(Age 66)           Since 2006,               (since 1996).                                                Chairman, The
                   Term Expires 2008                                                                      Select Sector
                                                                                                          SPDR
                                                                                                          Trust (since
                                                                                                          1998);
                                                                                                          Director,
                                                                                                          Liberty
                                                                                                          All-Star Growth
                                                                                                          Fund (since
                                                                                                          2006).

Richard W. Lowry   Chairman; Trustee         Private Investor since 1987.                     2           Director and
(Age 70)           Since 1986; Term Expires                                                               Chairman,
                   2007                                                                                   Liberty
                                                                                                          All-Star Growth
                                                                                                          Fund (since
                                                                                                          1994);
                                                                                                          Trustee,
                                                                                                          Columbia
                                                                                                          Fund Complex (81
                                                                                                          portfolios).

John J. Neuhauser  Trustee                   President, Saint Michael's College               2           Director,
(Age 63)           Since 1998; Term Expires  (since 2007); formerly, University                           Liberty
                   2007                      Professor, Boston College (from                              All-Star Growth
                                             December 2005 to 2007); formerly                             Fund (since
                                             Academic Vice President and Dean                             1998);
                                             of Faculties, Boston College (from                           Trustee,
                                             August 1999 to December 2005).                               Columbia
                                                                                                          Fund Complex (81
                                                                                                          Portfolios).

Richard C. Rantzow Trustee                   Chairman of the Board of First Funds             2           Trustee, Clough
(Age 68)           Since 2006,               (from 1992 to July 2006).                                    Global
                   Term expires 2007                                                                      Allocation
                                                                                                          Fund (since
                                                                                                          2004),
                                                                                                          Clough Global


                                       16
</TABLE>

<PAGE>


<TABLE>
<CAPTION>
                                                                                         NUMBER OF
                        POSITION WITH                                                    PORTFOLIOS
                         EQUITY FUND,                                                     IN FUND
                           TERM OF                                                        COMPLEX
                          OFFICE AND                                                     OVERSEEN               OTHER
NAME AND                  LENGTH OF               PRINCIPAL OCCUPATION(S)                   BY              DIRECTORSHIPS
ADDRESS*                   SERVICE                DURING PAST FIVE YEARS                  TRUSTEE                HELD
- ----------------   --------------------      ------------------------------------      ------------       -------------------
<S>                                                                                                       <C>
                                                                                                          Equity Fund
                                                                                                          (since
                                                                                                          2005) and Clough
                                                                                                          Global
                                                                                                          Opportunities
                                                                                                          Fund
                                                                                                          (since 2006);
                                                                                                          Director,
                                                                                                          Liberty
                                                                                                          All-Star Growth
                                                                                                          Fund (since
                                                                                                          2006).

</TABLE>
- -----------------

*  The address for all Trustees and Officers is:  c/o ALPS Advisers, Inc., 1290
   Broadway, Suite 1100; Denver, CO 80203.

INTERESTED TRUSTEES
- -------------------

<TABLE>
<CAPTION>
                                                                                         NUMBER OF
                        POSITION WITH                                                    PORTFOLIOS
                         EQUITY FUND,                                                     IN FUND
                           TERM OF                                                        COMPLEX
                          OFFICE AND                                                     OVERSEEN               OTHER
NAME AND                  LENGTH OF               PRINCIPAL OCCUPATION(S)                   BY              DIRECTORSHIPS
ADDRESS*                   SERVICE                DURING PAST FIVE YEARS                  TRUSTEE                HELD
- ----------------   --------------------      ------------------------------------      ------------       -------------------
<S>                <C>                       <C>                                              <C>         <C>

Edmund J. Burke           Trustee            President and a Director of ALPS                 2           President, Financial
(Age 45)**               Since 2006,         (since 2005), President and a                                Investors Trust
                      Term expires 2009      Director of ALPS Advisers (since                             (since 2001);
                                             2001), President and a Director of                           President, Reaves
                                             ALPS Financial Services, Inc. (1991-                         Utility Income Fund
                                             2005).                                                       (since 2004);
                                                                                                          President, Financial
                                                                                                          Investors Variable
                                                                                                          Trust (since 2006);
                                                                                                          Trustee and
                                                                                                          President, Clough
                                                                                                          Global Allocation
                                                                                                          Fund (Trustee since
                                                                                                          2006, President
                                                                                                          since 2004); Trustee
                                                                                                          and President,
                                                                                                          Clough Global
                                                                                                          Equity Fund
                                                                                                          (Trustee since 2006,
                                                                                                          President since
                                                                                                          2005); Trustee and
                                                                                                          President Clough
                                                                                                          Global
                                                                                                          Opportunities Fund
                                                                                                          (since 2006);
                                                                                                          Director, Liberty
                                                                                                          All-Star Growth
                                                                                                          Fund (since 2006);
                                                                                                          President and
                                                                                                          Trustee, Stone
                                                                                                          Harbor Local
                                                                                                          Markets Income
                                                                                                          Fund (since 2007).
</TABLE>

OFFICERS
- --------

<TABLE>
<CAPTION>
                                                                YEAR FIRST
                                                                 ELECTED
                                                                    OR
NAME AND                     POSITION WITH LIBERTY              APPOINTED                  PRINCIPAL OCCUPATION(S)
ADDRESS*                     ALL-STAR EQUITY FUND               TO OFFICE                  DURING PAST FIVE YEARS
- -----------------       ---------------------------------    -----------------   ----------------------------------------
<S>                      <C>                                    <C>               <C>
William R.               President and Chief Executive          1999              Chief Investment Officer, ALPS Advisers,
Parmentier,              Officer                                                  Inc. (since 2006); President and Chief
Jr. (Age 55)                                                                      Executive Officer of the Liberty All-Star
                                                                                  Funds (since April 1999); Senior Vice
                                                                                  President (2005-2006), Banc of America
                                                                                  Investment Advisors, Inc.

Mark T. Haley, CFA       Senior Vice President                  1999              Senior Vice President of the Liberty All-
(Age 42)                                                                          Star Funds (since January 1999). Vice
                                                                                  President, ALPS Advisers, Inc. (since
                                                                                  2006); Vice President, Banc of America
                                                                                  Investment Advisors (1999-2006).

Edmund J. Burke          Vice President                         2006              President and a Director of ALPS (since
(Age 45)                                                                          2005), President and a Director of ALPS
                                                                                  Advisers (since 2001), President and a
                                                                                  Director of ALPS Financial Services, Inc.
                                                                                  (1991-2005). See above for other
                                                                                  Directorships held.
</TABLE>
- --------------------

*  The address for all Trustees and Officers is:  c/o ALPS Advisers, Inc., 1290
   Broadway, Suite 1100; Denver, CO 80203.

** Mr. Burke is an "interested person" of All-Star as defined in the Investment
   Company Act, because he is an officer of ALPS and ALPS Advisers.


<TABLE>
<CAPTION>
                                                                YEAR FIRST
                                                                 ELECTED
                                                                    OR
NAME AND                     POSITION WITH LIBERTY              APPOINTED                  PRINCIPAL OCCUPATION(S)
ADDRESS*                     ALL-STAR EQUITY FUND               TO OFFICE                  DURING PAST FIVE YEARS
- -----------------       ---------------------------------    -----------------   ----------------------------------------
<S>                      <C>                                     <C>              <C>

Jeremy O. May            Treasurer                               2006             Mr. May is Managing Director of ALPS.
(Age 36)                                                                          Mr. May joined ALPS in 1995. Because of
                                                                                  his position with ALPS, Mr. May is deemed
                                                                                  an affiliate of All-Star as defined under the
                                                                                  1940 Act. Mr. May is currently the
                                                                                  Treasurer of Liberty All-Star Growth Fund,
                                                                                  Inc., Reaves Utility Income Fund, Clough
                                                                                  Global Equity Fund, Clough Global
                                                                                  Allocation Fund, Clough Global
                                                                                  Opportunities Fund, Financial Investors
                                                                                  Trust, and Financial Investors Variable
                                                                                  Insurance Trust. Mr. May is also on the
                                                                                  Board of Directors, and is Chairman of the
                                                                                  Audit Committee, of the University of
                                                                                  Colorado Foundation.

Kimberly R. Storms       Assistant Treasurer                     2006             Ms. Storms is Director of Fund

</TABLE>

                                       18


<PAGE>
<TABLE>
<CAPTION>
                                                                YEAR FIRST
                                                                 ELECTED
                                                                    OR
NAME AND                     POSITION WITH LIBERTY              APPOINTED                  PRINCIPAL OCCUPATION(S)
ADDRESS*                     ALL-STAR EQUITY FUND               TO OFFICE                  DURING PAST FIVE YEARS
- -----------------       ---------------------------------    -----------------   ----------------------------------------
<S>                      <C>                                     <C>              <C>
(Age 34)                                                                          Administration and Vice- President of
                                                                                  ALPS.  Ms. Storms joined ALPS in 1998 as
                                                                                  Assistant Controller.  Because of her
                                                                                  position with ALPS, Ms. Storms is deemed
                                                                                  an affiliate of All-Star as defined under the
                                                                                  1940 Act.  Ms. Storms is also Assistant
                                                                                  Treasurer of the Clough Global Equity
                                                                                  Fund, Clough Global Allocation Fund,
                                                                                  Clough Global Opportunities Fund, Liberty
                                                                                  All-Star Growth Fund, Inc., Reaves Utility
                                                                                  Income Fund and Financial Investors Trust
                                                                                  and Assistant Secretary of Ameristock
                                                                                  Mutual Fund, Inc.

Bradley J. Swenson       Chief Compliance Officer                2006             Chief Compliance Officer ("CCO"), ALPS
(Age 34)                                                                          Fund Services, Inc. and ALPS Distributors,
                                                                                  Inc., since 2004; CCO ALPS Advisers, Inc.
                                                                                  since 2006; Mr. Swenson currently acts in
                                                                                  the capacity of Fund CCO for Financial
                                                                                  Investors Variable Insurance Trust, Liberty
                                                                                  All-Star Growth Fund, Inc., the SPDR
                                                                                  Trust, MidCap SPDR Trust, DIAMONDS
                                                                                  Trust, NASDAQ-100 Trust, BLDRS Index
                                                                                  Funds Trust, WisdomTree Funds Trust, and
                                                                                  Healthshares, Inc.; Senior Audit Manager,
                                                                                  Janus Capital Group, Inc.; Senior Internal
                                                                                  Auditor, Oppenheimer Funds, Inc.

Tane T. Tyler            Secretary                               2006             Assistant Secretary, ALPS Funds Services,
(Age 41)                                                                          Inc. and ALPS Distributors, Inc., since
                                                                                  September 2004; Secretary, ALPS
                                                                                  Holdings, Inc., since August 2005; Assistant
                                                                                  Secretary, ALPS Advisers, Inc., since
                                                                                  August 2006; Secretary, Liberty All-Star
                                                                                  Equity Fund and Liberty All-Star Growth
                                                                                  Fund, Inc., since December 2006; Secretary,
                                                                                  Reaves Utility Income Fund, December
                                                                                  2004 to May 2007; Secretary, Westcore
                                                                                  Funds, February 2005 to May 2007;
                                                                                  Secretary, First Fund, from November 2004
                                                                                  to January 2007; Secretary, Financial
                                                                                  Investors Variable Insurance Trust, from
                                                                                  December 2004 - December 2006; Vice
                                                                                  President and Associate Counsel,
                                                                                  Oppenheimer Funds, from January 2004 to
                                                                                  August 2004; Vice President and Assistant
                                                                                  General Counsel, INVESCO Funds, from
                                                                                  September 1991 to December 2003.
</TABLE>
- ------------------

*  The address for all Trustees and Officers is:  c/o ALPS Advisers, Inc., 1290
   Broadway, Suite 1100; Denver, CO 80203.



                                       19
<PAGE>

ROLE OF THE BOARD OF TRUSTEES
- -----------------------------

      The Board of Trustees is responsible for the overall management and
supervision of All-Star's affairs and for protecting the interests of the
shareholders.  The Board of Trustees meets periodically throughout the year to
oversee All-Star's activities, review contractual arrangements with service
providers for All-Star and review All-Star's performance.

AUDIT COMMITTEE
- ---------------

      Messrs. Benning, Brock, Gaspari, Lowry, Neuhauser and Rantzow (Committee
Chairman) are members of the Audit Committee of All-Star.  All-Star's Audit
Committee is comprised only of members who are "Independent Trustees" (as
defined in the New York Stock Exchange (NYSE) Listing Standards for
trustees/directors of closed-end investment companies) of All-Star and who are
also not "interested persons" (as defined in the Investment Company Act) of All-
Star. The Board of Trustees has determined, in accordance with NYSE Listing
Standards, that each member of the Audit Committee is financially literate and
that one of its members has prior accounting experience or related financial
management expertise.

      The Audit Committee has adopted a written Audit Committee charter that
sets forth the Audit Committee's structure, duties and powers, and methods of
operation.  The principal functions of the Audit Committee are to assist the
Board of Trustee's oversight of: (1) the integrity of All-Star's financial
statements, (2) All-Star's compliance with legal and regulatory requirements,
(3) the qualifications and independence of the independent registered public
accounting firm (also referred to herein as the independent accountants), (4)
the performance of AAI's internal audit function, and (5) the performance of the
independent accountants. The Audit Committee is directly responsible for the
appointment, compensation, retention and oversight of the work of the
independent accountants (including the resolution of disagreements between
management and the independent accountants regarding financial reporting) for
the purpose of preparing or issuing an audit report or performing other review
or attest services for All-Star.

SHARE OWNERSHIP
- ---------------

      The following table shows the dollar range of equity securities
beneficially owned by each Trustee in All-Star as of December 31, 2006 (i) in
All-Star, and (ii) in all funds overseen by the Trustee in the Fund Complex.


<TABLE>
<CAPTION>

                                                                        Equity Securities Owned in
                                       Aggregate Dollar Range of          All Funds Overseen by
    Dollar Range of Equity               Securities Owned in the        Trustee/Director in Fund
    Name of Trustee/Director                    All-Star                         Complex
- ----------------------------------------------------------------------------------------------------
<S>                                      <C>                            <C>
DISINTERESTED TRUSTEES/DIRECTORS
John A. Benning                          Over $100,000                  Over $100,000
Thomas W. Brock                          Over $100,000                  Over $100,000
George R. Gaspari                        None                           None

</TABLE>

                                       20
<PAGE>

<TABLE>
<CAPTION>

<S>                                      <C>                            <C>
Richard W. Lowry                         Over $100,000                  Over $100,000
John J. Neuhauser                        $1 - $10,000                   $1 - $10,000
Richard C. Rantzow                       None                           None
INTERESTED TRUSTEE/DIRECTOR
Edmund J. Burke                          None                           None

</TABLE>

      During the past five calendar years, Mr. Lowry has had a material interest
in a trust (approximately $4,511,797 as of December 31, 2006) which owns units
of a limited partnership whose investments are managed by M.A. Weatherbie & Co.,
Inc., a portfolio manager of the Liberty All-Star Growth Fund, and whose general
partner is Weatherbie Limited Partnership. Mr. Benning also has had a material
interest in that trust (approximately $1,373,570 as of December 31, 2006).

      During the most recent fiscal year-end, Mr. Burke purchased shares of ALPS
Holdings, Inc., the parent company of AAI, totaling 1.85% of the outstanding
preferred shares of ALPS Holdings, Inc.

      As of December 31, 2006, no disinterested Trustee or any of their
immediate family members owned beneficially or of record any class of securities
of AAI, a Portfolio Manager or any person controlling, controlled by or under
common control with AAI or a Portfolio Manager.

      During the calendar years ended December 31, 2006 and December 31, 2005,
no disinterested Trustee (or their immediate family members) had any direct or
indirect interest in AAI, a Portfolio Manager or any person controlling,
controlled by or under common control with AAI or a Portfolio Manager.

      During the calendar years ended December 31, 2006 and December 31, 2005,
no disinterested Trustee (or their immediate family members) had any direct or
indirect material interest in any transaction or series of similar transactions
with (i) All-Star; (ii) another fund managed by AAI, a Portfolio Manager or a
person controlling, controlled by or under common control with AAI or a
Portfolio Manager; (iii) AAI or a Portfolio Manager; (iv) any person
controlling, controlled by or under common control with AAI or a Portfolio
Manager; or (v) an officer of any of the above.

      During the calendar years ended December 31, 2006 and December 31, 2005,
no disinterested Trustee (or their immediate family members) had any direct or
indirect relationship with (i) All-Star; (ii) another fund managed by AAI, a


                                       21
<PAGE>

Portfolio Manager or a person controlling, controlled by or under common control
with AAI or a Portfolio Manager; (iii) AAI or a Portfolio Manager; (iv) a person
controlling, controlled by or under common control with AAI or a Portfolio
Manager; or (v) an officer of any of the above.

      During the calendar years ended December 31, 2006 and December 31, 2005,
no officer of AAI, a Portfolio Manager or any person controlling, controlled by
or under common control with AAI or a Portfolio Manager served on the board of
directors of a company where a disinterested Trustee of All-Star or any of their
immediate family members served as an officer.

APPROVING THE INVESTMENT ADVISORY CONTRACTS
- -------------------------------------------

      A discussion of the factors considered by the Board of Trustees in
approving the current Fund Management Agreement and Portfolio Management
Agreements may be found in All-Star's annual shareholder report for the year
ended December 31, 2006.

GENERAL
- -------

      The Board of Trustees is divided into three classes, each of which serves
for three years. The term of office of one of the classes expires at the final
adjournment of the annual meeting of shareholders (or special meeting in lieu
thereof) each year or such later date as his successor shall have been elected
and shall have qualified. All-Star holds annual meetings of shareholders to vote
on, among other things, the election or re-election of the Trustees whose terms
are expiring with that meeting. Unless each is elected at that meeting, the term
of office of Mssrs. Lowry, Neuhauser and Rantzow will expire upon the final
adjournment of the 2007 annual meeting; the term of office of Messrs. Brock and
Gaspari will expire upon final adjournment of the annual meeting for the year
2008 and the term of office of Mssrs. Benning and Burke will expire upon the
final adjournment of the 2009 annual meeting. All-Star's Trustees are also
Directors of Liberty All-Star Growth Fund, Inc., another closed-end multi-
managed fund managed by AAI.

TRUSTEE COMPENSATION
- --------------------

      The following table shows, for the year ended December 31, 2006, the
compensation received from All-Star by each Trustee, and the aggregate
compensation paid to each Trustee for service on the Boards of funds within the
Fund Complex. All-Star has no bonus, profit sharing or retirement plans.

COMPENSATION TABLE
- ------------------

                           Aggregate Compensation      Total Compensation from
                               from All-Star           the Fund Complex(1)(2)
- -------------------------------------------------------------------------------
 DISINTERESTED TRUSTEES
 John A. Benning           $33,902.96                  $44,500.00
 Thomas W. Brock(2)        $29,709.33                  $39,000.00
 George R. Gaspari         None                        None
 Richard W. Lowry(2)       $45,335.40                  $59,500.00
 John J. Neuhauser(2)      $37,713.79                  $49,500.00


                                       22
<PAGE>

 Richard C. Rantzow        None                        None
 INTERESTED TRUSTEE
 William E. Mayer(2)(3)    $10,296.90                  $13,500.00
 Edmund J. Burke           None                        None

(1)   Prior to December 2006, in addition to receiving compensation for their
      services as Trustees of the Liberty All-Star Equity Fund and Liberty All-
      Star Growth Fund, Inc. ("Funds"), Messrs. Lowry, Neuhauser and Mayer
      received compensation for service as Trustees of the Columbia Funds group
      of funds, and Mr. Brock received compensation for service as
      Director/Manager of the Registered Hedge Funds as defined below. As of
      December 18, 2006, the Fund became part of the ALPS Advisers, Inc., fund
      complex ("Fund Complex").  At this time, the Funds are the only two funds
      in the Fund Complex.

(2)   At December 31, 2006, Messrs. Lowry, Mayer and Neuhauser also served as
      trustees of 78 open-end and 7 closed-end management investment company
      portfolios within the Columbia Funds group of funds. As of December 31,
      2006, Mr. Brock also served as manager or director of BACAP Alternative
      Multi-Strategy Fund, LLC and Columbia Management Multi-Strategy Hedge
      Fund, LLC (the "Registered Hedge Funds").

(3)   Mr. Mayer resigned from the Boards effective April 2006.

PORTFOLIO MANAGERS
- ------------------

CHASE INVESTMENT COUNSEL CORPORATION ("CHASE")

      MANAGEMENT. The portion of All-Star allocated to Chase is managed by a
team of investment professionals directed by David B. Scott, Chief Investment
Officer and including Derwood S. Chase, Jr., President, Brian J. Lazorishak,
Vice President, Peter W. Tuz, Vice President, and Peter C. Wood, Vice President.
All Chase accounts are managed on a team basis by this team.

DERWOOD S. CHASE, JR., CIC
PRESIDENT, FOUNDER AND DIRECTOR

      Mr. Chase earned a BS with Distinction from the University of Virginia in
1952 and a MBA from Harvard University in 1954.  His speeches, articles and
comments on investing and economic policy have been quoted in Barron's, Business
Week, The Wall Street Journal, Pensions & Investments, Kiplinger's Personal
Finance, The New York Times, and Value Line Mutual Fund Survey.  He has appeared
on CNBC, The Nightly Business Report (PBS) and Bloomberg.  Derwood is a
Chartered Investment Counselor, a member of the Analysts Club (N.Y.C.), the New
York and Richmond Societies of Financial Analysts, a former Governor of the
Investment Counsel Association of America, a member of the Mont Pelerin Society,
President of the Chase Foundation of Virginia, and a trustee of the Reason
Foundation.

DAVID B. SCOTT, CFA, CIC
SENIOR VICE PRESIDENT AND DIRECTOR
CHIEF INVESTMENT OFFICER

      Mr. Scott earned his BA in 1977 and a MBA with Honors in 1980 from the
College of William and Mary.  Before joining us in 1994, he had 15 years of
experience as an analyst and portfolio manager.  He is a CFA charter holder and
a member of The Richmond Society of Financial Analysts.  He has been quoted in
Barron's, Business Week, Kiplinger's Personal Finance, The New York Times, and
Value Line Mutual Fund Survey.  He has been a guest speaker on CNBC.



                                       23
<PAGE>

BRIAN J. LAZORISHAK, CFA, CIC, CIPM, CMT
VICE PRESIDENT
PORTFOLIO MANAGER & QUANTITATIVE ANALYST

      Mr. Lazorishak earned a BS in Psychology and Business Cum Laude from the
University of Pittsburgh in 1994.  Brian joined us in 1997.  He serves as a
portfolio manager and concentrates on quantitative and technical research.
Brian is a CFA charter holder, a CIPM certificate holder and a Chartered Market
Technician.  He is a member of the Richmond Society of Financial Analysts.

PETER W. TUZ, CFA
VICE PRESIDENT
SENIOR SECURITY ANALYST & PORTFOLIO MANAGER

      Mr. Tuz earned his BA from Ripon College in 1976, a MA from the University
of Missouri in 1979, and a MBA from Tulane University in 1984.  Peter is a CFA
charter holder.  Before joining us in 1997 he had 10 years experience as a
senior analyst and officer with two NYSE member firms.  He is a member of the
Richmond & Washington Societies of Financial Analysts.

PETER C. WOOD, CFA
VICE PRESIDENT
SENIOR SECURITY ANALYST & PORTFOLIO MANAGER

      Mr. Wood earned his BA from Duke University in 1979 and a MBA from Indiana
University in 1985.  Peter is a CFA charter holder.  Before joining us in 1997
he had 10 years experience as a senior security analyst concentrating in
technology.  He is a member of the New York and Richmond Societies of Financial
Analysts.

      OTHER ACCOUNTS. The table below provides information regarding the other
accounts managed by the team of investment professionals listed above as of
December 31, 2006:


<TABLE>
<CAPTION>

                                                               NUMBER OF
                                                                ACCOUNTS
                                                              MANAGED FOR
                                                             WHICH ADVISORY      ASSETS MANAGED FOR
                          NUMBER OF                              FEE IS          WHICH ADVISORY FEE
                          ACCOUNTS          TOTAL ASSETS      PERFORMANCE-        IS PERFORMANCE-
    TYPE OF ACCOUNT        MANAGED            MANAGED            BASED                 BASED
- ----------------------   -------------   -----------------  -----------------    -------------------
<S>                            <C>          <C>                    <C>                  <C>

Registered Investment          2            $618 million           0                    N/A
Companies

Other pooled investment        0                 0                 0                    N/A
vehicles

Other accounts                226          $5,854 million          0                    N/A

</TABLE>

                                       24
<PAGE>

      COMPENSATION STRUCTURE.  In addition to competitive salary (including 401K
and profit-sharing), all investment professionals are equity shareholders of the
firm and participate in the overall success of the firm through distributions
from the corporation.  Distributions are directly related to the individual's
percentage ownership of the corporation.  No portion of the fixed base salary of
the portfolio managers is tied to the management or the performance of the Fund
or to the performance of the Advisor's separately managed accounts.  The
portfolio managers as equity owners of the Advisor do not receive a salary
bonus.  As the firm is a subchapter S corporation, all net earnings are
distributed to the portfolio managers and the firm's other equity owners.  Mr.
Chase also receives a portion of the consulting fees received by the firm for
work he performs on alternative oil and gas investments.

      OWNERSHIP BY PORTFOLIO MANAGERS.  None of the individuals responsible for
the day-to-day management of All-Star own any shares of All-Star.

MATRIX ASSET ADVISORS, INC. ("MATRIX")
- --------------------------------------

      MANAGEMENT. The portion of All-Star allocated to Matrix is managed by
David A. Katz, Head of the Investment Policy Committee. Mr. Katz, CFA, graduated
summa cum laude from Union College with a Bachelor of Arts degree in Economics.
He received a Master of Business Administration degree, with a concentration in
Finance, from New York University Graduate School of Business in 1987,
graduating with distinction. His numerous works on Value Investing have earned
him various awards and distinctions at the undergraduate and graduate levels.
Mr. Katz is a Chartered Financial Analyst. After initially working at Management
Asset Corporation (Westport, CT), Mr. Katz co-founded Value Matrix Management
with John M. Gates in 1986. He served as the firm's Senior Vice President and
Chief Investment Officer and was Head of the Investment Policy Committee. In
1990 he merged the Value Matrix Management organization into Matrix Asset
Advisors. Mr. Katz is the firm's President and Chief Investment Officer, chairs
the Investment Policy Committee and is a Portfolio Manager/Analyst.

      OTHER ACCOUNTS. The table below provides information regarding the other
accounts managed by Mr. Katz as of December 31, 2006:


<TABLE>
<CAPTION>

                                                               NUMBER OF
                                                                ACCOUNTS
                                                              MANAGED FOR
                                                             WHICH ADVISORY      ASSETS MANAGED FOR
                          NUMBER OF                              FEE IS          WHICH ADVISORY FEE
                          ACCOUNTS          TOTAL ASSETS      PERFORMANCE-        IS PERFORMANCE-
    TYPE OF ACCOUNT        MANAGED            MANAGED            BASED                 BASED
- ----------------------   -------------   -----------------  -----------------    -------------------
<S>                       <C>                <C>                  <C>                <C>
DAVID A. KATZ

Registered Investment       4                $586 million         0                      N/A
Companies

Other pooled investment     1                $10 million          1                  $10 million
vehicles

Other accounts             445               $812 million         4                  $6 million

</TABLE>


                                       25
<PAGE>

      COMPENSATION STRUCTURE. Matrix Portfolio Managers, including Mr. Katz, are
paid competitively with meaningful potential bonuses based on individual
performance and firm success. Base salary is approximately 50-75% of total
compensation, with bonus, equity and profit sharing participation. Discretionary
bonus is based on overall performance of the firm, and not performance of any
particular account. Portfolio Managers are incented through competitive
compensation and benefits, as well as high degrees of responsibility, input and
autonomy. The firm has created a "stakeholder" program and profit sharing plan,
in which key personnel are granted participation in the profitability of the
firm in a parallel fashion as the owners of the firm.

      Such participation is contingent on continued employment. In addition, the
firm has offered equity ownership to retain key investment professionals.

      OWNERSHIP BY PORTFOLIO MANAGERS. Mr. Katz does not own any shares of All-
Star.

PZENA INVESTMENT MANAGEMENT, LLC ("PZENA")
- ------------------------------------------

      MANAGEMENT. The portion of All-Star allocated to Pzena is managed by a
team of portfolio managers. Individual portfolio managers on the team do not
have any latitude to make independent portfolio decisions. All decisions require
unanimous consent of a three-person portfolio management team. For the Fund,
Rich Pzena, John Goetz, and Tony DeSpirito have joint decision-making
responsibility and "veto authority" over any decision.

      Richard S. Pzena - Mr. Pzena is the Founder, Managing Principal, Chief
Executive Officer and Co-Chief Investment Officer of the firm. Prior to forming
Pzena Investment Management in 1995, Mr. Pzena was the Director of U.S. Equity
Investments and Chief Research Officer for Sanford C. Bernstein & Company. He
joined Bernstein in 1986 as an oil industry analyst and was named to the
Institutional Investor All America Research Team from 1988-1990. During 1990 and
1991, Mr. Pzena served as Chief Investment Officer, Small Cap Equities, and
assumed his broader domestic equity role in 1991. Prior to joining Bernstein,
Mr. Pzena worked for the Amoco Corporation in various financial and planning
roles. He earned a B.S. summa cum laude and an M.B.A. from the Wharton School of
the University of Pennsylvania in 1979 and 1980 respectively.

      John P. Goetz - Mr. Goetz is a Managing Principal and Co-Chief Investment
Officer at the firm. Prior to joining Pzena Investment Management in 1996, Mr.
Goetz held a range of key positions at Amoco Corporation for over 14 years, most
recently as the Global Business Manager for Amoco's $1 billion polypropylene
business where he had bottom line responsibility for operations and development
worldwide. Prior positions included strategic planning, joint venture
investments and project financing in various oil and chemical businesses. Prior
to joining Amoco, Mr. Goetz had been employed by The Northern Trust Company and
Bank of America. He earned a B.A. summa cum laude in Mathematics and Economics
from Wheaton College in 1979 and an M.B.A. from the Kellogg School at
Northwestern University in 1982.

      Antonio DeSpirito, III - Mr. DeSpirito is a Principal and Portfolio
Manager of Large Cap Value. Previously, Mr. Despirito was one of the Portfolio
Managers of Pzena Investment Management's Small Cap Value service. Prior to


                                       26
<PAGE>

joining Pzena Investment Management in 1996, Mr. DeSpirito was an Associate in
the Corporate Department at the Boston based law firm of Ropes & Gray. At Ropes
& Gray, he advised clients in the direct television, financial services,
fitness, packaging films, retail, software, and wire and cable industries. Mr.
DeSpirito earned a B.S. summa cum laude from the Wharton School of the
University of Pennsylvania in 1990 and a J.D. magna cum laude from Harvard Law
School in 1993.

      OTHER ACCOUNTS. The table below provides information regarding the other
accounts managed by Messrs. Pzena, Goetz and DeSpiritio,  as of December 31,
2006.


<TABLE>
<CAPTION>

                                                                       NUMBER OF
                                                                        ACCOUNTS
                                                                      MANAGED FOR
                                                                     WHICH ADVISORY            ASSETS MANAGED FOR
                               NUMBER OF                                 FEE IS                WHICH ADVISORY FEE
                               ACCOUNTS          TOTAL ASSETS         PERFORMANCE-              IS PERFORMANCE-
    TYPE OF ACCOUNT             MANAGED            MANAGED               BASED                       BASED
- ----------------------        -------------   -----------------     -----------------          -------------------
<S>                            <C>                <C>                     <C>                       <C>

RICHARD S. PZENA

Registered Investment           9                 $9,641 million          0                              N/A
Companies

Other pooled investment        109                $3,314 million          1                          $12 million
vehicles

Other accounts                 440                $12,802 million         12                        $1,961 million


JOHN GOETZ

Registered Investment          11                 $9,696 million          0                              N/A
Companies

Other pooled investment        119                $4,400 million          1                          $12 million
vehicles

Other accounts                 441                $12,935 million         12                        $1,961 million


ANTONIO DESPIRITO, III

Registered Investment           7                 $9,529 million          0                              N/A
Companies

Other pooled investment        45                 $2,590 million          0                              N/A
vehicles

Other accounts                 135                $5,626 million          8                         $1,088 million

</TABLE>

      COMPENSATION STRUCTURE. Pzena portfolio managers, including Messrs Pzena,
Goetz and DeSpirito, and other investment professionals at Pzena are compensated
through a combination of a fixed base salary, performance bonus and equity
ownership, if appropriate due to superior personal performance. Pzena avoids a


                                       27
<PAGE>

compensation model that is driven by individual security performance, as it
believes this can lead to short-term thinking which is contrary to the firm's
value investment philosophy. Pzena considers both quantitative and qualitative
factors when determining performance bonuses; however, performance bonuses are
not based directly on the performance of the Fund or other clients. For
investment professionals, Pzena examines such things as effort, efficiency,
ability to focus on the correct issues, stock modeling ability, and ability to
successfully interact with company management. However, Pzena always looks at
the person as a whole and the contributions that he/she has made and is likely
to make in the future. Pzena annually evaluates employees' eligibility for
performance bonus compensation.

      OWNERSHIP BY PORTFOLIO MANAGERS. None of the individuals at the firm
responsible for the day-to-day management of All-Star owns any shares of the
Fund.

SCHNEIDER CAPITAL MANAGEMENT CORPORATION ("SCHNEIDER")
- ------------------------------------------------------

      MANAGEMENT:  The portion of All-Star allocated to Schneider is managed by
Arnold C. Schneider III, CFA. Mr. Schneider serves as President and Chief
Investment Officer and manages the portion of All-Star allocated to Schneider.
Prior to founding Schneider, Mr. Schneider was a Senior Vice President and
Partner of the Wellington Management Company. He has earned the right to use the
CFA Institute Chartered Financial Analyst designation. Mr. Schneider received a
B.S. in Finance from the McIntire School of Commerce of the University of
Virginia.

      OTHER ACCOUNTS. The table below provides information about the other
accounts managed by Mr. Schneider as of December 31, 2006:

<TABLE>
<CAPTION>

                                                                       NUMBER OF
                                                                        ACCOUNTS
                                                                      MANAGED FOR
                                                                     WHICH ADVISORY            ASSETS MANAGED FOR
                               NUMBER OF                                 FEE IS                WHICH ADVISORY FEE
                               ACCOUNTS          TOTAL ASSETS         PERFORMANCE-              IS PERFORMANCE-
    TYPE OF ACCOUNT             MANAGED            MANAGED               BASED                       BASED
- ----------------------        -------------   -----------------     -----------------          -------------------
<S>                            <C>              <C>                       <C>                       <C>

ARNOLD C. SCHNEIDER III

Registered Investment             7             $1.222 million            0                         N/A
Companies

Other pooled investment           6              $901 million             0                         N/A
vehicles

Other accounts                   40             $3,320 million            0                         N/A

</TABLE>


      COMPENSATION STRUCTURE. Mr. Schneider's compensation consists of a fixed
base salary and a bonus. A portion of his bonus may be deferred. Generally, his
salary is fixed at the beginning of each year; his bonus and any deferred
compensation are discretionary and based on the overall profitability of the
firm.



                                       28
<PAGE>

      OWNERSHIP BY PORTFOLIO MANAGER. Mr. Schneider does not own any shares of
All-Star.

TCW INVESTMENT MANAGEMENT COMPANY ("TCW")
- -----------------------------------------

      MANAGEMENT. The portion of All-Star allocated to TCW is managed by Craig
C. Blum and Stephen A. Burlingame.

      Craig C. Blum, CFA, Portfolio Manager, Managing Director US Equities - Mr.
Blum is Co-Portfolio Manager of the Concentrated Core and Select Equities
investment strategies. He joined TCW in 1999 as part of a program designed to
fast-track high potential individuals, providing them with in-depth knowledge of
the firm's various investment groups. After gaining experience in the High Yield
and Mortgage-Backed Securities Groups, in 2000 Mr. Blum joined the US Equity
Research Group as an Analyst covering data networking, communications equipment,
and enterprise hardware and software companies. In 2002, Mr. Blum became a
member of the Concentrated Core / Select Equities Group, and in 2004 he was
promoted to Co-Portfolio Manager. Prior to joining TCW, Mr. Blum focused on
commercial mortgage-backed securities cash flow modeling and deal structuring as
a Senior Analyst with FMAC Capital Markets. Prior to that, he worked in
institutional sales and mortgage-backed securities analysis at PaineWebber. Mr.
Blum began his investment career in 1994 at Merrill Lynch where he developed a
financial advisory business focused on high net worth and corporate clients. He
has more than 10 years experience in the investment management industry. Mr.
Blum received his Bachelor of Science in Applied Mathematics and Computer
Science from the University of California at Los Angeles (UCLA) in 1993, and his
MBA in Finance from the UCLA Anderson Graduate School of Management in 1999. Mr.
Blum is a CFA charterholder.

      Stephen A. Burlingame, Portfolio Manager, Managing Director, US Equities -
Mr. Burlingame is Co-Portfolio Manager of the Concentrated Core and Select
Equities investment strategies at TCW. Previously, Mr. Burlingame was a member
of the Concentrated Core/ Select Equities team, having joined TCW in 2000 as a
health care analyst in the US Equity Research group.  Prior to joining TCW, Mr.
Burlingame was an analyst with Brandywine Asset Management from 1999 to 2000.
Between 1996 and 1999, Mr. Burlingame completed internships at two different
asset management firms. Mr. Burlingame graduated cum laude from Claremont
McKenna College in 1999 with a Bachelor of Arts degree in Economics and a minor
in Spanish.

      OTHER ACCOUNTS. The table below provides information about the other
accounts managed by Messrs. Blum and Burlingame as of December 31, 2006:

<TABLE>
<CAPTION>

                                                                       NUMBER OF
                                                                        ACCOUNTS
                                                                      MANAGED FOR
                                                                     WHICH ADVISORY            ASSETS MANAGED FOR
                               NUMBER OF                                 FEE IS                WHICH ADVISORY FEE
                               ACCOUNTS          TOTAL ASSETS         PERFORMANCE-              IS PERFORMANCE-
    TYPE OF ACCOUNT             MANAGED            MANAGED               BASED                       BASED
- ----------------------        -------------   -----------------     -----------------          -------------------
<S>                             <C>                <C>                       <C>                     <C>
CRAIG C. BLUM

Registered Investment            9                 $4,639.4 million          0                       N/A
Companies



                                       29

</TABLE>


<PAGE>

<TABLE>
<CAPTION>

<S>                             <C>                <C>                       <C>                     <C>
Other pooled investment          5                 $1,871.2 million          1                        $601.4 million
vehicles

Other accounts                  137                $10,399.6 million         6                       $1,349.2 million


STEPHEN A. BURLINGAME

Registered Investment            9                 $4,639.4 million          0                             N/A
Companies

Other pooled investment          5                 $1,871.2 million          1                        $601.4 million
vehicles

Other accounts                  137                $10,399.6 million         6                       $1,349.2 million

</TABLE>

      COMPENSATION STRUCTURE. The overall objective of the compensation program
for portfolio managers is for TCW Investment Management Company (the "Advisor")
to attract what it considers competent and expert investment professionals and
to retain them over the long-term. Compensation is comprised of several
components which, in the aggregate, are designed to achieve these objectives and
to reward the portfolio managers for their contribution to the success of their
clients and the Advisor and its affiliates within The TCW Group (collectively,
"TCW"). Portfolio managers are compensated through a combination of base salary,
profit sharing based compensation ("profit sharing"), bonus and equity incentive
participation in the Advisor's immediate parent, The TCW Group, Inc. and/or
ultimate parent, Societe Generale ("equity incentives"). Profit sharing and
equity incentives generally represent most of the portfolio managers'
compensation. In some cases, portfolio managers are eligible for discretionary
bonuses.

SALARY. Salary is agreed to with managers at time of employment and is reviewed
from time to time. It does not change significantly and often does not
constitute a significant part of the portfolio manager's compensation.

PROFIT SHARING. Profit sharing is linked quantitatively to a fixed percentage of
income relating to accounts in the investment strategy area for which the
portfolio managers are responsible and is paid quarterly. Profit sharing may be
determined on a gross basis, without the deduction of expenses; in most cases,
revenues are allocated to a pool and profit sharing compensation is paid out
after the deduction of group expenses. The profit sharing percentage used to
compensate a portfolio manager for management of the Fund is generally the same
as that used to compensate them for all other client accounts they manage in the
same strategy for TCW, with limited exceptions involving grandfathered accounts
(accounts that become clients of TCW before or after a specified date or former
clients of a manager that joined TCW from another firm), firm capital of TCW or
accounts sourced through a distinct distribution channel. Income included in a
profit sharing pool will relate to the products managed by the portfolio
manager. In some cases, the pool includes revenues related to more than one
equity or fixed income product where the portfolio managers work together as a
team, in which case each participant in the pool is entitled to profit sharing
derived from all the included products. In certain cases, a portfolio manager
may also participate in a profit sharing pool that includes revenues from
products besides the strategies offered in the TCW Funds, including alternative


                                       30
<PAGE>

investment products (as described below); the portfolio manger would be entitled
to participate in such pool where he or she supervises, is involved in the
management of, or is associated with a group, other members of which manage,
such products. Profit sharing arrangements are generally the result of agreement
between the portfolio manager and TCW, although in some cases they may be
discretionary based on supervisor allocation.

In some cases, the profit sharing percentage is subject to increase based on the
relative pre-tax performance of the investment strategy composite returns, net
of fees and expenses, to that of the benchmark. The measurement of performance
relative to the benchmark can be based on single year or multiple year metrics,
or a combination thereof. The benchmark used is the one associated with the Fund
managed by the portfolio manager as disclosed in the prospectus, except in the
case of the Growth Insights Fund where profit sharing of managers is tied to the
full menu of TCW-managed equity products that outperform their associated
benchmarks. Benchmarks vary from strategy to strategy but, within a given
strategy, the same benchmark applies to all accounts, including All-Star. In the
case of the Equities and Focused Equities Funds, which have two benchmarks, the
Russell 1000 Value is used.

Certain accounts of TCW (but not All-Star) have a performance (or incentive) fee
in addition to or in lieu of an asset-based fee. For these accounts, the profit
sharing pool from which the portfolio managers' profit sharing compensation is
paid will include the performance fees. For investment strategies investing in
marketable securities such as those employed in All-Star, the performance fee
normally consists of an increased asset-based fee, the increased percentage of
which is tied to the performance of the account relative to a benchmark (usually
the benchmark associated with the strategy). In these marketable securities
strategies, the profit sharing percentage applied relative to performance fees
is generally the same as it is for the asset-based fees chargeable to the Fund.
In the case of alternative investment strategies and TCW's "alpha" strategies,"
performance fees are based on the account achieving net gains over a specified
rate of return to the account or to a class of securities in the account. Profit
sharing for alternative investment strategies may also include structuring or
transaction fees. "Alpha strategies" are those in which the strategy seeks to
provide incremental risk-adjusted return relative to a LIBOR rate of return
through alpha and beta isolation techniques, that include the use of options,
forwards and derivative instruments. "Alternative investment strategies" include
(a) mezzanine or other forms of privately placed financing, distressed
investing, private equity, project finance, real estate investments, leveraged
strategies (including short sales) and other similar strategies not employed by
All-Star or (b) strategies employed by the Funds that are offered in structured
vehicles, such as collateralized loan obligations or collateralized debt
obligations or in private funds (sometimes referred to as hedge funds). In the
case of certain alternative investment products in which a portfolio manager may
be entitled to profit sharing compensation, the profit sharing percentage for
performance fees may be lower or higher than the percentage applicable to the
asset-based fees.

DISCRETIONARY BONUS/GUARANTEED MINIMUMS. In general, portfolio managers do not
receive discretionary bonuses. However, in some cases where portfolio managers
do not receive profit sharing or where the company has determined the
combination of salary and profit sharing does not adequately compensate the
portfolio manager, discretionary bonuses may be paid by TCW. Also, pursuant to
contractual arrangements, some portfolio managers may be entitled to a mandatory
bonus if the sum of their salary and profit sharing does not meet certain
minimum thresholds.


                                       31
<PAGE>


EQUITY INCENTIVES. All portfolio managers participate in equity incentives based
on overall firm performance of TCW and its affiliates, through stock ownership
or participation in stock option or stock appreciation plans of TCW and/or
Societe Generale. The TCW 2001 and 2005 TCW Stock Option Plans provide eligible
portfolio managers the opportunity to participate in an effective economic
interest in TCW, the value of which is tied to TCW's annual financial
performance as a whole. Participation is generally determined in the discretion
of TCW, taking into account factors relevant to the portfolio manager's
contribution to the success of TCW. Portfolio managers participating in the TCW
2001 or 2005 TCW Stock Option Plan will also generally participate in Societe
Generale's Stock Option Plan which grants options on its common stock, the value
of which may be realized after certain vesting requirements are met. Some
portfolio managers are direct stockholders of TCW and/or Societe Generale, as
well.

OTHER PLANS AND COMPENSATION VEHICLES. Portfolio managers may also participate
in a deferred compensation plan that is generally available to a wide-range of
officers of TCW, the purpose of which is to allow the participant to defer
portions of income to a later date while accruing earnings on a tax-deferred
basis based on performance of TCW-managed products selected by the participant.
Portfolio managers may also elect to participate in TCW's 401(k) plan, to which
they may contribute a portion of their pre- and post-tax compensation to the
plan for investment on a tax-deferred basis.

Following the sale of TCW to Societe Generale in 2001, a retention plan was put
in place in which most portfolio managers then at TCW were entitled to
participate. The retention plan provides for payout of fixed bonus compensation
to participants at various milestones over the course of five years, the last of
which was paid in February 2007.

      OWNERSHIP BY PORTFOLIO MANAGERS. None of the individuals at the firm
responsible for the day-to-day management of All-Star owns any shares of All-
Star.

DESCRIPTION OF CERTAIN MATERIAL CONFLICTS OF INTEREST
- -----------------------------------------------------

      Material conflicts of interest may arise when an individual with day-to-
day management responsibilities for All-Star also manages other funds or
accounts.  (Information regarding other funds, pooled investment vehicles and
accounts managed by the Portfolio Managers is set forth in tables above.)  These
potential material conflicts of interest include the following conflicts:

      ALLOCATION OF LIMITED INVESTMENT OPPORTUNITIES.  From time to time an
investment opportunity that is suitable for multiple funds and/or accounts may
be limited.  In such circumstances the opportunity will have to be allocated
among the funds and/or accounts managed by a portfolio manager, decreasing All-
Star's ability to participate in the investment opportunity.

      TIME AND FOCUS.  A portfolio manager who manages several funds and/or
accounts may not devote equal time and attention to all of these funds and/or
accounts.  This may adversely affect the portfolio manager's performance with
respect to the funds and/or accounts to which he or she devotes less time.



                                       32
<PAGE>

      BROKER-DEALER SELECTION.  Some broker-dealers provide portfolio managers
with brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934), which may result in higher
brokerage fees.  (See "Portfolio Security Transactions" below.)  These services
may benefit certain funds or accounts more than others.  Although the payment of
commissions is subject to the requirement that a portfolio manager determines in
good faith that the commissions are reasonable in relation to the value of the
brokerage and research services provided to the fund, a portfolio manager's
decision as to the selection of brokers and dealers could yield disproportionate
costs and benefits among the funds and/or accounts that he or she manages.

      COMPENSATION DIFFERENCES.  To the extent a fund or account compensates a
portfolio manager (either directly or indirectly by paying the portfolio
manager's firm) more than other funds or accounts, the portfolio manager might
have an economic incentive for certain funds or accounts to succeed more than
others.  This may be the case where an advisory fee is greater, where a fund or
account pays a performance-based fee or where the portfolio manager or his or
her firm has an interest in the fund or account.

      ADDITIONAL BUSINESS.  AAI, the Portfolio Managers or their affiliates may
provide more service for some funds or accounts than for others.  For example,
an affiliate may provide distribution, recordkeeping or administration services
for one fund but not for others.  This may result in a portfolio manager
benefiting, either directly or indirectly, from some funds over others.

      Each of the Portfolio Managers has trade allocation and other policies and
procedures that it believes are reasonably designed to address these and other
conflicts of interest.

      None of the Portfolio Managers' own any equity securities issued by All-
Star.

POTENTIAL CONFLICTS OF INTEREST IN MANAGING MULTIPLE ACCOUNTS
- -------------------------------------------------------------

      Like other investment professionals with multiple clients, a portfolio
manager for a Fund may face certain potential conflicts of interest in
connection with managing both the Fund and other accounts at the same time. The
paragraphs below describe some of these potential conflicts, which may be faced
by investment professionals at most major financial firms. ALPS Advisors, Inc.
and the Fund have adopted compliance policies and procedures that attempt to
address certain of these potential conflicts.

      The management of accounts with different advisory fee rates and/or fee
structures, including accounts that pay advisory fees based on account
performance ("performance fee accounts"), may raise potential conflicts of
interest by creating an incentive to favor higher-fee accounts. These potential
conflicts may include, among others:

      o     The most attractive investments could be allocated to higher-fee
            accounts or performance fee accounts.

      o     The trading of higher-fee accounts could be favored as to timing
            and/or execution price. For example, higher-fee accounts could be
            permitted to sell securities earlier than other accounts when a


                                       33
<PAGE>

            prompt sale is desirable or to buy securities at an earlier and more
            opportune time.

      o     The trading of other accounts could be used to benefit higher-fee
            accounts (front- running).

      o     The investment management team could focus their time and efforts
            primarily on higher-fee accounts due to a personal stake in
            compensation.

      Potential conflicts of interest may also arise when the portfolio managers
have personal investments in other accounts that may create an incentive to
favor those accounts.

      A potential conflict of interest may arise when All-Star and other
accounts purchase or sell the same securities. On occasions when a Portfolio
Manager considers the purchase or sale of a security to be in the best interests
of All-Star as well as other accounts, the adviser's trading desk may, to the
extent permitted by applicable laws and regulations, aggregate the securities to
be sold or purchased in order to obtain the best execution and lower brokerage
commissions, if any. Aggregation of trades may create the potential for
unfairness to All-Star or another account if one account is favored over another
in allocating the securities purchased or sold - for example, by allocating a
disproportionate amount of a security that is likely to increase in value to a
favored account.

      "Cross trades," in which one account sells a particular security to
another account (potentially saving transaction costs for both accounts), may
also pose a potential conflict of interest. Cross trades may be seen to involve
a potential conflict of interest if, for example, one account is permitted to
sell a security to another account at a higher price than an independent third
party would pay. All-Star has adopted compliance procedures that provide that
any transactions between All-Star and another advised account are to be made at
an independent current market price, as required by law.

      Another potential conflict of interest may arise based on the different
investment objectives and strategies of All-Star and other accounts. For
example, another account may have a shorter-term investment horizon or different
investment objectives, policies or restrictions than All-Star. Depending on
another account's objectives or other factors, a portfolio manager may give
advice and make decisions that may differ from advice given, or the timing or
nature of decisions made, with respect to All-Star. In addition, investment
decisions are the product of many factors in addition to basic suitability for
the particular account involved. Thus, a particular security may be bought or
sold for certain accounts even though it could have been bought or sold for
other accounts at the same time. More rarely, a particular security may be
bought for one or more accounts managed by a portfolio manager when one or more
other accounts are selling the security (including short sales). There may be
circumstances when purchases or sales of portfolio securities for one or more
accounts may have an adverse effect on other accounts.

      A Portfolio Manager who is responsible for managing multiple funds and/or
accounts may devote unequal time and attention to the management of those funds
and/or accounts. As a result, the portfolio manager may not be able to formulate
as complete a strategy or identify equally attractive investment opportunities
for each of those accounts as might be the case if he or she were to devote


                                       34
<PAGE>

substantially more attention to the management of a single fund. The effects of
this potential conflict may be more pronounced where funds and/or accounts
overseen by a particular portfolio manager have different investment strategies.

      A Portfolio Manager may be able to select or influence the selection of
the brokers and dealers that are used to execute securities transactions for
All-Star. In addition to executing trades, some brokers and dealers provide
portfolio managers with brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934), which may
result in the payment of higher brokerage fees than might have otherwise be
available. These services may be more beneficial to certain funds or accounts
than to others. Although the payment of brokerage commissions is subject to the
requirement that the portfolio manager determine in good faith that the
commissions are reasonable in relation to the value of the brokerage and
research services provided to the fund, a Portfolio Manager's decision as to the
selection of brokers and dealers could yield disproportionate costs and benefits
among the funds and/or accounts that he or she manages.

      AAI or an affiliate may provide more services (such as distribution or
recordkeeping) for some types of funds or accounts than for others. In such
cases, a Portfolio Manager may benefit, either directly or indirectly, by
devoting disproportionate attention to the management of fund and/or accounts
that provide greater overall returns to the investment manager and its
affiliates.

      A Portfolio Manager may also face other potential conflicts of interest in
managing All-Star, and the description above is not a complete description of
every conflict that could be deemed to exist in managing both All-Star and other
accounts. In addition, a Fund's portfolio manager may also manage other accounts
(including their personal assets or the assets of family members) in their
personal capacity. The management of these accounts may also involve certain of
the potential conflicts described above. Investment personnel at AAI, including
each Portfolio Manager, are subject to restrictions on engaging in personal
securities transactions pursuant to Codes of Ethics adopted by AAI.

      Each Portfolio Manager has trade allocation and other policies and
procedures that it believes are reasonably designed to address these and other
potential conflicts of interest.

                        PORTFOLIO SECURITY TRANSACTIONS

      Each Portfolio Manager has discretion to select brokers and dealers to
execute portfolio transactions initiated by that Portfolio Manager for the
portion of All-Star's portfolio assets allocated to it, and to select the
markets in which such transactions are to be executed. The Portfolio Management
Agreements provide, in substance, that in executing portfolio transactions and
selecting brokers or dealers, the primary responsibility of the Portfolio
Manager is to seek to obtain best net price and execution for All-Star.

      The Portfolio Managers are authorized to cause All-Star to pay a
commission to a broker or dealer who provides research products and services to
the Portfolio Manager for executing a portfolio transaction which is in excess
of the amount of commission another broker or dealer would have charged for
effecting the same transaction. The Portfolio Managers must determine in good
faith, however, that such commission was reasonable in relation to the value of
the research products and services provided to them, viewed in terms of that


                                       35
<PAGE>

particular transaction or in terms of all the client accounts (including All-
Star) over which the Portfolio Manager exercises investment discretion. It is
possible that certain of the services received by a Portfolio Manager
attributable to a particular transaction will primarily benefit one or more
other accounts for which investment discretion is exercised by the Portfolio
Manager.

      In addition, under their Portfolio Management Agreements with All-Star and
AAI the Portfolio Managers, in selecting brokers or dealers to execute portfolio
transactions for All-Star, are authorized to consider (and AAI may request them
to consider) brokers or dealers that provide to AAI, directly or through third
parties, research products or services such as research reports; portfolio
analyses; compilations of securities prices, earnings, dividends and other data;
computer software, and services of one or more consultants. The commissions paid
on such transactions may exceed the amount of commission another broker would
have charged for effecting that transaction. Research products and services made
available to AAI include performance and other qualitative and quantitative data
relating to investment managers in general and the Portfolio Managers in
particular; data relating to the historic performance of categories of
securities associated with particular investment styles; mutual fund portfolio
and performance data; data relating to portfolio manager changes by pension plan
fiduciaries; and related computer software, all of which are used by AAI in
connection with its selection and monitoring of Portfolio Managers, the assembly
of an appropriate mix of investment styles, and the determination of overall
portfolio strategies.

      AAI from time to time reaches understandings with each of the Portfolio
Managers as to the amounts of All-Star's portfolio transactions initiated by
such Portfolio Manager that are to be directed to brokers and dealers which
provide or make available research products and services to AAI and the
commissions to be charged to the Funds in connection therewith. These amounts
may differ among the Portfolio Managers based on the nature of the market for
the types of securities managed by them and other factors.

      Although All-Star does not permit a Portfolio Manager to act or to have a
broker-dealer affiliate act as broker for portfolio transactions initiated by
it, the Portfolio Managers are permitted to place portfolio transactions
initiated by them with another Portfolio Manager or its broker-dealer affiliate
for execution on an agency basis, provided that the commission does not exceed
the usual and customary broker's commission being paid to other brokers for
comparable transactions and is otherwise in accordance with All-Star's
procedures adopted pursuant to Rule 17e-1 under the 1940 Act.

      During 2006, 2005 and 2004, All-Star paid total brokerage commissions of
$2,036,245, $1,732,272 and $2,068,207, respectively.  Approximately $475,820,
$337,576 and $393,454, respectively, of the commissions paid in 2006, 2005 and
2004 on transactions aggregating approximately $468,489,986, $267,946,166 and
$282,755,530, respectively, were paid to brokerage firms which provided or made
available to the Portfolio Managers or to AAI research products and services as
described above.



                                       36
<PAGE>

                                     TAXES

      The following discussion of federal income tax matters is based on the
advice of Kirkpatrick & Lockhart Preston Gates Ellis LLP, counsel to All-Star.
All-Star has elected to be, and intends to continue to qualify each year for
treatment as a regulated investment company (a "RIC") under the Internal Revenue
Code of 1986, as amended (the "Code"). Accordingly, All-Star intends to satisfy
certain requirements relating to sources of its income and diversification of
its assets and to distribute substantially all of its net income and net short-
term and long-term capital gains (after reduction by any available capital loss
carryforwards) in accordance with the timing requirements imposed by the Code,
so as to maintain its RIC status and to avoid paying any federal income or
excise tax. To the extent it qualifies for treatment as a RIC which includes
satisfying the above-mentioned distribution requirements, All-Star will not be
subject to federal income tax on income and gains it distributes to its
shareholders.

      All-Star's investments in options, futures contracts, hedging
transactions, forward contracts (to the extent permitted) and certain other
transactions will be subject to special tax rules (including mark-to-market,
constructive sale, straddle, wash sale, short sale and other rules), the effect
of which may be to accelerate income to All-Star, defer losses, cause
adjustments in the holding periods of securities it holds, convert capital gain
into ordinary income and convert short-term capital losses into long-term
capital losses. These rules could therefore affect the amount, timing and
character of distributions to shareholders. All-Star may be required to limit
its activities in options and futures contracts to enable it to maintain its RIC
status.

      Some futures contracts (other than "securities futures contracts," as
defined in Code section 1234B(c)), foreign currency contracts, and "nonequity"
options (i.e., certain listed options, such as those on a "broad-based"
securities index) in which All-Star invests may be subject to Code section 1256
(collectively "section 1256 contracts").  Any section 1256 contracts All-Star
holds at the end of its taxable year generally must be "marked-to-market" (that
is, treated as having been sold at that time for their fair market value) for
federal income tax purposes, with the result that unrealized gains or losses
will be treated as though they were realized.  Sixty percent of any net gain or
loss recognized on these deemed sales, and 60% of any net realized gain or loss
from any actual sales of section 1256 contracts, will be treated as long-term
capital gain or loss, and the balance will be treated as short-term capital gain
or loss.  These rules may operate to increase the amount that All-Star must
distribute to satisfy the distribution requirement applicable to RICs (i.e.,
with respect to the portion treated as short-term capital gain), which will be
taxable to its shareholders as ordinary income, and to increase the net capital
gain (the excess of net long-term capital gain over net short-term capital loss)
All-Star recognizes, without in either case increasing the cash available to it.
Section 1256 contracts also are marked-to-market for purposes of the 4% excise
tax described in the Prospectus.

      Dividends and interest All-Star receives, and gains it realizes, on
foreign securities may be subject to income, withholding, or other taxes foreign
countries and U.S. possessions impose that would reduce the yield and/or total
return on its investments.  Tax conventions between certain countries and the
United States may reduce or eliminate these taxes, however, and many foreign
countries do not impose taxes on capital gains in respect of investments by
foreign investors.



                                       37
<PAGE>

      All-Star may invest in the stock of "passive foreign investment companies"
("PFICs").  A PFIC is any foreign corporation (with certain exceptions) that, in
general, meets either of the following tests: (1) at least 75% of its gross
income for the taxable year is passive or (2) an average of at least 50% of its
assets produce, or are held for the production of, passive income.  Under
certain circumstances, All-Star will be subject to federal income tax on a
portion of any "excess distribution" it receives on the stock of a PFIC or of
any gain on its disposition of that stock (collectively "PFIC income"), plus
interest thereon, even if All-Star distributes the PFIC income as a dividend to
its shareholders.  The balance of the PFIC income will be included in All-Star's
investment company taxable income and, accordingly, will not be taxable to it to
the extent it distributes that income to its shareholders.  All-Star's
distributions thereof will not be eligible for the 15% maximum federal income
tax rate on individuals' "qualified dividend income" described in the
Prospectus.

      If All-Star invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, All-Star would be required to include in income each taxable year
its pro rata share of the QEF's annual ordinary earnings and net capital gain
which All-Star likely would have to distribute to satisfy the distribution
requirement and avoid imposition of the 4% excise tax mentioned in the
Prospectus    even if All-Star did not receive those earnings and gain from the
QEF.  In most instances it will be very difficult, if not impossible, to make
this election because some of the information required to make this election may
not be easily obtainable.

      All-Star may elect to "mark to market" any stock in a PFIC it owns at the
end of its taxable year.  "Marking-to-market," in this context, means including
in gross income each taxable year (and treating as ordinary income) the excess,
if any, of the fair market value of the stock over All-Star's adjusted basis
therein (including mark-to-market gain for each prior year for which an election
was in effect) as of the end of that year.  Pursuant to the election, All-Star
also would be allowed to deduct (as an ordinary, not capital, loss) the excess,
if any, of its adjusted basis in PFIC stock over the fair market value thereof
as of the taxable year-end, but only to the extent of any net mark-to-market
gains with respect to that stock All-Star included in income for prior taxable
years under the election.  All-Star's adjusted basis in each PFIC's stock
subject to the election would be adjusted to reflect the amounts of income
included and deductions taken thereunder.

      Investors should be aware that All-Star may not be able, at the time it
acquires a foreign corporation's shares, to ascertain whether the corporation is
a PFIC and that a foreign corporation may become a PFIC after All-Star acquires
shares therein.  While All-Star generally will seek to avoid investing in PFIC
shares to avoid the tax consequences detailed above, there are no guarantees
that it will be able to do so and it reserves the right to make such investments
as a matter of its investment policy.

TAXATION OF SHAREHOLDERS
- ------------------------

      All or a portion of a loss realized on a disposition of All-Star Shares
may be disallowed under "wash sale" rules to the extent the shareholder acquires
other shares of All-Star including within the period beginning 30 days before
the disposition of the loss shares and ending 30 days after such date. Any


                                       38
<PAGE>

disallowed loss will result in an adjustment to the shareholder's tax basis in
some or all of the other shares acquired.

      If the aggregate qualified dividend income (as defined in the Prospectus)
All-Star receives during any taxable year is 95% or more of its gross income,
then 100% of its dividends (other than properly designated capital gain
dividends) will be eligible to be treated as qualified dividend income by its
individual shareholders.  For this purpose, the only gain included in the term
"gross income" is the excess of net short-term capital gain over net long-term
capital loss (i.e., net capital gain is excluded).

      If, as stated in the Prospectus, All-Star retains any net capital gain, it
may designate all or part of the retained amount as undistributed capital gains
in a notice to its shareholders.  If it makes such a designation, it would be
required to pay federal income tax at the rate of 35% on the undistributed gain
("All-Star tax") and each shareholder subject to federal income tax (1) would be
required to include in income, as long-term capital gain, his, her or its
proportionate share of the designated gain (which, in the case of individuals,
would be taxed at a maximum federal income tax rate of 15%), (2) would be
entitled to credit his, her or its proportionate share of the All-Star tax
against his, her or its federal income tax liability, if any, and to claim a
refund to the extent the credit exceeds that liability, and (3) would increase
the tax basis in his, her or its All-Star shares by the difference between the
included income and such share of the All-Star tax.

      As described in the Prospectus, individuals and certain other non-
corporate All-Star shareholders may be subject to 28% backup withholding if any
such shareholder fails to provide a correct taxpayer identification number
("TIN") or certain required certifications.  An individual's TIN is generally
his or her social security number. Backup withholding is not an additional tax.
Any amounts withheld under the backup withholding rules from payments made to a
shareholder may be refunded or credited against such shareholder's U.S. federal
income tax liability, if any, provided that the required information is
furnished to the Internal Revenue Service.

      The foregoing discussion and the "Tax Matters" section in the Prospectus
do not address the special tax rules applicable to certain classes of investors,
such as tax-exempt entities, foreign investors, insurance companies and
financial institutions. Shareholders should consult their own tax advisers with
respect to special tax rules that may apply in their particular situations, as
well as the state, local, and, where applicable, foreign tax consequences of
investing in All-Star.

                             PRINCIPAL SHAREHOLDERS

      As of [________], all officers and Trustees of All-Star as a group owned
less than 1% of the Fund's outstanding shares.

                              FINANCIAL STATEMENTS

      PricewaterhouseCoopers LLP, are the independent registered public
accounting firm for the Fund.  PricewaterhouseCoopers LLP provides audit and tax
return review services and assistance and consultation in connection with the
review of various Securities and Exchange Commission filings.  Prior to
September, 1999, there were other independent auditors for the Fund.  The annual
audited financial statements incorporated by reference in this SAI have been so


                                       39
<PAGE>

incorporated, and the financial statements in the Prospectus have been so
included, in reliance upon the report of PricewaterhouseCoopers LLP given on
authority of said firm as experts in accounting.    The audited financial
statements contained in the All-Star's annual report for the fiscal year ended
December 31, 2006 and the unaudited financial statements contained in All-Star's
semi-annual report for the six months ended June 30, 2007 are incorporated
herein by reference.  Any statement contained in the Fund's annual and semi-
annual report that was incorporated herein shall be deemed modified or
superseded for purposes of the Prospectus or this SAI to the extent a statement
contained in the Prospectus or this SAI varies from such statement.  Any such
statement so modified or superseded shall not, except as so modified or
superseded, be deemed to constitute a part of the Prospectus or this SAI.  All-
Star will furnish, without charge, a copy of its Annual Report, upon request to
All-Star c/o ALPS Fund Services, Inc., 1290 Broadway, Suite 1100, Denver,
Colorado 80203, telephone number 1-800-542-3863.


                                       40
<PAGE>



                                   APPENDIX A

                            PROXY VOTING GUIDELINES


















                                       A-1

<PAGE>

PART C. - Other Information.

Item 25. Financial Statements and Exhibits

<TABLE>
<CAPTION>
(1)         Financial Statements:
                  Included in Part A:
                  Financial Highlights

                  Included in Part B:
                  Financial statements included in the Annual Report dated December
                  31, 2006 (5)
<S>  <C>    <C>
(2)         Exhibits
     (a)(1) Declaration of Trust dated 8/20/1986 as amended through 9/16/1986 (3)
- --------------------------------------------------------------------------------------------
     (a)(2) Amendment to Declaration of Trust dated 5/11/1993 (3)
- --------------------------------------------------------------------------------------------
     (b)    Amended By-Laws (2)
- --------------------------------------------------------------------------------------------
     (c)    Not Applicable
- --------------------------------------------------------------------------------
     (d)(1) Form of  Specimen Certificate for Shares of Beneficial Interest  (3)
- --------------------------------------------------------------------------------------------
     (d)(2) Form of Subscription Certificate*
- --------------------------------------------------------------------------------------------
     (d)(3) Form of Notice of Guaranteed Delivery*
- --------------------------------------------------------------------------------------------
     (e)    Automatic Dividend Reinvestment and Cash Purchase Plan Brochure, as
            amended  (1)
- --------------------------------------------------------------------------------------------
     (f)    Not Applicable
- --------------------------------------------------------------------------------------------
     (g)(1) Fund Management Agreement between Registrant and ALPS Advisers, Inc.
            dated 12/18/2006, filed herewith.
- --------------------------------------------------------------------------------------------
     (g)(2) Portfolio Management Agreement between Registrant, ALPS Advisers, Inc.
            and Pzena Investment Management, LLC dated 12/18/2006, filed herewith
- --------------------------------------------------------------------------------------------
     (g)(3) Portfolio Management Agreement between Registrant, ALPS Advisers, Inc.
            and Chase Investment Counsel Corporation dated 12/18/2006, filed herewith.
- --------------------------------------------------------------------------------------------
     (g)(4) Portfolio Management Agreement between Registrant, ALPS Advisers, Inc.
            and TCW Investment Management Company dated 12/18/2006, filed
            herewith.
- --------------------------------------------------------------------------------------------
     (g)(5) Portfolio Management Agreement between Registrant, ALPS Advisers, Inc.
            and Matrix Asset Advisors, Inc. dated 12/18/2006,
            filed herewith.
- --------------------------------------------------------------------------------------------
     (g)(6) Portfolio Management Agreement between Registrant, ALPS Advisers, Inc.
            and Schneider Capital Management Corporation dated 12/18/2006, filed
            herewith.
- --------------------------------------------------------------------------------------------
     (h)    Not Applicable
- --------------------------------------------------------------------------------------------
     (i)    Not Applicable
- --------------------------------------------------------------------------------------------
     (j)(1) Amended and Restated Master Custodian Agreement between Registrant and
            State Street Bank and Trust Company dated 09/19/2005, filed herewith.
- --------------------------------------------------------------------------------------------
     (j)(2) Custody Fee Schedule between Registrant and State Street Bank and Trust
            Company dated March 1, 2007*
- --------------------------------------------------------------------------------------------

<PAGE>

     (k)(1) Administration, Bookkeeping and Pricing Services Agreement between
            Registrant and ALPS Fund Services, Inc. dated 12/18/2006, filed herewith.
- --------------------------------------------------------------------------------------------
     (k)(2) Addendum to Administration, Bookkeeping and Pricing Services Agreement
            dated 04/09/2007, filed herewith.
- --------------------------------------------------------------------------------------------
     (k)(3) Form of Subscription Agreement between Registrant and Computershare, Inc.,
            filed herewith
- --------------------------------------------------------------------------------------------
     (k)(4) Form of Information Agent Agreement between Registrant and The Altman
            Group, Inc., filed herewith
- --------------------------------------------------------------------------------------------
     (k)(5) Transfer Agency and Service Agreement between Registrant and
            Computershare Shareholder Services, Inc. dated 8/1/2007, filed herewith
- --------------------------------------------------------------------------------------------
     (k)(6) Fee Schedule to Transfer Agency and Service Agreement dated 8/1/2007,
            filed herewith
- --------------------------------------------------------------------------------------------
     (l)    Opinion and Consent of Counsel*
- --------------------------------------------------------------------------------------------
     (m)    Not Applicable
- --------------------------------------------------------------------------------------------
     (n)    Consent of Independent Registered Public Accounting Firm*
- --------------------------------------------------------------------------------------------
     (o)    Not Applicable
- --------------------------------------------------------------------------------------------
     (p)    Not Applicable
- --------------------------------------------------------------------------------------------
     (q)    Not Applicable
- --------------------------------------------------------------------------------------------
     (r)(1) Code of Ethics of ALPS Advisers, Inc., filed herewith
- --------------------------------------------------------------------------------------------
     (r)(2) Code of Ethics of Registrant, filed herewith
- --------------------------------------------------------------------------------------------
(99)        Power of Attorney for: John A. Benning, Thomas W. Brock, Edmund J.
            Burke, George R. Gaspari, Richard W. Lowry, John J. Neuhauser, and
            Richard C. Rantzow dated August 21, 2007, filed herewith.
- --------------------------------------------------------------------------------------------
</TABLE>

      *To be filed by Amendment.

      (1)  Incorporated by reference to the Registration Statement on Form N-2
      filed with the Commission on February 23, 1998.

      (2)  Incorporated by reference to the Registration Statement on Form N-2
      filed with the Commission on February 22, 2002.

      (3)  Incorporated by reference to Pre-Effective Amendment No. 1 to the
      Registration Statement on Form N-2 filed with the Commission on March 28,
      2002.

      (4)  Incorporated by reference to the Registration Statement on Form N-2
      filed with the Commission on March 8, 2004.

      (5) Incorporated by reference to the Form N-CSR filed with the Commission
      on March 8, 2007.

Item 26.  Marketing Arrangements

     Not Applicable.

<PAGE>

Item 27.  Other Expenses of Issuance and Distribution

The following table sets forth the expenses to be incurred in connection with
the offering described in this Registration Statement:

      Registration Fee                     $
      New York Stock Exchange listing fee  $
      Printing                             $
      Accounting fees and expenses         $
      Legal fees and expenses              $
      Information Agent fees and expenses  $
      Subscription Agent fees and expenses $
      Miscellaneous                        $
                                     Total $


Item 28.  Persons Controlled By or Under Common Control with Registrant


     None.


Item 29.  Number of Holders of Securities

 (1) Title of Class           (2) Number of Record Holders as of [DATE]
 Liberty All-Star Equity Fund [         ]


Item 30.  Indemnification

See Article V to the Amended Declaration of Trust as filed as Exhibit (a)(1)
hereto.

Insofar as indemnification for liabilities arising under the Securities Act of
1933, may be provided to Trustees, officers and controlling persons of the
Registrant, pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.

<PAGE>

ITEM 31.  Business and Other Connections of Investment Adviser.

ALPS Advisers, Inc., the Registrant's Investment Adviser, was incorporated April
2, 2001 and is primarily engaged in the corporate administration of and the
provision of multi-management services for the Registrant and Liberty All-Star
Growth Fund, Inc., another multi-managed closed-end investment company.

Information regarding ALPS Advisers, Inc., and its officers and directors is set
forth in the Prospectus, in the Statement of Additional Information and in its
Form ADV (File No. 801-67135) filed with the Commission and is incorporated
herein by reference.

Item 32.      Location of Accounts and Records:

Registrant maintains the records required to be maintained by it under Rules
31a-1(a), 31a-1(b), and 31a-2(a) under the Investment Company Act of 1940 at its
principal executive offices at 1290 Broadway, Suite 1100, Denver, Colorado
80203.  Certain records, including records relating to Registrant's shareholders
and the physical possession of its securities, may be maintained pursuant to
Rule 31a-3 at the main office of Registrant's transfer agent or custodian.

Item 33.      Management Services

None

Item 34.      Undertakings

(1)  The Registrant undertakes to suspend the offering of shares until the
prospectus is amended, if subsequent to the effective date of this Registration
Statement, its net asset value declines more than ten percent from its net asset
value, as of the effective date of the Registration Statement or its net asset
value increases to an amount greater than its net proceeds as stated in the
prospectus.

(2)  Not applicable.

(3)  Not applicable.

(4)  Not applicable.

(5)  Registrant undertakes that, for the purpose of determining any liability
under the Securities Act, the information omitted from the form of prospectus
filed as part of the Registration Statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the Registrant pursuant to Rule
497(h) will be deemed to be a part of the Registration Statement as of the time
it was declared effective.

Registrant undertakes that, for the purpose of determining any liability under
the Securities Act, each post-effective amendment that contains a form of
prospectus will be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time
will be deemed to be the initial bona fide offering thereof.

<PAGE>

(6)  Registrant undertakes to send by first class mail or other means designed
to ensure equally prompt delivery, within two business days of receipt of a
written or oral request, any Statement of Additional Information constituting
Part B of this Registration Statement.

<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Denver, and State of Colorado, on the 21st day of
August, 2007.

                                                    Liberty All-Star Equity Fund

                                                 By: /s/ Tane T. Taylor
                                                     ---------------------------
                                                     Tane T. Taylor, Secretary


      Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

/s/ John A. Benning
- -------------------
John A. Benning*
Trustee

/s/ Thomas W. Brock
- -------------------
Thomas W. Brock*
Trustee

/s/ Edmund J. Burke
- -------------------
Edmund J. Burke*
Trustee

/s/ George R. Gaspari
- ---------------------
George R. Gaspari*
Trustee

/s/ Richard W. Lowry
- --------------------
Richard W. Lowry*
Trustee

/s/ John J. Neuhauser
- ---------------------
John J. Neuhauser*
Trustee

/s/ Richard C. Rantzow
- ----------------------
Richard C. Rantzow*
Trustee

*Signatures affixed by Tane T. Tyler, pursuant to a Power of Attorney dated
August 21, 2007.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2G
<SEQUENCE>2
<FILENAME>exhibit2g1.txt
<DESCRIPTION>EX-99.2G1
<TEXT>
                          LIBERTY ALL-STAR EQUITY FUND
                            FUND MANAGEMENT AGREEMENT

FUND  MANAGEMENT  AGREEMENT dated December 18, 2006,  between  Liberty  All-Star
Equity Fund, a business trust  organized  under the laws of the  Commonwealth of
Massachusetts (the "Trust"),  and ALPS Advisers,  Inc., a corporation  organized
under the laws of the State of Colorado ("Manager").

WHEREAS the Trust will operate as a  closed-end  investment  company  registered
under the  Investment  Company Act of 1940  ("Investment  Company  Act") for the
purpose of investing and  reinvesting  its assets in securities  pursuant to the
investment objectives, policies and restrictions set forth in its Declaration of
Trust and By-Laws, as amended from time to time, and its registration  statement
on Form N-2 under the Investment Company Act and the Securities Act of 1933 (the
"Registration Statement"),  all as heretofore amended and supplemented;  and the
Trust desires to avail itself of the services,  information,  advice, assistance
and facilities of the Manager and to have the Manager  provide or perform for it
various administrative, management and other services; and

WHEREAS the Manager is registered as an investment  adviser under the Investment
Advisers Act of 1940, as amended (the  "Advisers  Act"),  and desires to provide
services  to the  Trust in  consideration  of and on the  terms  and  conditions
hereinafter set forth;

NOW, THEREFORE, the Trust and the Manager agree as follows:

1.     EMPLOYMENT OF THE MANAGER. The Trust hereby employs the Manager to manage
the investment and reinvestment of the Trust's assets in the manner set forth in
Section 2(A) of this  Agreement  and to provide the other  services set forth in
Section 2 of this  Agreement,  subject to the direction of the Board of Trustees
and the officers of the Trust, for the period,  in the manner,  and on the terms
hereinafter  set forth.  The Manager hereby  accepts such  employment and agrees
during such period to render the services and to assume the  obligations  herein
set  forth.  The  Manager  shall  for all  purposes  herein  be  deemed to be an
independent  contractor  and shall,  except as expressly  provided or authorized
(whether  herein or  otherwise),  have no authority to act for or represent  the
Trust in any way or otherwise be deemed an agent of the Trust.

2.     OBLIGATION OF AND SERVICES TO BE  PROVIDED  BY THE  MANAGER.  The Manager
undertakes  to  provide  the  services  hereinafter  set forth and to assume the
following obligations:

A.     Investment Management Services.

(1)    The Manager shall have overall supervisory responsibility for the general
       management and investment of the Trust's assets and securities  portfolio
       subject to and in accordance with the investment objectives, policies and
       restrictions of the Trust,  and any directions which the Trust's Trustees
       may issue to the Manager from time to time.

(2)    The Manager shall provide overall investment  programs and strategies for
       the Trust,  shall revise such programs as necessary and shall monitor and
       report  periodically to the Trustees concerning the implementation of the
       programs.

(3)    The Trust  and the  Manager  intend to  appoint  one or more  persons  or
       companies  ("Portfolio  Managers"),  each such Portfolio  Manager to have
       full investment discretion and to make all determinations with respect to
       the  investment  and  reinvestment  of the portion of the Trust's  assets
       assigned to that Portfolio Manager and the purchase and sale of portfolio
       securities  with  those  assets,   all  within  the  Trust's   investment
       objectives, policies and restrictions, and the Trust will take such steps
       as may be necessary to implement such appointments. The Manager shall not
       be responsible  or liable for the investment  merits of any decision by a
       Portfolio Manager to purchase,  hold or sell a security for the portfolio
       of the Trust.  The Manager  shall  advise the Trustees of the Trust which
       Portfolio  Managers  the Manager  believes  are best suited to invest the
       assets  of  the  Trust;   shall  monitor  and  evaluate  the   investment
<PAGE>
       performance  of each  Portfolio  Manager  employed  by the  Trust;  shall
       allocate and  reallocate  the portion of the Trust's assets to be managed
       by each  Portfolio  Manager;  shall  recommend  changes of or  additional
       Portfolio  Managers  when  deemed  appropriate  by  the  Manager;   shall
       coordinate  and  monitor  the  investment  activities  of  the  Portfolio
       Managers to ensure  compliance  with the Trust's  investment  objectives,
       policies and restrictions  and applicable laws,  including the Investment
       Company Act and the Internal Revenue Code of 1986, as amended; shall have
       full investment discretion to make all determinations with respect to the
       investment of the Trust's assets not then managed by a Portfolio Manager;
       and shall  implement  procedures  reasonably  designed to ensure that the
       Portfolio  Managers  comply  with  the  Trust's  investment   objectives,
       policies and restrictions.

(4)    The  Manager  shall  render  regular  reports  to the  Trust,  at regular
       meetings of the Trustees,  of, among other things,  the decisions that it
       has made with  respect to the  allocation  of the  Trust's  assets  among
       Portfolio Managers.

(5)    The  Manager  shall  comply - and to the extent the  Manager  takes or is
       required to take action on behalf of the Trust  hereunder shall cause the
       Trust to  comply - with all  applicable  requirements  of the  Investment
       Company Act and other applicable  laws,  rules,  regulations,  orders and
       codes  of  ethics,  as  well  as  all  investment  objectives,  policies,
       restrictions  and  procedures  adopted  by  the  Trust  and  the  Trust's
       registration statement on Form N-2, Declaration of Trust and By-laws.

B.     Provision  of  Information   Necessary  for   Preparation  of  Securities
       Registration Statements, Amendments and Other Materials.

The  Manager  will  make  available  and  provide   financial,   accounting  and
statistical  information  concerning  the  Manager  required by the Trust in the
preparation of registration statements,  reports and other documents required by
Federal and state securities  laws, and such other  information as the Trust may
reasonably  request for use in the  preparation  of such  documents  or of other
materials necessary or helpful for the distribution of the Trust's shares.

C.     Other Obligations and Services.

(l)    The  Manager  will make  available  its  officers  and  employees  to the
       Trustees  and  officers  of the Trust for  consultation  and  discussions
       regarding  the  administration  and  management  of  the  Trust  and  its
       investment activities.

(2)    The  Manager  will  adopt a  written  code of ethics  complying  with the
       requirements  of Rule  204A-1  under the  Advisers  Act and of Rule 17j-1
       under the Investment  Company Act, and will provide the Trust with a copy
       of the code of ethics and  evidence of its  adoption.  Within  forty-five
       (45) days of the end of the last calendar quarter of each year while this
       Agreement  is in effect,  or at any other time  required  by the Board of
       Trustees,  the  President  or a Vice  President  or other  officer of the
       Manager shall certify to the Trust that the Manager has complied with the
       requirements  of Rule 17j-1 during the  previous  year and that there has
       been no violation of the Manager's code of ethics or, if such a violation
       has  occurred,  that  appropriate  action was taken in  response  to such
       violation.  Upon the  written  request of the Trust,  the  Manager  shall
       permit the Trust,  its  employees  or its agents to examine  the  reports
       required to be made by the Manager by Rule 17j-1(c)(2)(ii).

(3)    The  Manager  will  maintain  and  implement   compliance   policies  and
       procedures  that are reasonably  designed to ensure its  compliance  with
       Rule  206(4)-7  of the  Advisers  Act and to  prevent  violations  of the
       Federal  Securities  Laws (as defined in Rule 38a-1 under the  Investment
       Company Act). The Manager also will provide the Trust's Chief  Compliance
       Officer with periodic reports regarding the Manager's compliance with the
       Federal  Securities  Laws  and  the  Manager's  compliance  policies  and
       procedures,  which may include,  from time to time, a copy and/or summary
       of such compliance  policies and  procedures,  and a report of the annual
       review  determining the  effectiveness  of such  compliance  policies and
       procedures.

(4)    The  Manager  (or  upon  written  request  of the  Manager,  one or  more
       Portfolio Managers) will vote all proxies solicited by or with respect to

                                       2
<PAGE>

       the issuers of  securities  in which  assets of the Trust may be invested
       from time to time in accordance with such policies as shall be determined
       by the Manager, and reviewed and approved by the Board of Trustees.

3.     EXECUTION   AND  ALLOCATION  OF  PORTFOLIO  BROKERAGE  COMMISSIONS.   The
Portfolio  Managers,  subject to and in accordance with any directions the Trust
may  issue  from time to time, shall place, in the name of the Trust, orders for
the  execution  of the Trust's portfolio transactions. When placing such orders,
the obligation of each Portfolio Manager shall be as provided in the  applicable
Portfolio Management Agreement. The Manager will oversee the placement of orders
by Portfolio Managers in accordance with their respective  Portfolio  Management
Agreements and will render regular  reports to the Trust of the total  brokerage
business placed on behalf of the Trust by the Portfolio  Managers and the manner
in which such brokerage business has been allocated.

The Trust hereby  agrees that any entity or person  associated  with the Manager
that is a member of a national  securities  exchange is authorized to effect any
transaction  on such  exchange for the account of the Trust to the extent and as
permitted by Section  11(a)(1)(H)  of the  Securities  Exchange Act of 1934,  as
amended ("1934 Act").

Subject to the  appropriate  policies  and  procedures  approved by the Board of
Trustees, the Manager may, to the extent authorized by Section 28(e) of the 1934
Act,  cause  the  Trust to pay a broker or dealer  that  provides  brokerage  or
research  services to the Manager,  the Portfolio Manager or the Trust an amount
of  commission  for  effecting  a Trust  transaction  in excess of the amount of
commission  another  broker or dealer  would have  charged  for  effecting  that
transaction  if the  Manager  determines,  in good  faith,  that such  amount of
commission  is  reasonable  in  relationship  to the value of such  brokerage or
research  services  provided  in terms  of that  particular  transaction  or the
Manager's overall responsibilities to the Trust or its other investment advisory
clients.  To the  extent  authorized  by said  Section  28(e)  and the  Board of
Trustees,  the Manager  shall not be deemed to have acted  unlawfully or to have
breached  any duty created by this  Agreement  or otherwise  solely by reason of
such action.

4.     EXPENSES OF THE TRUST.  It is understood  that the Trust will pay all its
       expenses  other  than  those  expressly  assumed  by the  Manager,  which
       expenses payable by the Trust shall include:

A.     Fees of the Manager;

B.     Expenses of all audits by independent public accountants;

C.     Expenses of administrator,  transfer agent, pricing services, bookkeeping
       services,  registrar,  dividend  disbursing agent and shareholder  record
       keeping services  (including  reasonable fees and expenses payable to the
       Manager, or an affiliate of the Manager, for such services);

D.     Expenses of custodial services;

E.     Expenses of obtaining quotations for calculating the value of the Trust's
       net assets;

F.     Salaries  and other  compensation  of any of its  executive  officers and
       employees who are not officers,  directors,  stockholders or employees of
       the Manager or any of its affiliates;

G.     Taxes levied  against the Trust and the expenses of preparing tax returns
       and reports;

H.     Brokerage fees and  commissions in connection  with the purchase and sale
       of portfolio securities for the Trust;

I.     Expenses  associated with any offering  (subject to any written agreement
       by the Manager or an affiliate of the Manager to reimburse any portion of
       such expenses);

J.     Costs, including the interest expense, of borrowing money;

                                       3
<PAGE>
K.     Costs  and/or fees  incident to Trustee and  shareholder  meetings of the
       Trust,  the preparation and mailings of proxy material,  prospectuses and
       reports of the Trust to its  shareholders,  the  filing of  reports  with
       regulatory  bodies,  the  maintenance  of the  Trust's  legal  existence,
       membership   dues  and  fees  of  investment   company   industry   trade
       associations,  the  listing  (and  maintenance  of such  listing)  of the
       Trust's shares on stock  exchanges,  and the  registration of shares with
       Federal and state securities authorities;

L.     Legal fees and expenses  (including  reasonable  fees for legal  services
       rendered  by the  Manager or its  affiliates),  including  the legal fees
       related to the  registration  and continued  qualification of the Trust's
       shares for sale;

M.     Costs of printing stock certificates representing shares of the Trust, if
       any;

N.     Trustees' fees and expenses of Trustees who are not directors,  officers,
       employees or stockholders of the Manager or any of its affiliates;

O.     Fees for the fidelity bond  required by Section  17(g) of the  Investment
       Company Act, or other insurance premiums; and

P.     Fees  payable to Federal and state  authorities  in  connection  with the
       registration of the Trust's shares.

Q.     Nonrecurring and extraordinary expenses, such as indemnification payments
       or damages awarded in litigation or settlements made.

5.     ACTIVITIES AND AFFILIATES OF THE MANAGER.

A.     The services of the Manager to the Trust  hereunder  are not to be deemed
       exclusive,  and the  Manager and any of its  affiliates  shall be free to
       render similar  services to others.  The Manager shall use the same skill
       and  care  in the  management  of the  Trust's  assets  as it uses in the
       administration  of other accounts to which it provides asset  management,
       consulting and portfolio  manager  selection  services,  but shall not be
       obligated  to give the Trust more  favorable  or  preferential  treatment
       vis-a-vis its other clients.

B.     Subject to, and in accordance  with, the Declaration of Trust and By-Laws
       of the Trust and to Section  10(a) of the  Investment  Company Act, it is
       understood that Trustees,  officers, agents and shareholders of the Trust
       are or may be interested  in the Manager or its  affiliates as directors,
       officers,  agents or stockholders of the Manager or its affiliates;  that
       directors,  officers,  agents  and  stockholders  of the  Manager  or its
       affiliates  are or may be interested in the Trust as Trustees,  officers,
       agents, shareholders or otherwise; that the Manager or its affiliates may
       be interested  in the Trust as  shareholders  or otherwise;  and that the
       effect of any such  interests  shall be governed by said  Declaration  of
       Trust, By-Laws and the Investment Company Act.

6.     FEES  FOR  SERVICES: Compensation of Manager and Portfolio Managers.  The
compensation  of the  Manager for its  services  under this  Agreement  shall be
calculated and paid by the Trust in accordance with the attached  Exhibit A. The
Manager will  compensate  the  Portfolio  Managers as provided in the  Portfolio
Management Agreement entered into with the Portfolio Managers from time to time.

7.     LIABILITIES OF THE MANAGER.

A.     In the absence of willful  misfeasance,  bad faith, gross negligence,  or
       reckless  disregard of obligations or duties hereunder on the part of the
       Manager, the Manager shall not be subject to liability to the Trust or to
       any shareholder of the Trust for any act or omission in the course of, or
       connected with,  rendering  services hereunder or for any losses that may
       be sustained in the purchase, holding or sale of any security.

B.     No provision of this Agreement  shall be construed to protect any Trustee
       or officer of the Trust,  or the Manager,  from liability in violation of
       Sections 17(h) and (i) of the Investment Company Act.

                                       4
<PAGE>

8.     RENEWAL AND TERMINATION.

A.     This  Agreement  shall  continue in effect for two years from the date of
       this Agreement and shall continue from year to year  thereafter  provided
       such  continuance is  specifically  approved at least annually by (i) the
       Trust's Board of Trustees or (ii) a vote of a majority of the outstanding
       voting  securities  of the Trust (as  defined in the  Investment  Company
       Act), provided that in either event the continuance is also approved by a
       majority of the Board of Trustees  who are not  "interested  persons" (as
       defined in the  Investment  Company  Act) of any party to this  Agreement
       ("Independent  Trustees"), by vote cast in person at a meeting called for
       the purpose of voting on such approval.  The aforesaid  requirement  that
       continuance  of  this  Agreement  be  "specifically   approved  at  least
       annually"  shall be construed in a manner  consistent with the Investment
       Company Act and the Rules and Regulations thereunder.

B.     This Agreement:

(a)    may at any time be terminated  without the payment of any penalty  either
       by vote  of the  Trustees  of the  Trust,  including  a  majority  of the
       Independent  Trustees, or by vote of a majority of the outstanding voting
       securities  of the  Trust,  on sixty  (60)  days'  written  notice to the
       Manager;

(b)    shall immediately  terminate in the event of its assignment (as that term
       is defined in the Investment Company Act); and

(c)    may be terminated  by the Manager on sixty (60) days'  written  notice to
       the Trust.

C.     Any notice under this Agreement  shall be given in writing  addressed and
       delivered or mailed postpaid, to the other party to this Agreement at its
       principal place of business.

9.     NO  PERSONAL  LIABILITY.  Reference is  hereby made to the Declaration of
Trust  dated  August  20, 1986  establishing the Trust, a copy of which has been
filed with the Secretary of the Commonwealth of Massachusetts and  elsewhere  as
required by law,  and to any and all  amendments  thereto so filed or  hereafter
filed.  The name  Liberty  All-Star  Equity Fund refers to the Board of Trustees
under said  Declaration  of Trust,  and not to the Trustees  personally,  and no
Trustee,  shareholder,  officer, agent or employee of the Trust shall be held to
any personal liability hereunder or in connection with the affairs of the Trust,
but only the trust estate under said  Declaration  of Trust is liable under this
Agreement. Without limiting the generality of the foregoing, neither the Manager
nor any of its officers,  directors,  shareholders or employees shall, under any
circumstances,  have  recourse or cause or willingly  permit  recourse to be had
directly or  indirectly to any personal,  statutory,  or other  liability of any
shareholder,  Trustee,  officer,  agent  or  employee  of  the  Trust  or of any
successor  of the Trust,  whether  such  liability  now  exists or is  hereafter
incurred for claims against the trust estate,  but shall look for payment solely
to said trust estate, or the assets of such successor of the Trust.

10.    USE OF NAME.  The Trust may use the name  "Liberty All-Star," "All-Star,"
or  a similar name  only for so long as this Agreement or any extension, renewal
or amendment hereof remains in effect, including any similar  agreement with any
organization  which shall have succeeded to the Manager's business as investment
adviser.  If this Agreement is no longer in effect,  the Trust (to the extent it
lawfully can) will cease to use such name or any other name  indicating  that it
is advised by or otherwise  connected with the Manager.  The Trust  acknowledges
that the  Manager  may grant the  non-exclusive  right to use the name  "Liberty
All-Star" or "All-Star" to any other  corporation  or entity,  including but not
limited to any  investment  company of which the  Manager or any  subsidiary  or
affiliate  thereof or any  successor to the business or any thereof  shall be an
investment adviser.

11.    SEVERABILITY.  If any provision of this  Agreement  shall be held or made
invalid by a court decision,  statute, rule or otherwise,  the remainder of this
Agreement shall not be affected thereby.

                                       5
<PAGE>

12.    GOVERNING LAW. To the extent that state law has not been preempted by the
provisions of any law of the United States heretofore or hereafter  enacted,  as
the same may be amended from time to time, this Agreement shall be administered,
construed  and  enforced   according  to  the  laws  of  the   Commonwealth   of
Massachusetts.

13.    INTERPRETATION.  Nothing herein contained  shall be deemed to require the
Trust to take any action contrary to this Agreement and its Declaration of Trust
or By-Laws, or any applicable  statutory or regulatory  requirements to which it
is subject or by which it is bound,  or to relieve or deprive  the  Trustees  of
their responsibility for and control of the conduct of the affairs of the Trust.

14.    ENTIRE  AGREEMENT. This  Agreement contains the entire understanding  and
agreement of the parties.

15.    HEADINGS. The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.

16.    FORCE  MAJEURE.  The Manager shall  not be  liable  for  delays or errors
occurring  by reason of  circumstances  beyond its  control,  including  but not
limited  to acts of civil or  military  authority,  national  emergencies,  work
stoppages,  fire, flood, catastrophe,  acts of God, insurrection,  war, riot, or
failure of communication or power supply.  In the event of equipment  breakdowns
beyond its control,  the Manager shall take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto.

17.    RECORDS.  The  records  relating  to  the  services  provided  under this
Agreement  shall  be the  property  of the Trust and shall be under its control;
however,  the  Trust shall  furnish to the Manager such records and permit it to
retain  such  records  (either  in  original or in  duplicate  form) as it shall
reasonably  require  in  order  to  carry  out  its duties.  In the event of the
termination  of  this  Agreement, such records shall promptly be returned to the
Trust  by  the  Manager free  from  any  claim  or retention of rights  therein,
provided  that the  Manager  may  retain  copies  of any  such  records that are
required  by law.  The Manager shall keep confidential any information  obtained
in  connection  with its duties  hereunder and disclose such information only if
the  Trust has  authorized  such  disclosure  or if such disclosure is expressly
required  or  lawfully  requested  by applicable  Federal  or  state  regulatory
authorities.

                                       6
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Fund Management
Agreement to be executed, as of the day and year first written above.

                                             LIBERTY ALL-STAR EQUITY FUND


                                             By: /s/ William J. Parmentier, Jr.
                                             Name: William J. Parmentier, Jr.
                                             Title: President


                                             ALPS ADVISERS, INC.



                                             By: /s/ Edmund J. Burke
                                             Name: Edmund J. Burke
                                             Title: President

                                       7
<PAGE>

                                    EXHIBIT A
                                   MANAGER FEE


For the investment management services provided to the Trust pursuant to Section
2(A) of this Agreement, the Trust will pay to the Manager, on or before the 10th
day of each  calendar  month,  a fee  calculated  and accrued  daily and payable
monthly by the Fund for the previous calendar month at the annual rate of: 0.80%
of the first $400 million of average  daily net assets;  0.72% of average  daily
net assets  exceeding $400 million up to and including  $800 million;  0.648% of
average  daily net  assets  exceeding  $800  million  up to and  including  $1.2
billion; and 0.584% of average daily net assets exceeding $1.2 billion.

Pursuant to Section 6 of this Agreement,  the Manager will pay to each Portfolio
Manager,  on or before the 10th day of each calendar month, a fee calculated and
accrued daily and payable monthly by the Manager for the previous calendar month
at the annual rate of: 0.40% of the amount obtained by multiplying the Portfolio
Manager's  Percentage (as hereinafter  defined) times the Average Total Fund Net
Assets (as hereinafter defined) up to $400 million; 0.36% of the amount obtained
by multiplying the Portfolio  Manager's  Percentage times the Average Total Fund
Net Assets  exceeding $400 million up to and including  $800 million;  0.324% of
the amount obtained by multiplying the Portfolio Manager's  Percentage times the
Average Total Fund Net Assets  exceeding  $800 million up to and including  $1.2
billion;  and  0.292%  of the  amount  obtained  by  multiplying  the  Portfolio
Manager's  Percentage  times the Average  Total Fund Net Assets  exceeding  $1.2
billion.

"Portfolio  Manager's  Percentage" means the percentage obtained by dividing (i)
the average daily net asset values of the portion of the portfolio assets of the
Trust assigned to that Portfolio Manager during the preceding  calendar month by
(ii) the Average Total Fund Net Assets.

"Average  Total Fund Net Assets" means the average daily net asset values of the
Trust as a whole during the preceding calendar month.

The fees  shall be pro rated for any month  during  which this  Agreement  is in
effect for only a portion of the month.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2G
<SEQUENCE>3
<FILENAME>exhibit2g2.txt
<DESCRIPTION>EX-99.2G2
<TEXT>

                          LIBERTY ALL-STAR EQUITY FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                        PZENA INVESTMENT MANAGEMENT, LLC


                                December 14, 2006


Re: Portfolio Management Agreement
    ------------------------------

Ladies and Gentlemen:

     Liberty  All-Star  Equity  Fund (the  "Fund") is a  diversified  closed-end
investment  company  registered  under the  Investment  Company Act of 1940,  as
amended (the  "Act"),  and is subject to the rules and  regulations  promulgated
thereunder.

     ALPS Advisers, Inc. (the "Fund Manager") evaluates and recommends portfolio
managers for the assets of the Fund, and the Fund Manager or an affiliate of the
Fund Manager is responsible for the day-to-day Fund administration of the Fund.

     1.  EMPLOYMENT AS A PORTFOLIO  MANAGER.  The Fund,  being duly  authorized,
hereby  employs Pzena  Investment  Management,  LLC  ("Portfolio  Manager") as a
discretionary  portfolio manager,  on the terms and conditions set forth herein,
of that portion of the Fund's assets which the Fund Manager determines to assign
to the  Portfolio  Manager  (those  assets being  referred to as the  "Portfolio
Manager  Account").  The Fund  Manager  may,  from  time to time,  allocate  and
reallocate the Fund's assets among the Portfolio Manager and the other portfolio
managers of the Fund's  assets.  The  Portfolio  Manager will be an  independent
contractor  and will have no authority  to act for or represent  the Fund or the
Fund Manager in any way or otherwise be deemed to be an agent of the Fund or the
Fund Manager  except as  expressly  authorized  in this  Agreement or in another
writing by the Fund Manager and the Portfolio Manager.  The Portfolio  Manager's
responsibilities  for providing portfolio  management services to the Fund shall
be limited to the Portfolio Manager Account.

     2. ACCEPTANCE OF EMPLOYMENT; STANDARD OF PERFORMANCE. The Portfolio Manager
accepts its employment as a  discretionary  portfolio  manager and agrees to use
its best  professional  judgment to make  timely  investment  decisions  for the
Portfolio Manager Account in accordance with the provisions of this Agreement.

     3. PORTFOLIO MANAGEMENT SERVICES OF PORTFOLIO MANAGER.
        ---------------------------------------------------

   A. In  providing  portfolio  management  services  to the  Portfolio  Manager
Account,  the Portfolio  Manager shall be subject to the Fund's  Declaration  of
Trust and By-Laws, as amended from time to time, investment objectives, policies
and  restrictions  of the Fund as set forth in its  Prospectus  and Statement of
Additional Information, as the same may be modified from time to time (together,
the "Prospectus"),  the investment objectives,  policies and restrictions of the
Fund  as  determined  from  time  to  time by the  Board  of  Trustees,  and the
investment  and  other  restrictions  set  forth  in the Act and the  rules  and
regulations thereunder,  to the supervision and control of the Board of Trustees
of the Fund, and to instructions  from the Fund Manager.  The Portfolio  Manager
shall not,  without the prior  approval of the Fund or the Fund Manager,  effect
any transactions  that would cause the Portfolio  Manager Account,  treated as a
separate  fund,  to be out  of  compliance  with  any of  such  restrictions  or
policies.  The  Portfolio  Manager  shall not consult  with any other  portfolio
manager of the Fund concerning  transactions for the Fund in securities or other
assets.

   B. As part of the services it will provide  hereunder,  the Portfolio Manager
will:

         (i)   formulate and implement a continuous  investment  program for the
               Portfolio Manager Account;

         (ii)  take whatever  steps are  necessary to implement  the  investment
               program for the  Portfolio  Manager  Account by arranging for the
               purchase and sale of securities and other investments;

         (iii) keep the Fund Manager and the Board of Trustees of the Fund fully
               informed  in writing on an ongoing  basis,  as agreed by the Fund
               Manager  and  the  Portfolio  Manager,   of  all  material  facts
               concerning the investment and  reinvestment  of the assets in the
<PAGE>

               Portfolio  Manager  Account,  the  Portfolio  Manager and its key
               investment  personnel and  operations;  make regular and periodic
               special written reports of such additional information concerning
               the same as may  reasonably be requested from time to time by the
               Fund Manager or the Trustees of the Fund;  attend  meetings  with
               the Fund Manager and/or  Trustees,  as reasonably  requested,  to
               discuss the  foregoing and such other matters as may be requested
               by the Fund Manager or Trustees;

         (iv)  in accordance  with  procedures  and methods  established  by the
               Trustees  of the Fund,  which may be  amended  from time to time,
               provide   assistance  in  determining   the  fair  value  of  all
               securities and other  investments/assets in the Portfolio Manager
               Account, as necessary,  and use reasonable efforts to arrange for
               the  provision  of  valuation  information  or a price(s)  from a
               party(ies) independent of the Portfolio Manager for each security
               or other  investment/asset  in the Portfolio  Manager Account for
               which market prices are not readily available; and

         (v)   cooperate  with and  provide  reasonable  assistance  to the Fund
               Manager, the Fund's administrator,  custodian, transfer agent and
               pricing  agents and all other agents and  representatives  of the
               Fund and the Fund Manager;  keep all such persons fully  informed
               as to such matters as they may  reasonably  deem necessary to the
               performance  of  their  obligations  to the  Fund  and  the  Fund
               Manager;  provide prompt responses to reasonable requests made by
               such persons;  and maintain any appropriate  interfaces with each
               so as to promote the efficient exchange of information.

     4.  TRANSACTION  PROCEDURES.  All portfolio  transactions for the Portfolio
Manager  Account will be  consummated by payment to or delivery by the custodian
of the  Fund  (the  "Custodian"),  or  such  depositories  or  agents  as may be
designated by the  Custodian in writing,  as custodian for the Fund, of all cash
and/or  securities  due to or  from  the  Portfolio  Manager  Account,  and  the
Portfolio   Manager  shall  not  have  possession  or  custody  thereof  or  any
responsibility or liability with respect to such custody.  The Portfolio Manager
shall advise and confirm in writing to the Custodian all  investment  orders for
the Portfolio  Manager Account placed by it with brokers and dealers at the time
and in the manner set forth in Schedule A hereto (as  amended  from time to time
by the Fund Manager). The Fund shall issue to the Custodian such instructions as
may be  appropriate  in  connection  with  the  settlement  of  any  transaction
initiated  by the  Portfolio  Manager.  The Fund  shall be  responsible  for all
custodial  arrangements and the payment of all custodial  charges and fees, and,
upon giving proper  instructions to the Custodian,  the Portfolio  Manager shall
have no  responsibility  or liability with respect to custodial  arrangements or
the acts, omissions or other conduct of the Custodian.

     5. ALLOCATION OF BROKERAGE.  The Portfolio Manager shall have authority and
discretion  to select  brokers  and  dealers to execute  portfolio  transactions
initiated by the Portfolio  Manager for the Portfolio  Manager  Account,  and to
select the markets on or in which the transaction will be executed.

   A. In doing so, the Portfolio  Manager's primary  responsibility  shall be to
      seek to obtain best net price and  execution for the Fund.  However,  this
      responsibility  shall  not  obligate  the  Portfolio  Manager  to  solicit
      competitive  bids for each  transaction  or to seek the  lowest  available
      commission cost to the Fund, so long as the Portfolio  Manager  reasonably
      believes  that the  broker or dealer  selected  by it can be  expected  to
      obtain a "best execution"  market price on the particular  transaction and
      determines  in good  faith  that  the  commission  cost is  reasonable  in
      relation to the value of the brokerage  and research  services (as defined
      in Section  28(e)(3) of the  Securities  Exchange Act of 1934) provided by
      such broker or dealer to the Portfolio  Manager  viewed in terms of either
      that  particular   transaction  or  of  the  Portfolio  Manager's  overall
      responsibilities  with respect to its clients,  including  the Fund, as to
      which   the   Portfolio   Manager   exercises    investment    discretion,
      notwithstanding  that  the  Fund  may  not  be  the  direct  or  exclusive
      beneficiary  of any such services or that another broker may be willing to
      charge the Fund a lower commission on the particular transaction.

   B. Subject to the  requirements of paragraph A above,  the Fund Manager shall
      have the right to  request  that  transactions  giving  rise to  brokerage
      commissions,  in an amount to be agreed  upon by the Fund  Manager and the
      Portfolio  Manager,  shall be executed by brokers and dealers that provide
      brokerage  or  research  services to the Fund  Manager,  or as to which an
      on-going  relationship  will be of value to the Fund in the  management of
      its assets,  which  services  and  relationship  may,  but need not, be of
      direct benefit to the Portfolio Manager Account. Notwithstanding any other
      provision  of  this  Agreement,   the  Portfolio   Manager  shall  not  be
      responsible under paragraph A above with respect to transactions  executed
      through any such broker or dealer.

   C. The Portfolio Manager shall not execute any portfolio transactions for the
      Portfolio  Manager Account with a broker or dealer which is an "affiliated
      person" (as defined in the Act) of the Fund, the Portfolio

 <PAGE>

     Manager  or any  other  portfolio  manager  of the Fund  without  the prior
     written  approval of the Fund.  The Fund Manager will provide the Portfolio
     Manager with a list of brokers and dealers which are  "affiliated  persons"
     of the Fund or its portfolio managers.

     6.  PROXIES.  The Fund Manager  will vote all proxies  solicited by or with
respect to the issuers of securities  in which assets of the  Portfolio  Manager
Account may be invested  from time to time in  accordance  with such policies as
shall be determined by the Fund Manager,  and reviewed and approved by the Board
of Trustees. Upon the written request of the Fund Manager, the Portfolio Manager
will vote all proxies  solicited by or with respect to the issuers of securities
in which assets of the  Portfolio  Manager  Account may be invested from time to
time in  accordance  with  such  policies  as  shall be  determined  by the Fund
Manager, and reviewed and approved by the Board of Trustees.

     7. FEES FOR SERVICES.  The  compensation  of the Portfolio  Manager for its
services under this  Agreement  shall be calculated and paid by the Fund Manager
in  accordance  with the attached  Schedule C.  Pursuant to the Fund  Management
Agreement  between  the Fund and the Fund  Manager,  the Fund  Manager is solely
responsible for the payment of fees to the Portfolio Manager,  and the Portfolio
Manager agrees to seek payment of its fees solely from the Fund Manager.

     8. OTHER INVESTMENT  ACTIVITIES OF PORTFOLIO MANAGER. The Fund acknowledges
that the  Portfolio  Manager  or one or more of its  affiliates  has  investment
responsibilities,  renders  investment  advice to and performs other  investment
advisory  services for other individuals or entities  ("Client  Accounts"),  and
that the Portfolio  Manager,  its  affiliates or any of its or their  directors,
officers,  agents or employees may buy, sell or trade in any  securities for its
or their respective accounts ("Affiliated Accounts").  Subject to the provisions
of  paragraph  2 hereof,  the Fund  agrees  that the  Portfolio  Manager  or its
affiliates may give advice or exercise  investment  responsibility and take such
other action with respect to other Client Accounts and Affiliated Accounts which
may differ  from the advice  given or the timing or nature of action  taken with
respect to the Portfolio  Manager Account,  provided that the Portfolio  Manager
acts in good faith,  and provided  further,  that it is the Portfolio  Manager's
policy to allocate,  within its reasonable discretion,  investment opportunities
to the Portfolio  Manager  Account over a period of time on a fair and equitable
basis relative to the Client Accounts and the Affiliated  Accounts,  taking into
account the cash position and the investment objectives and policies of the Fund
and  any  specific  investment   restrictions   applicable  thereto.   The  Fund
acknowledges that one or more Client Accounts and Affiliated Accounts may at any
time  hold,  acquire,  increase,  decrease,  dispose of or  otherwise  deal with
positions in  investments  in which the  Portfolio  Manager  Account may have an
interest from time to time,  whether in transactions which involve the Portfolio
Manager Account or otherwise.  The Portfolio Manager shall have no obligation to
acquire for the Portfolio Manager Account a position in any investment which any
Client  Account or  Affiliated  Account may acquire,  and the Fund shall have no
first refusal,  co-investment or other rights in respect of any such investment,
either for the Portfolio Manager Account or otherwise.

     9. LIMITATION OF LIABILITY.  The Portfolio  Manager shall not be liable for
any  action  taken,  omitted  or  suffered  to be taken by it in its  reasonable
judgment, in good faith and reasonably believed by it to be authorized or within
the discretion or rights or powers  conferred upon it by this  Agreement,  or in
accordance with (or in the absence of) specific  directions or instructions from
the Fund, provided, however, that such acts or omissions shall not have resulted
from the Portfolio Manager's willful misfeasance, bad faith or gross negligence,
a  violation  of the  standard  of care  established  by and  applicable  to the
Portfolio  Manager in its actions under this  Agreement or breach of its duty or
of its obligations hereunder (provided, however, that the foregoing shall not be
construed  to protect the  Portfolio  Manager  from  liability  in  violation of
Section 17(i) of the Act).

     10. CONFIDENTIALITY. Subject to the duty of the Portfolio Manager, the Fund
Manager and the Fund to comply with applicable law,  including any demand of any
regulatory or taxing  authority  having  jurisdiction,  the parties hereto shall
treat as  confidential  all  information  pertaining  to the  Portfolio  Manager
Account  and the  actions  of the  Portfolio  Manager  and the  Fund in  respect
thereof.

     11. ASSIGNMENT.  This Agreement shall terminate  automatically in the event
of its  assignment,  as that term is defined in Section  2(a)(4) of the Act. The
Portfolio  Manager shall notify the Fund in writing  sufficiently  in advance of
any  proposed  change of control,  as defined in Section  2(a)(9) of the Act, as
will enable the Fund to  consider  whether an  assignment  as defined in Section
2(a)(4) of the Act will occur,  and whether to take the steps necessary to enter
into a new contract with the Portfolio Manager.

     12.  REPRESENTATIONS,  WARRANTIES  AND  AGREEMENTS  OF THE  FUND.  The Fund
represents, warrants and agrees that:

          A. The Portfolio Manager has been duly appointed to provide investment
     services to the Portfolio Manager Account as contemplated hereby.

          B. The Fund will deliver to the Portfolio  Manager a true and complete
     copy of its then current Prospectus as effective from time to time and such

<PAGE>

     other documents  governing the investment of the Portfolio  Manager Account
     and such other  information  as is necessary for the  Portfolio  Manager to
     carry out its obligations under this Agreement.


    13. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE PORTFOLIO MANAGER. The
Portfolio Manager represents, warrants and agrees that:

          A. It is registered as an  "investment  adviser"  under the Investment
     Advisers Act of 1940, as amended  ("Advisers  Act") and will continue to be
     so registered for as long as this Agreement remains in effect.

          B. It will maintain,  keep current and preserve on behalf of the Fund,
     in the  manner  required  or  permitted  by  the  Act  and  the  rules  and
     regulations thereunder, the records required to be so kept by an investment
     adviser of the Fund in accordance with applicable  law,  including  without
     limitation  those  identified  in Schedule B (as  Schedule B may be amended
     from time to time by the Fund Manager).  The Portfolio  Manager agrees that
     such records are the property of the Fund,  and will be  surrendered to the
     Fund promptly upon request.

          C.  It has  adopted  a  written  code of  ethics  complying  with  the
     requirements of Rule 204A-1 under the Advisers Act and Rule 17j-1 under the
     Act and will provide the Fund Manager and the Board of Trustees with a copy
     of its code of ethics and evidence of its  adoption.  Within 45 days of the
     end of each year while this  Agreement  is in effect,  or at any other time
     requested by the Fund Manager,  an officer,  director or general partner of
     the Portfolio  Manager shall certify to the Fund that the Portfolio Manager
     has complied with the requirements of Rule 17j-1 and Rule 204A-1 during the
     previous year and that there has been no material  violation of its code of
     ethics or, if such a violation has occurred,  that  appropriate  action was
     taken in  response  to such  violation.  It will  promptly  notify the Fund
     Manager of any material change to its code of ethics or material  violation
     of its code of ethics.

          D. Upon request,  the Portfolio  Manager will promptly supply the Fund
     with any information concerning the Portfolio Manager and its stockholders,
     partners,  employees and affiliates that the Fund may reasonably request in
     connection with the preparation of its  registration  statement (as amended
     from time to time),  prospectus and statement of additional information (as
     supplemented and modified from time to time),  proxy material,  reports and
     other  documents  required to be filed under the Act, the Securities Act of
     1933, or other applicable securities laws.

          E.  Reference is hereby made to the  Declaration of Trust dated August
     20,  1986  establishing  the Fund,  a copy of which has been filed with the
     Secretary of the Commonwealth of Massachusetts and elsewhere as required by
     law, and to any and all amendments thereto so filed or hereafter filed. The
     name  Liberty  All-Star  Equity Fund refers to the Board of Trustees  under
     said Declaration of Trust, as Trustees and not to the Trustees  personally,
     and no Trustee,  shareholder,  officer, agent or employee of the Fund shall
     be held to any  personal  liability  hereunder  or in  connection  with the
     affairs of the Fund,  but only the trust estate under said  Declaration  of
     Trust is liable under this  Agreement.  Without  limiting the generality of
     the  foregoing,  neither the  Portfolio  Manager  nor any of its  officers,
     directors,  partners,  shareholders,  agents or employees shall,  under any
     circumstances,  have recourse or cause or willingly  permit  recourse to be
     had directly or indirectly to any personal,  statutory,  or other liability
     of any shareholder,  Trustee,  officer, agent or employee of the Fund or of
     any  successor  of the  Fund,  whether  such  liability  now  exists  or is
     hereafter  incurred for claims against the trust estate, but shall look for
     payment solely to said trust estate, or the assets of such successor of the
     Fund.

          F.  The Portfolio  Manager  shall  maintain and  implement  compliance
     procedures that are reasonably  designed to ensure its compliance with Rule
     206(4)-7  of the  Advisers  Act and to prevent  violations  of the  Federal
     Securities Laws (as defined in Rule 38a-1 under the Act).

          G.  The Portfolio Manager will:  (i) file Form 13F with the Securities
     and Exchange Commission (the "SEC"), on behalf of itself and ALPS Advisers,
     Inc.; (ii) within 60 days after the end of each calendar year,  provide the
     Fund Manager with a certification that the Portfolio Manager's Form 13F was
     filed with the SEC on a timely  basis and  included  all of the  securities
     required to be reported by the SEC;  (iii)  within 60 days after the end of
     each calendar year, provide to the Fund Manager a copy of each Form 13F, or
     amendment  to a Form 13F filed by it during  the prior four  quarters;  and
     (iv) promptly  notify the Fund Manager in the event the  Portfolio  Manager
     determines  that it has failed to comply with  Section  13(f) in a material
     respect,  or receives a comment letter from the SEC raising a question with
     respect to compliance.

<PAGE>

          H.  The Portfolio Manager has adopted written compliance  policies and
     procedures  reasonably  designed to prevent  violations of the Advisers Act
     and the rules  promulgated  thereunder and the Portfolio  Manager agrees to
     provide:  (a) from time to time, a copy and/or  summary of such  compliance
     policies and procedures and an accompanying  certification  certifying that
     the Portfolio Manager's  compliance policies and procedures comply with the
     Advisers  Act; (b) a report of the annual review  determining  the adequacy
     and  effectiveness  of the  Portfolio  Manager's  compliance  policies  and
     procedures;  and (c) the name of the Portfolio  Manager's Chief  Compliance
     Officer to act as a liaison for  compliance  matters that may arise between
     the Fund and the Portfolio Manager.

          I.  The Portfolio Manager will notify the Fund and the Fund Manager of
     any  assignment  of this  Agreement  or change of control of the  Portfolio
     Manager, as applicable, and any changes in the key personnel who are either
     the  portfolio  manager(s)  of the  Portfolio  Manager  Account  or  senior
     management  of the  Portfolio  Manager,  in each case prior to or  promptly
     after,  such change.  The Portfolio  Manager  agrees to bear all reasonable
     expenses of the Fund,  if any,  arising out of an  assignment  or change in
     control.

          J.  The Portfolio Manager agrees to maintain an  appropriate  level of
     errors and omissions or professional liability insurance coverage.

          14. AMENDMENT.  This Agreement may be amended at any time, but only by
written  agreement among the Portfolio  Manager,  the Fund Manager and the Fund,
which  amendment,  other than  amendments to Schedules A, B and C, is subject to
the approval of the Board of Trustees and the shareholders of the Fund as and to
the extent required by the Act, the rules thereunder or exemptive relief granted
by the SEC,  provided that  Schedules A and B may be amended by the Fund Manager
without the written agreement of the Fund or the Portfolio Manager.

          15. EFFECTIVE DATE; TERM. This Agreement shall become effective on the
date first above  written,  provided that this  Agreement  shall not take effect
unless it has first been  approved:  (1) by a vote of a majority of the Trustees
who are not  "interested  persons"  (as defined in the Act) of any party to this
Agreement ("Independent  Trustees"),  cast in person at a meeting called for the
purpose  of  voting on such  approval,  and (ii) by vote of "a  majority  of the
outstanding  voting  securities"  (as  defined  in the  Act) of the  Fund.  This
Agreement  shall continue for two years from the date of this Agreement and from
year to year thereafter  provided such  continuance is specifically  approved at
least  annually by (i) the Fund's Board of Trustees or (ii) a vote of a majority
of the outstanding voting securities of the Fund,  provided that in either event
such continuance is also approved by a majority of the Independent  Trustees, by
vote  cast in  person  at a meeting  called  for the  purpose  of voting on such
approval.  If the SEC  issues an order to the Fund and the Fund  Manager  for an
exemption  from  Section  15(a)  of  the  Act,  then,  in  accordance  with  the
application of the Fund and the Fund Manager,  the continuance of this Agreement
after initial  approval by the Trustees as set forth above,  shall be subject to
approval by a majority of the outstanding  voting  securities of the Fund at the
regularly scheduled annual meeting of the Fund's shareholders next following the
date of this Agreement.

          16.  TERMINATION.  This Agreement may be terminated at any time by any
party, without penalty,  immediately upon written notice to the other parties in
the  event of a breach  of any  provision  thereof  by a party so  notified,  or
otherwise  upon not less than thirty (30) days' written  notice to the Portfolio
Manager in the case of  termination  by the Fund or the Fund Manager,  or ninety
(90)  days'  written  notice  to the Fund and the  Fund  Manager  in the case of
termination by the Portfolio Manager,  but any such termination shall not affect
the status, obligations or liabilities of any party hereto to the other parties.

          17.  APPLICABLE  LAW. To the extent that state law is not preempted by
the provisions of any law of the United States heretofore or hereafter  enacted,
as the  same  may be  amended  from  time  to  time,  this  Agreement  shall  be
administered,  construed and enforced  according to the laws of the Commonwealth
of Massachusetts.

          18.  SEVERABILITY;  COUNTERPARTS.  If any  term or  condition  of this
Agreement shall be invalid or unenforceable to any extent or in any application,
then the remainder of this Agreement,  and such term or condition except to such
extent or in such application, shall not be affected thereby, and each and every
term and condition of this Agreement  shall be valid and enforced to the fullest
extent and in the broadest  application  permitted by law. This Agreement may be
executed in  counterparts,  each of which will be deemed an original  and all of
which together will be deemed to be one and the same agreement.

<PAGE>

          19. USE OF NAME. The Portfolio  Manager agrees and  acknowledges  that
the Fund Manager is the sole owner of the names and marks "Liberty All-Star" and
"All-Star", and that all use of any designation comprised in whole or in part of
these names and marks shall inure to the benefit of the Fund Manager.  Except as
used to identify the Fund to third parties as a client, the use by the Portfolio
Manager on its own behalf of such marks in any advertisement or sales literature
or other  materials  promoting  the  Portfolio  Manager  shall be with the prior
written consent of the Fund Manager.  The Portfolio  Manager shall not,  without
the consent of the Fund Manager, make representations  regarding the Fund or the
Fund Manager in any disclosure  document,  advertisement  or sales literature or
other  materials  promoting the Portfolio  Manager.  Consent by the Fund Manager
shall not be unreasonably  withheld.  Upon termination of this Agreement for any
reason, the Portfolio Manager shall cease any and all use of these marks as soon
as reasonably practicable.


                                 LIBERTY ALL-STAR EQUITY FUND

                                 By: /s/ William J. Parmentier, Jr.
                                     ------------------------------
                                 Name: William J. Parmentier, Jr.
                                 Title: President

                                 ALPS ADVISERS, INC.

                                 By: /s/ Edmund J. Burke
                                     -------------------
                                 Name: Edmund J. Burke
                                 Title: President

ACCEPTED:

PZENA INVESTMENT MANAGEMENT, LLC

By: /s/ William L. Lipsey
    ---------------------
Name: William L. Lipsey
Title: Managing Principal


SCHEDULES:
A. Operational Procedures

B. Records To Be Maintained By The Portfolio Manager

C. Portfolio Manager Fee

<PAGE>

                          LIBERTY ALL-STAR GROWTH FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE B

                RECORDS TO BE MAINTAINED BY THE PORTFOLIO MANAGER

1.   (Rule  31a-1(b)(5) and (6)) A record of each brokerage order, and all other
     portfolio  purchases and sales, given by the Portfolio Manager on behalf of
     the Fund for, or in connection  with,  the purchase or sale of  securities,
     whether executed or unexecuted. Such records shall include:

     A.   The name of the broker;

     B.   The terms and  conditions  of the  order and of any  modifications  or
          cancellation thereof;

     C.   The time of entry or cancellation;

     D.   The price at which executed;

     E.   The time of receipt of a report of execution; and

     F.   The name of the person who placed the order on behalf of the Fund.

2.   (Rule  31a-1(b)(9)) A record for each fiscal quarter,  completed within ten
     (10) days after the end of the quarter,  showing  specifically the basis or
     bases upon which the  allocation  of orders  for the  purchase  and sale of
     portfolio  securities  to named  brokers or dealers was  effected,  and the
     division of brokerage  commissions or other  compensation  on such purchase
     and sale orders. Such record:

     A.   Shall include the consideration given to:

        (i)  The sale of shares of the Fund by brokers or dealers.

        (ii) The supplying of services or benefits by brokers or dealers to:

             (a) The Fund;

             (b) The Fund Manager;

             (c) The Portfolio Manager; and

             (d) Any person other than the foregoing.

        (iii) Any other consideration other than the technical qualifications
              of the brokers and dealers as such.

     B.   Shall show the nature of the services or benefits made available.

     C.   Shall  describe in detail the  application  of any general or specific
          formula or other  determinant  used in arriving at such  allocation of
          purchase and sale orders and such division of brokerage commissions or
          other compensation.

     D.   The name of the person  responsible  for making the  determination  of
          such  allocation  and such division of brokerage  commissions or other
          compensation.

3.   (Rule  31a-1(b)(10))  A  record  in the form of an  appropriate  memorandum
     identifying  the person or persons,  committees or groups  authorizing  the
     purchase or sale of portfolio securities. Where an authorization is made by
     a committee  or group,  a record  shall be kept of the names of its members
     who  participate in the  authorization.  There shall be retained as part of
     this record:  any memorandum,  recommendation or instruction  supporting or
     authorizing  the  purchase or sale of portfolio  securities  and such other
     information as is appropriate to support the authorization.(1)

<PAGE>

4.   (Rule 31a-1(f)) Such accounts, books and other documents as are required to
     be  maintained  by  registered  investment  advisers by rule adopted  under
     Section  204 of the  Investment  Advisers  Act of 1940,  to the extent such
     records are  necessary or  appropriate  to record the  Portfolio  Manager's
     transactions with the Fund.

- ----------

(1)  Such information might include: the current Form 10-K, annual and quarterly
     reports,  press  releases,  reports by analysts  and from  brokerage  firms
     (including  their  recommendation:  i.e., buy, sell,  hold) or any internal
     reports or portfolio manager reviews.

<PAGE>

                          LIBERTY ALL-STAR GROWTH FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE C

                              PORTFOLIO MANAGER FEE

     For services  provided to the Portfolio  Manager Account,  the Fund Manager
will pay to the  Portfolio  Manager,  on or before the 10th day of each calendar
month,  a fee  calculated  and  accrued  daily and  payable  monthly by the Fund
Manager for the  previous  calendar  month at the annual  rate of:  0.40% of the
amount   obtained  by  multiplying  the  Portfolio   Manager's   Percentage  (as
hereinafter  defined)  times the Average  Total Fund Net Assets (as  hereinafter
defined) up to $400 million;  0.36% of the amount  obtained by  multiplying  the
Portfolio Manager's Percentage times the Average Total Fund Net Assets exceeding
$400 million up to and including $800 million;  0.324% of the amount obtained by
multiplying the Portfolio Manager's  Percentage times the Average Total Fund Net
Assets  exceeding $800 million up to and including  $1.2 billion;  0.292% of the
amount  obtained by multiplying  the Portfolio  Manager's  Percentage  times the
Average Total Fund Net Assets exceeding $1.2 billion.

     "Portfolio Manager's  Percentage" means the percentage obtained by dividing
(i) the average daily net asset values of the Portfolio  Manager  Account during
the preceding calendar month, by (ii) the Average Total Fund Net Assets.

     "Average Total Fund Net Assets" means the average daily net asset values of
the Fund as a whole during the preceding calendar month.

     The fee shall be pro-rated for any month during which this  Agreement is in
effect for only a portion of the month.

<PAGE>

April 2, 2007


Pzena Investment Management, LLC
Attn:  Legal Department
120 West 45th Street, 20th Floor
New York, NY  10036

RE:  Portfolio Management Agreement with Liberty All-Star Equity Fund

Dear Pzena:


In a recent audit of the Liberty All-Star Equity Fund (the "Fund") records, it
was discovered that Appendix B and C to the Portfolio Management Agreement
between Pzena Investment Management, LLC, ALPS Advisers, Inc., and the Fund was
mislabeled as Liberty All-Star Growth Fund, Inc.

Therefore, please accept the attached replacement pages with the correct
heading. The body of the pages did not change.

Additionally, please note that ALPS Advisers, Inc., and the Funds main address
has changed from 1625 Broadway, Suite 2200, Denver CO 80202 to 1290 Broadway,
Suite 1100, Denver, CO 80203.

Should you have any questions regarding these matters, please feel free to
contact me or my paralegal Stephanie Barres at 303.623.2577.

Sincerely,


/s/ Tane T. Tyler
- -----------------
Tane T. Tyler
Chief Legal Officer
ALPS Advisers, Inc.

<PAGE>

                          LIBERTY ALL-STAR EQUITY FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE B

                RECORDS TO BE MAINTAINED BY THE PORTFOLIO MANAGER

1.   (Rule  31a-1(b)(5) and (6)) A record of each brokerage order, and all other
     portfolio  purchases and sales, given by the Portfolio Manager on behalf of
     the Fund for, or in connection  with,  the purchase or sale of  securities,
     whether executed or unexecuted. Such records shall include:

     A.   The name of the broker;

     B.   The terms and  conditions  of the  order and of any  modifications  or
          cancellation thereof;

     C.   The time of entry or cancellation;

     D.   The price at which executed;

     E.   The time of receipt of a report of execution; and

     F.   The name of the person who placed the order on behalf of the Fund.

2.   (Rule  31a-1(b)(9)) A record for each fiscal quarter,  completed within ten
     (10) days after the end of the quarter,  showing  specifically the basis or
     bases upon which the  allocation  of orders  for the  purchase  and sale of
     portfolio  securities  to named  brokers or dealers was  effected,  and the
     division of brokerage  commissions or other  compensation  on such purchase
     and sale orders. Such record:

     A.   Shall include the consideration given to:

          (i)   The sale of shares of the Fund by brokers or dealers.

          (ii)  The supplying of services or benefits by brokers or dealers to:

               (a)   The Fund;

               (b)   The Fund Manager;

               (c)   The Portfolio Manager; and

               (d)   Any person other than the foregoing.

          (iii) Any other consideration other than the technical  qualifications
                of the brokers and dealers as such.

     B.   Shall show the nature of the services or benefits made available.

     C.   Shall  describe in detail the  application  of any general or specific
          formula or other  determinant  used in arriving at such  allocation of
          purchase and sale orders and such division of brokerage commissions or
          other compensation.

     D.   The name of the person  responsible  for making the  determination  of
          such  allocation  and such division of brokerage  commissions or other
          compensation.

3.   (Rule  31a-1(b)(10))  A  record  in the form of an  appropriate  memorandum
     identifying  the person or persons,  committees or groups  authorizing  the
     purchase or sale of portfolio securities. Where an authorization is made by
     a committee  or group,  a record  shall be kept of the names of its members
     who  participate in the  authorization.  There shall be retained as part of
     this record:  any memorandum,  recommendation or instruction  supporting or
     authorizing  the  purchase or sale of portfolio  securities  and such other
     information as is appropriate to support the authorization.(1)


<PAGE>

4.   (Rule 31a-1(f)) Such accounts, books and other documents as are required to
     be  maintained  by  registered  investment  advisers by rule adopted  under
     Section  204 of the  Investment  Advisers  Act of 1940,  to the extent such
     records are  necessary or  appropriate  to record the  Portfolio  Manager's
     transactions with the Fund.



- ----------
(1)  Such information might include: the current Form 10-K, annual and quarterly
     reports,  press  releases,  reports by analysts  and from  brokerage  firms
     (including  their  recommendation:  i.e., buy, sell,  hold) or any internal
     reports or portfolio manager reviews.

<PAGE>

                          LIBERTY ALL-STAR EQUITY FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE C

                              PORTFOLIO MANAGER FEE

     For services  provided to the Portfolio  Manager Account,  the Fund Manager
will pay to the  Portfolio  Manager,  on or before the 10th day of each calendar
month,  a fee  calculated  and  accrued  daily and  payable  monthly by the Fund
Manager for the  previous  calendar  month at the annual  rate of:  0.40% of the
amount   obtained  by  multiplying  the  Portfolio   Manager's   Percentage  (as
hereinafter  defined)  times the Average  Total Fund Net Assets (as  hereinafter
defined) up to $400 million;  0.36% of the amount  obtained by  multiplying  the
Portfolio Manager's Percentage times the Average Total Fund Net Assets exceeding
$400 million up to and including $800 million;  0.324% of the amount obtained by
multiplying the Portfolio Manager's  Percentage times the Average Total Fund Net
Assets  exceeding $800 million up to and including  $1.2 billion;  0.292% of the
amount  obtained by multiplying  the Portfolio  Manager's  Percentage  times the
Average Total Fund Net Assets exceeding $1.2 billion.

     "Portfolio Manager's  Percentage" means the percentage obtained by dividing
(i) the average daily net asset values of the Portfolio  Manager  Account during
the preceding calendar month, by (ii) the Average Total Fund Net Assets.

     "Average Total Fund Net Assets" means the average daily net asset values of
the Fund as a whole during the preceding calendar month.

     The fee shall be pro-rated for any month during which this  Agreement is in
effect for only a portion of the month.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2G
<SEQUENCE>4
<FILENAME>exhibit2g3.txt
<DESCRIPTION>EX-99.2G3
<TEXT>
                          LIBERTY ALL-STAR EQUITY FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                      CHASE INVESTMENT COUNSEL CORPORATION


                               December 18, 2006


Re: Portfolio Management Agreement
    ------------------------------

Ladies and Gentlemen:

  Liberty  All-Star  Equity  Fund  (the  "Fund")  is  a  diversified  closed-end
investment  company  registered  under  the  Investment Company Act of 1940,  as
amended  (the "Act"), and is subject to the rules  and  regulations  promulgated
thereunder.

  ALPS  Advisers,  Inc.  (the "Fund Manager") evaluates and recommends portfolio
managers for the assets of the Fund, and the Fund Manager or an affiliate of the
Fund Manager is responsible for the day-to-day Fund administration of the Fund.

  1. EMPLOYMENT AS A PORTFOLIO MANAGER.  The Fund, being duly authorized, hereby
employs  Chase  Investment  Counsel   Corporation  ("Portfolio  Manager")  as  a
discretionary portfolio manager, on the  terms  and conditions set forth herein,
of that portion of the Fund's assets which the Fund Manager determines to assign
to  the  Portfolio Manager (those assets being referred  to  as  the  "Portfolio
Manager Account").   The  Fund  Manager  may,  from  time  to time, allocate and
reallocate the Fund's assets among the Portfolio Manager and the other portfolio
managers  of  the Fund's assets.  The Portfolio Manager will be  an  independent
contractor and  will  have  no authority to act for or represent the Fund or the
Fund Manager in any way or otherwise be deemed to be an agent of the Fund or the
Fund Manager except as expressly  authorized  in  this  Agreement  or in another
writing by the Fund Manager and the Portfolio Manager.  The Portfolio  Manager's
responsibilities  for providing portfolio management services to the Fund  shall
be limited to the Portfolio Manager Account.

  2. ACCEPTANCE OF  EMPLOYMENT;  STANDARD OF PERFORMANCE.  The Portfolio Manager
accepts its employment as a discretionary  portfolio  manager  and agrees to use
its  best  professional  judgment  to make timely investment decisions  for  the
Portfolio Manager Account in accordance with the provisions of this Agreement.

  3. Portfolio Management Services of Portfolio Manager.

     A. In providing  portfolio  management  services to the  Portfolio  Manager
     Account,  the Portfolio Manager shall be subject to the Fund's  Declaration
     of Trust and By-Laws, as amended from time to time, investment  objectives,
     policies and  restrictions  of the Fund as set forth in its  Prospectus and
     Statement of Additional Information,  as the same may be modified from time
     to time (together, the "Prospectus"),  the investment objectives,  policies
     and  restrictions  of the Fund as determined from time to time by the Board
     of Trustees, and the investment and other restrictions set forth in the Act
     and the rules and regulations thereunder, to the supervision and control of
     the  Board of  Trustees  of the  Fund,  and to  instructions  from the Fund
     Manager. The Portfolio Manager shall not, without the prior approval of the
     Fund or the Fund  Manager,  effect any  transactions  that would  cause the
     Portfolio  Manager  Account,  treated  as a  separate  fund,  to be  out of
     compliance with any of such restrictions or policies. The Portfolio Manager
     shall not consult with any other  portfolio  manager of the Fund concerning
     transactions for the Fund in securities or other assets.

     B. As part of the services it will provide hereunder, the Portfolio Manager
     will:

      (i)   formulate  and implement a continuous  investment  program  for  the
            Portfolio Manager Account;

      (ii)  take whatever  steps  are  necessary  to  implement  the  investment
            program  for  the  Portfolio  Manager  Account by arranging for  the
            purchase and sale of securities and other investments;

      (iii) keep the Fund Manager and the Board of Trustees  of  the  Fund fully
            informed  in  writing  on  an  ongoing  basis, as agreed by the Fund
            Manager and the Portfolio Manager, of all  material facts concerning
            the  investment  and  reinvestment of the assets  in  the  Portfolio
            Manager  Account,  the Portfolio  Manager  and  its  key  investment

<PAGE>

            personnel and operations;  make regular and periodic special written
            reports of such additional information  concerning  the  same as may
            reasonably be requested from time to time by the Fund Manager or the
            Trustees  of the Fund; attend meetings with the Fund Manager  and/or
            Trustees, as reasonably requested, to discuss the foregoing and such
            other matters as may be requested by the Fund Manager or Trustees;

      (iv)  in  accordance  with  procedures  and  methods  established  by  the
            Trustees  of  the  Fund,  which  may  be  amended from time to time,
            provide assistance in determining the fair  value  of all securities
            and  other investments/assets in the Portfolio Manager  Account,  as
            necessary,  and  use reasonable efforts to arrange for the provision
            of valuation information or a price(s) from a party(ies) independent
            of the Portfolio Manager for each security or other investment/asset
            in the Portfolio Manager  Account  for  which  market prices are not
            readily available; and

      (v)   cooperate  with  and  provide  reasonable  assistance  to  the  Fund
            Manager,  the Fund's administrator, custodian,  transfer  agent  and
            pricing agents  and all other agents and representatives of the Fund
            and the Fund Manager;  keep  all  such  persons fully informed as to
            such  matters  as  they  may  reasonably  deem   necessary   to  the
            performance  of  their obligations to the Fund and the Fund Manager;
            provide  prompt  responses  to  reasonable  requests  made  by  such
            persons; and maintain  any appropriate interfaces with each so as to
            promote the efficient exchange of information.

  4.  TRANSACTION  PROCEDURES.  All portfolio  transactions  for  the  Portfolio
Manager Account will  be  consummated by payment to or delivery by the custodian
of  the Fund (the "Custodian"),  or  such  depositories  or  agents  as  may  be
designated  by  the Custodian in writing, as custodian for the Fund, of all cash
and/or securities  due  to  or  from  the  Portfolio  Manager  Account,  and the
Portfolio   Manager  shall  not  have  possession  or  custody  thereof  or  any
responsibility  or liability with respect to such custody. The Portfolio Manager
shall advise and  confirm  in writing to the Custodian all investment orders for
the Portfolio Manager Account  placed by it with brokers and dealers at the time
and in the manner set forth in Schedule  A  hereto (as amended from time to time
by the Fund Manager). The Fund shall issue to the Custodian such instructions as
may  be  appropriate  in  connection  with  the settlement  of  any  transaction
initiated  by  the Portfolio Manager. The Fund  shall  be  responsible  for  all
custodial arrangements  and  the payment of all custodial charges and fees, and,
upon giving proper instructions  to  the  Custodian, the Portfolio Manager shall
have no responsibility or liability with respect  to  custodial  arrangements or
the acts, omissions or other conduct of the Custodian.

  5.  ALLOCATION  OF BROKERAGE.  The Portfolio Manager shall have authority  and
discretion to select  brokers  and  dealers  to  execute  portfolio transactions
initiated  by the Portfolio Manager for the Portfolio Manager  Account,  and  to
select the markets on or in which the transaction will be executed.

     A. In doing so, the Portfolio Manager's primary  responsibility shall be to
     seek to obtain best net price and  execution  for the Fund.  However,  this
     responsibility   shall  not  obligate  the  Portfolio  Manager  to  solicit
     competitive  bids for each  transaction  or to seek  the  lowest  available
     commission  cost to the Fund, so long as the Portfolio  Manager  reasonably
     believes that the broker or dealer selected by it can be expected to obtain
     a  "best  execution"  market  price  on  the  particular   transaction  and
     determines in good faith that the commission cost is reasonable in relation
     to the value of the brokerage and research  services (as defined in Section
     28(e)(3) of the Securities Exchange Act of 1934) provided by such broker or
     dealer to the Portfolio  Manager viewed in terms of either that  particular
     transaction or of the Portfolio  Manager's  overall  responsibilities  with
     respect  to its  clients,  including  the Fund,  as to which the  Portfolio
     Manager exercises investment discretion,  notwithstanding that the Fund may
     not be the direct or  exclusive  beneficiary  of any such  services or that
     another broker may be willing to charge the Fund a lower  commission on the
     particular transaction.

     B. Subject to the requirements of paragraph A above, the Fund Manager shall
     have the  right to  request  that  transactions  giving  rise to  brokerage
     commissions,  in an amount to be agreed  upon by the Fund  Manager  and the
     Portfolio  Manager,  shall be executed by brokers and dealers  that provide
     brokerage or research  services to the Fund Manager,  or as to which an on-
     going  relationship  will be of value to the Fund in the  management of its
     assets,  which  services and  relationship  may, but need not, be of direct
     benefit  to  the  Portfolio  Manager  Account.  Notwithstanding  any  other
     provision of this Agreement, the Portfolio Manager shall not be responsible
     under paragraph A above with respect to transactions  executed  through any
     such broker or dealer.

     C. The Portfolio  Manager shall not execute any portfolio  transactions for
     the  Portfolio  Manager  Account  with  a  broker  or  dealer  which  is an
     "affiliated  person"  (as  defined in the Act) of the Fund,  the  Portfolio
     Manager  or any  other  portfolio  manager  of the Fund  without  the prior
     written  approval of the Fund.  The Fund Manager will provide the Portfolio

<PAGE>

     Manager with a list of brokers and dealers which are  "affiliated  persons"
     of the Fund or its portfolio managers.

  6. PROXIES.  The Fund  Manager  will  vote  all  proxies  solicited by or with
respect  to  the issuers of securities in which assets of the Portfolio  Manager
Account may be  invested  from  time to time in accordance with such policies as
shall be determined by the Fund Manager,  and reviewed and approved by the Board
of  Trustees.   Upon  the written request of the  Fund  Manager,  the  Portfolio
Manager will vote all proxies  solicited  by  or  with respect to the issuers of
securities in which assets of the Portfolio Manager Account may be invested from
time to time in accordance with such policies as shall be determined by the Fund
Manager, and reviewed and approved by the Board of Trustees.

  7.  FEES  FOR  SERVICES.  The compensation of the Portfolio  Manager  for  its
services under this Agreement  shall  be calculated and paid by the Fund Manager
in accordance with the attached Schedule  C.  Pursuant  to  the  Fund Management
Agreement  between  the  Fund and the Fund Manager, the Fund Manager  is  solely
responsible for the payment  of fees to the Portfolio Manager, and the Portfolio
Manager agrees to seek payment of its fees solely from the Fund Manager.

  8. OTHER INVESTMENT ACTIVITIES  OF  PORTFOLIO  MANAGER.  The Fund acknowledges
that  the  Portfolio  Manager  or one or more of its affiliates  has  investment
responsibilities, renders investment  advice  to  and  performs other investment
advisory  services  for other individuals or entities ("Client  Accounts"),  and
that the Portfolio Manager,  its  affiliates  or  any of its or their directors,
officers, agents or employees may buy, sell or trade  in  any securities for its
or their respective accounts ("Affiliated Accounts"). Subject  to the provisions
of  paragraph  2  hereof,  the  Fund  agrees that the Portfolio Manager  or  its
affiliates may give advice or exercise  investment  responsibility and take such
other action with respect to other Client Accounts and Affiliated Accounts which
may differ from the advice given or the timing or nature  of  action  taken with
respect  to  the  Portfolio Manager Account, provided that the Portfolio Manager
acts in good faith,  and  provided  further,  that it is the Portfolio Manager's
policy to allocate, within its reasonable discretion,  investment  opportunities
to  the Portfolio Manager Account over a period of time on a fair and  equitable
basis  relative  to the Client Accounts and the Affiliated Accounts, taking into
account the cash position and the investment objectives and policies of the Fund
and  any  specific  investment   restrictions   applicable   thereto.  The  Fund
acknowledges that one or more Client Accounts and Affiliated Accounts may at any
time  hold,  acquire,  increase,  decrease,  dispose of or otherwise  deal  with
positions in investments in which the Portfolio  Manager  Account  may  have  an
interest  from time to time, whether in transactions which involve the Portfolio
Manager Account  or otherwise. The Portfolio Manager shall have no obligation to
acquire for the Portfolio Manager Account a position in any investment which any
Client Account or  Affiliated  Account  may  acquire, and the Fund shall have no
first refusal, co-investment or other rights in  respect of any such investment,
either for the Portfolio Manager Account or otherwise.

  9. LIMITATION OF LIABILITY.  The Portfolio Manager shall not be liable for any
action taken, omitted or suffered to be taken by it  in its reasonable judgment,
in  good  faith  and reasonably believed by it to be authorized  or  within  the
discretion or rights  or  powers  conferred  upon  it  by  this Agreement, or in
accordance with (or in the absence of) specific directions or  instructions from
the Fund, provided, however, that such acts or omissions shall not have resulted
from the Portfolio Manager's willful misfeasance, bad faith or gross negligence,
a  violation  of  the  standard  of  care established by and applicable  to  the
Portfolio Manager in its actions under  this  Agreement or breach of its duty or
of its obligations hereunder (provided, however, that the foregoing shall not be
construed  to  protect  the Portfolio Manager from  liability  in  violation  of
Section 17(i) of the Act).

  10. CONFIDENTIALITY.  Subject  to  the duty of the Portfolio Manager, the Fund
Manager and the Fund to comply with applicable  law, including any demand of any
regulatory or taxing authority having jurisdiction,  the  parties  hereto  shall
treat  as  confidential  all  information  pertaining  to  the Portfolio Manager
Account  and  the  actions  of  the  Portfolio Manager and the Fund  in  respect
thereof.

  11. ASSIGNMENT.  This Agreement shall  terminate automatically in the event of
its assignment, as that term is defined in  Section  2(a)(4)  of  the  Act.  The
Portfolio  Manager  shall  notify the Fund in writing sufficiently in advance of
any proposed change of control,  as  defined  in  Section 2(a)(9) of the Act, as
will enable the Fund to consider whether an assignment  as  defined  in  Section
2(a)(4) of the Act will occur, and whether to take the steps necessary to  enter
into a new contract with the Portfolio Manager.

  12.  REPRESENTATIONS,  WARRANTIES  AND  AGREEMENTS  OF  THE  FUND.   The  Fund
represents, warrants and agrees that:

     A. The  Portfolio  Manager has been duly  appointed  to provide  investment
     services to the Portfolio Manager Account as contemplated hereby.

     B. The Fund will deliver to the Portfolio  Manager a true and complete copy
     of its then  current  Prospectus  as  effective  from time to time and such

<PAGE>

     other documents  governing the investment of the Portfolio  Manager Account
     and such other  information  as is necessary for the  Portfolio  Manager to
     carry out its obligations under this Agreement.


  13. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE PORTFOLIO  MANAGER.  The
Portfolio Manager represents, warrants and agrees that:

     A.  It is  registered  as an  "investment  adviser"  under  the  Investment
     Advisers Act of 1940, as amended  ("Advisers  Act") and will continue to be
     so registered for as long as this Agreement remains in effect.

     B. It will  maintain,  keep current and preserve on behalf of the Fund,  in
     the manner  required or permitted by the Act and the rules and  regulations
     thereunder,  the records required to be so kept by an investment adviser of
     the Fund in accordance with applicable law,  including  without  limitation
     those  identified  in Schedule B (as Schedule B may be amended from time to
     time by the Fund Manager).  The Portfolio  Manager agrees that such records
     are the property of the Fund,  and will be surrendered to the Fund promptly
     upon request.

     C. It has adopted a written code of ethics  complying with the requirements
     of Rule 204A-1 under the Advisers Act and Rule 17j-1 under the Act and will
     provide the Fund Manager and the Board of Trustees  with a copy of its code
     of ethics and evidence of its  adoption.  Within 45 days of the end of each
     year while this  Agreement is in effect,  or at any other time requested by
     the Fund Manager, an officer,  director or general partner of the Portfolio
     Manager shall  certify to the Fund that the Portfolio  Manager has complied
     with the  requirements  of Rule 17j-1 and Rule 204A-1  during the  previous
     year and that there has been no  material  violation  of its code of ethics
     or, if such a violation has occurred,  that appropriate action was taken in
     response to such violation. It will promptly notify the Fund Manager of any
     material change to its code of ethics or material  violation of its code of
     ethics.

     D. Upon request,  the Portfolio  Manager will promptly supply the Fund with
     any  information  concerning  the Portfolio  Manager and its  stockholders,
     partners,  employees and affiliates that the Fund may reasonably request in
     connection with the preparation of its  registration  statement (as amended
     from time to time),  prospectus and statement of additional information (as
     supplemented and modified from time to time),  proxy material,  reports and
     other  documents  required to be filed under the Act, the Securities Act of
     1933, or other applicable securities laws.

     E.  Reference is hereby made to the  Declaration  of Trust dated August 20,
     1986  establishing  the  Fund,  a copy of  which  has been  filed  with the
     Secretary of the Commonwealth of Massachusetts and elsewhere as required by
     law, and to any and all amendments thereto so filed or hereafter filed. The
     name  Liberty  All-Star  Equity Fund refers to the Board of Trustees  under
     said Declaration of Trust, as Trustees and not to the Trustees  personally,
     and no Trustee,  shareholder,  officer, agent or employee of the Fund shall
     be held to any  personal  liability  hereunder  or in  connection  with the
     affairs of the Fund,  but only the trust estate under said  Declaration  of
     Trust is liable under this  Agreement.  Without  limiting the generality of
     the  foregoing,  neither the  Portfolio  Manager  nor any of its  officers,
     directors,  partners,  shareholders,  agents or employees shall,  under any
     circumstances,  have recourse or cause or willingly  permit  recourse to be
     had directly or indirectly to any personal,  statutory,  or other liability
     of any shareholder,  Trustee,  officer, agent or employee of the Fund or of
     any  successor  of the  Fund,  whether  such  liability  now  exists  or is
     hereafter  incurred for claims against the trust estate, but shall look for
     payment solely to said trust estate, or the assets of such successor of the
     Fund.

     F. The Portfolio Manager shall maintain and implement compliance procedures
     that are reasonably designed to ensure its compliance with Rule 206(4)-7 of
     the Advisers Act and to prevent  violations of the Federal  Securities Laws
     (as defined in Rule 38a-1 under the Act).

     G.The  Portfolio  Manager will: (i) on the cover page of each Form 13F that
     the Portfolio  Manager files with the  Securities  and Exchange  Commission
     (the  "SEC"),  check the "13F  Combination  Report" box and on the Form 13F
     Summary Page identify "ALPS  Advisers,  Inc." as another  manager for which
     the  Portfolio  Manager is filing the Form 13F report;  (ii) within 60 days
     after  the end of each  calendar  year,  provide  the Fund  Manager  with a
     certification that the Portfolio  Manager's Form 13F was filed with the SEC
     on a  timely  basis  and  included  all of the  securities  required  to be
     reported by the SEC;  (iii)  within 60 days after the end of each  calendar
     year,  provide to the Fund Manager a copy of each Form 13F, or amendment to
     a Form 13F filed by it during the prior four  quarters;  and (iv)  promptly
     notify the Fund Manager in the event the Portfolio Manager  determines that

<PAGE>

     it has  failed to comply  with  Section  13(f) in a  material  respect,  or
     receives a comment  letter from the SEC raising a question  with respect to
     compliance.

     H. The  Portfolio  Manager  has  adopted  written  compliance  policies and
     procedures  reasonably  designed to prevent  violations of the Advisers Act
     and the rules  promulgated  thereunder and the Portfolio  Manager agrees to
     provide:  (a) from time to time, a copy and/or  summary of such  compliance
     policies and procedures and an accompanying  certification  certifying that
     the Portfolio Manager's  compliance policies and procedures comply with the
     Advisers  Act; (b) a report of the annual review  determining  the adequacy
     and  effectiveness  of the  Portfolio  Manager's  compliance  policies  and
     procedures;  and (c) the name of the Portfolio  Manager's Chief  Compliance
     Officer to act as a liaison for  compliance  matters that may arise between
     the Fund and the Portfolio Manager.

     I. The Portfolio  Manager  will notify the Fund and the Fund Manager of any
     assignment of this Agreement or change of control of the Portfolio Manager,
     as  applicable,  and any  changes in the key  personnel  who are either the
     portfolio  manager(s) of the Portfolio Manager Account or senior management
     of the Portfolio  Manager,  in each case prior to or promptly  after,  such
     change. The Portfolio Manager agrees to bear all reasonable expenses of the
     Fund, if any, arising out of an assignment or change in control.

     J. The Portfolio Manager agrees to maintain an appropriate  level of errors
     and omissions or professional liability insurance coverage.

  14. AMENDMENT.  This Agreement may be amended at any time, but only by written
agreement  among  the  Portfolio  Manager,  the Fund Manager and the Fund, which
amendment, other than amendments to Schedules  A,  B  and  C,  is subject to the
approval of the Board of Trustees and the shareholders of the Fund as and to the
extent required by the Act, the rules thereunder or exemptive relief  granted by
the  SEC,  provided  that  Schedules  A and B may be amended by the Fund Manager
without the written agreement of the Fund or the Portfolio Manager.

  15. EFFECTIVE DATE; TERM.  This Agreement  shall  become effective on the date
first above written, provided that this Agreement shall  not  take effect unless
it has first been approved: (1) by a vote of a majority of the  Trustees who are
not "interested persons" (as defined in the Act) of any party to  this Agreement
("Independent Trustees"), cast in person at a  meeting called for the purpose of
voting  on  such  approval,  and  (ii) by vote of "a majority of the outstanding
voting securities" (as defined in the  Act)  of  the Fund.  This Agreement shall
continue for two years from the date of this Agreement  and  from  year  to year
thereafter  provided such continuance is specifically approved at least annually
by (i) the Fund's  Board  of  Trustees  or  (ii)  a  vote  of  a majority of the
outstanding voting securities of the Fund, provided that in either  event   such
continuance  is also approved by a majority of the Independent Trustees, by vote
cast in person  at  a meeting called for the purpose of voting on such approval.
If the SEC issues an  order  to  the Fund and the Fund Manager  for an exemption
from Section 15(a) of the Act, then,  in  accordance with the application of the
Fund  and the Fund Manager, the continuance  of  this  Agreement  after  initial
approval  by  the Trustees as set forth above, shall be subject to approval by a
majority of the  outstanding  voting  securities  of  the  Fund at the regularly
scheduled annual meeting of the Fund's shareholders next following  the  date of
this Agreement.

  16.  TERMINATION.   This Agreement may be terminated at any time by any party,
without penalty, immediately  upon  written  notice  to the other parties in the
event of a breach of any provision thereof by a party  so notified, or otherwise
upon not less than thirty (30) days' written notice to the  Portfolio Manager in
the  case of termination by the Fund or the Fund Manager, or ninety  (90)  days'
written  notice  to  the Fund and the Fund Manager in the case of termination by
the Portfolio Manager,  but  any  such  termination shall not affect the status,
obligations or liabilities of any party hereto to the other parties.

  17. APPLICABLE LAW.  To the extent that  state  law  is  not  preempted by the
provisions of any law of the United States heretofore or hereafter  enacted,  as
the same may be amended from time to time, this Agreement shall be administered,
construed   and   enforced   according  to  the  laws  of  the  Commonwealth  of
Massachusetts.

  18. SEVERABILITY; COUNTERPARTS.   If  any  term or condition of this Agreement
shall be invalid or unenforceable to any extent  or in any application, then the
remainder of this Agreement, and such term or condition except to such extent or
in such application, shall not be affected thereby,  and each and every term and
condition of this Agreement shall be valid and enforced  to  the  fullest extent
and  in  the  broadest  application  permitted  by  law.  This Agreement may  be
executed in counterparts, each of which will be deemed  an  original  and all of
which together will be deemed to be one and the same agreement.


<PAGE>


  19.  USE OF NAME.  The Portfolio Manager agrees and acknowledges that the Fund
Manager  is  the sole owner of the names and marks "Liberty All-Star" and  "All-
Star", and that  all  use  of  any  designation comprised in whole or in part of
these names and marks shall inure to the benefit of the Fund Manager.  Except as
used to identify the Fund to third parties as a client, the use by the Portfolio
Manager on its own behalf of such marks in any advertisement or sales literature
or other materials promoting the Portfolio  Manager  shall  be  with  the  prior
written  consent  of the Fund Manager.  The Portfolio Manager shall not, without
the consent of the  Fund Manager, make representations regarding the Fund or the
Fund Manager in any disclosure  document,  advertisement  or sales literature or
other materials promoting the Portfolio Manager.  Consent by  the  Fund  Manager
shall not be unreasonably withheld.  Upon termination of this Agreement for  any
reason, the Portfolio Manager shall cease any and all use of these marks as soon
as reasonably practicable.


                       LIBERTY ALL-STAR EQUITY FUND

                       By: /s/ William R. Parmentier, Jr.
                           ------------------------------
                       Name: William R. Parmentier, Jr.
                       Title: President

                       ALPS ADVISERS, INC.

                       By: /s/ Edmund J. Burke
                           -------------------
                       Name: Edmund J. Burke
                       Title: President

ACCEPTED:

CHASE INVESTMENT COUNSEL CORPORATION

By: /s/ David B. Scott
    ------------------
Name: David B. Scott
Title: Sr. Vice President


SCHEDULES:
A. Operational Procedures

B. Records To Be Maintained By The Portfolio Manager

C. Portfolio Manager Fee


<PAGE>

                          LIBERTY ALL-STAR GROWTH FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE B

               RECORDS TO BE MAINTAINED BY THE PORTFOLIO MANAGER

1.   (Rule  31a-1(b)(5) and (6)) A record of each brokerage order, and all other
     portfolio  purchases and sales, given by the Portfolio Manager on behalf of
     the Fund for, or in connection  with,  the purchase or sale of  securities,
     whether executed or unexecuted. Such records shall include:

     A.   The name of the broker;

     B.   The terms and  conditions  of the  order and of any  modifications  or
          cancellation thereof;

     C.   The time of entry or cancellation;

     D.   The price at which executed;

     E.   The time of receipt of a report of execution; and

     F.   The name of the person who placed the order on behalf of the Fund.

2.   (Rule  31a-1(b)(9)) A record for each fiscal quarter,  completed within ten
     (10) days after the end of the quarter,  showing  specifically the basis or
     bases upon which the  allocation  of orders  for the  purchase  and sale of
     portfolio  securities  to named  brokers or dealers was  effected,  and the
     division of brokerage  commissions or other  compensation  on such purchase
     and sale orders. Such record:

     A.   Shall include the consideration given to:

          (i)  The sale of shares of the Fund by brokers or dealers.

          (ii) The supplying of services or benefits by brokers or dealers to:

               (a)  The Fund;

               (b)  The Fund Manager;

               (c)  The Portfolio Manager; and

               (d)  Any person other than the foregoing.

          (iii) Any other consideration other than the technical  qualifications
                of the brokers and dealers as such.

     B.   Shall show the nature of the services or benefits made available.

     C.   Shall  describe in detail the  application  of any general or specific
          formula or other  determinant  used in arriving at such  allocation of
          purchase and sale orders and such division of brokerage commissions or
          other compensation.

     D.   The name of the person  responsible  for making the  determination  of
          such  allocation  and such division of brokerage  commissions or other
          compensation.

3.   (Rule  31a-1(b)(10))  A  record  in the form of an  appropriate  memorandum
     identifying  the person or persons,  committees or groups  authorizing  the
     purchase or sale of portfolio securities. Where an authorization is made by
     a committee  or group,  a record  shall be kept of the names of its members
     who  participate in the  authorization.  There shall be retained as part of
     this record:  any memorandum,  recommendation or instruction  supporting or
     authorizing  the  purchase or sale of portfolio  securities  and such other
     information as is appropriate to support the authorization.(1)


<PAGE>


4.   (Rule 31a-1(f)) Such accounts, books and other documents as are required to
     be  maintained  by  registered  investment  advisers by rule adopted  under
     Section  204 of the  Investment  Advisers  Act of 1940,  to the extent such
     records are  necessary or  appropriate  to record the  Portfolio  Manager's
     transactions with the Fund.

- ----------
(1)  Such information might include: the current Form 10-K, annual and quarterly
     reports,  press  releases,  reports by analysts  and from  brokerage  firms
     (including  their  recommendation:  i.e., buy, sell,  hold) or any internal
     reports or portfolio manager reviews.


<PAGE>
                          LIBERTY ALL-STAR GROWTH FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE C

                             PORTFOLIO MANAGER FEE


      For  services  provided to the Portfolio Manager Account, the Fund Manager
will pay to the Portfolio  Manager, on or before the 10th day of each calendar
month, a fee calculated and  accrued  daily  and  payable  monthly  by  the Fund
Manager  for  the  previous calendar month at the annual rate of:  0.40% of  the
amount  obtained  by  multiplying   the   Portfolio   Manager's  Percentage  (as
hereinafter  defined)  times the Average Total Fund Net Assets  (as  hereinafter
defined) up to $400 million;  0.36%  of  the  amount obtained by multiplying the
Portfolio Manager's Percentage times the Average Total Fund Net Assets exceeding
$400 million up to and including $800 million;  0.324% of the amount obtained by
multiplying the Portfolio Manager's Percentage times  the Average Total Fund Net
Assets exceeding $800 million up to and including $1.2  billion;  0.292%  of the
amount  obtained  by  multiplying  the  Portfolio Manager's Percentage times the
Average Total Fund Net Assets exceeding $1.2 billion.

      "Portfolio Manager's Percentage" means the percentage obtained by dividing
(i) the average daily net asset values of  the  Portfolio Manager Account during
the preceding calendar month, by (ii) the Average Total Fund Net Assets.

      "Average Total Fund Net Assets" means the average  daily  net asset values
of the Fund as a whole during the preceding calendar month.

      The fee shall be pro-rated for any month during which this Agreement is in
effect for only a portion of the month.


<PAGE>


April 2, 2007


Chase Investment Counsel Corporation
Attn:  Legal Department
300 Preston Avenue, Suite 403
Charlottesville, VA  22902-5091

RE:  Portfolio Management Agreement with Liberty All-Star Equity Fund

Dear Chase:


In a recent audit of the Liberty All-Star Equity Fund (the "Fund") records, it
was discovered that Appendix B and C to the Portfolio Management Agreement
between Chase Investment Counsel Corporation, ALPS Advisers, Inc., and the Fund
was mislabeled as Liberty All-Star Growth Fund, Inc.

Therefore, please accept the attached replacement pages with the correct
heading.  The body of the pages did not change.

Additionally, please note that ALPS Advisers, Inc., and the Funds main address
has changed from 1625 Broadway, Suite 2200, Denver CO  80202 to 1290 Broadway,
Suite 1100, Denver, CO  80203.

Should you have any questions regarding these matters, please feel free to
contact me or my paralegal Stephanie Barres at 303.623.2577.

Sincerely,


/s/ Tane T. Tyler
- -----------------
Tane T. Tyler
Chief Legal Officer
ALPS Advisers, Inc.


Enclosures


<PAGE>
                          LIBERTY ALL-STAR EQUITY FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE B

               RECORDS TO BE MAINTAINED BY THE PORTFOLIO MANAGER

1.   (Rule  31a-1(b)(5) and (6)) A record of each brokerage order, and all other
     portfolio  purchases and sales, given by the Portfolio Manager on behalf of
     the Fund for, or in connection  with,  the purchase or sale of  securities,
     whether executed or unexecuted. Such records shall include:

     A.   The name of the broker;

     B.   The terms and  conditions  of the  order and of any  modifications  or
          cancellation thereof;

     C.   The time of entry or cancellation;

     D.   The price at which executed;

     E.   The time of receipt of a report of execution; and

     F.   The name of the person who placed the order on behalf of the Fund.

2.   (Rule  31a-1(b)(9)) A record for each fiscal quarter,  completed within ten
     (10) days after the end of the quarter,  showing  specifically the basis or
     bases upon which the  allocation  of orders  for the  purchase  and sale of
     portfolio  securities  to named  brokers or dealers was  effected,  and the
     division of brokerage  commissions or other  compensation  on such purchase
     and sale orders. Such record:

     A.   Shall include the consideration given to:

          (i)  The sale of shares of the Fund by brokers or dealers.

          (ii) The supplying of services or benefits by brokers or dealers to:

               (a)  The Fund;

               (b)  The Fund Manager;

               (c)  The Portfolio Manager; and

               (d)  Any person other than the foregoing.

          (iii) Any other consideration other than the technical  qualifications
               of the brokers and dealers as such.

     B.   Shall show the nature of the services or benefits made available.

     C.   Shall  describe in detail the  application  of any general or specific
          formula or other  determinant  used in arriving at such  allocation of
          purchase and sale orders and such division of brokerage commissions or
          other compensation.

     D.   The name of the person  responsible  for making the  determination  of
          such  allocation  and such division of brokerage  commissions or other
          compensation.

3.   (Rule  31a-1(b)(10))  A  record  in the form of an  appropriate  memorandum
     identifying  the person or persons,  committees or groups  authorizing  the
     purchase or sale of portfolio securities. Where an authorization is made by
     a committee  or group,  a record  shall be kept of the names of its members
     who  participate in the  authorization.  There shall be retained as part of
     this record:  any memorandum,  recommendation or instruction  supporting or
     authorizing  the  purchase or sale of portfolio  securities  and such other
     information as is appropriate to support the authorization.(1)


<PAGE>


4.   (Rule 31a-1(f)) Such accounts, books and other documents as are required to
     be  maintained  by  registered  investment  advisers by rule adopted  under
     Section  204 of the  Investment  Advisers  Act of 1940,  to the extent such
     records are  necessary or  appropriate  to record the  Portfolio  Manager's
     transactions with the Fund.

- -----------
(1)  Such information might include: the current Form 10-K, annual and quarterly
     reports,  press  releases,  reports by analysts  and from  brokerage  firms
     (including  their  recommendation:  i.e., buy, sell,  hold) or any internal
     reports or portfolio manager reviews.





<PAGE>
                          LIBERTY ALL-STAR EQUITY FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE C

                             PORTFOLIO MANAGER FEE


      For  services  provided to the Portfolio Manager Account, the Fund Manager
will pay to the Portfolio  Manager, on or before the 10th day of each calendar
month, a fee calculated and  accrued  daily  and  payable  monthly  by  the Fund
Manager  for  the  previous calendar month at the annual rate of:  0.40% of  the
amount  obtained  by  multiplying   the   Portfolio   Manager's  Percentage  (as
hereinafter  defined)  times the Average Total Fund Net Assets  (as  hereinafter
defined) up to $400 million;  0.36%  of  the  amount obtained by multiplying the
Portfolio Manager's Percentage times the Average Total Fund Net Assets exceeding
$400 million up to and including $800 million;  0.324% of the amount obtained by
multiplying the Portfolio Manager's Percentage times  the Average Total Fund Net
Assets exceeding $800 million up to and including $1.2  billion;  0.292%  of the
amount  obtained  by  multiplying  the  Portfolio Manager's Percentage times the
Average Total Fund Net Assets exceeding $1.2 billion.

      "Portfolio Manager's Percentage" means the percentage obtained by dividing
(i) the average daily net asset values of  the  Portfolio Manager Account during
the preceding calendar month, by (ii) the Average Total Fund Net Assets.

      "Average Total Fund Net Assets" means the average  daily  net asset values
of the Fund as a whole during the preceding calendar month.

      The fee shall be pro-rated for any month during which this Agreement is in
effect for only a portion of the month.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2G
<SEQUENCE>5
<FILENAME>exhibit2g4.txt
<DESCRIPTION>EX-99.2G4
<TEXT>
                          LIBERTY ALL-STAR EQUITY FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                       TCW INVESTMENT MANAGEMENT COMPANY


                               December 18, 2006


Re: Portfolio Management Agreement
    ------------------------------

Ladies and Gentlemen:

     Liberty  All-Star  Equity  Fund (the  "Fund") is a  diversified  closed-end
investment  company  registered  under the  Investment  Company Act of 1940,  as
amended (the  "Act"),  and is subject to the rules and  regulations  promulgated
thereunder.

     ALPS Advisers, Inc. (the "Fund Manager") evaluates and recommends portfolio
managers for the assets of the Fund, and the Fund Manager or an affiliate of the
Fund Manager is responsible for the day-to-day Fund administration of the Fund.

     1.  EMPLOYMENT AS A PORTFOLIO  MANAGER.  The Fund,  being duly  authorized,
hereby  employs TCW Investment  Management  Company  ("Portfolio  Manager") as a
discretionary  portfolio manager,  on the terms and conditions set forth herein,
of that portion of the Fund's assets which the Fund Manager determines to assign
to the  Portfolio  Manager  (those  assets being  referred to as the  "Portfolio
Manager  Account").  The Fund  Manager  may,  from  time to time,  allocate  and
reallocate the Fund's assets among the Portfolio Manager and the other portfolio
managers of the Fund's  assets.  The  Portfolio  Manager will be an  independent
contractor  and will have no authority  to act for or represent  the Fund or the
Fund Manager in any way or otherwise be deemed to be an agent of the Fund or the
Fund Manager  except as  expressly  authorized  in this  Agreement or in another
writing by the Fund Manager and the Portfolio Manager.  The Portfolio  Manager's
responsibilities  for providing portfolio  management services to the Fund shall
be limited to the Portfolio Manager Account.

     2. ACCEPTANCE OF EMPLOYMENT; STANDARD OF PERFORMANCE. The Portfolio Manager
accepts its employment as a  discretionary  portfolio  manager and agrees to use
its best  professional  judgment to make  timely  investment  decisions  for the
Portfolio Manager Account in accordance with the provisions of this Agreement.

     3. PORTFOLIO MANAGEMENT SERVICES OF PORTFOLIO MANAGER.

          A. In providing portfolio management services to the Portfolio Manager
          Account,  the  Portfolio  Manager  shall  be  subject  to  the  Fund's
          Declaration  of Trust  and  By-Laws,  as  amended  from  time to time,
          investment  objectives,  policies and  restrictions of the Fund as set
          forth in its  Prospectus and Statement of Additional  Information,  as
          the  same  may  be  modified   from  time  to  time   (together,   the
          "Prospectus"), the investment objectives, policies and restrictions of
          the Fund as determined from time to time by the Board of Trustees, and
          the  investment  and other  restrictions  set forth in the Act and the
          rules and  regulations  thereunder,  to the supervision and control of
          the Board of Trustees of the Fund, and to  instructions  from the Fund
          Manager.  The Portfolio  Manager shall not, without the prior approval
          of the Fund or the Fund Manager,  effect any  transactions  that would
          cause the Portfolio Manager Account, treated as a separate fund, to be
          out of  compliance  with any of such  restrictions  or  policies.  The
          Portfolio  Manager shall not consult with any other portfolio  manager
          of the Fund  concerning  transactions  for the Fund in  securities  or
          other assets.

          B. As part of the services it will provide  hereunder,  the  Portfolio
          Manager will:

            (i)   formulate  and implement a continuous  investment  program for
                  the Portfolio Manager Account;

            (ii)  take whatever  steps are necessary to implement the investment
                  program for the Portfolio Manager Account by arranging for the
                  purchase and sale of securities and other investments;

            (iii) keep the Fund  Manager  and the Board of  Trustees of the Fund
                  fully  informed in writing on an ongoing  basis,  as agreed by
                  the Fund Manager and the  Portfolio  Manager,  of all material
                  facts concerning the investment and reinvestment of the assets
                  in the Portfolio  Manager Account,  the Portfolio  Manager and


<PAGE>


                  its key investment personnel and operations;  make regular and
                  periodic   special   written   reports   of  such   additional
                  information concerning the same as may reasonably be requested
                  from time to time by the Fund  Manager or the  Trustees of the
                  Fund;  attend meetings with the Fund Manager and/or  Trustees,
                  as  reasonably  requested,  to discuss the  foregoing and such
                  other  matters  as may be  requested  by the Fund  Manager  or
                  Trustees;

            (iv)  in accordance with  procedures and methods  established by the
                  Trustees of the Fund,  which may be amended from time to time,
                  provide  assistance  in  determining  the  fair  value  of all
                  securities  and  other  investments/assets  in  the  Portfolio
                  Manager Account,  as necessary,  and use reasonable efforts to
                  arrange  for  the  provision  of  valuation  information  or a
                  price(s)  from  a  party(ies)  independent  of  the  Portfolio
                  Manager  for each  security or other  investment/asset  in the
                  Portfolio  Manager  Account  for which  market  prices are not
                  readily available; and

            (v)   cooperate with and provide  reasonable  assistance to the Fund
                  Manager, the Fund's administrator,  custodian,  transfer agent
                  and pricing agents and all other agents and representatives of
                  the Fund and the Fund  Manager;  keep all such  persons  fully
                  informed  as to such  matters  as  they  may  reasonably  deem
                  necessary to the performance of their  obligations to the Fund
                  and the Fund Manager;  provide prompt  responses to reasonable
                  requests  made by such persons;  and maintain any  appropriate
                  interfaces  with each so as to promote the efficient  exchange
                  of information.

     4.  TRANSACTION  PROCEDURES.  All portfolio  transactions for the Portfolio
Manager  Account will be  consummated by payment to or delivery by the custodian
of the  Fund  (the  "Custodian"),  or  such  depositories  or  agents  as may be
designated by the  Custodian in writing,  as custodian for the Fund, of all cash
and/or  securities  due to or  from  the  Portfolio  Manager  Account,  and  the
Portfolio   Manager  shall  not  have  possession  or  custody  thereof  or  any
responsibility or liability with respect to such custody.  The Portfolio Manager
shall advise and confirm in writing to the Custodian all  investment  orders for
the Portfolio  Manager Account placed by it with brokers and dealers at the time
and in the manner set forth in Schedule A hereto (as  amended  from time to time
by the Fund Manager). The Fund shall issue to the Custodian such instructions as
may be  appropriate  in  connection  with  the  settlement  of  any  transaction
initiated  by the  Portfolio  Manager.  The Fund  shall be  responsible  for all
custodial  arrangements and the payment of all custodial  charges and fees, and,
upon giving proper  instructions to the Custodian,  the Portfolio  Manager shall
have no  responsibility  or liability with respect to custodial  arrangements or
the acts, omissions or other conduct of the Custodian.

     5. ALLOCATION OF BROKERAGE.  The Portfolio Manager shall have authority and
discretion  to select  brokers  and  dealers to execute  portfolio  transactions
initiated by the Portfolio  Manager for the Portfolio  Manager  Account,  and to
select the markets on or in which the transaction will be executed.

          A. In doing so, the Portfolio Manager's primary  responsibility  shall
          be to seek to  obtain  best net  price  and  execution  for the  Fund.
          However,  this responsibility shall not obligate the Portfolio Manager
          to solicit competitive bids for each transaction or to seek the lowest
          available  commission  cost to the  Fund,  so  long  as the  Portfolio
          Manager  reasonably  believes that the broker or dealer selected by it
          can be  expected  to  obtain a "best  execution"  market  price on the
          particular   transaction   and  determines  in  good  faith  that  the
          commission  cost  is  reasonable  in  relation  to  the  value  of the
          brokerage and research services (as defined in Section 28(e)(3) of the
          Securities  Exchange Act of 1934) provided by such broker or dealer to
          the  Portfolio  Manager  viewed  in terms of  either  that  particular
          transaction  or of the Portfolio  Manager's  overall  responsibilities
          with  respect  to its  clients,  including  the Fund,  as to which the
          Portfolio Manager  exercises  investment  discretion,  notwithstanding
          that the Fund may not be the direct or  exclusive  beneficiary  of any
          such services or that another broker may be willing to charge the Fund
          a lower commission on the particular transaction.

          B. Subject to the  requirements of paragraph A above, the Fund Manager
          shall  have the right to  request  that  transactions  giving  rise to
          brokerage  commissions,  in an amount  to be  agreed  upon by the Fund
          Manager and the  Portfolio  Manager,  shall be executed by brokers and
          dealers  that  provide  brokerage  or  research  services  to the Fund
          Manager,  or as to which an on- going relationship will be of value to
          the  Fund  in  the  management  of  its  assets,  which  services  and
          relationship  may, but need not, be of direct benefit to the Portfolio
          Manager   Account.   Notwithstanding   any  other  provision  of  this
          Agreement,  the  Portfolio  Manager  shall  not be  responsible  under
          paragraph A above with respect to  transactions  executed  through any
          such broker or dealer.

          C. The Portfolio Manager shall not execute any portfolio  transactions
          for the Portfolio  Manager Account with a broker or dealer which is an
          "affiliated person" (as defined in the Act) of the Fund, the Portfolio
          Manager or any other  portfolio  manager of the Fund without the prior
          written  approval  of the Fund.  The Fund  Manager  will  provide  the


<PAGE>


          Portfolio  Manager  with a list  of  brokers  and  dealers  which  are
          "affiliated persons" of the Fund or its portfolio managers.

     6.  PROXIES.  The Fund Manager  will vote all proxies  solicited by or with
respect to the issuers of securities  in which assets of the  Portfolio  Manager
Account may be invested  from time to time in  accordance  with such policies as
shall be determined by the Fund Manager,  and reviewed and approved by the Board
of Trustees. Upon the written request of the Fund Manager, the Portfolio Manager
will vote all proxies  solicited by or with respect to the issuers of securities
in which assets of the  Portfolio  Manager  Account may be invested from time to
time in  accordance  with  such  policies  as  shall be  determined  by the Fund
Manager, and reviewed and approved by the Board of Trustees.

     7. FEES FOR SERVICES.  The  compensation  of the Portfolio  Manager for its
services under this  Agreement  shall be calculated and paid by the Fund Manager
in  accordance  with the attached  Schedule C.  Pursuant to the Fund  Management
Agreement  between  the Fund and the Fund  Manager,  the Fund  Manager is solely
responsible for the payment of fees to the Portfolio Manager,  and the Portfolio
Manager agrees to seek payment of its fees solely from the Fund Manager.

     8. OTHER INVESTMENT  ACTIVITIES OF PORTFOLIO MANAGER. The Fund acknowledges
that the  Portfolio  Manager  or one or more of its  affiliates  has  investment
responsibilities,  renders  investment  advice to and performs other  investment
advisory  services for other individuals or entities  ("Client  Accounts"),  and
that the Portfolio  Manager,  its  affiliates or any of its or their  directors,
officers,  agents or employees may buy, sell or trade in any  securities for its
or their respective accounts ("Affiliated Accounts").  Subject to the provisions
of  paragraph  2 hereof,  the Fund  agrees  that the  Portfolio  Manager  or its
affiliates may give advice or exercise  investment  responsibility and take such
other action with respect to other Client Accounts and Affiliated Accounts which
may differ  from the advice  given or the timing or nature of action  taken with
respect to the Portfolio  Manager Account,  provided that the Portfolio  Manager
acts in good faith,  and provided  further,  that it is the Portfolio  Manager's
policy to allocate,  within its reasonable discretion,  investment opportunities
to the Portfolio  Manager  Account over a period of time on a fair and equitable
basis relative to the Client Accounts and the Affiliated  Accounts,  taking into
account the cash position and the investment objectives and policies of the Fund
and  any  specific  investment   restrictions   applicable  thereto.   The  Fund
acknowledges that one or more Client Accounts and Affiliated Accounts may at any
time  hold,  acquire,  increase,  decrease,  dispose of or  otherwise  deal with
positions in  investments  in which the  Portfolio  Manager  Account may have an
interest from time to time,  whether in transactions which involve the Portfolio
Manager Account or otherwise.  The Portfolio Manager shall have no obligation to
acquire for the Portfolio Manager Account a position in any investment which any
Client  Account or  Affiliated  Account may acquire,  and the Fund shall have no
first refusal,  co-investment or other rights in respect of any such investment,
either for the Portfolio Manager Account or otherwise.

     9. LIMITATION OF LIABILITY.  The Portfolio  Manager shall not be liable for
any  action  taken,  omitted  or  suffered  to be taken by it in its  reasonable
judgment, in good faith and reasonably believed by it to be authorized or within
the discretion or rights or powers  conferred upon it by this  Agreement,  or in
accordance with (or in the absence of) specific  directions or instructions from
the Fund, provided, however, that such acts or omissions shall not have resulted
from the Portfolio Manager's willful misfeasance, bad faith or gross negligence,
a  violation  of the  standard  of care  established  by and  applicable  to the
Portfolio  Manager in its actions under this  Agreement or breach of its duty or
of its obligations hereunder (provided, however, that the foregoing shall not be
construed  to protect the  Portfolio  Manager  from  liability  in  violation of
Section 17(i) of the Act).

     10. CONFIDENTIALITY. Subject to the duty of the Portfolio Manager, the Fund
Manager and the Fund to comply with applicable law,  including any demand of any
regulatory or taxing  authority  having  jurisdiction,  the parties hereto shall
treat as  confidential  all  information  pertaining  to the  Portfolio  Manager
Account  and the  actions  of the  Portfolio  Manager  and the  Fund in  respect
thereof.

     11. ASSIGNMENT.  This Agreement shall terminate  automatically in the event
of its  assignment,  as that term is defined in Section  2(a)(4) of the Act. The
Portfolio  Manager shall notify the Fund in writing  sufficiently  in advance of
any  proposed  change of control,  as defined in Section  2(a)(9) of the Act, as
will enable the Fund to  consider  whether an  assignment  as defined in Section
2(a)(4) of the Act will occur,  and whether to take the steps necessary to enter
into a new contract with the Portfolio Manager.

     12.  REPRESENTATIONS,  WARRANTIES  AND  AGREEMENTS  OF THE  FUND.  The Fund
represents, warrants and agrees that:

          A. The Portfolio Manager has been duly appointed to provide investment
          services to the Portfolio Manager Account as contemplated hereby.

          B. The Fund will deliver to the Portfolio  Manager a true and complete
          copy of its then current Prospectus as effective from time to time and


<PAGE>


          such other documents governing the investment of the Portfolio Manager
          Account and such other  information  as is necessary for the Portfolio
          Manager to carry out its obligations under this Agreement.


     13.  REPRESENTATIONS,  WARRANTIES AND AGREEMENTS OF THE PORTFOLIO  MANAGER.
The Portfolio Manager represents, warrants and agrees that:

          A. It is registered as an  "investment  adviser"  under the Investment
          Advisers Act of 1940, as amended ("Advisers Act") and will continue to
          be so registered for as long as this Agreement remains in effect.

          B. It will maintain,  keep current and preserve on behalf of the Fund,
          in the  manner  required  or  permitted  by the Act and the  rules and
          regulations  thereunder,  the  records  required  to be so  kept by an
          investment  adviser of the Fund in  accordance  with  applicable  law,
          including  without  limitation  those  identified  in  Schedule  B (as
          Schedule B may be amended from time to time by the Fund Manager).  The
          Portfolio  Manager  agrees that such  records are the  property of the
          Fund, and will be surrendered to the Fund promptly upon request.

          C.  It has  adopted  a  written  code of  ethics  complying  with  the
          requirements  of Rule  204A-1  under the  Advisers  Act and Rule 17j-1
          under  the Act and will  provide  the Fund  Manager  and the  Board of
          Trustees  with a copy  of its  code  of  ethics  and  evidence  of its
          adoption.  Within 45 days of the end of each year while this Agreement
          is in effect,  or at any other time requested by the Fund Manager,  an
          officer,  director or general  partner of the Portfolio  Manager shall
          certify to the Fund that the  Portfolio  Manager has complied with the
          requirements  of Rule 17j-1 and Rule 204A-1  during the previous  year
          and that there has been no  material  violation  of its code of ethics
          or, if such a violation  has  occurred,  that  appropriate  action was
          taken in response to such violation.  It will promptly notify the Fund
          Manager  of any  material  change to its code of  ethics  or  material
          violation of its code of ethics.

          D. Upon request,  the Portfolio  Manager will promptly supply the Fund
          with  any  information   concerning  the  Portfolio  Manager  and  its
          stockholders,  partners,  employees and  affiliates  that the Fund may
          reasonably   request  in  connection   with  the  preparation  of  its
          registration statement (as amended from time to time),  prospectus and
          statement of additional information (as supplemented and modified from
          time to time), proxy material, reports and other documents required to
          be  filed  under  the  Act,  the  Securities  Act of  1933,  or  other
          applicable securities laws.

          E.  Reference is hereby made to the  Declaration of Trust dated August
          20, 1986  establishing  the Fund,  a copy of which has been filed with
          the Secretary of the  Commonwealth of  Massachusetts  and elsewhere as
          required  by law,  and to any and all  amendments  thereto so filed or
          hereafter  filed.  The name Liberty All-Star Equity Fund refers to the
          Board of Trustees under said Declaration of Trust, as Trustees and not
          to the  Trustees  personally,  and no Trustee,  shareholder,  officer,
          agent or employee of the Fund shall be held to any personal  liability
          hereunder or in connection  with the affairs of the Fund, but only the
          trust  estate  under said  Declaration  of Trust is liable  under this
          Agreement.  Without limiting the generality of the foregoing,  neither
          the Portfolio  Manager nor any of its officers,  directors,  partners,
          shareholders, agents or employees shall, under any circumstances, have
          recourse or cause or willingly  permit  recourse to be had directly or
          indirectly  to any  personal,  statutory,  or other  liability  of any
          shareholder, Trustee, officer, agent or employee of the Fund or of any
          successor  of the  Fund,  whether  such  liability  now  exists  or is
          hereafter incurred for claims against the trust estate, but shall look
          for  payment  solely  to said  trust  estate,  or the  assets  of such
          successor of the Fund.

          F. The  Portfolio  Manager  shall  maintain and  implement  compliance
          procedures that are reasonably  designed to ensure its compliance with
          Rule  206(4)-7 of the  Advisers Act and to prevent  violations  of the
          Federal Securities Laws (as defined in Rule 38a-1 under the Act).

          G. The Portfolio  Manager will: (i) on the cover page of each Form 13F
          that the  Portfolio  Manager  files with the  Securities  and Exchange
          Commission (the "SEC"),  check the "13F Combination Report" box and on
          the Form 13F Summary Page identify  "ALPS  Advisers,  Inc." as another
          manager for which the Portfolio Manager is filing the Form 13F report;
          (ii) within 60 days after the end of each calendar  year,  provide the
          Fund Manager with a  certification  that the Portfolio  Manager's Form
          13F was filed with the SEC on a timely  basis and  included all of the
          securities  required to be reported by the SEC;  (iii)  within 60 days
          after the end of each  calendar  year,  provide to the Fund  Manager a
          copy of each Form 13F, or  amendment  to a Form 13F filed by it during
          the prior four quarters;  and (iv) promptly notify the Fund Manager in
          the event  the  Portfolio  Manager  determines  that it has  failed to


<PAGE>


          comply with Section 13(f) in a material respect, or receives a comment
          letter from the SEC raising a question with respect to compliance.

          H. The Portfolio Manager has adopted written  compliance  policies and
          procedures  reasonably  designed to prevent violations of the Advisers
          Act and the rules  promulgated  thereunder  and the Portfolio  Manager
          agrees to provide:  (a) from time to time,  a copy  and/or  summary of
          such   compliance   policies  and  procedures   and  an   accompanying
          certification  certifying  that  the  Portfolio  Manager's  compliance
          policies and procedures  comply with the Advisers Act; (b) a report of
          the annual review  determining the adequacy and  effectiveness  of the
          Portfolio Manager's  compliance  policies and procedures;  and (c) the
          name of the Portfolio  Manager's Chief Compliance  Officer to act as a
          liaison for compliance matters that may arise between the Fund and the
          Portfolio Manager.

          I. The Portfolio  Manager will notify the Fund and the Fund Manager of
          any assignment of this Agreement or change of control of the Portfolio
          Manager,  as applicable,  and any changes in the key personnel who are
          either the portfolio  manager(s) of the Portfolio  Manager  Account or
          senior management of the Portfolio  Manager,  in each case prior to or
          promptly after, such change.  The Portfolio Manager agrees to bear all
          reasonable  expenses of the Fund, if any, arising out of an assignment
          or change in control.

          J. The Portfolio  Manager agrees to maintain an  appropriate  level of
          errors and omissions or professional liability insurance coverage.

     14.  AMENDMENT.  This  Agreement  may be amended  at any time,  but only by
written  agreement among the Portfolio  Manager,  the Fund Manager and the Fund,
which  amendment,  other than  amendments to Schedules A, B and C, is subject to
the approval of the Board of Trustees and the shareholders of the Fund as and to
the extent required by the Act, the rules thereunder or exemptive relief granted
by the SEC,  provided that  Schedules A and B may be amended by the Fund Manager
without the written agreement of the Fund or the Portfolio Manager.

     15. EFFECTIVE DATE; TERM. This Agreement shall become effective on the date
first above written,  provided that this Agreement  shall not take effect unless
it has first been approved:  (1) by a vote of a majority of the Trustees who are
not "interested  persons" (as defined in the Act) of any party to this Agreement
("Independent Trustees"),  cast in person at a meeting called for the purpose of
voting on such  approval,  and (ii) by vote of "a  majority  of the  outstanding
voting  securities"  (as defined in the Act) of the Fund.  This Agreement  shall
continue  for two years  from the date of this  Agreement  and from year to year
thereafter provided such continuance is specifically  approved at least annually
by (i)  the  Fund's  Board  of  Trustees  or (ii) a vote  of a  majority  of the
outstanding  voting  securities of the Fund,  provided that in either event such
continuance is also approved by a majority of the Independent  Trustees, by vote
cast in person at a meeting  called for the purpose of voting on such  approval.
If the SEC  issues an order to the Fund and the Fund  Manager  for an  exemption
from Section 15(a) of the Act, then, in accordance  with the  application of the
Fund and the Fund  Manager,  the  continuance  of this  Agreement  after initial
approval by the Trustees as set forth  above,  shall be subject to approval by a
majority  of the  outstanding  voting  securities  of the Fund at the  regularly
scheduled annual meeting of the Fund's  shareholders  next following the date of
this Agreement.

     16. TERMINATION. This Agreement may be terminated at any time by any party,
without  penalty,  immediately  upon written  notice to the other parties in the
event of a breach of any provision thereof by a party so notified,  or otherwise
upon not less than thirty (30) days' written notice to the Portfolio  Manager in
the case of  termination  by the Fund or the Fund Manager,  or ninety (90) days'
written  notice to the Fund and the Fund Manager in the case of  termination  by
the Portfolio  Manager,  but any such  termination  shall not affect the status,
obligations or liabilities of any party hereto to the other parties.

     17.  APPLICABLE  LAW. To the extent that state law is not  preempted by the
provisions of any law of the United States heretofore or hereafter  enacted,  as
the same may be amended from time to time, this Agreement shall be administered,
construed  and  enforced   according  to  the  laws  of  the   Commonwealth   of
Massachusetts.

     18. SEVERABILITY;  COUNTERPARTS. If any term or condition of this Agreement
shall be invalid or unenforceable to any extent or in any application,  then the
remainder of this Agreement, and such term or condition except to such extent or
in such application,  shall not be affected thereby, and each and every term and
condition of this  Agreement  shall be valid and enforced to the fullest  extent
and in the broadest application permitted by law. This Agreement may be executed
in  counterparts,  each of which  will be  deemed an  original  and all of which
together will be deemed to be one and the same agreement.


<PAGE>


     19. USE OF NAME.  The Portfolio  Manager agrees and  acknowledges  that the
Fund  Manager is the sole owner of the names and marks  "Liberty  All-Star"  and
"All- Star",  and that all use of any designation  comprised in whole or in part
of these names and marks shall inure to the benefit of the Fund Manager.  Except
as used to  identify  the  Fund to third  parties  as a  client,  the use by the
Portfolio  Manager on its own behalf of such marks in any advertisement or sales
literature or other materials  promoting the Portfolio Manager shall be with the
prior  written  consent of the Fund Manager.  The  Portfolio  Manager shall not,
without the consent of the Fund Manager, make representations regarding the Fund
or  the  Fund  Manager  in  any  disclosure  document,  advertisement  or  sales
literature or other materials  promoting the Portfolio  Manager.  Consent by the
Fund  Manager  shall not be  unreasonably  withheld.  Upon  termination  of this
Agreement for any reason,  the Portfolio  Manager shall cease any and all use of
these marks as soon as reasonably practicable.


                       LIBERTY ALL-STAR EQUITY FUND

                       By: /s/ William J. Parmentier, Jr.
                           ------------------------------
                       Name: William J. Parmentier, Jr.
                       Title: President

                       ALPS ADVISERS, INC.

                       By: /s/ Edmund J. Burke
                           -------------------
                       Name: Edmund J. Burke
                       Title: President

ACCEPTED:

TCW INVESTMENT MANAGEMENT COMPANY

By: /s/ Alvin R. Albe, Jr.
    ----------------------
Name: Alvin R. Albe, Jr.
Title: President


SCHEDULES:
A. Operational Procedures

B. Records To Be Maintained By The Portfolio Manager

C. Portfolio Manager Fee


<PAGE>

                          LIBERTY ALL-STAR GROWTH FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE B

               RECORDS TO BE MAINTAINED BY THE PORTFOLIO MANAGER

1.   (Rule  31a-1(b)(5) and (6)) A record of each brokerage order, and all other
     portfolio  purchases and sales, given by the Portfolio Manager on behalf of
     the Fund for, or in connection  with,  the purchase or sale of  securities,
     whether executed or unexecuted. Such records shall include:

     A.   The name of the broker;

     B.   The terms and  conditions  of the  order and of any  modifications  or
          cancellation thereof;

     C.   The time of entry or cancellation;

     D.   The price at which executed;

     E.   The time of receipt of a report of execution; and

     F.   The name of the person who placed the order on behalf of the Fund.

2.   (Rule  31a-1(b)(9)) A record for each fiscal quarter,  completed within ten
     (10) days after the end of the quarter,  showing  specifically the basis or
     bases upon which the  allocation  of orders  for the  purchase  and sale of
     portfolio  securities  to named  brokers or dealers was  effected,  and the
     division of brokerage  commissions or other  compensation  on such purchase
     and sale orders. Such record:

     A.   Shall include the consideration given to:

          (i)   The sale of shares of the Fund by brokers or dealers.

          (ii)  The supplying of services or benefits by brokers or dealers to:

               (a)  The Fund;

               (b)  The Fund Manager;

               (c)  The Portfolio Manager; and

               (d)  Any person other than the foregoing.

          (iii) Any other consideration other than the technical  qualifications
                of the brokers and dealers as such.

     B.   Shall show the nature of the services or benefits made available.

     C.   Shall  describe in detail the  application  of any general or specific
          formula or other  determinant  used in arriving at such  allocation of
          purchase and sale orders and such division of brokerage commissions or
          other compensation.

     D.   The name of the person  responsible  for making the  determination  of
          such  allocation  and such division of brokerage  commissions or other
          compensation.

3.   (Rule  31a-1(b)(10))  A  record  in the form of an  appropriate  memorandum
     identifying  the person or persons,  committees or groups  authorizing  the
     purchase or sale of portfolio securities. Where an authorization is made by
     a committee  or group,  a record  shall be kept of the names of its members
     who  participate in the  authorization.  There shall be retained as part of
     this record:  any memorandum,  recommendation or instruction  supporting or
     authorizing  the  purchase or sale of portfolio  securities  and such other
     information as is appropriate to support the authorization.(1)


<PAGE>


4.   (Rule 31a-1(f)) Such accounts, books and other documents as are required to
     be  maintained  by  registered  investment  advisers by rule adopted  under
     Section  204 of the  Investment  Advisers  Act of 1940,  to the extent such
     records are  necessary or  appropriate  to record the  Portfolio  Manager's
     transactions with the Fund.

- -------------
(1)  Such information might include: the current Form 10-K, annual and quarterly
     reports,  press  releases,  reports by analysts  and from  brokerage  firms
     (including  their  recommendation:  i.e., buy, sell,  hold) or any internal
     reports or portfolio manager reviews.



<PAGE>
                          LIBERTY ALL-STAR GROWTH FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE C

                             PORTFOLIO MANAGER FEE


      For  services  provided to the Portfolio Manager Account, the Fund Manager
will pay to the Portfolio  Manager, on or before the  10th  day of each calendar
month, a fee calculated and  accrued  daily  and  payable  monthly  by  the Fund
Manager  for  the  previous calendar month at the annual rate of:  0.40% of  the
amount  obtained  by  multiplying   the   Portfolio   Manager's  Percentage  (as
hereinafter  defined)  times the Average Total Fund Net Assets  (as  hereinafter
defined) up to $400 million;  0.36%  of  the  amount obtained by multiplying the
Portfolio Manager's Percentage times the Average Total Fund Net Assets exceeding
$400 million up to and including $800 million;  0.324% of the amount obtained by
multiplying the Portfolio Manager's Percentage times  the Average Total Fund Net
Assets exceeding $800 million up to and including $1.2  billion;  0.292%  of the
amount  obtained  by  multiplying  the  Portfolio Manager's Percentage times the
Average Total Fund Net Assets exceeding $1.2 billion.

      "Portfolio Manager's Percentage" means the percentage obtained by dividing
(i) the average daily net asset values of  the  Portfolio Manager Account during
the preceding calendar month, by (ii) the Average Total Fund Net Assets.

      "Average Total Fund Net Assets" means the average  daily  net asset values
of the Fund as a whole during the preceding calendar month.

      The fee shall be pro-rated for any month during which this Agreement is in
effect for only a portion of the month.


<PAGE>






April 2, 2007


TCW Investment Management Company
Attn:  Legal Department
865 South Figueroa Street
Los Angeles, CA 90017

RE:  Portfolio Management Agreement with Liberty All-Star Equity Fund

Dear TCW:


In a recent audit of the Liberty All-Star Equity Fund (the "Fund") records, it
was discovered that Appendix B and C to the Portfolio Management Agreement
between TCW Investment Management Company, ALPS Advisers, Inc., and the Fund was
mislabeled as Liberty All-Star Growth Fund, Inc.

Therefore, please accept the attached replacement pages with the correct
heading.  The body of the pages did not change.

Additionally, please note that ALPS Advisers, Inc., and the Funds main address
has changed from 1625 Broadway, Suite 2200, Denver CO  80202 to 1290 Broadway,
Suite 1100, Denver, CO  80203.

Should you have any questions regarding these matters, please feel free to
contact me or my paralegal Stephanie Barres at 303.623.2577.

Sincerely,


/s/ Tane T. Tyler
- -----------------
Tane T. Tyler
Chief Legal Officer
ALPS Advisers, Inc.


Enclosures


<PAGE>
                          LIBERTY ALL-STAR EQUITY FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE B

               RECORDS TO BE MAINTAINED BY THE PORTFOLIO MANAGER

1.   (Rule  31a-1(b)(5) and (6)) A record of each brokerage order, and all other
     portfolio  purchases and sales, given by the Portfolio Manager on behalf of
     the Fund for, or in connection  with,  the purchase or sale of  securities,
     whether executed or unexecuted. Such records shall include:

     A.   The name of the broker;

     B.   The terms and  conditions  of the  order and of any  modifications  or
          cancellation thereof;

     C.   The time of entry or cancellation;

     D.   The price at which executed;

     E.   The time of receipt of a report of execution; and

     F.   The name of the person who placed the order on behalf of the Fund.

2.   (Rule  31a-1(b)(9)) A record for each fiscal quarter,  completed within ten
     (10) days after the end of the quarter,  showing  specifically the basis or
     bases upon which the  allocation  of orders  for the  purchase  and sale of
     portfolio  securities  to named  brokers or dealers was  effected,  and the
     division of brokerage  commissions or other  compensation  on such purchase
     and sale orders. Such record:

     A.   Shall include the consideration given to:

          (i)   The sale of shares of the Fund by brokers or dealers.

          (ii)  The supplying of services or benefits by brokers or dealers to:

               (a)  The Fund;

               (b)  The Fund Manager;

               (c)  The Portfolio Manager; and

               (d)  Any person other than the foregoing.

          (iii) Any other consideration other than the technical  qualifications
                of the brokers and dealers as such.

     B.   Shall show the nature of the services or benefits made available.

     C.   Shall  describe in detail the  application  of any general or specific
          formula or other  determinant  used in arriving at such  allocation of
          purchase and sale orders and such division of brokerage commissions or
          other compensation.

     D.   The name of the person  responsible  for making the  determination  of
          such  allocation  and such division of brokerage  commissions or other
          compensation.

3.   (Rule  31a-1(b)(10))  A  record  in the form of an  appropriate  memorandum
     identifying  the person or persons,  committees or groups  authorizing  the
     purchase or sale of portfolio securities. Where an authorization is made by
     a committee  or group,  a record  shall be kept of the names of its members
     who  participate in the  authorization.  There shall be retained as part of
     this record:  any memorandum,  recommendation or instruction  supporting or
     authorizing  the  purchase or sale of portfolio  securities  and such other
     information as is appropriate to support the authorization.(1)


<PAGE>


4.   (Rule 31a-1(f)) Such accounts, books and other documents as are required to
     be  maintained  by  registered  investment  advisers by rule adopted  under
     Section  204 of the  Investment  Advisers  Act of 1940,  to the extent such
     records are  necessary or  appropriate  to record the  Portfolio  Manager's
     transactions with the Fund.

- -------------
(1)  Such information might include: the current Form 10-K, annual and quarterly
     reports,  press  releases,  reports by analysts  and from  brokerage  firms
     (including  their  recommendation:  i.e., buy, sell,  hold) or any internal
     reports or portfolio manager reviews.


<PAGE>
                          LIBERTY ALL-STAR EQUITY FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE C

                             PORTFOLIO MANAGER FEE


      For  services  provided to the Portfolio Manager Account, the Fund Manager
will pay to the Portfolio  Manager, on or before the  10th  day of each calendar
month, a fee calculated and  accrued  daily  and  payable  monthly  by  the Fund
Manager  for  the  previous calendar month at the annual rate of:  0.40% of  the
amount  obtained  by  multiplying   the   Portfolio   Manager's  Percentage  (as
hereinafter  defined)  times the Average Total Fund Net Assets  (as  hereinafter
defined) up to $400 million;  0.36%  of  the  amount obtained by multiplying the
Portfolio Manager's Percentage times the Average Total Fund Net Assets exceeding
$400 million up to and including $800 million;  0.324% of the amount obtained by
multiplying the Portfolio Manager's Percentage times  the Average Total Fund Net
Assets exceeding $800 million up to and including $1.2  billion;  0.292%  of the
amount  obtained  by  multiplying  the  Portfolio Manager's Percentage times the
Average Total Fund Net Assets exceeding $1.2 billion.

      "Portfolio Manager's Percentage" means the percentage obtained by dividing
(i) the average daily net asset values of  the  Portfolio Manager Account during
the preceding calendar month, by (ii) the Average Total Fund Net Assets.

      "Average Total Fund Net Assets" means the average  daily  net asset values
of the Fund as a whole during the preceding calendar month.

      The fee shall be pro-rated for any month during which this Agreement is in
effect for only a portion of the month.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2G
<SEQUENCE>6
<FILENAME>exhibit2g5.txt
<DESCRIPTION>EX-99.2G5
<TEXT>
                          LIBERTY ALL-STAR EQUITY FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                           MATRIX ASSET ADVISERS, INC.


                               December 18, 2006


Re: Portfolio Management Agreement
    ------------------------------

Ladies and Gentlemen:

  Liberty  All-Star  Equity  Fund  (the  "Fund")  is  a  diversified  closed-end
investment  company  registered  under  the  Investment Company Act of 1940,  as
amended  (the "Act"), and is subject to the rules  and  regulations  promulgated
thereunder.

  ALPS  Advisers,  Inc.  (the "Fund Manager") evaluates and recommends portfolio
managers for the assets of the Fund, and the Fund Manager or an affiliate of the
Fund Manager is responsible for the day-to-day Fund administration of the Fund.

  1. EMPLOYMENT AS A PORTFOLIO MANAGER.  The Fund, being duly authorized, hereby
employs Matrix Asset Advisers,  Inc.  ("Portfolio  Manager")  as a discretionary
portfolio manager, on the terms and conditions set forth herein, of that portion
of  the  Fund's  assets  which  the  Fund  Manager determines to assign  to  the
Portfolio Manager (those assets being referred  to  as  the  "Portfolio  Manager
Account").  The Fund Manager may, from time to time, allocate and reallocate the
Fund's  assets  among the Portfolio Manager and the other portfolio managers  of
the Fund's assets.   The Portfolio Manager will be an independent contractor and
will have no authority  to  act for or represent the Fund or the Fund Manager in
any way or otherwise be deemed  to  be  an agent of the Fund or the Fund Manager
except as expressly authorized in this Agreement  or  in  another writing by the
Fund   Manager   and   the   Portfolio   Manager.    The   Portfolio   Manager's
responsibilities  for providing portfolio management services to the Fund  shall
be limited to the Portfolio Manager Account.

  2. ACCEPTANCE OF  EMPLOYMENT;  STANDARD OF PERFORMANCE.  The Portfolio Manager
accepts its employment as a discretionary  portfolio  manager  and agrees to use
its  best  professional  judgment  to make timely investment decisions  for  the
Portfolio Manager Account in accordance with the provisions of this Agreement.

  3. PORTFOLIO MANAGEMENT SERVICES OF PORTFOLIO MANAGER.
     --------------------------------------------------

     A.    In providing portfolio  management services  to the Portfolio Manager
   Account,  the Portfolio Manager shall be subject to the Fund's Declaration of
   Trust and  By-Laws,  as  amended  from time to time,  investment  objectives,
   policies  and  restrictions  of the Fund as set forth in its  Prospectus  and
   Statement of Additional Information, as the same may be modified from time to
   time (together,  the "Prospectus"),  the investment objectives,  policies and
   restrictions  of the Fund as  determined  from  time to time by the  Board of
   Trustees,  and the investment and other restrictions set forth in the Act and
   the rules and regulations  thereunder,  to the supervision and control of the
   Board of Trustees of the Fund, and to instructions from the Fund Manager. The
   Portfolio  Manager shall not,  without the prior  approval of the Fund or the
   Fund Manager,  effect any transactions that would cause the Portfolio Manager
   Account, treated as a separate fund, to be out of compliance with any of such
   restrictions  or policies.  The Portfolio  Manager shall not consult with any
   other portfolio  manager of the Fund concerning  transactions for the Fund in
   securities or other assets.

    B.   As part of the  services  it will  provide  hereunder,  the  Portfolio
   Manager will:

      (i)   formulate  and implement a continuous  investment  program  for  the
            Portfolio Manager Account;

      (ii)  take whatever  steps  are  necessary  to  implement  the  investment
            program  for  the  Portfolio  Manager  Account by arranging for  the
            purchase and sale of securities and other investments;

      (iii) keep the Fund Manager and the Board of Trustees  of  the  Fund fully
            informed  in  writing  on  an  ongoing  basis, as agreed by the Fund
            Manager and the Portfolio Manager, of all  material facts concerning

<PAGE>

            the  investment  and  reinvestment of the assets  in  the  Portfolio
            Manager  Account,  the Portfolio  Manager  and  its  key  investment
            personnel and operations;  make regular and periodic special written
            reports of such additional information  concerning  the  same as may
            reasonably be requested from time to time by the Fund Manager or the
            Trustees  of the Fund; attend meetings with the Fund Manager  and/or
            Trustees, as reasonably requested, to discuss the foregoing and such
            other matters as may be requested by the Fund Manager or Trustees;

      (iv)  in  accordance  with  procedures  and  methods  established  by  the
            Trustees  of  the  Fund,  which  may  be  amended from time to time,
            provide assistance in determining the fair  value  of all securities
            and  other investments/assets in the Portfolio Manager  Account,  as
            necessary,  and  use reasonable efforts to arrange for the provision
            of valuation information or a price(s) from a party(ies) independent
            of the Portfolio Manager for each security or other investment/asset
            in the Portfolio Manager  Account  for  which  market prices are not
            readily available; and

      (v)   cooperate  with  and  provide  reasonable  assistance  to  the  Fund
            Manager,  the Fund's administrator, custodian,  transfer  agent  and
            pricing agents  and all other agents and representatives of the Fund
            and the Fund Manager;  keep  all  such  persons fully informed as to
            such  matters  as  they  may  reasonably  deem   necessary   to  the
            performance  of  their obligations to the Fund and the Fund Manager;
            provide  prompt  responses  to  reasonable  requests  made  by  such
            persons; and maintain  any appropriate interfaces with each so as to
            promote the efficient exchange of information.

  4.  TRANSACTION  PROCEDURES.  All portfolio  transactions  for  the  Portfolio
Manager Account will  be  consummated by payment to or delivery by the custodian
of  the Fund (the "Custodian"),  or  such  depositories  or  agents  as  may  be
designated  by  the Custodian in writing, as custodian for the Fund, of all cash
and/or securities  due  to  or  from  the  Portfolio  Manager  Account,  and the
Portfolio   Manager  shall  not  have  possession  or  custody  thereof  or  any
responsibility  or liability with respect to such custody. The Portfolio Manager
shall advise and  confirm  in writing to the Custodian all investment orders for
the Portfolio Manager Account  placed by it with brokers and dealers at the time
and in the manner set forth in Schedule  A  hereto (as amended from time to time
by the Fund Manager). The Fund shall issue to the Custodian such instructions as
may  be  appropriate  in  connection  with  the settlement  of  any  transaction
initiated  by  the Portfolio Manager. The Fund  shall  be  responsible  for  all
custodial arrangements  and  the payment of all custodial charges and fees, and,
upon giving proper instructions  to  the  Custodian, the Portfolio Manager shall
have no responsibility or liability with respect  to  custodial  arrangements or
the acts, omissions or other conduct of the Custodian.

  5.  ALLOCATION  OF BROKERAGE.  The Portfolio Manager shall have authority  and
discretion to select  brokers  and  dealers  to  execute  portfolio transactions
initiated  by the Portfolio Manager for the Portfolio Manager  Account,  and  to
select the markets on or in which the transaction will be executed.

     A.     In doing so, the Portfolio Manager's primary responsibility shall be
   to seek to  obtain  best  net price and execution for the Fund. However, this
   responsibility  shall  not  obligate   the   Portfolio   Manager  to  solicit
   competitive  bids  for  each  transaction  or  to  seek the lowest  available
   commission  cost  to  the Fund, so long as the Portfolio  Manager  reasonably
   believes that the broker or dealer selected by it can be expected to obtain a
   "best execution" market price on the particular transaction and determines in
   good faith that the commission cost is reasonable in relation to the value of
   the brokerage and research  services  (as  defined in Section 28(e)(3) of the
   Securities Exchange Act of 1934) provided by  such  broker  or  dealer to the
   Portfolio Manager viewed in terms of either that particular transaction or of
   the Portfolio Manager's overall responsibilities with respect to its clients,
   including  the  Fund,  as to which the Portfolio Manager exercises investment
   discretion, notwithstanding  that the Fund may not be the direct or exclusive
   beneficiary of any such services  or  that  another  broker may be willing to
   charge the Fund a lower commission on the particular transaction.

     B.     Subject to the requirements of paragraph A above,  the  Fund Manager
   shall  have  the  right to request that transactions giving rise to brokerage
   commissions, in an  amount  to  be  agreed  upon  by the Fund Manager and the
   Portfolio  Manager,  shall be executed by brokers and  dealers  that  provide
   brokerage or research  services  to  the  Fund Manager, or as to which an on-
   going relationship will be of value to the  Fund  in  the  management  of its
   assets,  which  services  and  relationship  may,  but need not, be of direct
   benefit to the Portfolio Manager Account. Notwithstanding any other provision
   of  this  Agreement,  the  Portfolio Manager shall not be  responsible  under
   paragraph A above with respect  to  transactions  executed  through  any such
   broker or dealer.

     C.     The  Portfolio  Manager shall not execute any portfolio transactions
   for the Portfolio Manager  Account  with  a  broker  or  dealer  which  is an
   "affiliated  person"  (as  defined  in  the  Act)  of the Fund, the Portfolio
   Manager or any other portfolio manager of the Fund without  the prior written
   approval of the Fund.  The  Fund Manager will  provide the  Portfolio Manager

<PAGE>

   with a list of brokers and dealers which are "affiliated persons" of the Fund
   or its portfolio managers.

  6. PROXIES.  The Fund  Manager  will  vote  all  proxies  solicited by or with
respect  to  the issuers of securities in which assets of the Portfolio  Manager
Account may be  invested  from  time to time in accordance with such policies as
shall be determined by the Fund Manager,  and reviewed and approved by the Board
of  Trustees.   Upon  the written request of the  Fund  Manager,  the  Portfolio
Manager will vote all proxies  solicited  by  or  with respect to the issuers of
securities in which assets of the Portfolio Manager Account may be invested from
time to time in accordance with such policies as shall be determined by the Fund
Manager, and reviewed and approved by the Board of Trustees.

  7.  FEES  FOR  SERVICES.  The compensation of the Portfolio  Manager  for  its
services under this Agreement  shall  be calculated and paid by the Fund Manager
in accordance with the attached Schedule  C.  Pursuant  to  the  Fund Management
Agreement  between  the  Fund and the Fund Manager, the Fund Manager  is  solely
responsible for the payment  of fees to the Portfolio Manager, and the Portfolio
Manager agrees to seek payment of its fees solely from the Fund Manager.

  8. OTHER INVESTMENT ACTIVITIES  OF  PORTFOLIO  MANAGER.  The Fund acknowledges
that  the  Portfolio  Manager  or one or more of its affiliates  has  investment
responsibilities, renders investment  advice  to  and  performs other investment
advisory  services  for other individuals or entities ("Client  Accounts"),  and
that the Portfolio Manager,  its  affiliates  or  any of its or their directors,
officers, agents or employees may buy, sell or trade  in  any securities for its
or their respective accounts ("Affiliated Accounts"). Subject  to the provisions
of  paragraph  2  hereof,  the  Fund  agrees that the Portfolio Manager  or  its
affiliates may give advice or exercise  investment  responsibility and take such
other action with respect to other Client Accounts and Affiliated Accounts which
may differ from the advice given or the timing or nature  of  action  taken with
respect  to  the  Portfolio Manager Account, provided that the Portfolio Manager
acts in good faith,  and  provided  further,  that it is the Portfolio Manager's
policy to allocate, within its reasonable discretion,  investment  opportunities
to  the Portfolio Manager Account over a period of time on a fair and  equitable
basis  relative  to the Client Accounts and the Affiliated Accounts, taking into
account the cash position and the investment objectives and policies of the Fund
and  any  specific  investment   restrictions   applicable   thereto.  The  Fund
acknowledges that one or more Client Accounts and Affiliated Accounts may at any
time  hold,  acquire,  increase,  decrease,  dispose of or otherwise  deal  with
positions in investments in which the Portfolio  Manager  Account  may  have  an
interest  from time to time, whether in transactions which involve the Portfolio
Manager Account  or otherwise. The Portfolio Manager shall have no obligation to
acquire for the Portfolio Manager Account a position in any investment which any
Client Account or  Affiliated  Account  may  acquire, and the Fund shall have no
first refusal, co-investment or other rights in  respect of any such investment,
either for the Portfolio Manager Account or otherwise.

  9. LIMITATION OF LIABILITY.  The Portfolio Manager shall not be liable for any
action taken, omitted or suffered to be taken by it  in its reasonable judgment,
in  good  faith  and reasonably believed by it to be authorized  or  within  the
discretion or rights  or  powers  conferred  upon  it  by  this Agreement, or in
accordance with (or in the absence of) specific directions or  instructions from
the Fund, provided, however, that such acts or omissions shall not have resulted
from the Portfolio Manager's willful misfeasance, bad faith or gross negligence,
a  violation  of  the  standard  of  care established by and applicable  to  the
Portfolio Manager in its actions under  this  Agreement or breach of its duty or
of its obligations hereunder (provided, however, that the foregoing shall not be
construed  to  protect  the Portfolio Manager from  liability  in  violation  of
Section 17(i) of the Act).

  10. CONFIDENTIALITY.  Subject  to  the duty of the Portfolio Manager, the Fund
Manager and the Fund to comply with applicable  law, including any demand of any
regulatory or taxing authority having jurisdiction,  the  parties  hereto  shall
treat  as  confidential  all  information  pertaining  to  the Portfolio Manager
Account  and  the  actions  of  the  Portfolio Manager and the Fund  in  respect
thereof.

  11. ASSIGNMENT.  This Agreement shall  terminate automatically in the event of
its assignment, as that term is defined in  Section  2(a)(4)  of  the  Act.  The
Portfolio  Manager  shall  notify the Fund in writing sufficiently in advance of
any proposed change of control,  as  defined  in  Section 2(a)(9) of the Act, as
will enable the Fund to consider whether an assignment  as  defined  in  Section
2(a)(4) of the Act will occur, and whether to take the steps necessary to  enter
into a new contract with the Portfolio Manager.

  12.  REPRESENTATIONS,  WARRANTIES  AND  AGREEMENTS  OF  THE  FUND.   The  Fund
represents, warrants and agrees that:

     A.  The  Portfolio  Manager  has  been duly appointed to provide investment
   services to the Portfolio Manager Account as contemplated hereby.


     B. The Fund will deliver to the Portfolio  Manager a true and complete copy
   of its then current Prospectus as effective from  time to time and such other


<PAGE>


   documents governing the investment of the Portfolio  Manager Account and such
   other information as is necessary for the Portfolio Manager  to carry out its
   obligations under this Agreement.

  13. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE PORTFOLIO  MANAGER.  The
Portfolio Manager represents, warrants and agrees that:

     A.  It  is  registered  as  an  "investment  adviser"  under the Investment
   Advisers Act of 1940, as amended ("Advisers Act") and will  continue to be so
   registered for as long as this Agreement remains in effect.

     B. It will maintain, keep current and preserve on behalf of  the  Fund,  in
   the  manner  required  or  permitted by the Act and the rules and regulations
   thereunder, the records required  to  be  so kept by an investment adviser of
   the  Fund  in accordance with applicable law,  including  without  limitation
   those identified  in  Schedule  B  (as Schedule B may be amended from time to
   time by the Fund Manager). The Portfolio Manager agrees that such records are
   the property of the Fund, and will be  surrendered  to the Fund promptly upon
   request.

     C. It has adopted a written code of ethics complying  with the requirements
   of Rule 204A-1 under the Advisers Act and Rule 17j-1 under  the  Act and will
   provide the Fund Manager and the Board of Trustees with a copy of its code of
   ethics and evidence of its adoption. Within 45 days of the end of  each  year
   while this Agreement is in effect, or at any other time requested by the Fund
   Manager,  an  officer,  director  or general partner of the Portfolio Manager
   shall certify to the Fund that the  Portfolio  Manager  has complied with the
   requirements of Rule 17j-1 and Rule 204A-1 during the previous  year and that
   there  has  been  no material violation of its code of ethics or, if  such  a
   violation has occurred, that appropriate action was taken in response to such
   violation.  It will  promptly  notify the Fund Manager of any material change
   to its code of ethics or material violation of its code of ethics.

     D. Upon request, the Portfolio  Manager  will promptly supply the Fund with
   any  information  concerning  the  Portfolio Manager  and  its  stockholders,
   partners, employees and affiliates that  the  Fund  may reasonably request in
   connection  with  the preparation of its registration statement  (as  amended
   from time to time),  prospectus  and  statement of additional information (as
   supplemented and modified from time to  time),  proxy  material,  reports and
   other  documents  required to be filed under the Act, the Securities  Act  of
   1933, or other applicable securities laws.

     E. Reference is hereby  made  to  the Declaration of Trust dated August 20,
   1986 establishing the Fund, a copy of which has been filed with the Secretary
   of the Commonwealth of Massachusetts and elsewhere as required by law, and to
   any and all amendments thereto so filed  or hereafter filed. The name Liberty
   All-Star Equity Fund refers to the Board of  Trustees  under said Declaration
   of  Trust, as Trustees and not to the Trustees personally,  and  no  Trustee,
   shareholder,  officer,  agent  or  employee  of the Fund shall be held to any
   personal liability hereunder or in connection  with  the affairs of the Fund,
   but  only the trust estate under said Declaration of Trust  is  liable  under
   this Agreement. Without limiting the generality of the foregoing, neither the
   Portfolio Manager nor any of its officers, directors, partners, shareholders,
   agents or employees shall, under any circumstances, have recourse or cause or
   willingly  permit  recourse to be had directly or indirectly to any personal,
   statutory, or other  liability of any shareholder, Trustee, officer, agent or
   employee of the Fund or  of any successor of the Fund, whether such liability
   now exists or is hereafter  incurred for claims against the trust estate, but
   shall look for payment solely  to  said  trust  estate, or the assets of such
   successor of the Fund.

   F.   The  Portfolio  Manager  shall  maintain and  implement  compliance
   procedures  that are reasonably  designed to ensure its compliance  with Rule
   206(4)-7  of the  Advisers  Act  and to  prevent  violations  of the  Federal
   Securities Laws (as defined in Rule 38a-1 under the Act).

     G.The Portfolio Manager  will:  (i) on the cover page of each Form 13F that
   the Portfolio Manager files with the  Securities and Exchange Commission (the
   "SEC"), check the "13F Combination Report"  box  and  on the Form 13F Summary
   Page  identify  "ALPS  Advisers,  Inc."  as  another manager  for  which  the
   Portfolio Manager is filing the Form 13F report;  (ii)  within  60 days after
   the  end of each calendar year, provide the Fund Manager with a certification
   that the  Portfolio  Manager's  Form  13F  was filed with the SEC on a timely
   basis and included all of the securities required  to be reported by the SEC;
   (iii) within 60 days after the end of each calendar year, provide to the Fund
   Manager  a  copy of each Form 13F, or amendment to a Form  13F  filed  by  it
   during the prior  four quarters; and (iv) promptly notify the Fund Manager in
   the event the Portfolio  Manager determines that it has failed to comply with

<PAGE>


   Section 13(f) in a material  respect,  or  receives a comment letter from the
   SEC raising a question with respect to compliance.

     H. The Portfolio  Manager  has  adopted  written  compliance  policies  and
   procedures reasonably designed to prevent violations  of the Advisers Act and
   the rules promulgated thereunder and the Portfolio Manager agrees to provide:
   (a) from time to time, a copy and/or summary of such compliance  policies and
   procedures  and  an  accompanying certification certifying that the Portfolio
   Manager's compliance policies  and  procedures  comply with the Advisers Act;
   (b) a report of the annual review determining the  adequacy and effectiveness
   of the Portfolio Manager's compliance policies and procedures;  and  (c)  the
   name  of the Portfolio Manager's Chief Compliance Officer to act as a liaison
   for compliance  matters  that  may  arise  between the Fund and the Portfolio
   Manager.

     I. The Portfolio Manager will notify the Fund  and  the Fund Manager of any
   assignment  of this Agreement or change of control of the Portfolio  Manager,
   as applicable,  and  any  changes  in  the  key  personnel who are either the
   portfolio manager(s) of the Portfolio Manager Account or senior management of
   the Portfolio Manager, in each case prior to or promptly  after, such change.
   The Portfolio Manager agrees to bear all reasonable expenses  of the Fund, if
   any, arising out of an assignment or change in control.

     J. The Portfolio Manager agrees to maintain an appropriate level  of errors
   and omissions or professional liability insurance coverage.

  14. AMENDMENT.  This Agreement may be amended at any time, but only by written
agreement  among  the  Portfolio  Manager,  the Fund Manager and the Fund, which
amendment, other than amendments to Schedules  A,  B  and  C,  is subject to the
approval of the Board of Trustees and the shareholders of the Fund as and to the
extent required by the Act, the rules thereunder or exemptive relief  granted by
the  SEC,  provided  that  Schedules  A and B may be amended by the Fund Manager
without the written agreement of the Fund or the Portfolio Manager.

  15. EFFECTIVE DATE; TERM.  This Agreement  shall  become effective on the date
first above written, provided that this Agreement shall  not  take effect unless
it has first been approved: (1) by a vote of a majority of the  Trustees who are
not "interested persons" (as defined in the Act) of any party to  this Agreement
("Independent Trustees"), cast in person at a  meeting called for the purpose of
voting  on  such  approval,  and  (ii) by vote of "a majority of the outstanding
voting securities" (as defined in the  Act)  of  the Fund.  This Agreement shall
continue for two years from the date of this Agreement  and  from  year  to year
thereafter  provided such continuance is specifically approved at least annually
by (i) the Fund's  Board  of  Trustees  or  (ii)  a  vote  of  a majority of the
outstanding voting securities of the Fund, provided that in either  event   such
continuance  is also approved by a majority of the Independent Trustees, by vote
cast in person  at  a meeting called for the purpose of voting on such approval.
If the SEC issues an  order  to  the Fund and the Fund Manager  for an exemption
from Section 15(a) of the Act, then,  in  accordance with the application of the
Fund  and the Fund Manager, the continuance  of  this  Agreement  after  initial
approval  by  the Trustees as set forth above, shall be subject to approval by a
majority of the  outstanding  voting  securities  of  the  Fund at the regularly
scheduled annual meeting of the Fund's shareholders next following  the  date of
this Agreement.

  16.  TERMINATION.   This Agreement may be terminated at any time by any party,
without penalty, immediately  upon  written  notice  to the other parties in the
event of a breach of any provision thereof by a party  so notified, or otherwise
upon not less than thirty (30) days' written notice to the  Portfolio Manager in
the  case of termination by the Fund or the Fund Manager, or ninety  (90)  days'
written  notice  to  the Fund and the Fund Manager in the case of termination by
the Portfolio Manager,  but  any  such  termination shall not affect the status,
obligations or liabilities of any party hereto to the other parties.

  17. APPLICABLE LAW.  To the extent that  state  law  is  not  preempted by the
provisions of any law of the United States heretofore or hereafter  enacted,  as
the same may be amended from time to time, this Agreement shall be administered,
construed   and   enforced   according  to  the  laws  of  the  Commonwealth  of
Massachusetts.

  18. SEVERABILITY; COUNTERPARTS.   If  any  term or condition of this Agreement
shall be invalid or unenforceable to any extent  or in any application, then the
remainder of this Agreement, and such term or condition except to such extent or
in such application, shall not be affected thereby,  and each and every term and
condition of this Agreement shall be valid and enforced  to  the  fullest extent
and  in  the  broadest  application  permitted  by  law.  This Agreement may  be
executed in counterparts, each of which will be deemed  an  original  and all of
which together will be deemed to be one and the same agreement.


<PAGE>


  19.  USE OF NAME.  The Portfolio Manager agrees and acknowledges that the Fund
Manager  is  the sole owner of the names and marks "Liberty All-Star" and  "All-
Star", and that  all  use  of  any  designation comprised in whole or in part of
these names and marks shall inure to the benefit of the Fund Manager.  Except as
used to identify the Fund to third parties as a client, the use by the Portfolio
Manager on its own behalf of such marks in any advertisement or sales literature
or other materials promoting the Portfolio  Manager  shall  be  with  the  prior
written  consent  of the Fund Manager.  The Portfolio Manager shall not, without
the consent of the  Fund Manager, make representations regarding the Fund or the
Fund Manager in any disclosure  document,  advertisement  or sales literature or
other materials promoting the Portfolio Manager.  Consent by  the  Fund  Manager
shall not be unreasonably withheld.  Upon termination of this Agreement for  any
reason, the Portfolio Manager shall cease any and all use of these marks as soon
as reasonably practicable.


                       LIBERTY ALL-STAR EQUITY FUND

                       By: /s/ William J. Parmentier, Jr.
                           ------------------------------
                       Name: William J. Parmentier, Jr.
                       Title: President

                       ALPS ADVISERS, INC.

                       By: /s/ Edmund J. Burke
                           -------------------
                       Name: Edmund J. Burke
                       Title: President

ACCEPTED:

MATRIX ASSET ADVISERS, INC.

By: /s/ Douglas Altabef
    -------------------
Name: Douglas Altabef
Title: Sr. Managing Director


SCHEDULES:
A. Operational Procedures

B. Records To Be Maintained By The Portfolio Manager

C. Portfolio Manager Fee


<PAGE>

                          LIBERTY ALL-STAR GROWTH FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE B

               RECORDS TO BE MAINTAINED BY THE PORTFOLIO MANAGER

1.   (Rule  31a-1(b)(5) and (6)) A record of each brokerage order, and all other
     portfolio  purchases and sales, given by the Portfolio Manager on behalf of
     the Fund for, or in connection  with,  the purchase or sale of  securities,
     whether executed or unexecuted. Such records shall include:

     A.   The name of the broker;

     B.   The terms and  conditions  of the  order and of any  modifications  or
          cancellation thereof;

     C.   The time of entry or cancellation;

     D.   The price at which executed;

     E.   The time of receipt of a report of execution; and

     F.   The name of the person who placed the order on behalf of the Fund.

2.   (Rule  31a-1(b)(9)) A record for each fiscal quarter,  completed within ten
     (10) days after the end of the quarter,  showing  specifically the basis or
     bases upon which the  allocation  of orders  for the  purchase  and sale of
     portfolio  securities  to named  brokers or dealers was  effected,  and the
     division of brokerage  commissions or other  compensation  on such purchase
     and sale orders. Such record:

     A.   Shall include the consideration given to:

          (i)   The sale of shares of the Fund by brokers or dealers.

          (ii)  The supplying of services or benefits by brokers or dealers to:

               (a)  The Fund;

               (b)  The Fund Manager;

               (c)  The Portfolio Manager; and

               (d)  Any person other than the foregoing.

          (iii) Any other consideration other than the technical  qualifications
                of the brokers and dealers as such.

     B.   Shall show the nature of the services or benefits made available.

     C.   Shall  describe in detail the  application  of any general or specific
          formula or other  determinant  used in arriving at such  allocation of
          purchase and sale orders and such division of brokerage commissions or
          other compensation.

     D.   The name of the person  responsible  for making the  determination  of
          such  allocation  and such division of brokerage  commissions or other
          compensation.

3.   (Rule  31a-1(b)(10))  A  record  in the form of an  appropriate  memorandum
     identifying  the person or persons,  committees or groups  authorizing  the
     purchase or sale of portfolio securities. Where an authorization is made by
     a committee  or group,  a record  shall be kept of the names of its members
     who  participate in the  authorization.  There shall be retained as part of
     this record:  any memorandum,  recommendation or instruction  supporting or
     authorizing  the  purchase or sale of portfolio  securities  and such other
     information as is appropriate to support the authorization.(1)


<PAGE>


4.   (Rule 31a-1(f)) Such accounts, books and other documents as are required to
     be  maintained  by  registered  investment  advisers by rule adopted  under
     Section  204 of the  Investment  Advisers  Act of 1940,  to the extent such
     records are  necessary or  appropriate  to record the  Portfolio  Manager's
     transactions with the Fund.

- ------------
(1)  Such information might include: the current Form 10-K, annual and quarterly
     reports,  press  releases,  reports by analysts  and from  brokerage  firms
     (including  their  recommendation:  i.e., buy, sell,  hold) or any internal
     reports or portfolio manager reviews.



<PAGE>
                          LIBERTY ALL-STAR GROWTH FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE C

                             PORTFOLIO MANAGER FEE


      For  services  provided to the Portfolio Manager Account, the Fund Manager
will pay to the Portfolio  Manager, on or before the  10th  day of each calendar
month, a fee calculated and  accrued  daily  and  payable  monthly  by  the Fund
Manager  for  the  previous calendar month at the annual rate of:  0.40% of  the
amount  obtained  by  multiplying   the   Portfolio   Manager's  Percentage  (as
hereinafter  defined)  times the Average Total Fund Net Assets  (as  hereinafter
defined) up to $400 million;  0.36%  of  the  amount obtained by multiplying the
Portfolio Manager's Percentage times the Average Total Fund Net Assets exceeding
$400 million up to and including $800 million;  0.324% of the amount obtained by
multiplying the Portfolio Manager's Percentage times  the Average Total Fund Net
Assets exceeding $800 million up to and including $1.2  billion;  0.292%  of the
amount  obtained  by  multiplying  the  Portfolio Manager's Percentage times the
Average Total Fund Net Assets exceeding $1.2 billion.

      "Portfolio Manager's Percentage" means the percentage obtained by dividing
(i) the average daily net asset values of  the  Portfolio Manager Account during
the preceding calendar month, by (ii) the Average Total Fund Net Assets.

      "Average Total Fund Net Assets" means the average  daily  net asset values
of the Fund as a whole during the preceding calendar month.

      The fee shall be pro-rated for any month during which this Agreement is in
effect for only a portion of the month.



<PAGE>





April 2, 2007


Matrix Asset Advisors, Inc.
Attn:  Legal Department
747 Third Avenue, 31st Floor
New York, NY  10017

RE:  Portfolio Management Agreement with Liberty All-Star Equity Fund

Dear Matrix:


In a recent audit of the Liberty All-Star Equity Fund (the "Fund") records, it
was discovered that Appendix B and C to the Portfolio Management Agreement
between Matrix Asset Advisors, Inc., ALPS Advisers, Inc., and the Fund was
mislabeled as Liberty All-Star Growth Fund, Inc.

Therefore, please accept the attached replacement pages with the correct
heading.  The body of the pages did not change.

Additionally, please note that ALPS Advisers, Inc., and the Funds main address
has changed from 1625 Broadway, Suite 2200, Denver CO  80202 to 1290 Broadway,
Suite 1100, Denver, CO  80203.

Should you have any questions regarding these matters, please feel free to
contact me or my paralegal Stephanie Barres at 303.623.2577.

Sincerely,


/s/ Tane T. Tyler
- -----------------
Tane T. Tyler
Chief Legal Officer
ALPS Advisers, Inc.


Enclosures


<PAGE>
                          LIBERTY ALL-STAR EQUITY FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE B

               RECORDS TO BE MAINTAINED BY THE PORTFOLIO MANAGER

1.   (Rule  31a-1(b)(5) and (6)) A record of each brokerage order, and all other
     portfolio  purchases and sales, given by the Portfolio Manager on behalf of
     the Fund for, or in connection  with,  the purchase or sale of  securities,
     whether executed or unexecuted. Such records shall include:

     A.   The name of the broker;

     B.   The terms and  conditions  of the  order and of any  modifications  or
          cancellation thereof;

     C.   The time of entry or cancellation;

     D.   The price at which executed;

     E.   The time of receipt of a report of execution; and

     F.   The name of the person who placed the order on behalf of the Fund.

2.   (Rule  31a-1(b)(9)) A record for each fiscal quarter,  completed within ten
     (10) days after the end of the quarter,  showing  specifically the basis or
     bases upon which the  allocation  of orders  for the  purchase  and sale of
     portfolio  securities  to named  brokers or dealers was  effected,  and the
     division of brokerage  commissions or other  compensation  on such purchase
     and sale orders. Such record:

     A.   Shall include the consideration given to:

          (i)   The sale of shares of the Fund by brokers or dealers.

          (ii)  The supplying of services or benefits by brokers or dealers to:

               (a)  The Fund;

               (b)  The Fund Manager;

               (c)  The Portfolio Manager; and

               (d)  Any person other than the foregoing.

          (iii) Any other consideration other than the technical  qualifications
                of the brokers and dealers as such.

     B.   Shall show the nature of the services or benefits made available.

     C.   Shall  describe in detail the  application  of any general or specific
          formula or other  determinant  used in arriving at such  allocation of
          purchase and sale orders and such division of brokerage commissions or
          other compensation.

     D.   The name of the person  responsible  for making the  determination  of
          such  allocation  and such division of brokerage  commissions or other
          compensation.

3.   (Rule  31a-1(b)(10))  A  record  in the form of an  appropriate  memorandum
     identifying  the person or persons,  committees or groups  authorizing  the
     purchase or sale of portfolio securities. Where an authorization is made by
     a committee  or group,  a record  shall be kept of the names of its members
     who  participate in the  authorization.  There shall be retained as part of
     this record:  any memorandum,  recommendation or instruction  supporting or
     authorizing  the  purchase or sale of portfolio  securities  and such other
     information as is appropriate to support the authorization.(1)


<PAGE>


4.   (Rule 31a-1(f)) Such accounts, books and other documents as are required to
     be  maintained  by  registered  investment  advisers by rule adopted  under
     Section  204 of the  Investment  Advisers  Act of 1940,  to the extent such
     records are  necessary or  appropriate  to record the  Portfolio  Manager's
     transactions with the Fund.

- --------------
(1)  Such information might include: the current Form 10-K, annual and quarterly
     reports,  press  releases,  reports by analysts  and from  brokerage  firms
     (including  their  recommendation:  i.e., buy, sell,  hold) or any internal
     reports or portfolio manager reviews.



<PAGE>
                          LIBERTY ALL-STAR EQUITY FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE C

                             PORTFOLIO MANAGER FEE


      For  services  provided to the Portfolio Manager Account, the Fund Manager
will pay to the Portfolio  Manager, on or before the  10th  day of each calendar
month, a fee calculated and  accrued  daily  and  payable  monthly  by  the Fund
Manager  for  the  previous calendar month at the annual rate of:  0.40% of  the
amount  obtained  by  multiplying   the   Portfolio   Manager's  Percentage  (as
hereinafter  defined)  times the Average Total Fund Net Assets  (as  hereinafter
defined) up to $400 million;  0.36%  of  the  amount obtained by multiplying the
Portfolio Manager's Percentage times the Average Total Fund Net Assets exceeding
$400 million up to and including $800 million;  0.324% of the amount obtained by
multiplying the Portfolio Manager's Percentage times  the Average Total Fund Net
Assets exceeding $800 million up to and including $1.2  billion;  0.292%  of the
amount  obtained  by  multiplying  the  Portfolio Manager's Percentage times the
Average Total Fund Net Assets exceeding $1.2 billion.

      "Portfolio Manager's Percentage" means the percentage obtained by dividing
(i) the average daily net asset values of  the  Portfolio Manager Account during
the preceding calendar month, by (ii) the Average Total Fund Net Assets.

      "Average Total Fund Net Assets" means the average  daily  net asset values
of the Fund as a whole during the preceding calendar month.

      The fee shall be pro-rated for any month during which this Agreement is in
effect for only a portion of the month.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2G
<SEQUENCE>7
<FILENAME>exhibit2g6.txt
<DESCRIPTION>EX-99.2G6
<TEXT>
                          LIBERTY ALL-STAR EQUITY FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                    SCHNEIDER CAPITAL MANAGEMENT CORPORATION


                               December 18, 2006


Re: Portfolio Management Agreement
    ------------------------------

Ladies and Gentlemen:

     Liberty  All-Star  Equity  Fund (the  "Fund") is a  diversified  closed-end
investment  company  registered  under the  Investment  Company Act of 1940,  as
amended (the  "Act"),  and is subject to the rules and  regulations  promulgated
thereunder.

     ALPS Advisers, Inc. (the "Fund Manager") evaluates and recommends portfolio
managers for the assets of the Fund, and the Fund Manager or an affiliate of the
Fund Manager is responsible for the day-to-day Fund administration of the Fund.

     1.  EMPLOYMENT AS A PORTFOLIO  MANAGER.  The Fund,  being duly  authorized,
hereby employs Schneider Capital Management Corporation ("Portfolio Manager") as
a discretionary portfolio manager, on the terms and conditions set forth herein,
of that portion of the Fund's assets which the Fund Manager determines to assign
to the  Portfolio  Manager  (those  assets being  referred to as the  "Portfolio
Manager  Account").  The Fund  Manager  may,  from  time to time,  allocate  and
reallocate the Fund's assets among the Portfolio Manager and the other portfolio
managers of the Fund's  assets.  The  Portfolio  Manager will be an  independent
contractor  and will have no authority  to act for or represent  the Fund or the
Fund Manager in any way or otherwise be deemed to be an agent of the Fund or the
Fund Manager  except as  expressly  authorized  in this  Agreement or in another
writing by the Fund Manager and the Portfolio Manager.  The Portfolio  Manager's
responsibilities  for providing portfolio  management services to the Fund shall
be limited to the Portfolio Manager Account.

     2. ACCEPTANCE OF EMPLOYMENT; STANDARD OF PERFORMANCE. The Portfolio Manager
accepts its employment as a  discretionary  portfolio  manager and agrees to use
its best  professional  judgment to make  timely  investment  decisions  for the
Portfolio Manager Account in accordance with the provisions of this Agreement.

     3. PORTFOLIO MANAGEMENT SERVICES OF PORTFOLIO MANAGER.

        A. In providing  portfolio  management services to the Portfolio Manager
        Account,   the  Portfolio   Manager  shall  be  subject  to  the  Fund's
        Declaration  of  Trust  and  By-Laws,  as  amended  from  time to  time,
        investment  objectives,  policies  and  restrictions  of the Fund as set
        forth in its Prospectus and Statement of Additional Information,  as the
        same may be modified from time to time (together, the "Prospectus"), the
        investment  objectives,   policies  and  restrictions  of  the  Fund  as
        determined  from  time  to  time  by the  Board  of  Trustees,  and  the
        investment and other restrictions set forth in the Act and the rules and
        regulations  thereunder,  to the supervision and control of the Board of
        Trustees of the Fund,  and to  instructions  from the Fund Manager.  The
        Portfolio  Manager shall not,  without the prior approval of the Fund or
        the Fund Manager, effect any transactions that would cause the Portfolio
        Manager  Account,  treated as a separate  fund,  to be out of compliance
        with any of such  restrictions or policies.  The Portfolio Manager shall
        not  consult  with any other  portfolio  manager of the Fund  concerning
        transactions for the Fund in securities or other assets.

        B. As part of the  services it will  provide  hereunder,  the  Portfolio
        Manager will:

            (i)   formulate  and implement a continuous  investment  program for
                  the Portfolio Manager Account;

            (ii)  take whatever  steps are necessary to implement the investment
                  program for the Portfolio Manager Account by arranging for the
                  purchase and sale of securities and other investments;

            (iii) keep the Fund  Manager  and the Board of  Trustees of the Fund
                  fully  informed in writing on an ongoing  basis,  as agreed by
                  the Fund Manager and the  Portfolio  Manager,  of all material
                  facts concerning the investment and reinvestment of the assets
                  in the Portfolio Manager Account, the


<PAGE>

                  Portfolio  Manager  and  its  key  investment   personnel  and
                  operations;  make regular and periodic special written reports
                  of such  additional  information  concerning  the  same as may
                  reasonably be requested  from time to time by the Fund Manager
                  or the  Trustees of the Fund;  attend  meetings  with the Fund
                  Manager and/or Trustees, as reasonably  requested,  to discuss
                  the  foregoing  and such other  matters as may be requested by
                  the Fund Manager or Trustees;

            (iv)  in accordance with  procedures and methods  established by the
                  Trustees of the Fund,  which may be amended from time to time,
                  provide  assistance  in  determining  the  fair  value  of all
                  securities  and  other  investments/assets  in  the  Portfolio
                  Manager Account,  as necessary,  and use reasonable efforts to
                  arrange  for  the  provision  of  valuation  information  or a
                  price(s)  from  a  party(ies)  independent  of  the  Portfolio
                  Manager  for each  security or other  investment/asset  in the
                  Portfolio  Manager  Account  for which  market  prices are not
                  readily available; and

            (v)   cooperate with and provide  reasonable  assistance to the Fund
                  Manager, the Fund's administrator,  custodian,  transfer agent
                  and pricing agents and all other agents and representatives of
                  the Fund and the Fund  Manager;  keep all such  persons  fully
                  informed  as to such  matters  as  they  may  reasonably  deem
                  necessary to the performance of their  obligations to the Fund
                  and the Fund Manager;  provide prompt  responses to reasonable
                  requests  made by such persons;  and maintain any  appropriate
                  interfaces  with each so as to promote the efficient  exchange
                  of information.

     4.  TRANSACTION  PROCEDURES.  All portfolio  transactions for the Portfolio
Manager  Account will be  consummated by payment to or delivery by the custodian
of the  Fund  (the  "Custodian"),  or  such  depositories  or  agents  as may be
designated by the  Custodian in writing,  as custodian for the Fund, of all cash
and/or  securities  due to or  from  the  Portfolio  Manager  Account,  and  the
Portfolio   Manager  shall  not  have  possession  or  custody  thereof  or  any
responsibility or liability with respect to such custody.  The Portfolio Manager
shall advise and confirm in writing to the Custodian all  investment  orders for
the Portfolio  Manager Account placed by it with brokers and dealers at the time
and in the manner set forth in Schedule A hereto (as  amended  from time to time
by the Fund Manager). The Fund shall issue to the Custodian such instructions as
may be  appropriate  in  connection  with  the  settlement  of  any  transaction
initiated  by the  Portfolio  Manager.  The Fund  shall be  responsible  for all
custodial  arrangements and the payment of all custodial  charges and fees, and,
upon giving proper  instructions to the Custodian,  the Portfolio  Manager shall
have no  responsibility  or liability with respect to custodial  arrangements or
the acts, omissions or other conduct of the Custodian.

     5. ALLOCATION OF BROKERAGE.  The Portfolio Manager shall have authority and
discretion  to select  brokers  and  dealers to execute  portfolio  transactions
initiated by the Portfolio  Manager for the Portfolio  Manager  Account,  and to
select the markets on or in which the transaction will be executed.

        A. In doing so, the Portfolio Manager's primary  responsibility shall be
        to seek to obtain best net price and  execution  for the Fund.  However,
        this responsibility  shall not obligate the Portfolio Manager to solicit
        competitive  bids for each  transaction or to seek the lowest  available
        commission cost to the Fund, so long as the Portfolio Manager reasonably
        believes  that the broker or dealer  selected  by it can be  expected to
        obtain a "best execution" market price on the particular transaction and
        determines  in good  faith that the  commission  cost is  reasonable  in
        relation to the value of the brokerage and research services (as defined
        in Section 28(e)(3) of the Securities  Exchange Act of 1934) provided by
        such broker or dealer to the Portfolio Manager viewed in terms of either
        that  particular  transaction  or of  the  Portfolio  Manager's  overall
        responsibilities with respect to its clients,  including the Fund, as to
        which   the   Portfolio   Manager   exercises   investment   discretion,
        notwithstanding  that  the  Fund  may  not be the  direct  or  exclusive
        beneficiary  of any such services or that another  broker may be willing
        to charge the Fund a lower commission on the particular transaction.

        B. Subject to the  requirements  of paragraph A above,  the Fund Manager
        shall  have the  right  to  request  that  transactions  giving  rise to
        brokerage  commissions,  in an  amount  to be  agreed  upon by the  Fund
        Manager  and the  Portfolio  Manager,  shall be  executed by brokers and
        dealers that provide brokerage or research services to the Fund Manager,
        or as to which an on- going relationship will be of value to the Fund in
        the management of its assets,  which services and relationship  may, but
        need  not,  be of  direct  benefit  to the  Portfolio  Manager  Account.
        Notwithstanding  any other  provision of this  Agreement,  the Portfolio
        Manager shall not be responsible under paragraph A above with respect to
        transactions executed through any such broker or dealer.

        C. The Portfolio  Manager  shall not execute any portfolio  transactions
        for the  Portfolio  Manager  Account with a broker or dealer which is an
        "affiliated  person" (as defined in the Act) of the Fund,  the Portfolio
        Manager or any other  portfolio  manager of the Fund  without  the prior
        written approval of the Fund. The Fund


<PAGE>


        Manager  will provide the  Portfolio  Manager with a list of brokers and
        dealers  which are  "affiliated  persons"  of the Fund or its  portfolio
        managers.

     6.  PROXIES.  The Fund Manager  will vote all proxies  solicited by or with
respect to the issuers of securities  in which assets of the  Portfolio  Manager
Account may be invested  from time to time in  accordance  with such policies as
shall be determined by the Fund Manager,  and reviewed and approved by the Board
of Trustees. Upon the written request of the Fund Manager, the Portfolio Manager
will vote all proxies  solicited by or with respect to the issuers of securities
in which assets of the  Portfolio  Manager  Account may be invested from time to
time in  accordance  with  such  policies  as  shall be  determined  by the Fund
Manager, and reviewed and approved by the Board of Trustees.

     7. FEES FOR SERVICES.  The  compensation  of the Portfolio  Manager for its
services under this  Agreement  shall be calculated and paid by the Fund Manager
in  accordance  with the attached  Schedule C.  Pursuant to the Fund  Management
Agreement  between  the Fund and the Fund  Manager,  the Fund  Manager is solely
responsible for the payment of fees to the Portfolio Manager,  and the Portfolio
Manager agrees to seek payment of its fees solely from the Fund Manager.

     8. Other Investment  Activities of Portfolio Manager. The Fund acknowledges
that the  Portfolio  Manager  or one or more of its  affiliates  has  investment
responsibilities,  renders  investment  advice to and performs other  investment
advisory  services for other individuals or entities  ("Client  Accounts"),  and
that the Portfolio  Manager,  its  affiliates or any of its or their  directors,
officers,  agents or employees may buy, sell or trade in any  securities for its
or their respective accounts ("Affiliated Accounts").  Subject to the provisions
of  paragraph  2 hereof,  the Fund  agrees  that the  Portfolio  Manager  or its
affiliates may give advice or exercise  investment  responsibility and take such
other action with respect to other Client Accounts and Affiliated Accounts which
may differ  from the advice  given or the timing or nature of action  taken with
respect to the Portfolio  Manager Account,  provided that the Portfolio  Manager
acts in good faith,  and provided  further,  that it is the Portfolio  Manager's
policy to allocate,  within its reasonable discretion,  investment opportunities
to the Portfolio  Manager  Account over a period of time on a fair and equitable
basis relative to the Client Accounts and the Affiliated  Accounts,  taking into
account the cash position and the investment objectives and policies of the Fund
and  any  specific  investment   restrictions   applicable  thereto.   The  Fund
acknowledges that one or more Client Accounts and Affiliated Accounts may at any
time  hold,  acquire,  increase,  decrease,  dispose of or  otherwise  deal with
positions in  investments  in which the  Portfolio  Manager  Account may have an
interest from time to time,  whether in transactions which involve the Portfolio
Manager Account or otherwise.  The Portfolio Manager shall have no obligation to
acquire for the Portfolio Manager Account a position in any investment which any
Client  Account or  Affiliated  Account may acquire,  and the Fund shall have no
first refusal,  co-investment or other rights in respect of any such investment,
either for the Portfolio Manager Account or otherwise.

     9. LIMITATION OF LIABILITY.  The Portfolio  Manager shall not be liable for
any  action  taken,  omitted  or  suffered  to be taken by it in its  reasonable
judgment, in good faith and reasonably believed by it to be authorized or within
the discretion or rights or powers  conferred upon it by this  Agreement,  or in
accordance with (or in the absence of) specific  directions or instructions from
the Fund, provided, however, that such acts or omissions shall not have resulted
from the Portfolio Manager's willful misfeasance, bad faith or gross negligence,
a  violation  of the  standard  of care  established  by and  applicable  to the
Portfolio  Manager in its actions under this  Agreement or breach of its duty or
of its obligations hereunder (provided, however, that the foregoing shall not be
construed  to protect the  Portfolio  Manager  from  liability  in  violation of
Section 17(i) of the Act).

     10. CONFIDENTIALITY. Subject to the duty of the Portfolio Manager, the Fund
Manager and the Fund to comply with applicable law,  including any demand of any
regulatory or taxing  authority  having  jurisdiction,  the parties hereto shall
treat as  confidential  all  information  pertaining  to the  Portfolio  Manager
Account  and the  actions  of the  Portfolio  Manager  and the  Fund in  respect
thereof.

     11. ASSIGNMENT.  This Agreement shall terminate  automatically in the event
of its  assignment,  as that term is defined in Section  2(a)(4) of the Act. The
Portfolio  Manager shall notify the Fund in writing  sufficiently  in advance of
any  proposed  change of control,  as defined in Section  2(a)(9) of the Act, as
will enable the Fund to  consider  whether an  assignment  as defined in Section
2(a)(4) of the Act will occur,  and whether to take the steps necessary to enter
into a new contract with the Portfolio Manager.

     12.  REPRESENTATIONS,  WARRANTIES  AND  AGREEMENTS  OF THE  FUND.  The Fund
represents, warrants and agrees that:

        A. The Portfolio  Manager has been duly appointed to provide  investment
        services to the Portfolio Manager Account as contemplated hereby.

        B. The Fund will  deliver to the  Portfolio  Manager a true and complete
        copy of its then current Prospectus as


<PAGE>


        effective  from  time to time and such  other  documents  governing  the
        investment of the Portfolio  Manager Account and such other  information
        as is necessary for the Portfolio  Manager to carry out its  obligations
        under this Agreement.

     13.  REPRESENTATIONS,  WARRANTIES AND AGREEMENTS OF THE PORTFOLIO  MANAGER.
The Portfolio Manager represents, warrants and agrees that:

        A. It is  registered as an  "investment  adviser"  under the  Investment
        Advisers Act of 1940, as amended  ("Advisers  Act") and will continue to
        be so registered for as long as this Agreement remains in effect.

        B. It will maintain, keep current and preserve on behalf of the Fund, in
        the  manner  required  or  permitted  by  the  Act  and  the  rules  and
        regulations  thereunder,  the  records  required  to  be so  kept  by an
        investment  adviser  of the  Fund in  accordance  with  applicable  law,
        including without limitation those identified in Schedule B (as Schedule
        B may be amended from time to time by the Fund  Manager).  The Portfolio
        Manager  agrees that such records are the property of the Fund, and will
        be surrendered to the Fund promptly upon request.

        C.  It  has  adopted  a  written  code  of  ethics  complying  with  the
        requirements  of Rule 204A-1 under the Advisers Act and Rule 17j-1 under
        the Act and will provide the Fund Manager and the Board of Trustees with
        a copy of its code of ethics and  evidence  of its  adoption.  Within 45
        days of the end of each year while this  Agreement  is in effect,  or at
        any other time  requested by the Fund Manager,  an officer,  director or
        general partner of the Portfolio  Manager shall certify to the Fund that
        the Portfolio  Manager has complied with the  requirements of Rule 17j-1
        and Rule  204A-1  during  the  previous  year and that there has been no
        material  violation  of its code of ethics or, if such a  violation  has
        occurred,  that  appropriate  action  was  taken  in  response  to  such
        violation.  It will  promptly  notify the Fund  Manager of any  material
        change  to its  code of  ethics  or  material  violation  of its code of
        ethics.

        D. Upon  request,  the Portfolio  Manager will promptly  supply the Fund
        with  any   information   concerning  the  Portfolio   Manager  and  its
        stockholders,  partners,  employees  and  affiliates  that  the Fund may
        reasonably   request  in  connection   with  the   preparation   of  its
        registration  statement (as amended from time to time),  prospectus  and
        statement of additional  information (as  supplemented and modified from
        time to time),  proxy material,  reports and other documents required to
        be filed under the Act, the Securities Act of 1933, or other  applicable
        securities laws.

        E. Reference is hereby made to the Declaration of Trust dated August 20,
        1986  establishing  the Fund,  a copy of which has been  filed  with the
        Secretary of the Commonwealth of Massachusetts and elsewhere as required
        by law,  and to any and all  amendments  thereto  so filed or  hereafter
        filed.  The name  Liberty  All-Star  Equity  Fund refers to the Board of
        Trustees  under said  Declaration  of Trust,  as Trustees and not to the
        Trustees  personally,  and no Trustee,  shareholder,  officer,  agent or
        employee of the Fund shall be held to any personal  liability  hereunder
        or in connection with the affairs of the Fund, but only the trust estate
        under said Declaration of Trust is liable under this Agreement.  Without
        limiting the generality of the foregoing,  neither the Portfolio Manager
        nor any of its officers, directors,  partners,  shareholders,  agents or
        employees  shall,  under any  circumstances,  have  recourse or cause or
        willingly  permit  recourse  to be had  directly  or  indirectly  to any
        personal,  statutory,  or other liability of any  shareholder,  Trustee,
        officer,  agent or employee of the Fund or of any successor of the Fund,
        whether such  liability  now exists or is hereafter  incurred for claims
        against  the trust  estate,  but shall look for  payment  solely to said
        trust estate, or the assets of such successor of the Fund.

        F.  The  Portfolio  Manager  shall  maintain  and  implement  compliance
        procedures  that are reasonably  designed to ensure its compliance  with
        Rule  206(4)-7  of the  Advisers  Act and to prevent  violations  of the
        Federal Securities Laws (as defined in Rule 38a-1 under the Act).

        G. The Portfolio  Manager  will:  (i) on the cover page of each Form 13F
        that the  Portfolio  Manager  files  with the  Securities  and  Exchange
        Commission (the "SEC"),  check the "13F  Combination  Report" box and on
        the Form 13F Summary  Page  identify  "ALPS  Advisers,  Inc." as another
        manager for which the  Portfolio  Manager is filing the Form 13F report;
        (ii)  within 60 days after the end of each  calendar  year,  provide the
        Fund Manager with a certification that the Portfolio  Manager's Form 13F
        was  filed  with  the SEC on a  timely  basis  and  included  all of the
        securities  required  to be reported  by the SEC;  (iii)  within 60 days
        after the end of each calendar year,  provide to the Fund Manager a copy
        of each  Form 13F,  or  amendment  to a Form 13F filed by it during  the
        prior four  quarters;  and (iv) promptly  notify the Fund Manager in the
        event the Portfolio Manager determines that it has failed to comply with
        Section 13(f) in a material  respect,  or receives a comment letter from
        the SEC raising a question with respect to compliance.

        H. The Portfolio  Manager has adopted  written  compliance  policies and
        procedures reasonably designed to prevent violations of the Advisers Act
        and the rules promulgated thereunder and the Portfolio Manager agrees to
        provide: (a) from time to time, a copy and/or summary of such compliance
        policies and procedures  and an  accompanying  certification  certifying
        that the Portfolio  Manager's  compliance policies and procedures comply
        with the Advisers Act; (b) a report of the annual review determining the
        adequacy  and  effectiveness  of  the  Portfolio  Manager's   compliance
        policies and  procedures;  and (c) the name of the  Portfolio  Manager's
        Chief Compliance Officer to act as a liaison for compliance matters that
        may arise between the Fund and the Portfolio Manager.

        I. The  Portfolio  Manager  will notify the Fund and the Fund Manager of
        any  assignment of this  Agreement or change of control of the Portfolio
        Manager,  as  applicable,  and any changes in the key  personnel who are
        either the  portfolio  manager(s) of the  Portfolio  Manager  Account or
        senior  management  of the Portfolio  Manager,  in each case prior to or
        promptly after,  such change.  The Portfolio  Manager agrees to bear all
        reasonable expenses of the Fund, if any, arising out of an assignment or
        change in control.

        J. The  Portfolio  Manager  agrees to maintain an  appropriate  level of
        errors and omissions or professional liability insurance coverage.

     14.  AMENDMENT.  This  Agreement  may be amended  at any time,  but only by
written  agreement among the Portfolio  Manager,  the Fund Manager and the Fund,
which  amendment,  other than  amendments to Schedules A, B and C, is subject to
the approval of the Board of Trustees and the shareholders of the Fund as and to
the extent required by the Act, the rules thereunder or exemptive relief granted
by the SEC,  provided that  Schedules A and B may be amended by the Fund Manager
without the written agreement of the Fund or the Portfolio Manager.

     15. EFFECTIVE DATE; TERM. This Agreement shall become effective on the date
first above written,  provided that this Agreement  shall not take effect unless
it has first been approved:  (1) by a vote of a majority of the Trustees who are
not "interested  persons" (as defined in the Act) of any party to this Agreement
("Independent Trustees"),  cast in person at a meeting called for the purpose of
voting on such  approval,  and (ii) by vote of "a  majority  of the  outstanding
voting  securities"  (as defined in the Act) of the Fund.  This Agreement  shall
continue  for two years  from the date of this  Agreement  and from year to year
thereafter provided such continuance is specifically  approved at least annually
by (i)  the  Fund's  Board  of  Trustees  or (ii) a vote  of a  majority  of the
outstanding  voting  securities of the Fund,  provided that in either event such
continuance is also approved by a majority of the Independent  Trustees, by vote
cast in person at a meeting  called for the purpose of voting on such  approval.
If the SEC  issues an order to the Fund and the Fund  Manager  for an  exemption
from Section 15(a) of the Act, then, in accordance  with the  application of the
Fund and the Fund  Manager,  the  continuance  of this  Agreement  after initial
approval by the Trustees as set forth  above,  shall be subject to approval by a
majority  of the  outstanding  voting  securities  of the Fund at the  regularly
scheduled annual meeting of the Fund's  shareholders  next following the date of
this Agreement.

     16. TERMINATION. This Agreement may be terminated at any time by any party,
without  penalty,  immediately  upon written  notice to the other parties in the
event of a breach of any provision thereof by a party so notified,  or otherwise
upon not less than thirty (30) days' written notice to the Portfolio  Manager in
the case of  termination  by the Fund or the Fund Manager,  or ninety (90) days'
written  notice to the Fund and the Fund Manager in the case of  termination  by
the Portfolio  Manager,  but any such  termination  shall not affect the status,
obligations or liabilities of any party hereto to the other parties.

     17.  APPLICABLE  LAW. To the extent that state law is not  preempted by the
provisions of any law of the United States heretofore or hereafter  enacted,  as
the same may be amended from time to time, this Agreement shall be administered,
construed  and  enforced   according  to  the  laws  of  the   Commonwealth   of
Massachusetts.

     18. SEVERABILITY;  COUNTERPARTS. If any term or condition of this Agreement
shall be invalid or unenforceable to any extent or in any application,  then the
remainder of this Agreement, and such term or condition except to such extent or
in such application,  shall not be affected thereby, and each and every term and
condition of this  Agreement  shall be valid and enforced to the fullest  extent
and in the broadest application permitted by law. This Agreement may be executed
in  counterparts,  each of which  will be  deemed an  original  and all of which
together will be deemed to be one and the same agreement.

     19. USE OF NAME.  The Portfolio  Manager agrees and  acknowledges  that the
Fund  Manager is the sole owner of the names and marks  "Liberty  All-Star"  and
"All- Star",  and that all use of any designation  comprised in whole or in part
of these names and marks shall inure to the benefit of the Fund Manager.  Except
as used to  identify  the  Fund to third  parties  as a  client,  the use by the
Portfolio  Manager on its own behalf of such marks in any advertisement or sales
literature or other materials  promoting the Portfolio Manager shall be with the
prior  written  consent of the Fund Manager.  The  Portfolio  Manager shall not,
without the consent of the Fund Manager, make representations regarding the Fund
or  the  Fund  Manager  in  any  disclosure  document,  advertisement  or  sales
literature or other materials  promoting the Portfolio  Manager.  Consent by the
Fund  Manager  shall not be  unreasonably  withheld.  Upon  termination  of this
Agreement for any reason,  the Portfolio  Manager shall cease any and all use of
these marks as soon as reasonably practicable.


                       LIBERTY ALL-STAR EQUITY FUND

                       By: /s/ William R. Parmentier, Jr.
                           ------------------------------
                       Name: William R. Parmentier, Jr.
                       Title: President

                       ALPS ADVISERS, INC.

                       By: /s/ Edmund J. Burke, Jr.
                           ------------------------------
                       Name: Edmund J. Burke, Jr.
                       Title: President

ACCEPTED:

SCHNEIDER CAPITAL MANAGEMENT CORPORATION

By: /s/ Steven J. Fellin
    --------------------
Name: Steven J. Fellin
Title: COO/CFO


SCHEDULES:
A. Operational Procedures

B. Records To Be Maintained By The Portfolio Manager

C. Portfolio Manager Fee



<PAGE>

                          LIBERTY ALL-STAR GROWTH FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE B

               RECORDS TO BE MAINTAINED BY THE PORTFOLIO MANAGER

1.   (Rule  31a-1(b)(5) and (6)) A record of each brokerage order, and all other
     portfolio  purchases and sales, given by the Portfolio Manager on behalf of
     the Fund for, or in connection  with,  the purchase or sale of  securities,
     whether executed or unexecuted. Such records shall include:

     A.   The name of the broker;

     B.   The terms and  conditions  of the  order and of any  modifications  or
          cancellation thereof;

     C.   The time of entry or cancellation;

     D.   The price at which executed;

     E.   The time of receipt of a report of execution; and

     F.   The name of the person who placed the order on behalf of the Fund.

2.   (Rule  31a-1(b)(9)) A record for each fiscal quarter,  completed within ten
     (10) days after the end of the quarter,  showing  specifically the basis or
     bases upon which the  allocation  of orders  for the  purchase  and sale of
     portfolio  securities  to named  brokers or dealers was  effected,  and the
     division of brokerage  commissions or other  compensation  on such purchase
     and sale orders. Such record:

     A.   Shall include the consideration given to:

          (i)   The sale of shares of the Fund by brokers or dealers.

          (ii)  The supplying of services or benefits by brokers or dealers to:

                (a) The Fund;

                (b) The Fund Manager;

                (c) The Portfolio Manager; and

                (d) Any person other than the foregoing.

          (iii) Any other consideration other than the technical  qualifications
                of the brokers and dealers as such.

     B.   Shall show the nature of the services or benefits made available.

     C.   Shall  describe in detail the  application  of any general or specific
          formula or other  determinant  used in arriving at such  allocation of
          purchase and sale orders and such division of brokerage commissions or
          other compensation.

     D.   The name of the person  responsible  for making the  determination  of
          such  allocation  and such division of brokerage  commissions or other
          compensation.

3.   (Rule  31a-1(b)(10))  A  record  in the form of an  appropriate  memorandum
     identifying  the person or persons,  committees or groups  authorizing  the
     purchase or sale of portfolio securities. Where an authorization is made by
     a committee  or group,  a record  shall be kept of the names of its members
     who  participate in the  authorization.  There shall be retained as part of
     this record:  any memorandum,  recommendation or instruction  supporting or
     authorizing  the  purchase or sale of portfolio  securities  and such other
     information as is appropriate to support the authorization.(1)


<PAGE>


4.   (Rule 31a-1(f)) Such accounts, books and other documents as are required to
     be  maintained  by  registered  investment  advisers by rule adopted  under
     Section  204 of the  Investment  Advisers  Act of 1940,  to the extent such
     records are  necessary or  appropriate  to record the  Portfolio  Manager's
     transactions with the Fund.

- ---------------

(1)  Such information might include: the current Form 10-K, annual and quarterly
     reports,  press  releases,  reports by analysts  and from  brokerage  firms
     (including  their  recommendation:  i.e., buy, sell,  hold) or any internal
     reports or portfolio manager reviews.


<PAGE>


                          LIBERTY ALL-STAR GROWTH FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE C

                             PORTFOLIO MANAGER FEE


     For services  provided to the Portfolio  Manager Account,  the Fund Manager
will pay to the Portfolio Manager,  on or before the  10th  day of each calendar
month,  a fee  calculated  and  accrued  daily and  payable  monthly by the Fund
Manager for the  previous  calendar  month at the annual  rate of:  0.40% of the
amount   obtained  by  multiplying  the  Portfolio   Manager's   Percentage  (as
hereinafter  defined)  times the Average  Total Fund Net Assets (as  hereinafter
defined) up to $400 million;  0.36% of the amount  obtained by  multiplying  the
Portfolio Manager's Percentage times the Average Total Fund Net Assets exceeding
$400 million up to and including $800 million;  0.324% of the amount obtained by
multiplying the Portfolio Manager's  Percentage times the Average Total Fund Net
Assets  exceeding $800 million up to and including  $1.2 billion;  0.292% of the
amount  obtained by multiplying  the Portfolio  Manager's  Percentage  times the
Average Total Fund Net Assets exceeding $1.2 billion.

     "Portfolio Manager's  Percentage" means the percentage obtained by dividing
(i) the average daily net asset values of the Portfolio  Manager  Account during
the preceding calendar month, by (ii) the Average Total Fund Net Assets.

     "Average Total Fund Net Assets" means the average daily net asset values of
the Fund as a whole during the preceding calendar month.

     The fee shall be pro-rated for any month during which this  Agreement is in
effect for only a portion of the month.


<PAGE>


April 2, 2007


Schneider Capital Management Corp.
Attn:  Legal Department
460 East Swedesford Road, Suite 2000
Wayne, PA  19087

RE:  Portfolio Management Agreement with Liberty All-Star Equity Fund

Dear Schneider:


In a recent audit of the Liberty All-Star Equity Fund (the "Fund") records, it
was discovered that Appendix B and C to the Portfolio Management Agreement
between Schneider Capital Management Corp., ALPS Advisers, Inc., and the Fund
was mislabeled as Liberty All-Star Growth Fund, Inc.

Therefore, please accept the attached replacement pages with the correct
heading.  The body of the pages did not change.

Additionally, please note that ALPS Advisers, Inc., and the Funds main address
has changed from 1625 Broadway, Suite 2200, Denver CO  80202 to 1290 Broadway,
Suite 1100, Denver, CO  80203.

Should you have any questions regarding these matters, please feel free to
contact me or my paralegal Stephanie Barres at 303.623.2577.

Sincerely,


/s/ Tane T. Tyler
- -----------------
Tane T. Tyler
Chief Legal Officer
ALPS Advisers, Inc.


Enclosures


<PAGE>


                          LIBERTY ALL-STAR EQUITY FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE B

               RECORDS TO BE MAINTAINED BY THE PORTFOLIO MANAGER

1.   (Rule  31a-1(b)(5) and (6)) A record of each brokerage order, and all other
     portfolio  purchases and sales, given by the Portfolio Manager on behalf of
     the Fund for, or in connection  with,  the purchase or sale of  securities,
     whether executed or unexecuted. Such records shall include:

     A.   The name of the broker;

     B.   The terms and  conditions  of the  order and of any  modifications  or
          cancellation thereof;

     C.   The time of entry or cancellation;

     D.   The price at which executed;

     E.   The time of receipt of a report of execution; and

     F.   The name of the person who placed the order on behalf of the Fund.

2.   (Rule  31a-1(b)(9)) A record for each fiscal quarter,  completed within ten
     (10) days after the end of the quarter,  showing  specifically the basis or
     bases upon which the  allocation  of orders  for the  purchase  and sale of
     portfolio  securities  to named  brokers or dealers was  effected,  and the
     division of brokerage  commissions or other  compensation  on such purchase
     and sale orders. Such record:

     A.   Shall include the consideration given to:

          (i)   The sale of shares of the Fund by brokers or dealers.

          (ii)  The supplying of services or benefits by brokers or dealers to:

               (a)  The Fund;

               (b)  The Fund Manager;

               (c)  The Portfolio Manager; and

               (d)  Any person other than the foregoing.

          (iii) Any other consideration other than the technical  qualifications
                of the brokers and dealers as such.

     B.   Shall show the nature of the services or benefits made available.

     C.   Shall  describe in detail the  application  of any general or specific
          formula or other  determinant  used in arriving at such  allocation of
          purchase and sale orders and such division of brokerage commissions or
          other compensation.

     D.   The name of the person  responsible  for making the  determination  of
          such  allocation  and such division of brokerage  commissions or other
          compensation.

3.   (Rule  31a-1(b)(10))  A  record  in the form of an  appropriate  memorandum
     identifying  the person or persons,  committees or groups  authorizing  the
     purchase or sale of portfolio securities. Where an authorization is made by
     a committee  or group,  a record  shall be kept of the names of its members
     who  participate in the  authorization.  There shall be retained as part of
     this record:  any memorandum,  recommendation or instruction  supporting or
     authorizing  the  purchase or sale of portfolio  securities  and such other
     information as is appropriate to support the authorization.(1)


<PAGE>


4.   (Rule 31a-1(f)) Such accounts, books and other documents as are required to
     be  maintained  by  registered  investment  advisers by rule adopted  under
     Section  204 of the  Investment  Advisers  Act of 1940,  to the extent such
     records are  necessary or  appropriate  to record the  Portfolio  Manager's
     transactions with the Fund.

- ---------------
(1)  Such information might include: the current Form 10-K, annual and quarterly
     reports,  press  releases,  reports by analysts  and from  brokerage  firms
     (including  their  recommendation:  i.e., buy, sell,  hold) or any internal
     reports or portfolio manager reviews.


<PAGE>


                          LIBERTY ALL-STAR EQUITY FUND
                         PORTFOLIO MANAGEMENT AGREEMENT
                                   SCHEDULE C

                             PORTFOLIO MANAGER FEE


     For services  provided to the Portfolio  Manager Account,  the Fund Manager
will pay to the Portfolio Manager,  on or before the  10th  day of each calendar
month,  a fee  calculated  and  accrued  daily and  payable  monthly by the Fund
Manager for the  previous  calendar  month at the annual  rate of:  0.40% of the
amount   obtained  by  multiplying  the  Portfolio   Manager's   Percentage  (as
hereinafter  defined)  times the Average  Total Fund Net Assets (as  hereinafter
defined) up to $400 million;  0.36% of the amount  obtained by  multiplying  the
Portfolio Manager's Percentage times the Average Total Fund Net Assets exceeding
$400 million up to and including $800 million;  0.324% of the amount obtained by
multiplying the Portfolio Manager's  Percentage times the Average Total Fund Net
Assets  exceeding $800 million up to and including  $1.2 billion;  0.292% of the
amount  obtained by multiplying  the Portfolio  Manager's  Percentage  times the
Average Total Fund Net Assets exceeding $1.2 billion.

     "Portfolio Manager's  Percentage" means the percentage obtained by dividing
(i) the average daily net asset values of the Portfolio  Manager  Account during
the preceding calendar month, by (ii) the Average Total Fund Net Assets.

     "Average Total Fund Net Assets" means the average daily net asset values of
the Fund as a whole during the preceding calendar month.

     The fee shall be pro-rated for any month during which this  Agreement is in
effect for only a portion of the month.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2J
<SEQUENCE>8
<FILENAME>exhibit2j1.txt
<DESCRIPTION>EX-99.2J1
<TEXT>



                AMENDED AND RESTATED MASTER CUSTODIAN AGREEMENT
                -----------------------------------------------


      This  Amended  and  Restated  Master  Custodian  Agreement  is  made as of
September  19,  2005  between  each registered investment company identified  on
Appendix A hereto (each such registered  investment  company and each registered
investment company made subject to this Agreement in accordance  with Section 18
below shall hereinafter be referred to as the "FUND"), and STATE STREET BANK and
TRUST COMPANY, a Massachusetts trust company {the "CUSTODIAN").

                                  WITNESSETH:

      WHEREAS, each Fund is registered under the Investment Company Act of 1940,
as amended, (the "1940 ACT");

      WHEREAS, the Funds have appointed the Custodian as custodian of its assets
by  a  Master Custodian Agreement dated as of October 10, 2001, as amended  (the
"ORIGINAL  CUSTODY AGREEMENT"), and retained the Custodian to serve as custodian
of its assets,  for  itself,  and,  to  the extent a Fund is authorized to issue
shares of common stock or shares of beneficial  interest  in separate series, on
behalf  of  each  of  its  series  set forth on Appendix A hereto  (such  series
together with all other series subsequently  established  by  a  Fund  and  made
subject to this Agreement in accordance with Section 19 below, shall hereinafter
be  referred  to  as the "PORTFOLIO(S)"; for each Fund not authorized to issue
separate  series  of   shares,   all  references  hereinafter  to  one  or  more
"Portfolio(s)" shall be deemed to refer to such Fund); and

      WHEREAS, the Funds and Custodian  desire to amend and restate the Original
Custody Agreement pursuant to the terms and conditions herein.

      Now THEREFORE, in consideration of  the  mutual  covenants  and agreements
hereinafter contained, the parties hereto agree as follows:

Section I. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT


Each  Fund  hereby employs the Custodian as the custodian of certain  assets  of
such Fund, including  securities  which  the  Fund,  on behalf of the applicable
Portfolio,  desires  to  be held in places within the United  States  ("DOMESTIC
SECURITIES") and securities  it  desires  to  be  held outside the United States
("FOREIGN SECURITIES"). The Fund, on behalf of the  Portfolio(s),  has delivered
or  will  deliver  to  the  Custodian  all securities and cash of the Portfolios
(other  than  any  securities  or  cash of the  Portfolios  held  by  a  futures
commission merchant or commodity clearing  organization  pursuant  to Rule 17f-6
under  the  1940  Act),  and  all  payments of income, payments of principal  or
capital distributions received by it with respect to all securities owned by the
Portfolio(s) from time to time, and  the  cash  consideration received by it for
such  new or treasury shares of beneficial interest  of  the  Fund  representing
interests  in  the  Portfolios  ("SHARES") as may be issued or sold from time to
time. The Custodian shall not be  responsible  for  any  property of a Portfolio
held  or  received  by  the Portfolio and not delivered to the  Custodian.  With
respect to uncertificated  shares  (the  "UNDERLYING  SHARES")  of  registered
investment  companies  (hereinafter  sometimes  referred  to  as the "UNDERLYING
PORTFOLIOS"), the holding of confirmation statements that identify the shares as


                                                                               1
<PAGE>

being recorded in the Custodian's name on behalf of the Portfolio will be deemed
custody for purposes hereof.


Upon  receipt  of  "PROPER  INSTRUCTIONS"  (as such term is defined in Section 7
hereof),  the Custodian shall on behalf of the applicable  Portfolios) from time
to time employ one or more sub-custodians located in the United States, but only
in  accordance  with an  applicable  vote by the  Board  of  Trustees,  Board of
Directors,  Board of Managers or other governing board, as applicable, of a Fund
(the "BOARD") on behalf of the applicable Portfolio(s). The Custodian may employ
as  sub-custodian  for a Fund's  foreign  securities on behalf of the applicable
Portfolio(s)   the  foreign   banking   institutions   and  foreign   securities
depositories designated in Schedules A and B hereto, but only in accordance with
the applicable  provisions of Sections 3 and 4. The Custodian shall have no more
or less  responsibility  or  liability  to the Fund on account of any actions or
omissions of any  sub-custodian so employed than any such  sub-custodian  has to
the Custodian.


Section 2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY
           THE CUSTODIAN IN THE UNITED STATES

      Section 2.1      HOLDING   SECURITIES.   The   Custodian  shall  hold  and
physically segregate for the account of each Portfolio all non-cash property, to
be held by it in the United States, including all domestic  securities  owned by
such  Portfolio  other  than  (a)  securities  which  are maintained pursuant to
Section 2.8 in a clearing agency which acts as a securities  depository  or in a
book-entry  system  authorized  by the U.S. Department of the Treasury (each,  a
"U.S. Securities system") and (b)  the Underlying Shares owned by the Fund which
are maintained pursuant to Section 2.13 in an account with State Street Bank and
Trust Company or such other entity as  may  from  time to time act as a transfer
agent for the Underlying Portfolios and with respect  to  which the Custodian is
provided with Proper Instructions (the "Underlying Transfer Agent").

       Section 2.2  DELIVERY OF  SECURITIES.  The  Custodian  shall  release and
deliver  domestic  securities owned by a Portfolio held by the Custodian or in a
U.S.  Securities  System  account  of  the  Custodian  or in an  account  at the
Underlying Transfer Agent, only upon receipt of Proper Instructions on behalf of
the  applicable  Portfolio,  which may be  continuing  instructions  when deemed
appropriate by the parties, and only in the following cases:

      1)    Upon sale of such securities for  the  account of the Portfolio and
            receipt of payment therefor;

      2)    Upon  the  receipt  of payment in connection  with  any  repurchase
            agreement related to such securities entered into by the Portfolio;

      3)    In the case of a sale effected through a U.S. Securities System, in
            accordance with the provisions of Section 2.8 hereof;

      4)    To the depository agent  in connection with tender or other similar
            offers for securities of the Portfolio;

      5)    To the issuer thereof or its agent when such securities are called,
            redeemed, retired or otherwise  become  payable;  provided that, in
            any such case, the cash or other consideration is to  be  delivered
            to the Custodian;

                                                                               2
<PAGE>

      6)    To the issuer thereof, or its agent, for transfer into the  name of
            the  Portfolio  or into the name of any nominee or nominees of  the
            Custodian or into  the  name or nominee name of any agent appointed
            pursuant to Section 2.7 or  into  the  name  or nominee name of any
            sub-custodian appointed pursuant to Section 1;  or for exchange for
            a  different  number  of  bonds,  certificates  or  other  evidence
            representing  the  same aggregate face amount or number  of  units;
            provided that, in any  such  case,  the  new  securities  are to be
            delivered to the Custodian;

      7)    Upon  the sale of such securities for the account of the Portfolio,
            to the  broker  or  its  clearing  agent,  against  a  receipt, for
            examination  in accordance with "street delivery" custom;  provided
            that in any such  case,  the Custodian shall have no responsibility
            or  liability  for any loss  arising  from  the  delivery  of  such
            securities prior to receiving payment for such securities except as
            may  arise  from  the   Custodian's   own   negligence  or  willful
            misconduct;

      8)    For  exchange  or  conversion  pursuant  to  any  plan  of  merger,
            consolidation, recapitalization, reorganization or  readjustment of
            the  securities  of  the issuer of such securities, or pursuant  to
            provisions for conversion contained in such securities, or pursuant
            to any deposit agreement;  provided that, in any such case, the new
            securities and cash, if any, are to be delivered to the Custodian;

      9)    In  the  case  of  warrants,  rights  or  similar  securities,  the
            surrender  thereof in the exercise  of  such  warrants,  rights  or
            similar  securities   or  the  surrender  of  interim  receipts  or
            temporary securities for  definitive  securities; provided that, in
            any  such case, the new securities and cash,  if  any,  are  to  be
            delivered to the Custodian;

      10)   For delivery in connection with any loans of securities made by the
            Portfolio,  but  only  against  receipt  of  adequate collateral as
            agreed  upon from time to time by the Custodian  and  the  Fund  on
            behalf of  the  Portfolio,  which  may  be  in  the form of cash or
            obligations issued by the United States government, its agencies or
            instrumentalities,  except that in connection with  any  loans  for
            which collateral is to  be  credited  to the Custodian's account in
            the  book-entry system authorized by the  U.S.  Department  of  the
            Treasury,  the  Custodian  will  not  be held liable or responsible
            under this Agreement for the delivery of  securities  owned  by the
            Portfolio prior to the receipt of such collateral;

      11)   For delivery in connection with any loans of securities made by the
            Fund  to  a  third  party  lending  agent,  or  the lending agent's
            custodian, in accordance with Proper Instructions  (which  may  not
            provide  for  the  receipt by the Custodian of collateral therefor)
            agreed upon from time  to  time  by  the  Custodian and the Fund on
            behalf of the Portfolio;

      12)   For delivery as security in connection with  any  borrowing  by the
            Fund on behalf of the Portfolio requiring a pledge of assets by the


                                                                               3
<PAGE>

            Fund  on  behalf  of  the  Portfolio,  but  only against receipt of
            amounts borrowed;

      13)   For  delivery in accordance with the provisions  of  any  agreement
            among  the  Fund  on  behalf  of the Portfolio, the Custodian and a
            broker-dealer registered under  the Securities Exchange Act of 1934
            (the "Exchange Act") and a member  of  The  National Association of
            Securities Dealers, Inc. ("NASD"), relating to  compliance with the
            rules  of  The Options Clearing Corporation and of  any  registered
            national securities  exchange,  or  of  any similar organization or
            organizations, regarding escrow or other arrangements in connection
            with transactions by the Portfolio of the Fund;

      14)   For  delivery in accordance with the provisions  of  any  agreement
            among  the  Fund  on  behalf of the Portfolio, the Custodian, and a
            futures commission merchant registered under the Commodity Exchange
            Act, relating to compliance with the rules of the Commodity Futures
            Trading Commission ("CFTC')  and/or  any  contract  market,  or any
            similar  organization  or organizations, regarding account deposits
            in connection with transactions by the Portfolio of the Fund;

      15)   Upon the sale or other delivery  of  such  investments  (including,
            without  limitation,  to  one  or  more  custodians  (each, a "Repo
            Custodian")  appointed  by  the  Fund on behalf of a Portfolio  and
            communicated  to  the Custodian by Proper  Instructions,  including
            Schedule D (as may  be  amended from time to time) attached to this
            Agreement, duly executed  by  two  authorized officers of the Fund,
            for the purpose of engaging in repurchase  agreement transactions),
            and prior to receipt of payment therefor, as  set  forth in written
            Proper  Instructions  (such  delivery in advance of payment,  along
            with payment in advance of delivery made in accordance with Section
            2.6(8), as applicable, shall each  be referred to herein as a "Free
            Trade"), provided that such Proper Instructions shall set forth (a)
            the  securities  of  the  Portfolio to be  delivered  and  (b)  the
            person(s) to whom delivery of such securities shall be made;

      16)   Upon receipt of instructions  from  the  Fund or the transfer agent
            for the Fund (the "Transfer Agent") for delivery  to  such Transfer
            Agent  or to the holders of Shares in connection with distributions
            in kind,  as  may  be  described from time to time in the currently
            effective prospectus and statement of additional information of the
            Fund related to the Portfolio  (the  "Prospectus"), in satisfaction
            of requests by holders of Shares for repurchase or redemption;

      17)   For  delivery  as initial or variation margin  in  connection  with
            futures or options on futures contracts entered into by the Fund on
            behalf of the Portfolio; and

      18)   In the case of a  sale  processed  through  the Underlying Transfer
            Agent of Underlying Shares, in accordance with Section 2.13 hereof;

      19)   For any other purpose, but only upon receipt of Proper Instructions
            from the Fund on behalf of the applicable Portfolio  specifying the


                                                                               4
<PAGE>

            securities of the Portfolio to be delivered and naming  the  person
            or persons to whom delivery of such securities shall be made.

      Section 2.3      REGISTRATION  OF SECURITIES. Domestic securities held  by
the Custodian (other than bearer securities)  shall be registered in the name of
the  Portfolio  or in the name of any nominee of  the  Fund  on  behalf  of  the
Portfolio or of ally  nominee  of  the Custodian which nominee shall be assigned
exclusively to the Portfolio, unless  the  Fund  has  authorized  in writing the
appointment  of a nominee to be used in common with other registered  investment
companies having the same investment advisor as the Portfolio, or in the name or
nominee name of  any  agent  appointed pursuant to Section 2.7 or in the name or
nominee  name  of  any  sub-custodian  appointed  pursuant  to  Section  1.  All
securities accepted by the  Custodian on behalf of the Portfolio under the terms
of this Agreement shall be in  "street  name"  or  other good delivery form. If,
however, the Fund directs the Custodian to maintain securities in "street name",
the Custodian shall utilize its best efforts only to  timely  collect income due
the Fund on such securities and to notify the Fund on a best efforts  basis only
of relevant corporate actions including, without limitation, pendency of  calls,
maturities, tender or exchange offers.

       Section  2.4 BANK  ACCOUNTS.  The  Custodian  shall  open and  maintain a
separate  bank  account or  accounts  in the  United  States in the name of each
Portfolio of the Fund,  subject only to draft or order by the  Custodian  acting
pursuant  to the terms of this  Agreement,  and shall  hold in such  account  or
accounts,  subject to the provisions hereof, all cash received by it from or for
the account of the Portfolio,  other than cash  maintained by the Portfolio in a
bank account  established  and used in accordance with Rule 17f-3 under the 1940
Act.  Funds held by the  Custodian for a Portfolio may be deposited by it to its
credit as Custodian in the banking  department of the Custodian or in such other
banks  or  trust  companies  as it may  in  its  discretion  deem  necessary  or
desirable;  provided,  however,  that every such bank or trust  company shall be
qualified  to act as a  custodian  under the 1940 Act and that each such bank or
trust company and the funds to be deposited with each such bank or trust company
shall on behalf of each  applicable  Portfolio be approved by vote of a majority
of the Board.  Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that capacity.

       Section 2.5  COLLECTION OF INCOME.  Subject to the  provisions of Section
2.3, the Custodian shall collect on a timely basis all income and other payments
with respect to  registered  domestic  securities  held  hereunder to which each
Portfolio  shall  be  entitled  either  by  law or  pursuant  to  custom  in the
securities  business,  and shall  collect on a timely basis all income and other
payments with respect to bearer  domestic  securities if, on the date of payment
by the issuer,  such securities are held by the Custodian or its agent and shall
credit such income, as collected, to such Portfolio's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach and present
for payment all coupons and other income  items  requiring  presentation  as and
when they become due and shall  collect  interest  when due on  securities  held
hereunder.  Income due each  Portfolio  on  securities  loaned  pursuant  to the
provisions  of Section  2.2 (10) shall be the  responsibility  of the Fund.  The
Custodian will have no duty or  responsibility  in connection  therewith,  other
than to provide the Fund with such  information  or data as may be  necessary to
assist the Fund in  arranging  for the timely  delivery to the  Custodian of the
income to which the Portfolio is properly entitled.


                                                                               5
<PAGE>

       Section 2.6 PAYMENT OF FUND MONIES.  Upon receipt of Proper  Instructions
on behalf of the applicable Portfolio, which may be continuing instructions when
deemed  appropriate  by the  parties,  the  Custodian  shall pay out monies of a
Portfolio in the following cases only:

      1)   Upon the purchase of domestic securities, options, futures contracts
           or options on futures contracts for the account of the Portfolio but
           only  (a)  against the delivery of such securities  or  evidence  of
           title to such  options,  futures  contracts  or  options  on futures
           contracts  to  the  Custodian  (or  any  bank, banking firm or trust
           company  doing  business in the United States  or  abroad  which  is
           qualified under the  1940  Act  to  act  as a custodian and has been
           designated  by  the  Custodian  as  its  agent  for   this  purpose)
           registered in the name of the Portfolio or in the name  of a nominee
           of the Custodian referred to in Section 2.3 hereof or in proper form
           for transfer; (b) in the case of a purchase effected through  a U.S.
           Securities  System,  in accordance with the conditions set forth  in
           Section 2.8 hereof; (c)  in  the  case  of  a purchase of Underlying
           Shares, in accordance with the conditions set forth in Section 2.13;
           (d) in the case of repurchase agreements entered  into  between  the
           Fund  on behalf of the Portfolio and the Custodian, or another bank,
           or a broker-dealer  which  is  a member of NASD, against delivery of
           the  securities  either in certificate  form  or  through  an  entry
           crediting the Custodian's  account  at the Federal Reserve Bank with
           such securities; or (e) for transfer  to  a  time deposit account of
           the Fund in any bank, whether domestic or foreign; such transfer may
           be effected prior to receipt of a confirmation  from a broker and/or
           the applicable bank pursuant to Proper Instructions from the Fund as
           defined herein;

      2)   In connection with conversion, exchange or surrender  of  securities
           owned by the Portfolio as set forth in Section 2.2 hereof;

      3)   For  the  redemption or repurchase of Shares issued as set forth  in
Section 6 hereof;

      4)   For  the payment  of  any  expense  or  liability  incurred  by  the
           Portfolio,  including  but not limited to the following payments for
           the  account  of  the  Portfolio:   interest,   taxes,   management,
           accounting, transfer agent and legal fees, and operating expenses of
           the  Fund  whether  or not such expenses are to be in whole or  part
           capitalized or treated as deferred expenses;

      5)   For the payment of any  dividends on Shares declared pursuant to the
           governing documents of the Fund;

      6)   For  payment of the amount  of  dividends  received  in  respect  of
           securities sold short;
      7)   For payment  as  initial  or  variation  margin  in  connection with
           futures or options on futures contracts entered into by  the Fund on
           behalf of the Portfolio; and

      8)   For  delivery  to  a  Repo Custodian for the purpose of engaging  in
           repurchase  agreement  transactions,  which  delivery  may  be  made
           without contemporaneous  receipt  by  the  Custodian  of  assets  in
           exchange therefor, and upon which delivery to such Repo Custodian in
           accordance  with  Proper  Instructions  from the Fund on behalf of a


                                                                               6
<PAGE>

           Portfolio,  the  Custodian shall have no further  responsibility  or
           obligation to the Fund as a custodian for the Portfolio with respect
           to the securities so delivered (each such delivery, a "FREE TRADE"),
           provided that, in  preparing  reports of monies received or paid out
           of  the  Portfolio  or  of  assets  comprising  the  Portfolio,  the
           Custodian shall be entitled to rely upon  information  received from
           time  to  time  from the Repo Custodian and shall not be responsible
           for the accuracy or completeness of such information included in the
           Custodian's reports until such assets are received by the Custodian;
           and

      9)   For any other purpose,  but only upon receipt of Proper Instructions
           from the Fund on behalf of  the  Portfolio  specifying the amount of
           such payment and naming the person or persons  to  whom such payment
           is to be made.

     Section 2.7  APPOINTMENT OF AGENTS.  The Custodian may at any time or times
in its  discretion  appoint (and may at any time remove) any other bank or trust
company which is itself  qualified under the 1940 Act to act as a custodian,  as
its agent to carry out such of the provisions of this Section 2 as the Custodian
may from time to time direct;  provided,  however,  that the  appointment of any
agent shall not relieve the  Custodian of its  responsibilities  or  liabilities
hereunder.  The  Underlying  Transfer  Agent  shall  not be  deemed  an agent or
subcustodian  of the  Custodian  for  purposes of this  Section 2.7 or any other
provision of this Agreement.

       Section  2.8  DEPOSIT  OF FUND  ASSETS IN U.S.  SECURITIES  SYSTEMS.  The
Custodian may deposit and/or maintain  securities owned by a Portfolio in a U.S.
Securities System in compliance with the conditions of Rule 17f-4 under the 1940
Act, as amended from time to time.

       Section 2.9  SEGREGATED  ACCOUNT.  The  Custodian  shall upon  receipt of
Proper  Instructions  on  behalf  of each  applicable  Portfolio  establish  and
maintain  a  segregated  account  or  accounts  for and on  behalf  of each such
Portfolio,  into which  account  or  accounts  may be  transferred  cash  and/or
securities,  including  securities  maintained  in an account  by the  Custodian
pursuant to Section 2.8 hereof,  (i) in  accordance  with the  provisions of any
agreement  among  the Fund on  behalf  of the  Portfolio,  the  Custodian  and a
broker-dealer registered under the Exchange Act and a member of the NASD (or any
futures  commission  merchant  registered  under the  Commodity  Exchange  Act),
relating to compliance with the rules of The Options Clearing Corporation and of
any  registered  national  securities  exchange  (or the CFTC or any  registered
contract market),  or of any similar  organization or  organizations,  regarding
escrow or other  arrangements in connection with  transactions by the Portfolio,
(ii) for purposes of segregating U.S. cash, U.S. Government securities, or other
U.S.  securities  in  connection  with swaps  arrangements  in  connection  with
transactions  by the  Portfolio,  options  purchased,  sold  or  written  by the
Portfolio or commodity futures contracts or options thereon purchased or sold by
the  Portfolio,  (iii) for the purposes of compliance by the Portfolio  with the
procedures  required  by  Investment  Company  Act  Release  No.  10666,  or any
subsequent release of the U.S.  Securities and Exchange Commission (the "SEC"`),
or  interpretative  opinion of the staff of the SEC, relating to the maintenance
of segregated  accounts by  registered  investment  companies,  and (iv) for any
other purpose upon receipt of Proper Instructions from the Fund on behalf of the
applicable Portfolio.

     Section 2.10 OWNERSHIP  CERTIFICATES FOR TAX PURPOSES.  The Custodian shall
execute  ownership and other  certificates  and  affidavits  for all federal and


                                                                               7
<PAGE>

state tax purposes in connection  with receipt of income or other  payments with
respect to domestic  securities of each  Portfolio  held by it and in connection
with transfers of securities.

     Section 2.11  PROXIES.  The Custodian  shall,  with respect to the domestic
securities  held  hereunder,  cause to be promptly  executed  by the  registered
holder of such  securities,  if the securities are registered  otherwise than in
the name of the Portfolio or a nominee of the  Portfolio,  all proxies,  without
indication  of the  manner in which  such  proxies  are to be  voted,  and shall
promptly deliver to the Portfolio such proxies,  all proxy soliciting  materials
and all notices relating to such securities.

       Section 2.12 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES.  Subject to
the provisions of Section 2.3, the Custodian shall transmit promptly to the Fund
for each  Portfolio  all written  information  (including,  without  limitation,
pendency of calls and  maturities  of domestic  securities  and  expirations  of
rights in  connection  therewith and notices of exercise of call and put options
written  by the Fund on behalf of the  Portfolio  and the  maturity  of  futures
contracts  purchased or sold by the  Portfolio)  received by the Custodian  from
issuers of the securities  being held for the Portfolio.  With respect to tender
or exchange offers,  the Custodian shall transmit  promptly to the Portfolio all
written  information  received by the Custodian  from issuers of the  securities
whose tender or exchange is sought and from the party (or its agents) making the
tender or exchange offer.  If the Portfolio  desires to take action with respect
to any  tender  offer,  exchange  offer or any other  similar  transaction,  the
Portfolio  shall notify the Custodian at least three  business days prior to the
date on which the Custodian is to take such action.

     Section 2.13  DEPOSIT OF FUND ASSETS WITH THE  UNDERLYING  TRANSFER  AGENT.
Underlying Shares shall be deposited and/or maintained in an account or accounts
maintained  with the Underlying  Transfer Agent.  The Underlying  Transfer Agent
shall be deemed to be acting as if it is a "securities  depository" for purposes
of Rule 17f-4 under the 1940 Act.  The Fund  hereby  directs  the  Custodian  to
deposit and/or  maintain such  securities  with the Underlying  Transfer  Agent,
subject to the following provisions:

      1)   The  Custodian shall keep Underlying Shares owned by a Portfolio with
           the Underlying  Transfer  Agent  provided  that  such  securities are
           maintained in an account or accounts on the books and records  of the
           Underlying  Transfer  Agent in the name of the Custodian as custodian
           for the Portfolio.
      2)   The records of the Custodian with respect to Underlying Shares which
           are maintained with the  Underlying Transfer Agent shall identify by
           book-entry those Underlying Shares belonging to a Portfolio;

      3)   The Custodian shall pay for  Underlying  Shares  purchased  for  the
           account  of  a  Portfolio  upon  (i)  receipt  of  advice  from  the
           Portfolio's investment manager that such Underlying Shares have been
           purchased  and  will be transferred to the account of the Custodian,
           on  behalf of the  Portfolio,  on  the  books  and  records  of  the
           Underlying  Transfer  Agent,  and (ii) the making of an entry on the
           records of the Custodian to reflect  such  payment  and transfer for
           the   account   of   the  Portfolio.  The  Custodian  shall  receive
           confirmation from the  Underlying  Transfer Agent of the purchase of


                                                                               8
<PAGE>

           such  securities  and  the  transfer  of   such  securities  to  the
           Custodian's account with the Underlying Transfer  Agent  only  after
           such payment is made. The Custodian shall transfer Underlying Shares
           redeemed  for  the  account  of  a  Portfolio (i) upon receipt of an
           advice from the Portfolio's investment  manager that such securities
           have  been  redeemed and that payment for such  securities  will  be
           transferred to  the Custodian and (ii) the making of an entry on the
           records of the Custodian  to  reflect  such transfer and payment for
           the   account   of  the  Portfolio.  The  Custodian   will   receive
           confirmation from the Underlying Transfer Agent of the redemption of
           such securities and  payment therefor only after such securities are
           redeemed. Copies of all  advices  from  the  Portfolio's  investment
           manager of purchases and sales of Underlying Shares for the  account
           of the Portfolio shall identify the Portfolio, be maintained for the
           Portfolio  by  the  Custodian,  and  be  provided  to the investment
           manager at its request;

      4)   The  Custodian shall be not be liable to the Fund for  any  loss  or
           damage  to  the Fund resulting from maintenance of Underlying Shares
           with Underlying  Transfer Agent except for losses resulting directly
           from the negligence,  misfeasance  or misconduct of the Custodian or
           any of its agents or of any of its or their employees.

Section 3. PROVISIONS RELATING TO RULES 17F-5 AND 17F-7

     Section  3.1.   DEFINITIONS.   As  used  throughout  this  Agreement,   the
capitalized terms set forth below shall have the indicated meanings:

"COUNTRY RISK" means all factors reasonably related  to  the  systemic  risk  of
holding  Foreign  Assets  in a particular country including, but not limited to,
such  country's political environment,  economic  and  financial  infrastructure
(including  any  Eligible  Securities  Depository  operating  in  the  country),
prevailing  or  developing  custody  and  settlement  practices,  and  laws  and
regulations applicable to the safekeeping and recovery of Foreign Assets held in
custody in that country.

"ELIGIBLE FOREIGN CUSTODIAN" has the meaning set forth in section (a)(1) of Rule
17f-5,  including  a  majority-owned  or  indirect subsidiary of a U.S. Bank (as
defined in Rule 17f-5), a bank holding company  meeting  the  requirements of an
Eligible  Foreign Custodian (as set forth in Rule 17f-5 or by other  appropriate
action of the  SEC, or a foreign branch of a Bank (as defined in Section 2(a)(5)
of the 1940 Act)  meeting the requirements of a custodian under Section 17(f) of
the 1940 Act; the term does not include any Eligible Securities Depository.


"ELIGIBLE SECURITIES  DEPOSITORY" has the meaning set forth in section (b)(1) of
Rule 17 f-7.

"FOREIGN ASSETS" means  any  of  the  Portfolios' investments (including foreign
currencies) for which the primary market  is  outside the United States and such
cash and cash equivalents as are reasonably necessary  to effect the Portfolios'
transactions in such investments.

"FOREIGN CUSTODY MANAGER" has the meaning set forth in section (a)(3) of Rule
17f-5.

"RULE 17F-5" means Rule 17f-5 promulgated under the 1940 Act.

                                                                               9
<PAGE>


"RULE L7F-T" means Rule 17f-7 promulgated under the 1940 Act.

      Section 3.2. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.

       3.2.1 DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY  MANAGER.  The Fund,
by resolution adopted by its Board,  hereby delegates to the Custodian,  subject
to Section (b) of Rule 17f-5, the responsibilities set forth in this Section 3.2
with respect to Foreign Assets of the Portfolios held outside the United States,
and the Custodian hereby accepts such delegation as Foreign Custody Manager with
respect to the Portfolios.

       3.2.2 COUNTRIES COVERED. The Foreign Custody Manager shall be responsible
for performing the delegated responsibilities defined below only with respect to
the countries and custody  arrangements for each such country listed on Schedule
A to this Agreement, which list of countries may be amended from time to time by
the Fund with the agreement of the Foreign Custody Manager.  The Foreign Custody
Manager shall list on Schedule A the Eligible Foreign Custodians selected by the
Foreign Custody Manager to maintain the assets of the Portfolios,  which list of
Eligible  Foreign  Custodians  may be  amended  from  time to  time in the  sole
discretion of the Foreign  Custody  Manager.  The Foreign  Custody  Manager will
provide amended versions of Schedule A in accordance with Section 3.2.5 hereof.

Upon the receipt by the Foreign Custody Manager of Proper Instructions  to  open
an  account  or  to  place  or  maintain  Foreign  Assets in a country listed on
Schedule A, and the fulfillment by the Fund, on behalf of the Portfolios, of the
applicable account opening requirements for such country,  the  Foreign  Custody
Manager  shall  be  deemed  to have been delegated by the Board on behalf of the
Portfolios responsibility as  Foreign  Custody  Manager  with  respect  to  that
country and to have accepted such delegation. Execution of this Agreement by the
Fund  shall be deemed to be a Proper Instruction to open an account, or to place
or maintain  Foreign  Assets,  in each country listed on Schedule A in which the
Custodian has previously placed  or  currently maintains Foreign Assets pursuant
to the terms of the Agreement. Following  the  receipt  of  Proper  Instructions
directing  the Foreign Custody Manager to close the account of a Portfolio  with
the Eligible  Foreign  Custodian  selected  by  the Foreign Custody Manager in a
designated country, the delegation by the Board on  behalf  of the Portfolios to
the  Custodian as Foreign Custody Manager for that country shall  be  deemed  to
have been  withdrawn and the Custodian shall immediately cease to be the Foreign
Custody Manager of the Portfolios with respect to that country.

The  Foreign   Custody   Manager   may  withdraw  its  acceptance  of  delegated
responsibilities with respect to a designated country upon written notice to the
Fund. Thirty days (or such longer period  to which the parties agree in writing)
after  receipt  of any such notice by the Fund,  the  Custodian  shall  have  no
further responsibility  in  its  capacity as Foreign Custody Manager to the Fund
with respect to the country as to which the Custodian's acceptance of delegation
is withdrawn.


3.2.3 SCOPE OF DELEGATED RESPONSIBILITIES:

      (a)    SELECTION  OF  ELIGIBLE   FOREIGN   CUSTODIANS.   Subject  to  the
provisions  of  this  Section  3.2, the Foreign Custody Manager may  place  and
maintain the Foreign Assets in the  care  of  the  Eligible  Foreign  Custodian


                                       10
<PAGE>

selected  by the Foreign Custody Manager in each country listed on Schedule  A,
as amended  from  time to time. In performing its delegated responsibilities as
Foreign Custody Manager  to  place  or maintain Foreign Assets with an Eligible
Foreign Custodian, the Foreign Custody Manager shall determine that the Foreign
Assets will be subject to reasonable care, based on the standards applicable to
custodians in the country in which the  Foreign  Assets  will  be  held by that
Eligible  Foreign  Custodian,  after  considering  all factors relevant to  the
safekeeping of such assets, including, without limitation the factors specified
in Rule 17f-5(c)(l).

      (b)    CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS.  The  Foreign  Custody
Manager  shall  determine  that  the  contract  governing  the  foreign custody
arrangements  with  each  Eligible  Foreign  Custodian selected by the  Foreign
Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).

      (c)    MONITORING.  In each case in which  the  Foreign  Custody  Manager
maintains Foreign Assets with  an  Eligible  Foreign  Custodian selected by the
Foreign Custody Manager, the Foreign Custody Manager shall  establish  a system
to monitor (i) the appropriateness of maintaining the Foreign Assets with  such
Eligible  Foreign  Custodian  and  (ii)  the  contract  governing  the  custody
arrangements  established  by  the  Foreign  Custody  Manager with the Eligible
Foreign Custodian. In the event the Foreign Custody Manager determines that the
custody arrangements with an Eligible Foreign Custodian  it has selected are no
longer  appropriate,  the  Foreign Custody Manager shall notify  the  Board  in
accordance with Section 3.2.5 hereunder.

       3.2.4 GUIDELINES FOR THE, EXERCISE OF DELEGATED  AUTHORITY.  For purposes
of  this  Section  3.2,  the  Board,  or at the  Board's  delegation,  a  Fund's
investment advisor, shall be deemed to have considered and determined to accept,
on  behalf  of the  Fund,  such  Country  Risk as is  incurred  by  placing  and
maintaining the Foreign Assets in each country for which the Custodian is sewing
as Foreign Custody Manager of the Portfolios.

       3.2.5  REPORTING  REQUIREMENTS.  The Foreign Custody Manager shall report
the withdrawal of the Foreign Assets from an Eligible Foreign  Custodian and the
placement of such  Foreign  Assets with another  Eligible  Foreign  Custodian by
providing to the Board an amended  Schedule A at the end of the calendar quarter
in which an amendment to such Schedule has occurred. The Foreign Custody Manager
shall make written  reports  notifying the Board of any other material change in
the foreign custody arrangements of the Portfolios described in this Section 3.2
after the occurrence of the material change.

       3.2.6  STANDARD OF CARE AS FOREIGN  CUSTODY  MANAGER OF A  PORTFOLIO.  In
performing the  responsibilities  delegated to it, the Foreign  Custody  Manager
agrees to exercise  reasonable  care,  prudence and  diligence  such as a person
having  responsibility  for the  safekeeping of assets of management  investment
companies registered under the 1940 Act would exercise.

       3.2.7  REPRESENTATIONS  WITH RESPECT TO RULE 17F-5.  The Foreign  Custody
Manager  represents  to the Fund that it is a U.S.  Bank as  defined  in section
(a)(7) of Rule 17f-5.  The Fund  represents to the Custodian  that the Board has
determined  that it is  reasonable  for the  Board to rely on the  Custodian  to
perform  the  responsibilities  delegated  pursuant  to  this  Agreement  to the
Custodian as the Foreign Custody Manager of the Portfolios.

                                                                              11
<PAGE>

     3.2.8  EFFECTIVE DATE AND  TERMINATION OF THE CUSTODIAN AS FOREIGN  CUSTODY
MANAGER.  The Board's  delegation to the Custodian as Foreign Custody Manager of
the  Portfolios  shall be  effective  as of the date hereof and shall  remain in
effect until terminated at any time, without penalty, by written notice from the
terminating  party  to  the  non-terminating  party.   Termination  will  become
effective  thirty (30) days after receipt by the  non-terminating  party of such
notice.  The  provisions of Section 3.2.2 hereof shall govern the  delegation to
and  termination of the Custodian as Foreign  Custody  Manager of the Portfolios
with respect to designated countries.

   Section 3.3 ELIGIBLE SECURITIES DEPOSITORIES.

       3.3.1 ANALYSIS AND  MONITORING.  The Custodian shall (a) provide the Fund
(or its  duly-authorized  investment  manager  or  investment  advisor)  with an
analysis  of the  custody  risks  associated  with  maintaining  assets with the
Eligible  Securities  Depositories  set forth on Schedule B hereto in accordance
with  section  (a)(1)(i)(A)  of Rule  17f-7,  and (b)  monitor  such  risks on a
continuing  basis,  and  promptly  notify  the  Fund  (or  its   duly-authorized
investment manager or investment  advisor) of any material change in such risks,
in accordance with section (a)(1)(i)(B) of Rule 17f-7.

       3.3.2 STANDARD OF CARE. The Custodian agrees to exercise reasonable care,
prudence and diligence in performing the duties set forth in Section 3.3.1.

Section 4. Duties Of The Custodian With Respect To Property Of The Portfolios
           Held Outside The United States


       Section  4.1  DEFINITIONS.   As  used  throughout  this  Agreement,   the
capitalized  terms set forth below shall have the indicated  meanings:  "FOREIGN
SECURITIES SYSTEM" means an Eligible Securities  Depository listed on Schedule B
hereto.

"FOREIGN SUB-CUSTODIAN" means a foreign banking institution serving as an
Eligible Foreign Custodian.

       Section 4.2 HOLDING SECURITIES. The Custodian shall identify on its books
as belonging to the Portfolios the foreign  securities held by each Foreign Sub-
Custodian  or  Foreign   Securities  System.  The  Custodian  may  hold  foreign
securities for all of its customers,  including the Portfolios, with any Foreign
Sub-Custodian in an account that is identified as belonging to the Custodian for
the  benefit of its  customers,  provided  however,  that (i) the records of the
Custodian  with  respect  to  foreign  securities  of the  Portfolios  which are
maintained in such account shall identify  those  securities as belonging to the
Portfolios  and (ii),  to the extent  permitted  and  customary in the market in
which the account is maintained,  the Custodian shall require that securities so
held by the Foreign  Sub-Custodian  be held  separately  from any assets of such
Foreign Sub-Custodian or of other customers of such Foreign Sub-Custodian.

   Section 4.3.  FOREIGN  SECURITIES  SYSTEMS.  Foreign  securities   shall   be
maintained  in  a  Foreign  Securities  System  in  a designated country through
arrangements  implemented  by  the  Custodian  or  a Foreign  Sub-Custodian,  as
applicable, in such country.

                                                                              12
<PAGE>


   Section 4.4   TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.

       4.4.1.  DELIVERY  OF  FOREIGN  SECURITIES.  The  Custodian  or a  Foreign
Sub-Custodian  shall release and deliver  foreign  securities of the  Portfolios
held by the Custodian or such Foreign Sub-Custodian,  or in a Foreign Securities
System  account,  only  upon  receipt  of  Proper  Instructions,  which  may  be
continuing  instructions when deemed appropriate by the parties, and only in the
following cases:

   (i)   upon  the  sale  of  such  foreign securities  for  the  Portfolio  in
         accordance with commercially reasonable market practice in the country
         where such foreign securities  are  held or traded, including, without
         limitation:  (A)  delivery  against  expectation  of  receiving  later
         payment;  or  (B) in the case of a sale  effected  through  a  Foreign
         Securities  System,   in  accordance  with  the  rules  governing  the
         operation of the Foreign Securities System;

   (ii)  in  connection  with  any  repurchase  agreement  related  to  foreign
         securities;

   (iii) to the depository agent  in  connection  with  tender or other similar
         offers for foreign securities of the Portfolios;

   (iv)  to  the issuer thereof or its agent when such foreign  securities  are
         called, redeemed, retired or otherwise become payable;

   (v)   to the issuer thereof, or its agent, for transfer into the name of the
         Custodian  (or  the name of the respective Foreign Sub-Custodian or of
         any nominee of the  Custodian  or  such  Foreign Sub-Custodian) or for
         exchange  for  a  different  number of bonds,  certificates  or  other
         evidence representing the same  aggregate  face  amount  or  number of
         units;

   (vi)  to brokers, clearing banks or other clearing agents for examination or
         trade execution in accordance with market custom; provided that in any
         such  case  the Foreign Sub-Custodian shall have no responsibility  or
         liability for  any  loss  arising from the delivery of such securities
         prior to receiving payment  for  such  securities  except as may arise
         from the Foreign Sub-Custodian's own negligence or willful misconduct;

   (vii) for   exchange   or   conversion  pursuant  to  any  plan  of  merger,
         consolidation, recapitalization, reorganization or readjustment of the
         securities of the issuer of such securities, or pursuant to provisions
         for conversion contained  in  such  securities,  or  pursuant  to  any
         deposit agreement;

   (viii)in  the  case  of  warrants, rights or similar foreign securities, the
         surrender thereof in  the exercise of such warrants, rights or similar
         securities  or  the  surrender   of   interim  receipts  or  temporary
         securities for definitive securities;

   (ix)  for  delivery as security in connection  with  any  borrowing  by  the
         Portfolios requiring a pledge of assets by the Portfolios;

                                                                              13
<PAGE>

   (x)   for delivery as initial or variation margin in connection with futures
         or options  on futures contracts entered into by the Fund on behalf of
         the Portfolio;

   (xi)  in connection with the lending of foreign securities; and

   (xii) for any other  purpose,  but  only upon receipt of Proper Instructions
         specifying the foreign securities  to  be  delivered  and  naming  the
         person or persons to whom delivery of such securities shall be made.

      4.4.2.  PAYMENT  OF PORTFOLIO MONIES. Upon receipt of Proper Instructions,
which may be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out,  or  direct the respective Foreign Sub-Custodian or the
respective Foreign Securities System  to  pay  out, monies of a Portfolio in the
following cases only:

    (i)  upon  the purchase of foreign securities  for  the  Portfolio,  unless
         otherwise  directed by Proper Instructions, by (A) delivering money to
         the seller thereof  or  to  a  dealer  therefor  (or an agent for such
         seller or dealer) against expectation `of receiving  later delivery of
         such  foreign  securities;  or (B) in the case of a purchase  effected
         through a Foreign Securities  System,  in  accordance  with  the rules
         governing the operation of such Foreign Securities System;

    (ii) in  connection  with  the conversion, exchange or surrender of foreign
         securities of the Portfolio;

    (iii)for  the  payment  of any  expense  or  liability  of  the  Portfolio,
         including but not limited  to the following payments: interest, taxes,
         investment  advisory  fees, transfer  agency  fees,  fees  under  this
         Agreement, legal fees, accounting fees, and other operating expenses;

    (iv) for the purchase or sale  of  foreign  exchange  or  foreign  exchange
         contracts  for the Portfolio, including transactions executed with  or
         through the Custodian or its Foreign Sub-Custodians;

    (v)  for delivery as initial or variation margin in connection with futures
         or options on  futures contracts entered into by the Fund on behalf of
         the Portfolio;

    (vi) for payment of part  or  all  of  the dividends received in respect of
         securities sold short;

    (vii)in connection with the borrowing or lending of foreign securities; and

    (viii)For delivery to Repo Custodian, which  delivery  may  be made without
         contemporaneous  receipt  by  the  Custodian  of  assets  in  exchange
         therefor, and upon which delivery to such Repo Custodian in accordance
         with  Proper Instructions from the Fund on behalf of a Portfolio,  the
         Custodian  shall  have  no further responsibility or obligation to the
         Fund as a custodian for the Fund on behalf of a Portfolio with respect
         to the securities so delivered  (each  such delivery, a "FREE TRADE"),


                                                                              14
<PAGE>

         provided that, in preparing reports of monies  received or paid out of
         the  Portfolio  or of assets comprising the Portfolio,  the  Custodian
         shall be entitled  to rely upon information received from time to time
         from the Repo Custodian  and shall not be responsible for the accuracy
         or  completeness  of  such information  included  in  the  Custodian's
         reports until such assets are received by the Custodian; and

    (ix) for any other purpose,  but  only  upon receipt of Proper Instructions
         specifying the amount of such payment and naming the person or persons
         to whom such payment is to be made.

         4.4.3.  MARKET  CONDITIONS.  Notwithstanding   any  provision  of  this
Agreement  to the contrary, settlement and payment for Foreign  Assets  received
for the account  of the Portfolios and delivery of Foreign Assets maintained for
the account of the  Portfolios  may be effected in accordance with the customary
established securities trading or  processing  practices  and  procedures in the
country   or   market  in  which  the  transaction  occurs,  including,  without
limitation, delivering  Foreign  Assets  to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or  dealer)  with  the  expectation  of
receiving later payment for such Foreign Assets from such purchaser or dealer.

The Custodian shall provide to the Board the information with respect to custody
and  settlement  practices in countries in which the Custodian employs a Foreign
Sub-Custodian described  on  Schedule C hereto at the time or times set forth on
such Schedule. The Custodian may revise

Schedule C from time to time, provided that no such revision shall result in the
Board  being  provided  with  substantively   less  information  than  had  been
previously provided hereunder.

         Section 4.5 REGISTRATION OF FOREIGN SECURITIES.  The foreign securities
maintained  in  the  custody  of a  Foreign  Sub-Custodian  (other  than  bearer
securities)  shall be registered in the name of the  applicable  Portfolio or in
the name of the Custodian or in the name of any Foreign  Sub-Custodian or in the
name of any nominee of the  foregoing,  and the Fund on behalf of such Portfolio
agrees  to hold any such  nominee  harmless  from any  liability  as a holder of
record of such foreign  securities.  The  Custodian  or a Foreign  Sub-Custodian
shall not be obligated to accept  securities on behalf of a Portfolio  under the
terms of this  Agreement  unless the form of such  securities  and the manner in
which they are delivered are in accordance with reasonable market practice.

       Section 4.6 BANK ACCOUNTS.  The Custodian  shall identify on its books as
belonging to the Fund cash  (including cash  denominated in foreign  currencies)
deposited  with the  Custodian.  Where the  Custodian is unable to maintain,  or
market practice does not facilitate the maintenance of, cash on the books of the
Custodian,  a bank  account  or bank  accounts  shall be opened  and  maintained
outside the United States on behalf of a Portfolio with a Foreign Sub-Custodian.
All accounts referred to in this Section shall be subject only to draft or order
by the Custodian (or, if applicable, such Foreign Sub-Custodian) acting pursuant
to the  terms of this  Agreement  to hold  cash  received  by or from or for the
account  of the  Portfolio.  Cash  maintained  on  the  books  of the  Custodian
(including its branches,  subsidiaries and  affiliates),  regardless of currency
denomination,  is maintained in bank accounts  established under, and subject to
the laws of, The Commonwealth of Massachusetts.

       Section 4.7.  COLLECTION OF INCOME.  The Custodian  shall use  reasonable
commercial  efforts to collect all income and other payments with respect to the
Foreign  Assets held  hereunder  to which the  Portfolios  shall be entitled and
shall credit such income, as collected, to the applicable Portfolio. In the


                                                                              15
<PAGE>

event that extraordinary  measures are required to collect such income, the Fund
and the Custodian  shall consult as to such measures and as to the  compensation
and expenses of the Custodian relating to such measures.

         Section 4.8 SHAREHOLDER  RIGHTS. With respect to the foreign securities
held pursuant to this Section 4, the Custodian  will use  reasonable  commercial
efforts to  facilitate  the  exercise  of voting and other  shareholder  rights,
subject always to the laws, regulations and practical constraints that may exist
in the country where such  securities  are issued.  The Fund  acknowledges  that
local conditions,  including lack of regulation, onerous procedural obligations,
lack of notice and other  factors may have the effect of severely  limiting  the
ability of the Fund to exercise shareholder rights.

         Section  4.9.  COMMUNICATIONS  RELATING  TO  FOREIGN  SECURITIES,   The
Custodian shall transmit  promptly to the Fund written  information with respect
to  materials  received by the  Custodian  via the Foreign  Sub-Custodians  from
issuers of the foreign  securities  being held for the account of the Portfolios
(including,  without  limitation,  pendency of calls and  maturities  of foreign
securities and expirations of rights in connection  therewith).  With respect to
tender or exchange  offers,  the Custodian  shall transmit  promptly to the Fund
written  information with respect to materials so received by the Custodian from
issuers of the foreign securities whose tender or exchange is sought or from the
party (or its agents) making the tender or exchange  offer.  The Custodian shall
not be liable for any untimely  exercise of any tender,  exchange or other right
or power  in  connection  with  foreign  securities  or  other  property  of the
Portfolios  at any time held by it unless (i) the  Custodian  or the  respective
Foreign  Sub-Custodian  is in actual  possession  of such foreign  securities or
property and (ii) the Custodian receives Proper  Instructions with regard to the
exercise of any such right or power,  and both (i) and (ii) occur at least three
business  days  prior to the date on which the  Custodian  is to take  action to
exercise such right or power.

       Section  4.10.  LIABILITY  OF  FOREIGN  SUB-CUSTODIANS.   Each  agreement
pursuant to which the Custodian  employs a Foreign  Sub-Custodian  shall, to the
extent possible,  require the Foreign  Sub-Custodian to exercise reasonable care
in the  performance  of its duties,  and to indemnify,  and hold  harmless,  the
Custodian from and against any loss, damage,  cost, expense,  liability or claim
arising out of or in connection with the Foreign Sub-Custodian's  performance of
such obligations. At the Fund's election, the Portfolios shall be entitled to be
subrogated to the rights of the Custodian  with respect to any claims  against a
Foreign  Sub-Custodian as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the  Portfolios  have not been made
whole for any such loss, damage, cost, expense, liability or claim.

       Section  4.11 TAX LAW.  The  Custodian  shall have no  responsibility  or
liability  for  any  obligations  now or  hereafter  imposed  on the  Fund,  the
Portfolios or the Custodian as custodian of the Portfolios by the tax law of the
United States or of any state or political  subdivision thereof. It shall be the
responsibility of the Fund to notify the Custodian of the obligations imposed on
the Fund with  respect to the  Portfolios  or the  Custodian as custodian of the
Portfolios by the tax law of countries  other than those  mentioned in the above
sentence,  including responsibility for withholding and other taxes, assessments
or other governmental charges,  certifications and governmental  reporting.  The
sole responsibility of the Custodian with regard to such tax law shall be to use


                                                                              16
<PAGE>

reasonable efforts to assist the Fund with respect to any claim for exemption or
refund  under the tax law of  countries  for which  the Fund has  provided  such
information.

       Section 4.12.  LIABILITY OF CUSTODIAN.  The Custodian shall be liable for
the acts or omissions of a Foreign Sub-Custodian to the same extent as set forth
with respect to  sub-custodians  generally in the Agreement  and,  regardless of
whether  assets are  maintained in the custody of a Foreign  Sub-Custodian  or a
Foreign  Securities  System,  the  Custodian  shall not be liable  for any loss,
damage,  cost,  expense,  liability  or claim  resulting  from  nationalization,
expropriation,  currency restrictions, or acts of war or terrorism, or any other
loss where the Sub-Custodian has otherwise acted with reasonable care.

       Section 5. LOAN SERVICING PROVISIONS

       Section 5.1 GENERAL. The following provisions shall apply with respect to
investments,  property  or  assets  in the  nature of  loans,  or  interests  or
participations in loans,  including without  limitation  interests in syndicated
bank loans and bank loan participations,  whether in the U.S. or utside the U.S.
(collectively, "Loans") entered into by the Fund on behalf of one or more of its
Portfolios (referred to in this Section 5 as the "Fund").

       Section 5.2 SAFEKEEPING.  Instruments,  certificates,  agreements  and/or
other  documents  which the Custodian may receive with respect to Loans,  if any
(collectively  "Financing  Documents"),  from time to time, shall be held by the
Custodian at its offices in Boston, Massachusetts.

       Section 5.3 DUTIES OF THE  CUSTODIAN.  The  Custodian  shall  accept such
Financing  Documents,  if any,  with  respect to Loans as may be delivered to it
from time to time by the Fund.  The  Custodian  shall be under no  obligation to
examine  the  contents  or  determine  the  sufficiency  of any  such  Financing
Documents or to provide any certification with respect thereto, whether received
by the Custodian as original documents,  photocopies, by facsimile or otherwise.
Without  limiting the  foregoing,  the Custodian is under no duty to examine any
such Financing Documents to determine whether necessary steps have been taken or
requirements  met with respect to the assignment or transfer of the related Loan
or applicable  interest or  participation  in such Loan. The Custodian  shall be
entitled  to  assume  the  genuineness,  sufficiency  and  completeness  of  any
Financing  Documents  received,  and the  genuineness  and due  authority of any
signature  appearing  on  such  documents.  Notwithstanding  any  term  of  this
Agreement to the contrary, with respect to any Loans, (i) the Custodian shall be
under  no  obligation  to  determine,  and  shall  have no  liability  for,  the
sufficiency of, or to require delivery of, any instrument, document or agreement
constituting,  evidencing or representing  such Loan, other than to receive such
Financing Documents, if any, as may be delivered or caused to be delivered to it
by the Fund (or its  investment  manager  acting on its  behalf),  (ii)  without
limiting the generality of the foregoing,  delivery of any such Loan  (including
without  limitation,  for  purposes  of  Section  2.6  above) may be made to the
Custodian by, and may be represented  solely by,  delivery to the Custodian of a
facsimile or photocopy of an assignment agreement (an "ASSIGNMENT AGREEMENT") or
a confirmation or certification from the Fund (or the investment manager) to the
effect that it has acquired such Loan and/or has received or will  receive,  and
will deliver to the Custodian,  appropriate  Financing  Documents  constituting,
evidencing  or  representing  such Loan  (such  confirmation  or  certification,
together with any Assignment Agreement,  collectively,  an "ASSIGNMENT AGREEMENT
OR  CONFIRMATION"),  in  any  case  without  delivery  of any  promissory  note,
participation certificate or similar instrument (collectively, an "INSTRUMENT"),
(iii) if an original  Instrument shall be or shall become available with respect
to any such Loan, it shall be the sole responsibility of the Fund (or the


                                                                              17
<PAGE>

investment  manager acting on its behalf) to make or cause  delivery  thereof to
the  Custodian,  and the  Custodian  shall be under no obligation at any time or
times to determine whether any such original  Instrument has been issued or made
available  with respect to such Loan,  and shall not be under any  obligation to
compel  compliance by the Fund to make or cause  delivery of such  Instrument to
the Custodian,  and (iv) any reference to Financing  Documents appearing in this
Section 5 shall be deemed to include,  without  limitation,  any such Instrument
and/or Assignment Agreement or Confirmation.

If payments with  respect  to  a  Loan  ("LOAN PAYMENT") are not received by the
Custodian  on  the  date on which they are due,  as  reflected  in  the  Payment
Schedule (as such term  is  defined  in Section 5.4 below) of the Loan ("PAYMENT
DATE"), or in the case of interest payments,  not received either on a scheduled
interest  payable  date,  as  reported to the Custodian  by  the  Fund  (or  the
investment manager acting on its  behalf)  for  the  Loan (the "INTEREST PAYABLE
DATE"), or in the amount of their accrued interest payable,  the Custodian shall
promptly, but in no event later than one business day after the  Payment Date or
the  Interest Payable Date, give telephonic notice to the party obligated  under
the Financing Documents to make such Loan Payment (the "OBLIGOR") of its failure
to make  timely  payment,  and  (2) if such payment is not received within three
business days of its due date, shall  notify the Fund (or the investment manager
on its behalf) of such Obligor's failure  to make the Loan Payment. In the event
the Custodian should receive a past due interest  or  other  Loan  Payment,  the
Custodian  shall  notify  the  Fund of such receipt. The Custodian shall have no
responsibility with respect to the  collection  of  Loan Payments which are past
due, other than the duty to notify the Obligor and the  Fund  (or the investment
manager acting on its behalf) as provided herein.

The  Custodian  shall have no responsibilities or duties whatsoever  under  this
Agreement, with respect  to  Loans  or  the Financing Documents, except for such
responsibilities  as  are  expressly  set forth  herein.  Without  limiting  the
generality of the foregoing, the Custodian  shall have no obligation to preserve
any  rights  against  prior parties or to exercise  any  right  or  perform  any
obligation in connection  with  the Loans or any Financing Documents (including,
without limitation, no obligation  to  take  any  action  in  respect of or upon
receipt  of  any  consent  solicitation,  notice  of  default or similar  notice
received  from  any  bank  agent  or  Obligor, except that the  Custodian  shall
undertake reasonable efforts to forward  any  such  notice  to  the  Fund or the
investment manager acting on its behalf). In case any question arises  as to its
duties hereunder, the Custodian may request instructions from the Fund and shall
be  entitled  at  all  times  to  refrain  from  taking any action unless it has
received Proper Instructions from the Fund or the  investment  manager  and  the
Custodian  shall  in  all  events have no liability, risk or cost for any action
taken, with respect to a Loan,  pursuant  to  and  in compliance with the Proper
Instructions of such parties.

The  Custodian  shall  be  only responsible and accountable  for  Loan  Payments
actually received by it and  identified  as for the account of the Fund; any and
all credits and payments credited to the Fund,  with  respect to Loans, shall be
conditional upon clearance and actual receipt by the Custodian  of final payment
thereon.

The  Custodian  shall promptly, upon the Fund's request, release to  the  Fund's
investment manager  or to any party as the Fund or the Fund's investment manager
may specify, any Financing  Documents  being held on behalf of the Fund. Without
limiting the foregoing, the Custodian shall  not be deemed to have or be charged
with knowledge of the sale of any Loan, unless and except to the extent it shall
have received written notice and instruction from  the  Fund  (or the investment
manager acting on its behalf) with respect thereto, and except  to the extent it
shall have received the sale proceeds thereof.

                                                                              18
<PAGE>

In no event shall the Custodian be under any obligation or liability to make any
advance of its own funds with respect to any Loan.

       Section 5.4 RESPONSIBILITY OF THE FUND. With respect to each Loan held by
the Custodian hereunder in accordance with the provisions hereof, the Fund shall
(a) cause the Financing  Documents  evidencing  such Loan to be delivered to the
Custodian; (b) include with such Financing Documents an amortization schedule of
payments  (the  "PAYMENT  SCHEDULE")  identifying  the  amount  and due dates of
scheduled principal  payments,  the Interest Payable Date(s) and related payment
amount information,  and such other information with respect to the related Loan
and  Financing  Documents as the  Custodian  reasonably  may require in order to
perform its services hereunder (collectively,  "LOAN INFORMATION"), in such form
and format as the  Custodian  reasonably  may  require;  (c) take,  or cause the
investment  manager to take, all actions necessary to acquire good title to such
Loan (or the  participation  in such  Loan,  as the case may be),  as and to the
extent  intended to be acquired;  and (d) cause the Custodian to be named as its
nominee for payment purposes under the Financing  Documents or otherwise provide
for the direct payment of the Payments to the Custodian.  The Custodian shall be
entitled  to rely upon the Loan  Information  provided to it by the Fund (or the
investment  manager acting on its behalf)  without any obligation on the part of
the  Custodian  independently  to verify,  investigate,  recalculate,  update or
otherwise confirm the accuracy or completeness  thereof; and the Custodian shall
have no liability  for any delay or failure on the part of the Fund in providing
necessary Loan  Information to the Custodian,  or for any inaccuracy  therein or
incompleteness  thereof.  With respect to each such Loan, the Custodian shall be
entitled to rely on any information and notices it may receive from time to time
from the  related  bank  agent,  Obligor  or similar  party with  respect to the
related  Loan,  and shall be entitled to update its records on the basis of such
information   or  notices   received,   without  any   obligation  on  its  part
independently to verify, investigate or recalculate such information.

      Section 5.5  INSTRUCTIONS;  AUTHORITY  TO  ACT.  The  certificate  of  the
Secretary or an Assistant Secretary of the Fund, identifying certain individuals
to  be  officers  of  the  Fund  or  employees  of the Fund's investment manager
authorized  to  sign  any such instructions, may be  received  and  accepted  as
conclusive evidence of  the  incumbency  and authority of such to act and may be
considered by the Custodian to be in full  force  and  effect  until it receives
written notice to the contrary from the Secretary or Assistant Secretary  of the
Fund's  Board.  Notwithstanding  any  other  provision  of  this  Agreement, the
Custodian shall have no responsibility to ensure that any investment by the Fund
with respect to Loans has been authorized.

       Section 5.6 ATTACHMENT. In case any portion of the Loans or the Financing
Documents shall be attached or levied upon pursuant to an order of court, or the
delivery  or  disbursement  thereof  shall be stayed or  enjoined by an order of
court,  or any other  order,  judgment or decree shall be made or entered by any
court  affecting the property of the Fund or any act of the  Custodian  relating
thereto,  the Custodian is hereby expressly authorized in its sole discretion to
obey and  comply  with all  orders,  judgments  or decrees so entered or issued,
without the necessity of inquire  whether such court had  jurisdiction,  and, in
case the Custodian obeys or complies with any such order, judgment or decree, it
shall not be liable to anyone by reason of such compliance.

Section 6. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES



                                                                              19
<PAGE>

The Custodian  shall  receive  from  the  distributor for the Shares or from the
Transfer Agent and deposit into the account  of  the  appropriate Portfolio such
payments as are received for Shares thereof issued or sold  from time to time by
the Fund. The Custodian will provide timely notification to the  Fund  on behalf
of  each  such Portfolio and the Transfer Agent of any receipt by it of payments
for Shares of such Portfolio.

From such funds  as  may be available for the purpose, the Custodian shall, upon
receipt of instructions  from  the  Transfer  Agent,  make  funds  available for
payment to holders of Shares who have delivered to the Transfer Agent  a request
for  redemption or repurchase of their Shares. In connection with the redemption
or  repurchase   of   Shares,  the  Custodian  is  authorized  upon  receipt  of
instructions from the Transfer  Agent  to  wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares, the Custodian shall honor checks drawn on the Custodian
by a holder of Shares, which cheeks have been  furnished  by  the  Fund  to  the
holder  of  Shares,  when  presented  to  the  Custodian in accordance with such
procedures and controls as are mutually agreed upon  from  time  to time between
the Fund and the Custodian.


Section 7. PROPER INSTRUCTIONS

Proper Instructions, which may also be standing instructions, as used throughout
this  Agreement,  shall  mean  instructions received by the Custodian  from  any
person duly authorized by the Fund  or its investment adviser. Such instructions
may be in writing signed by the authorized  person  or  persons  or  may be in a
communication utilizing access codes or a tested communication effected  between
electro-mechanical  or  electronic  devices,  or  may be by such other means and
utilizing such intermediary systems and utilities as  may be agreed to from time
to  time  by  the Custodian and the person or entity giving  such  instructions,
provided that the  Fund has followed any security procedures agreed to from time
to time by the Fund  and  the  Custodian,  including,  but  not  limited to, the
security procedures selected by the Fund in the Funds Transfer Addendum  to this
Agreement.  Oral  instructions  will  be  considered  Proper Instructions if the
Custodian reasonably believes them to have been given by  a person authorized to
give such instructions with respect to the transaction involved.  The Fund shall
cause  all  oral instructions to be confirmed in writing. For purposes  of  this
Section,  Proper   Instructions  shall  include  instructions  received  by  the
Custodian pursuant to  any  multi-party  agreement  which  requires a segregated
asset account in accordance with Section 2.9 of this Agreement.  The Fund or the
Fund's investment manager shall cause its duly authorized officer  to certify to
the Custodian in writing the names and specimen signatures of persons authorized
to  give Proper Instructions. The Custodian shall be entitled to rely  upon  the
authority  of  such  persons  until  it  receives  notice  from  the Fund to the
contrary.

Section 8. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY

The Custodian may in its discretion, without express authority from  the Fund on
behalf of each applicable Portfolio:

      1)    make  payments  to  itself or others for minor expenses of handling
            securities or other similar items relating to its duties under this
            Agreement, provided that  all  such payments shall be accounted for
            to the Fund on behalf of the Portfolio;

                                                                              20
<PAGE>

      2)    surrender securities in temporary form for securities in definitive
            form;

      3)    endorse  for  collection, in the name  of  the  Portfolio,  checks,
            drafts and other negotiable instruments; and

      4)    in general, attend  to  all non-discretionary details in connection
            with the sale, exchange, substitution, purchase, transfer and other
            dealings with the securities  and  property of the Portfolio except
            as otherwise directed by the Board.

Section 9.   EVIDENCE OF AUTHORITY


The  Custodian  shall  be  protected in acting upon  any  instructions,  notice,
request, consent, certificate  or other instrument or paper believed by it to be
genuine and to have been properly  executed  by  or  on  behalf of the Fund. The
Custodian  may  receive  and  accept  a  copy of a resolution certified  by  the
Secretary  or an Assistant Secretary of the  Fund  ("Certified  Resolution")  as
conclusive evidence (a) of the authority of any person to act in accordance with
such resolution  or  (b)  of  any determination or of any action by the Board as
described in such resolution, and  such  resolution may be considered as in full
force  and  effect  until receipt by the Custodian  of  written  notice  to  the
contrary.

Section 10. RECORDS


      (a)    The Custodian  shall  with  respect  to  each Portfolio create and
maintain  all  records  relating to its activities and obligations  under  this
Agreement in such manner  as  will  meet  the obligations of the Fund under the
1940 Act, with particular attention to Section  31 thereof and Rules 31 a-1 and
31a-2 thereunder. All such records shall be the property  of the Fund and shall
at  all times during the regular business hours of the Custodian  be  open  for
inspection  by  duly  authorized  officers, employees or agents of the Fund and
employees and agents of the SEC. The  Custodian  shall,  at the Fund's request,
supply  the  Fund with a tabulation of securities owned by each  Portfolio  and
held by the Custodian  and  shall,  when requested to do so by the Fund and for
such compensation as shall be agreed  upon  between the Fund and the Custodian,
include certificate numbers in such tabulations.

      (b)    For  a period of seven (7) years  following  termination  of  this
Agreement or, if earlier,  until  the  delivery to the Fund or its agent (which
includes a Successor Custodian) of Portfolio  Information  (as  defined  below)
from  the  preceding  five  (5)  years  in  a  reasonably  searchable  paper or
electronic  format  to be agreed upon by the parties acting in good faith,  the
Custodian shall maintain  and,  upon  request  of  the  Fund and subject to the
payment of compensation to the Custodian as provided below,  make  available to
the  Fund,  its  representatives or agents, such Portfolio Information  as  may
reasonably be required  in  order  for  the  Fund  or  its  agents (but not the
Custodian)  to  determine  whether  the Fund may be entitled to participate  in
certain class action securities litigation  or other legal proceedings. As used
in  this  subsection  (b),  the  term  "PORTFOLIO   INFORMATION"  shall  mean  a
Portfolio's  portfolio holdings  information that is maintained by the Custodian
pursuant  to Section  10(a).  The  Custodian  shall be  entitled  to  reasonable
compensation  for any services  provided and any  additional  expenses  incurred
under this Section 10(b).


                                                                              21
<PAGE>

Section 11. OPINION OF FUND'S INDEPENDENT ACCOUNTANT


The Custodian shall take all reasonable action, as the  Fund  on  behalf of each
applicable Portfolio may from time to time request, to obtain from  year to year
favorable opinions from the Fund's
independent  accountants  with respect to its activities hereunder in connection
with the preparation of the  Fund's  Form  N-1 A, and Form N-SAR or other annual
reports to the SEC and with respect to any other requirements thereof.

Section 12. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS

The Custodian shall provide the Fund, on behalf  of  each  of  the Portfolios at
such  times  as  the  Fund  may  reasonably require, with reports by independent
public accountants on the accounting  system,  internal  accounting  control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a U.S. Securities
System or a Foreign Securities System (either, a "Securities System"),  relating
to  the  services  provided by the Custodian under this Agreement; such reports,
shall be of sufficient  scope  and  in  sufficient  detail, as may reasonably be
required  by  the  Fund  to  provide  reasonable  assurance  that  any  material
inadequacies would be disclosed by such examination,  and,  if there are no such
inadequacies, the reports shall so state.


Section 13. COMPENSATION OF CUSTODIAN

The Custodian shall be entitled to reasonable compensation for  its services and
expenses as Custodian, as agreed upon in writing from time to time  between  the
Fund on behalf of each applicable Portfolio and the Custodian.

Section 14. RESPONSIBILITY OF CUSTODIAN

So  long as and to the extent that it is in the exercise of reasonable care, the
Custodian shall not be responsible for the title, validity or genuineness of any
property or evidence of title thereto received by it or delivered by it pursuant
to this Agreement and shall be held harmless in acting upon any notice, request,
consent, certificate or other instrument reasonably believed by it to be genuine
and to  be  signed  by  the  proper  party  or  parties,  including  any futures
commission  merchant  acting  pursuant to the terms of a three-party futures  or
options agreement. The Custodian  shall  be  held  to the exercise of reasonable
care in carrying out the provisions of this Agreement,  but shall be indemnified
by and shall be without liability to the Fund for any action taken or omitted by
it  in good faith without negligence, including, without limitation,  acting  in
accordance  with any Proper Instruction. It shall be entitled to rely on and may
act upon advice of counsel (who may be counsel for the Fund) on all matters, and
shall be without  liability  for any action reasonably taken or omitted pursuant
to such advice. Except to the extent arising from the Custodian's own negligence
or  willful  misconduct  or the negligence  or  willful  misconduct  of  a  Sub-
Custodian, however, the Custodian shall be without liability to the Fund and the
Portfolios for any loss, liability, claim or expense resulting from or caused by
anything which is part of  Country  Risk  (as  defined  in  Section  3  hereof),
including    without   limitation   nationalization,   expropriation,   currency
restrictions, or acts of war, revolution, riots or terrorism.

                                                                              22
<PAGE>

Except as may arise from the Custodian's own negligence or willful misconduct or
the negligence  or willful misconduct of a sub-custodian or agent, the Custodian
shall be without liability to the Fund for any loss, liability, claim or expense
resulting from or  caused  by; (i) events or circumstances beyond the reasonable
control of the Custodian or  any sub-custodian or Securities System or any agent
or  nominee  of  any  of  the  foregoing,  including,  without  limitation,  the
interruption, suspension or restriction  of  trading  on  or  the closure of any
securities  market,  power  or  other  mechanical  or technological failures  or
interruptions, computer viruses or communications disruptions,  work  stoppages,
natural disasters, or other similar events or acts; (ii) errors by the  Fund  or
its   duly-authorized   investment   manager  or  investment  advisor  in  their
instructions to the Custodian provided such instructions have been in accordance
with  this  Agreement;  (iii) the insolvency  of  or  acts  or  omissions  by  a
Securities  System;  (iv)  any   delay  or  failure  of  any  broker,  agent  or
intermediary, central bank or other  commercially  prevalent payment or clearing
system to deliver to the Custodian's sub-custodian or agent securities purchased
or in the remittance or payment made in connection with securities sold; (v) any
delay  or  failure  of  any company, corporation, or other  body  in  charge  of
registering or transferring  securities  in the name of the Custodian, the Fund,
the Custodian's sub-custodians, nominees or  agents  or any consequential losses
arising out of such delay or failure to transfer such  securities including non-
receipt of bonus, dividends and rights and other accretions  or  benefits;  (vi)
delays  or  inability  to  perform  its  duties  due  to  any disorder in market
infrastructure with respect to any particular security or Securities System; and
(vii) any provision of any present or future law or regulation  or  order of the
United  States  of  America,  or  any  state  thereof, or any other country,  or
political subdivision thereof or of any court of competent jurisdiction.

The  Custodian  shall  be liable for the acts or omissions  of  a  Foreign  Sub-
Custodian (as defined in  Section 4 hereof) to the same extent as set forth with
respect to sub-custodians generally in this Agreement.

If the Fund on behalf of a  Portfolio  requires the Custodian to take any action
with respect to securities, which action  involves the payment of money or which
action may, in the opinion of the Custodian,  result  in  the  Custodian  or its
nominee  assigned  to the Fund or the Portfolio being liable for the payment  of
money or incurring liability  of  some  other  form,  the  Fund on behalf of the
Portfolio,  as  a prerequisite to requiring the Custodian to take  such  action,
shall provide indemnity  to  the Custodian in an amount and form satisfactory to
it.

If the Fund requires the Custodian,  its  affiliates, subsidiaries or agents, to
advance  cash  or  securities for any purpose  (including  but  not  limited  to
securities settlements, foreign exchange contracts and assumed settlement) or in
the event that the Custodian  or  its  nominee  shall  incur  or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in  connection with
the  performance  of  this Agreement, except such as may arise from its  or  its
nominee's own negligent  action, negligent failure to act or willful misconduct,
any property at any time held  for the account of the applicable Portfolio shall
be security therefor and should  the  Fund fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.

In no event shall the Custodian be liable for indirect, special or consequential
damages.

                                                                              23
<PAGE>

Section 15. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT


This Agreement shall become effective as of its execution and shall continue for
a term of one (1) year, subject to up to two (2) automatic one (1) year renewals
(collectively, the "INITIAL TERM"), unless  either  party  gives  prior  written
notice  to  the other of its intent not to renew; provided, however, that either
party may terminate  this  Agreement  without penalty upon sixty (60) days prior
written notice for cause. This Agreement  may  be  amended at any time by mutual
agreement of the parties hereto and after the Initial Term, this Agreement shall
continue in full force and effect until terminated by either party by delivering
written notice the other party in accordance with Section  22,  such termination
to take effect not sooner than sixty (60) days after the date of  such  delivery
or  mailing; provided, however, that the Fund shall not amend or terminate  this
Agreement  in  contravention  of any applicable federal or state regulations, or
any provision of the Fund's Declaration  of Trust, Articles of Incorporation and
By-laws, Partnership or Limited Liability  Company  Agreement or other governing
documents, as applicable, ("GOVERNING DOCUMENTS") and further provided, that the
Fund on behalf of one or more of the Portfolios may at any time by action of its
Board (i) substitute another bank or trust company for  the  Custodian by giving
notice as described above to the Custodian, or (ii) immediately  terminate  this
Agreement  in  the event of the appointment of a conservator or receiver for the
Custodian by the  Comptroller  of  the  Currency or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction.

Upon  termination  of  the Agreement, the Fund  on  behalf  of  each  applicable
Portfolio shall pay to the  Custodian  such compensation as may be due as of the
date of such termination and shall likewise  reimburse  the  Custodian  for  its
reasonable costs, expenses and disbursements.

Section 16. SUCCESSOR CUSTODIAN


If  a  successor  custodian for one or more Portfolios shall be appointed by the
Board,  the  Custodian  shall,  upon  termination,  deliver  to  such  successor
custodian at the  office  of  the  Custodian,  duly endorsed and in the form for
transfer, all securities of each applicable Portfolio  then held by it hereunder
and  shall  transfer  to  an  account  of  the successor custodian  all  of  the
securities  of  each  such  Portfolio held in a  Securities  System  or  at  the
Underlying Transfer Agent.

If no such successor custodian  shall be appointed, the Custodian shall, in like
manner, upon receipt of a Certified  Resolution,  deliver  at  the office of the
Custodian and transfer such securities, funds and other properties in accordance
with such resolution.

In  the  event  that  no  written  order  designating  a successor custodian  or
Certified Resolution shall have been delivered to the Custodian on or before the
date when such termination shall become effective, then the Custodian shall have
the right to deliver to a bank or trust company, which is a "bank" as defined in
the 1940 Act, doing business in Boston, Massachusetts, or New York, New York, of
its own selection, having an aggregate capital, surplus,  and undivided profits,
as  shown  by  its  last  published  report,  of not less than $25,000,000,  all
securities, funds and other properties held by  the  Custodian on behalf of each
applicable Portfolio and all instruments held by the Custodian  relative thereto
and  all  other  property  held  by  it under this Agreement on behalf  of  each
applicable Portfolio, and to transfer  to an account of such successor custodian


                                                                              24
<PAGE>

all of the securities of each such Portfolio held in any Securities System or at
the Underlying Transfer Agent. Thereafter,  such  bank or trust company shall be
the successor of the Custodian under this Agreement.

In  the  event  that  securities,  funds  and  other properties  remain  in  the
possession  of  the  Custodian  after the date of termination  hereof  owing  to
failure of the Fund to procure the  Certified  Resolution to appoint a successor
custodian, the Custodian shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of such securities, funds
and other properties and the provisions of this Agreement relating to the duties
and obligations of the Custodian shall remain in full force and effect.

Section 17. INTERPRETIVE AND ADDITIONAL PROVISIONS

In connection with the operation of this Agreement,  the  Custodian and the Fund
on  behalf  of  each  of  the Portfolios, may from time to time  agree  on  such
provisions interpretive of or in addition to the provisions of this Agreement as
may  in their joint opinion  be  consistent  with  the  general  tenor  of  this
Agreement.  Any such interpretive or additional provisions shall be in a writing
signed by both  parties  and  shall  be  annexed  hereto,  provided that no such
interpretive or additional provisions shall contravene any applicable federal or
state  regulations  or  any  provision  of  the  Fund's Governing Documents.  No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Agreement.

Section 18. ADDITIONAL FUNDS

In the event that any registered investment company  in addition to those listed
on Appendix A hereto desires to have the Custodian render  services as custodian
under the teems hereof, it shall so notify the Custodian in  writing, and if the
Custodian agrees in writing to provide such services, such registered investment
company shall become a Fund hereunder and be bound by all terms  and  conditions
and provisions of this Agreement.

Section 19. ADDITIONAL PORTFOLIOS

In the event that any Fund establishes one or more series of Shares in  addition
to  those  listed  on  the Appendix attached to this Agreement, with respect  to
which it desires to have  the  Custodian  render services as custodian under the
terms hereof, it shall so notify the Custodian  in  writing  and transmit to the
Custodian  a  revised  Appendix  A,  and if the Custodian agrees in  writing  to
provide such services, such series of Shares shall become a Portfolio hereunder.

Section 20. MASSACHUSETTS LAW TO APPLY

This Agreement shall be construed and  the  provisions thereof interpreted under
and in accordance with laws of The Commonwealth of Massachusetts.

Section 21. PRIOR AGREEMENTS


                                                                              25
<PAGE>

This Agreement supersedes and terminates, as  of  the  date  hereof,  all  prior
Agreements  between  the  Fund  on  behalf  of  each  of  the Portfolios and the
Custodian relating to the custody of the Fund's assets.

Section 22. NOTICES.

Any notice, instruction or other instrument required to be  given  hereunder may
be delivered in person to the offices of the parties as set forth herein  during
normal business hours or delivered prepaid registered mail or by telex, cable or
telecopy  to  the parties at the following addresses or such other addresses  as
may be notified by any party from time to time.




To the Fund:           Columbia Management Advisors, Inc.
                       245 Summer Street, 3rd Floor
                       Boston, Massachusetts 022101
                       Attention: Michael Clarke
                       Telephone: 617-585-4130
                       Facsimile: 617-585-4065

To the Custodian:      STATE STREET BANK AND TRUST COMPANY
                       Two Avenue de Lafayette, LCC/4S
                       Boston, Massachusetts 02111
                       Attention: Edward J. McKenzie, Vice President
                       Telephone: 617-662-4100
                       Facsimile: 617-662-4313

Such notice, instruction or other instrument shall be deemed to have been served
in the case of a registered letter at the expiration of five business days after
posting, in the  case of cable twenty-four hours after dispatch and, in the case
of telex, immediately on dispatch and if delivered outside normal business hours
it shall be deemed  to  have  been received at the next time after delivery when
normal business hours commence  and  in  the case of cable, telex or telecopy on
the  business  day  after the receipt thereof.  Evidence  that  the  notice  was
properly addressed, stamped  and  put into the post shall be conclusive evidence
of posting.

Section 23. REPRODUCTION OF DOCUMENTS

This Agreement and all schedules, addenda,  exhibits, attachments and amendments
hereto  may be reproduced by any photographic,  photostatic,  microfilm,  micro-
card, miniature  photographic  or  other  similar  process.  The  parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original  is  in  existence and whether or not such reproduction was made  by  a
party in the regular  course of business, and that any enlargement, facsimile or
further reproduction of  such  reproduction  shall  likewise  be  admissible  in
evidence.


                                                                              26
<PAGE>

Section 24. THE PARTIES

All  references  herein  to  the "Fund" are to each of the management investment
companies listed on Appendix A  hereto,  and  each management investment company
made  subject  to  this  Agreement  in  accordance  with   Section   18   above,
individually,  as  if  this  Agreement were between such individual Fund and the
Custodian. In the case of a series  corporation,  trust  or  other  entity,  all
references  herein  to the "Portfolio" are to the individual series or portfolio
of such corporation,  trust  or  other  entity, or to such corporation, trust or
other entity on behalf of the individual  series  or  portfolio, as appropriate,
made  subject  to  this  Agreement  in  accordance with Section  19  above.  Any
reference in this Agreement to "the parties"  shall  mean the Custodian and such
other individual Fund as to which the matter pertains.

On  behalf  of  each Fund that is organized as a Massachusetts  business  trust,
notice is hereby  given that a copy of the Agreement and Declaration of Trust of
the  Fund is on file  with  the  Secretary  of  State  of  The  Commonwealth  of
Massachusetts, and that this Agreement is executed by an officer of the Fund, as
an officer  and  not  individually,  on  behalf  of the trustees of the Fund, as
trustees and not individually, and that the obligations  of  this Agreement with
respect to the Fund shall be binding upon the assets and properties  of the Fund
only  and  shall  not  be binding upon any of the Trustees, officers, employees,
agents or shareholders of the Fund or the Trust individually.

Section 25. REPRESENTATIONS AND WARRANTIES OF EACH FUND

Each Fund hereby represents  and  warrants  that:  (a)  it is duly incorporated,
formed or organized and is validly existing in good standing in its jurisdiction
of incorporation, formation or organization; (b) it has the  requisite power and
authority  under applicable law and its Governing Documents to  enter  into  and
perform this  Agreement;  (c)  all  requisite  proceedings  have  been  taken to
authorize  it  to  enter  into  and  perform  this Agreement; (d) this Agreement
constitutes  its  legal,  valid,  binding  and enforceable  agreement;  (e)  its
entrance into this Agreement shall not cause a material breach or be in material
conflict with any other agreement or obligation  of  the  Fund  or  any  law  or
regulation  applicable  to  it,  and  (f) it is an investment company registered
under the 1940 Act, as amended and will  continue  to be a registered investment
company under the 1940 Act for the term of this Agreement.

Section 26. REMOTE ACCESS SERVICES ADDENDUM

The Custodian and the Fund agree to be bound by the  terms  of the Remote Access
Services Addendum attached hereto.

Section 27. COUNTERPARTS

This  Agreement  may  be  executed  in  any number of counterparts  and  by  the
different parties hereto on separate counterparts,  each of which, when executed
and delivered, shall constitute an original, and all  such counterparts together
shall constitute one and the same instrument.


                                       27
<PAGE>

Section 28. CONFIDENTIALITY

The  parties hereto agree that each shall treat confidentially  all  information
provided by each party to the other party regarding its business and operations.
All confidential  information  provided  by  a party hereto shall be used by any
other party hereto solely for the purpose of rendering services pursuant to this
Agreement and, except as may be required in carrying  out  this Agreement, shall
not  be disclosed to any third party without the prior written  consent  of  the
party providing the information. In addition, during the term of this Agreement,
the Custodian  will  maintain  policies  reasonably  designed  to  prohibit  the
Custodian  and  its  employees from engaging in securities transactions based on
knowledge of the Fund's portfolio holdings.

The foregoing shall not  be  applicable  to any information that is (i) publicly
available when provided or thereafter becomes  publicly  available,  other  than
through  a  breach  of  this  Agreement, or that is independently derived by any
party hereto without the use of  any  information  provided  by  the other party
hereto in connection with this Agreement, (ii) aggregated, without  reference to
such  Fund,  in  whole  or  in  part,  with  other  client  information  for the
Custodian's own marketing, reporting or other purposes, or (iii) required in any
legal  or  regulatory  proceeding,  investigation, audit, examination, subpoena,
civil investigative demand or other similar  process,  or by operation of law or
regulation.

Section 29. PROVISIONS SURVIVING TERMINATION

The provisions of Sections 4.11, 4.12, 10, 14, 15, 16, 20,  26  and  28  of this
Agreement shall survive termination of this Agreement for any reason.

Section 30. SHAREHOLDER COMMUNICATIONS ELECTION

SEC  Rule  14b-2  of  Regulation 14A under the Exchange Act requires banks which
hold securities for the  account  of customers to respond to requests by issuers
of securities for the names, addresses  and  holdings  of  beneficial  owners of
securities  of  that  issuer  held  by  the bank unless the beneficial owner has
expressly objected to disclosure of this  information.  In  order to comply with
the  rule,  the Custodian needs the Fund to indicate whether it  authorizes  the
Custodian to  provide the Fund's name, address, and share position to requesting
companies whose  securities the Fund owns. If the Fund tells the Custodian "no",
the Custodian will  not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the
Custodian is required  by the rule to treat the Fund as consenting to disclosure
of this information for  all  securities  owned  by  the  Fund  or  any funds or
accounts established by the Fund. For the Fund's protection, the Rule  prohibits
the  requesting  company  from using the Fund's name and address for any purpose
other than corporate communications.  Please  indicate  below  whether  the Fund
consents or objects by checking one of the alternatives below.

YES [ ]     The Custodian is authorized to release the Fund's name, address, and
share positions.

NO [ X ]    The Custodian is not authorized to release the Fund's name, address,
and share positions.


                                                                              28
<PAGE>




2


<PAGE>


IN  WITNESS  WHEREOF,  each  of  the  parties  has  caused this instrument to be
executed in its name and behalf by its duly authorized  representative  and  its
seal to be hereunder affixed as of the date first written above.

Each Of The Entities Set Forth On            Fund Signature Attested To By:
The APPENDIX A Attached Hereto

By: /S/ J. Kevin Connaughton                 By: /S/ Lucy L. Greene
    ------------------------                     ------------------

Name: J. Kevin Connaughton                   Name: Lucy L. Greene
      --------------------                         --------------

Title: Treasurer Funds                       Title: Analyst
       ---------------                              -------





State Street Bank And Trust Company  Signature Attested To By:



By: /S/ Joseph L. Hooley                     By: /S/ Veronica Greenbauh
    --------------------                         ----------------------

Name: Joseph L. Hooley                       Name: Veronica Greenbauh
      ----------------                             ------------------

Title: Executive Vice President              Title: Vice President
       ------------------------                     --------------


(Notary Stamp)


<PAGE>





                                   APPENDIX A



LIBERTY ALL-STAR EQUITY FUND

LIBERTY ALL-STAR GROWTH FUND, INC.
LIBERTY ALL-STAR MID-CAP FUND
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2K
<SEQUENCE>9
<FILENAME>exhibit2k1.txt
<DESCRIPTION>EX-99.2K1
<TEXT>
                        ADMINISTRATION, BOOKKEEPING AND
                           PRICING SERVICES AGREEMENT

      THIS  AGREEMENT  is made as of December 18, 2006, between Liberty All-Star
Equity  Fund,  a Massachusetts  business  trust  (the  "Fund"),  and  ALPS  Fund
Services, Inc., a Colorado corporation ("ALPS").

      WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended ("1940 Act") as a closed-end, non-diversified management investment
company;

      WHEREAS, ALPS provides certain administrative, bookkeeping and pricing
services to investment companies; and

      WHEREAS,  the   Fund   desires   to   appoint   ALPS  to  perform  certain
administrative,  bookkeeping and pricing services for the  Fund,  and  ALPS  has
indicated its willingness to so act, subject to the terms and conditions of this
Agreement.

      NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, the parties hereto agree as follows:

1.    ALPS APPOINTMENT AND DUTIES.

     (a) The Fund  hereby  appoints  ALPS to provide administrative, bookkeeping
         and pricing services as are set  forth  in  APPENDIX A, as amended from
         time to time, upon the terms and conditions hereinafter set forth. ALPS
         hereby accepts such appointment and agrees to  furnish  such  specified
         services.  ALPS  shall  for all purposes be deemed to be an independent
         contractor and shall, except  as otherwise expressly authorized in this
         Agreement, have no authority to  act  for  or represent the Fund in any
         way or otherwise be deemed an agent of the Fund.

     (b) ALPS  may  employ  or  associate  itself with a person  or  persons  or
         organizations, including affiliates  of  ALPS,  as  ALPS believes to be
         desirable in the performance of its duties hereunder; provided that, in
         such event, the compensation of such person or persons or organizations
         shall be paid by and be the sole responsibility of ALPS  and  the  Fund
         shall  bear  no  cost  or obligation with respect thereto; and provided
         further that ALPS shall not be relieved of any of its obligations under
         this Agreement in such event  and  shall be responsible for all acts of
         any such person or persons or organizations  taken  in  furtherance  of
         this  Agreement  to  the same extent it would be for its own acts. ALPS
         will obtain approval from  the Fund's Board of Trustees ("Board") prior
         to employing or associating with such persons or organizations.

     (c) ALPS will permit individuals  who  are officers or employees of ALPS to
         serve (if duly elected or appointed)  as officers, Trustees, members of
         any committee of the Board, members of  any  advisory board, or members
         of any other committee of the Fund, without remuneration  or other cost
         to the Fund; provided, however, that notwithstanding anything contained
         herein to the contrary, the Fund may pay

                                       1
<PAGE>

         compensation  to, and expenses of, the Fund's Chief Compliance  Officer
         to the extent that  the  Board  expressly  so authorizes, regardless of
         whether  such  officer is also an officer or employee  of  ALPS  or  an
         affiliate of ALPS.

     (d) ALPS will provide  necessary  executive  and other personnel, including
         personnel for the performance of clerical  and  other office functions,
         exclusive of those functions: (a) related to and  to be performed under
         the  Fund's contract or contracts for custodial, accounting,  transfer,
         and dividend  disbursing  agency  or  other  services  by  any  entity,
         including  ALPS  or  its  affiliates, selected to perform such services
         under such contracts; and (b)  related  to  the services to be provided
         under a Fund Management or Portfolio Management Agreement.

2.    ALPS COMPENSATION; EXPENSES.

     (a) In consideration for the services to be performed hereunder by ALPS,
         the Fund shall pay ALPS the fees listed in APPENDIX B, hereto.

     (b) ALPS will bear all expenses in connection with  the  performance of its
         services under this Agreement and all related agreements, ALPS will not
         pay  expenses  incurred  by  the  Fund,  such  as, but not limited  to,
         advisory   fees,   Trustees'  fees,  portfolio  transaction   expenses,
         litigation expenses,  taxes, costs of preferred shares, costs of rights
         offerings,  costs of shareholder  reports,  costs  of  New  York  Stock
         Exchange  ("NYSE")  and  Securities  and  Exchange  Commission  ("SEC")
         filings, the  cost of counsel, expenses of conducting repurchase offers
         for the purpose of repurchasing fund shares, extraordinary expenses and
         dividends on securities sold short.

3.   RIGHT TO RECEIVE ADVICE.

     (a) ADVICE OF THE FUND. If ALPS is in doubt as to any action it should or
         should not take, ALPS shall request directions or advice from the Fund.

     (b) ADVICE OF COUNSEL.  If  ALPS  is  in  doubt  as  to any question of law
         pertaining  to  any  action  it should or should not take,  ALPS  shall
         request advice from counsel of its own choosing and at its own expense.

     (c) CONFLICTING ADVICE. In the event  of  a  conflict  between  directions,
         advice or instructions ALPS receives from the Fund and the advice  ALPS
         receives  from  counsel,  ALPS shall inform the Fund and its counsel of
         the conflict and seek resolution.

     (d) Nothing in this subsection shall excuse ALPS when an action or omission
         on  the  part  of  ALPS constitutes  willful  misfeasance,  bad  faith,
         negligence or reckless  disregard by ALPS of any duties, obligations or
         responsibilities set forth in this Agreement.

                                       2
<PAGE>

4.   LIABILITY OF ALPS.

     (a) ALPS may rely upon the written  advice  of counsel for the Fund and the
         Fund's independent accountants, and upon  oral or written statements of
         the Fund's investment adviser, brokers and  other  service providers to
         the Fund, reasonably believed by ALPS in good faith  to be an expert in
         the  matters  upon  which  they  are  consulted  and,  for any  actions
         reasonably taken in good faith reliance upon such advice  or statements
         and without negligence, ALPS shall not be liable to anyone.

     (b) Nothing herein contained shall be construed to protect ALPS against any
         liability to the Fund or its shareholders to which ALPS would otherwise
         be subject by reason of willful misfeasance, bad faith, negligence,  or
         reckless disregard in the performance of its duties.

     (c) Except as may otherwise be provided by applicable law, neither ALPS nor
         its  shareholders,  officers,  directors,  employees or agents shall be
         subject to, and the Fund shall indemnify and hold such persons harmless
         from and against, any liability for and any damages, expenses or losses
         incurred by reason of the inaccuracy of factual  information  furnished
         to ALPS by the Fund or its adviser.

     (d) ALPS  shall  be obligated to exercise commercially reasonable care  and
         diligence in the  performance  of  its duties hereunder, to act in good
         faith  and  to  use  its  best efforts, within  reasonable  limits,  in
         performing services provided  for  under  this Agreement. ALPS shall be
         liable for actual damages arising out of ALPS'  failure  to perform its
         duties  under  this Agreement to the extent such damages arise  out  of
         ALPS' willful misfeasance,  bad faith, negligence or reckless disregard
         of such duties.

     (e) ALPS shall not be liable for any error of judgment or mistake of law or
         for any loss suffered by the  Fund  in  connection  with the matters to
         which this Agreement relates, except for a loss resulting  from willful
         misfeasance,  bad  faith, negligence on its part in the performance  of
         its duties or from reckless  disregard  by  it  of  its obligations and
         duties under this Agreement.

5.   REPORTS.  Whenever,  in  the  course  of performing its duties  under  this
     Agreement, ALPS determines, on the basis of information supplied to ALPS by
     the Fund or its authorized agents, that  a  violation of applicable law has
     occurred or that, to its knowledge, a possible  violation of applicable law
     may  have occurred or, with the passage of time, would  occur,  ALPS  shall
     promptly notify the Fund and its counsel.

6.   ACTIVITIES OF ALPS. The services of ALPS under this Agreement are not to be
     deemed  exclusive,  and  ALPS  shall  be free to render similar services to
     others. The Fund recognizes that from time  to time directors, officers and
     employees of ALPS may serve as directors, officers  and  employees of other
     corporations or businesses (including other investment companies)  and that
     such  other  corporations and funds may include ALPS as part of their  name
     and that ALPS or its affiliates may enter into administrative, bookkeeping,
     pricing agreements  or  other  agreements  with such other corporations and
     funds.


                                       3
<PAGE>

7.  ACCOUNTS AND RECORDS. The accounts and records  maintained  by ALPS shall be
    the  properly  of  the  Fund.  Such accounts and records shall be  prepared,
    maintained and preserved as required  by  the  1940 Act and other applicable
    securities laws, rules and regulations. Such accounts  and  records shall be
    surrendered to the Fund promptly upon receipt of instructions  from the Fund
    in  the  foam  in  which  such accounts and records have been maintained  or
    preserved. The Fund shall have  access  to  such accounts and records at all
    times during  ALPS' normal business hours.  Upon  the  reasonable request of
    the Fund, copies of any such books and records shall be  provided by ALPS to
    the  Fund  at  the  Fund's expense. ALPS shall assist the Fund,  the  Fund's
    independent auditors, or, upon approval of the Fund, any regulatory body, in
    any requested review of the Fund's accounts and records, and reports by ALPS
    or its independent accountants concerning its accounting system and internal
    auditing controls will be open to such entities for audit or inspection upon
    reasonable request.

8.  CONFIDENTIAL AND PROPRIETARY  INFORMATION.  ALPS  agrees  that  it  will, on
    behalf  of  itself  and  its  officers and employees, treat all transactions
    contemplated by this Agreement,  and all records and information relative to
    the  Fund  and  its  shareholders  (past,  present  and  future)  and  other
    information germane thereto, as confidential  and as proprietary information
    of the Fund and not to use, sell, transfer or divulge  such  information  or
    records  to  any person for any purpose other than performance of its duties
    hereunder, except  after  prior notification to and approval in writing from
    the Fund, which approval shall  not  be unreasonably withheld. It may not be
    withheld  where  ALPS  may  be  exposed to  civil,  regulatory  or  criminal
    proceedings  for  failure  to  comply,   when   requested  to  divulge  such
    information by duly constituted authorities, or when  so  requested  by  the
    Fund.  ALPS  shall  have  in  place  and  maintain  physical, electronic and
    procedural   safeguards  reasonably  designed  to  protect   the   security,
    confidentiality  and  integrity of, and to prevent unauthorized access to or
    use of records and information  relating  to  the Fund and its past, present
    and future shareholders, consumers and customers.

9.  COMPLIANCE WITH RULES AND REGULATIONS. ALPS shall comply - and to the extent
    ALPS takes or is required to take action on behalf  of  the  Fund  hereunder
    shall  cause  the  Fund to comply - with all applicable requirements of  the
    1940 Act and other applicable  laws,  rules, regulations, orders and code of
    ethics, as well as all investment objectives,  policies,  restrictions,  and
    procedures adopted by the Fund and the Fund's registration statement on Form
    N-2,  Declaration  of  Trust  and  By-laws. Except as specifically set forth
    herein, ALPS assumes no responsibility for such compliance by the Fund. ALPS
    will maintain and implement compliance  policies  and  procedures  that  are
    reasonably  designed to ensure its compliance with and to prevent violations
    of the Federal  Securities  Laws  (as  defined  in Rule 38a-1 under the 1940
    Act).  ALPS  also  will  provide  the Fund's Chief Compliance  Officer  with
    periodic reports regarding ALPS' compliance with the Federal Securities Laws
    and ALPS' compliance policies and procedures.

                                       4
<PAGE>

10.   REPRESENTATIONS AND WARRANTIES OF ALPS. ALPS represents and warrants to

the Fund that:


    (a)  It is duly organized and existing as a corporation and in good standing
         under the laws of the State of Colorado.

    (b)  It is empowered under applicable laws and by its Articles of
         Incorporation and By-laws to enter into and perform this Agreement.

    (c)  All requisite corporate proceedings have been taken to authorize it to
         enter into and perform this Agreement.

    (d)  It has and will continue to have  access  to  the necessary facilities,
         equipment  and  personnel to perform its duties and  obligations  under
         this Agreement in accordance with industry standards.

    (e)  It has and will keep  in effect professional liability insurance naming
         ALPS as insured and providing coverage with respect to ALPS' activities
         on behalf of the Fund in  the  amount  of at least $1,000,000, and will
         provide  to  the  Fund  at least annually a  certificate  of  insurance
         evidencing that such insurance is in full force and effect.


    REPRESENTATIONS AND WARRANTIES OF THE FUND. The Fund represents and warrants
    to ALPS that:

    (a) It is a Massachusetts business  trust organized and existing and in good
         standing under the laws of the Commonwealth  of  Massachusetts  and  is
         registered with the SEC as a closed-end investment company.

    (b)  It is empowered under applicable laws and by its Declaration of Trust
         and By-laws to enter into and perform this Agreement.

    (c)    The Board has duly authorized it to enter into and perform this
    Agreement.

    (d)  It has provided ALPS with copies of its Prospectus(es) and Statement(s)
         of Additional Information and will provide ALPS with any amendments or
         supplements thereto.

11. LIAISON  WITH  ACCOUNTANTS.  ALPS  shall  act  as  liaison  with  the Fund's
    independent  public  accountants and shall provide account analysis,  fiscal
    year  summaries, and other  audit-related  schedules  with  respect  to  the
    services  provided to the Fund. ALPS shall take all reasonable action in the
    performance  of its duties under this Agreement to assure that the necessary
    information in  ALPS'  control is made available to such accountants for the
    expression of their opinion, as required by the Fund.

12. BUSINESS  INTERRUPTION PLAN.  ALPS  shall  maintain  in  effect  a  business
    interruption  plan, and enter into any agreements necessary with appropriate
    parties making  reasonable  provisions  for emergency use of electronic data
    processing equipment customary in the industry.  In  the  event of equipment
    failures, ALPS shall, at no additional expense to the Fund, take



                                       5
<PAGE>

    commercially reasonable steps to minimize service interruptions.  ALPS shall
    have  no liability with respect to the loss of data or service interruptions
    caused by equipment failure provided such loss or interruption is not caused
    by  ALPS'  own  willful  misfeasance,  bad  faith,  negligence  or  reckless
    disregard of its duties or obligations under this Agreement.

13.   DURATION AND TERMINATION OF THIS AGREEMENT.

    (a)  INITIAL  TERM.  This  Agreement  shall  become effective as of the date
         first written above (the "Start Date") and  shall  continue  thereafter
         throughout  the  period  which  ends  1  year after the Start Date (the
         "Initial Term"). Until the end of the Initial  Term, this Agreement may
         be terminated without penalty only by agreement of the parties upon not
         less  than  60  days' written notice or for cause pursuant  to  Section
         13(c)  hereof. If  the  Fund  terminates  this  Agreement  unilaterally
         without  cause  prior  to  the  end  of the Initial Term, it will be in
         default hereunder, causing substantial  damages to ALPS. Because of the
         difficulty of estimating the damages that  will result, the Fund agrees
         to pay to ALPS, as liquidated damages for such default, an amount equal
         to twenty-five percent (25%) of the annual fee in effect at the time of
         termination (the "Default Payment").

         The parties agree that the Default Payment is  a reasonable forecast of
         probable  actual  loss  to  ALPS  and  that this sum is  agreed  to  as
         liquidated damages and not as a penalty.

    (b)  RENEWAL TERM. If not sooner terminated,  this  Agreement shall renew at
         the  end  of  the  Initial  Term  and  shall  thereafter  continue  for
         successive annual periods, so long as approved  annually by a vote of a
         majority of the Trustees who are not "interested  persons"  (as deed in
         the 1940 Act) of any party to this Agreement, until terminated  by  the
         Fund  or  by ALPS, without penalty, upon not less than 60 days' written
         notice to the other party.

    (c)  CAUSE. Notwithstanding  anything  to  the  contrary  elsewhere  in this
         Agreement,  the Fund may terminate this Agreement for cause immediately
         at any time,  without  penalty, without default and without the payment
         of any Default Payment or  other  liquidated  damages.  Termination for
         "cause" hereunder shall mean:

         (i)  willful  misfeasance, had faith, negligence or reckless  disregard
              on the part  of  ALPS in the performance of or with respect to its
              obligations and duties hereunder;

         (ii)regulatory, administrative,  or  judicial  proceedings against ALPS
             which  result  in a determination that, in rendering  its  services
             hereunder, ALPS  has violated - or has caused the Fund to violate -
             any applicable law,  rule,  regulation, order or code of ethics, or
             any investment objective, restriction,  policy or procedure adopted


                                       6
<PAGE>

             by the Fund of which ALPS had knowledge;
         (iii)financial difficulties on the part of ALPS  which are evidenced by
             the  authorization  or commencement of, or involvement  by  way  of
             pleading, answer, consent,  or  acquiescence  in,  a  voluntary  or
             involuntary  case under Title 11 of the United States Code, as from
             time to time in  effect,  or  any  applicable  law, other than said
             Title  11,  of  any  jurisdiction  relating  to the liquidation  or
             reorganization of debtors or to the modification  or  alteration of
             the rights of creditors;

         (iv)failure by ALPS to keep in effect professional liability  insurance
             satisfactory  to  the  Fund  Trustees  naming  ALPS  as insured and
             providing  coverage with respect to ALPS' activities on  behalf  of
             the Fund in  the  amount  of at least $1,000,000, and to provide to
             the Fund at least annually  a  certificate  of insurance evidencing
             that such insurance is in full force and effect; or

         (v) any  other circumstance which, in the reasonable  judgment  of  the
             Trustees,  including  a  majority  of  the  Trustees  who  are  not
             "interested  persons"  (as defined in the 1940 Act) of any party to
             this Agreement, materially  impairs  ALPS'  ability  to perform its
             obligations and duties hereunder.

    (d)  DELIVERIES  UPON TERMINATION. Upon termination of this Agreement,  ALPS
         shall deliver  to the Fund or as otherwise directed by the Fund (at the
         expense of the Fund,  unless  such  termination  is  for  "cause")  all
         records  and  other documents made or accumulated in the performance of
         its duties for the Fund hereunder.

14. ASSIGNMENT. This Agreement  shall  extend  to  and shall be binding upon the
    parties  hereto  and  their  respective  successors and  permitted  assigns;
    provided, however, that this Agreement shall  not  be assignable by the Fund
    without  the  prior written consent of ALPS, or by ALPS  without  the  prior
    written consent of the Fund.

15. GOVERNING LAW.  The  provisions  of  this  Agreement  shall be construed and
    interpreted in accordance with the laws of the State of  Colorado,  and  the
    1940  Act and the rules thereunder. To the extent that the laws of the State
    of Colorado  conflict  with  the  1940  Act  or such rules, the latter shall
    control.

16. NAMES. The obligations of the "Fund" entered into  in  the name or on behalf
    thereof  by  any  Trustee,  representative  or agent thereof  are  made  not
    individually, but in such capacities, and are  not  binding  upon any of the
    Trustees,  shareholders,  representatives or agents of the Fund  personally,
    but bind only the property  of  the  Fund,  and all persons dealing with the
    Fund must look solely to the property of the Fund for the enforcement of any
    claims against the Fund.

17.  AMENDMENTS TO THIS AGREEMENT. This Agreement may only be amended by the
     parties in writing.

                                       7
<PAGE>

18.  NOTICES.  All  notices  and  other communications  hereunder  shall  be  in
     writing, shall be deemed to have  been  given when received or when sent by
     telex or facsimile, and shall be given to  the following addresses {or such
     other addresses as to which notice is given):

                            To ALPS:

                            ALPS Fund Services, Inc.
                            1625 Broadway, Suite 2200
                            Denver, Colorado 80202
                            Attn: General Counsel
                            Fax: (303) 623-7850

                            To the Fund:

                            Liberty All-Star Equity Fund 1625 Broadway, Suite
                            2200 Denver, Colorado 80202
                            Attn: Secretary
                            Fax: (303) 623-7850

19.  COUNTERPARTS. This Agreement may be executed  by  the parties hereto on any
     number of counterparts, and all of said counterparts  taken  together shall
     be deemed to constitute one and the same instrument.

20. ENTIRE   AGREEMENT.  This  Agreement  embodies  the  entire  agreement   and
    understanding  among  the  parties  and  supersedes all prior agreements and
    understandings  relating to the subject matter  hereof;  provided,  however,
    that ALPS may embody  in  one  or  more separate documents its agreement, if
    any, with respect to delegated duties and oral instructions.

21. NO PERSONAL LIABILITY. Reference is  hereby made to the Declaration of Trust
    dated August 20, 1986 establishing the  Fund, a copy of which has been filed
    with the Secretary of the Commonwealth of  Massachusetts  and  elsewhere  as
    required by law, and to any and all amendments thereto so filed or hereafter
    filed.  The name Liberty All-Star Equity Fund refers to the Board under said
    Declaration  of  Trust,  and not to the Trustees personally, and no Trustee,
    shareholder, officer, agent  or  employee  of  the Fund shall be held to any
    personal liability hereunder or in connection with  the affairs of the Fund,
    but only the trust estate under said Declaration of Trust  is  liable  under
    this  Agreement.  Without  limiting the generality of the foregoing, neither
    ALPS nor any of its officers,  directors,  shareholders  or employees shall,
    under any circumstances, have recourse or cause or willingly permit recourse
    to  be  had  directly  or  indirectly to any personal, statutory,  or  other
    liability of any Trustee, shareholder,  officer,  agent  or  employee of the
    Fund or of any successor of the Fund, whether such liability now  exists  or
    is  hereafter  incurred  for claims against the trust estate, but shall look
    for payment solely to said  trust estate, or the assets of such successor of
    the Fund.

                                       8
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

                                   LIBERTY ALL-STAR EQUITY FUND

                                   By: /S/William R. Parmentier
                                       ------------------------
                                   Name: William R. Parmentier
                                         ---------------------
                                   Title: President
                                          ---------


                                   ALPS FUND SERVICES, INC.

                                   By: /S/William R. Parmentier
                                       ------------------------
                                   Name: William R. Parmentier
                                         ---------------------
                                   Title: President
                                          ---------



<PAGE>

                                   APPENDIX A



                                    SERVICES
                                    --------



ADMINISTRATIVE

   O  Develop and Implement procedures to ensure, and on a periodic basis assist
      the  Fund  in  monitoring,  compliance  with  the  investment  objectives,
      policies,  restrictions  and  procedures   of  the  Fund  and  such  other
      requirements imposed by the Board, the SEC and tax authorities.

   O  Test  for  qualification  as a "regulated investment  company"  under  the
      Internal  Revenue Code of 1986,  as  amended,  and  compute  distributions
      required for  such  qualification  and,  unless  directed otherwise by the
      Board, to avoid imposition of excise tax.

   O  Distribute,  collect  and  review quarterly compliance  reports  from  the
      Fund's Portfolio Managers and  review  and  produce  quarterly  reports to
      Trustees in accordance with the Fund's policies and procedures.

   O  Assist  the  Fund with placement of fidelity bond and errors and omissions
      insurance policies.

   O  Prepare reports  to  shareholders of the Fund including but not limited to
      the Fund's quarterly, annual and semi-annual financial statements.

   O  Monitor the preparation  and maintenance by the Fund's custodian, or other
      agents, of all records that  may be reasonably required in connection with
      the  audit performed by the Fund's  independent  auditors,  the  SEC,  the
      Internal Revenue Service or other federal or state regulatory agencies.

   O  Provide   facilities,   information   and   personnel,  as  necessary,  to
      accommodate  annual  audits  with the Fund's independent  accountants,  or
      examinations conducted by the SEC or other regulatory authorities.

   O  Monitor the Fund's expense accruals  by  establishing  expense budgets and
      comparing expense accruals on a periodic basis to actual expenses paid.

   O  Report  performance  and  other  Fund  information  to  outside  reporting
      agencies as directed by the Fund.

   O  Calculate monthly total return performance calculations.

<PAGE>

   O  Prepare the Fund's federal and state tax returns.

   O  Supervise the activities of the Fund's custodian and transfer agent.

   O  Respond to telephonic or in-person inquiries from existing stockholders or
      their  representatives  requesting information regarding matters  such  as
      stockholder account or transaction status, net asset value of Fund shares,
      Fund  performance,  Fund services,  plans  and  options,  Fund  investment
      policies,   Fund  portfolio   holdings,   and   Fund   distributions   and
      classifications thereof for tax purposes.

   O  Maintain the Fund's offices within ALPS' offices.

   O  Maintenance of the books and records of the Fund as required by law, other
      than the books  and  records  that  are  not  required  to  be  maintained
      expressly in writing by another service provider.

   O  Prepare such financial information as is reasonably necessary for  reports
      to shareholders of the Fund, reports to the Board and the officers of  the
      Fund, and reports of the Fund to the SEC, the Internal Revenue Service and
      other federal and state regulatory agencies.

   O  Prepare  communications  to  shareholders of the Fund, making arrangements
      for  maintenance  of other communications  with  shareholders,  which  may
      include a website and dedicated telephone line.

   O  Negotiate,  or  assist   in   the  negotiation  of,  agreements  or  other
      arrangements with, and general  oversight  and coordination of, agents and
      others  retained  by  the  Fund  to  provide custodial,  transfer  agency,
      portfolio accounting, legal, tax and accounting services.

   O  Coordinate with independent auditors, review audit budgets, schedule audit
      work,  and  coordinate  the preparation of  audit  work  papers  with  the
      custodian and other service providers, as requested by ALPS.

   O  Coordinate all activities  with  auditors,  transfer  agent, custodian and
      printer in connection with the preparation and distribution  of the Fund's
      shareholder reports.

   O  Provide  such  assistance  to the Fund's service providers and the  Fund's
      counsel and auditors as may  be required to carry on properly the business
      and operations of the Fund.

   O  Oversee the Fund's custodian in  its  performance  of  its services to the
      Fund.

   O  Prepare  or  assist  in  the  preparation  of, oversee and assist  in  the
      coordination  of,  and,  as the Trustees may reasonably  request  or  deem
      appropriate, make reports  and  recommendations  to  the  Trustees  on the
      performance  of  administrative  and professional services rendered to the
      Fund by others, including the custodian,  registrar,  transfer  agent  and
      dividend  disbursing  agent, shareholder servicing agents, accountants and
      attorneys.


<PAGE>

   O  Coordinate, prepare, gather,  assemble  and  distribute  meeting  notices,
      agendas and Board materials and make arrangements for the meetings and the
      accommodations of the Trustees.
   O  Meet  with  the  Audit  Committee  of  the  Fund,  upon  request,  prepare
      information   reasonably  requested  by  the  Committee,  and  assist  the
      Committee in carrying out its responsibilities. Assist the Audit Committee
      in  its performance  under  its  charter  and  pre-approval  policies  and
      procedures.

   O  Prepare  written  consents  of the Board related to distributions or other
      matters.

   O  Facilitate meetings of shareholders,  and  assist  in  the  preparation of
      proxy statements in connection with meetings of shareholders.

   O  Prepare and/or coordinate the preparation of, subject to approval  by  the
      Fund,   and  filing  of  any  post-effective  amendments  to  registration
      statements,  notices, reports, tax returns and other documents required by
      federal, state  and other applicable laws and regulations, including proxy
      materials, periodic  reports to Fund shareholders, Form N-SAR, Form N-CSR,
      Form N-PX and Form N-Q  necessary to maintain the registration of the Fund
      under the 1940 Act and the  listing  of  its  common  stock  on  the NYSE.
      Coordinate  the  audit  of  any  financial  statements  contained  in such
      filings.

      ALPS  shall  not  be  responsible  for  the  accuracy  or  adequacy of any
      information  contained in the documents listed above, to the  extent  such
      information is  provided  to  ALPS by the Fund, other service providers to
      the Fund, or any other third party.

   O  Prepare certifications required under the Sarbanes-Oxley Act of 2002.

   O  Make filings required to be made  with  the  NYSE or any other exchange on
      which shares of the Fund are listed,

   O  Oversee  the preparation and filing of registration  statements,  notices,
      reports and  other  documents  required  by  state  "blue  sky"  laws,  if
      applicable,  and oversee the monitoring of sales of shares of the Fund for
      compliance with state securities laws.

   O  Prepare and file Section 16 beneficial ownership reports (i.e., Forms 3, 4
      and 5) for reporting persons of the Fund.

   O  Provide the Fund  with  the  services  of  an  adequate  number of persons
      competent  to perform the administrative and clerical functions  described
      herein, including  a  paralegal  to  assist  in  the  preparation of Board
      materials and to make required filings.

   O  Provide for the services of principals and employees of  ALPS  who  may be
      appointed as officers of the Fund.

<PAGE>

BOOKKEEPING AND PRICING

   O  Maintain a separate account for the Fund, as directed from time to time by
      written instructions from the Fund.
   O  Compute  net asset value for the Fund and, as appropriate, compute yields,
      expense ratios, and portfolio turnover rate.

   O  Obtain security  market  quotes  from  independent  pricing  services,  if
      available,  approved  by the Fund, or if such quotes are unavailable, then
      obtain  such  prices  pursuant   to  the  Fund's  valuation  policies  and
      procedures, and in either case calculate  the  market  value of the Fund's
      investments.

   O  Timely calculate and transmit the Fund's daily net asset  value and public
      offering  price  (such  determinations to be made in accordance  with  the
      provisions of the Fund's  then  -current  Prospectuses  and  Statements of
      Additional  Information,  and any applicable resolutions and policies  and
      procedures of the Board) and  promptly  communicate such values and prices
      to the Fund.

   O  Maintain and preserve in a secure manner  the  accounting  records  of the
      Fund  including  all  such  accounting records as the Fund is obligated to
      maintain  and  preserve under the  1940  Act  and  the  rules  thereunder,
      applicable federal and state tax laws and any other applicable laws, rules
      or regulations that are not required to be maintained expressly in writing
      by another service  provider. In addition to the accounting records of the
      Fund as a whole, ALPS  will  maintain  and  preserve  in  a  secure manner
      separate portfolio accounts for the assets of the Fund allocated  to  each
      of  the  Fund's Portfolio Managers from time to time. All records shall be
      the property of the Fund.

   O  Reconcile cash and investment balances with the custodian.

   O  Compute the  net  income  and  capital  gains  and  losses of the Fund and
      calculate income dividend rates in accordance with relevant  policies  and
      resolutions of the Board.

   O  Provide  such  advice that may be reasonably necessary to account properly
      for  the  Fund's  financial  transactions,  and  to  maintain  the  Fund's
      accounting  procedures  and  records  so  as  to  ensure  compliance  with
      generally accepted accounting and tax practices and rules.

   O  Maintain current  trend  and  historical summaries of the Fund's net asset
      value, capital share activity,  distributions,  expenses,  expense ratios,
      financial statistics and financial statements.

   O  Determine  and  timely communicate to persons designated by the  Fund  the
      Fund's net asset  value  per  share  in  accordance  with  the  applicable
      provisions  of the Fund's Registration Statement on Form N-2 and valuation
      procedures adopted by the Board from time to time.


<PAGE>

                                   APPENDIX B

                                      FEES
                                      ----


For administrative  services,  the  Fund will pay to ALPS, on or before the 10th
day  of each calendar month, a fee calculated  and  accrued  daily  and  payable
monthly  by the Fund for the previous calendar month at an annual rate of: 0.20%
of the first  $400  million  of average daily net assets; 0.18% of average daily
net assets exceeding $400 million  up  to  and including $800 million; 0.162% of
average  daily  net  assets exceeding $800 million  up  to  and  including  $1.2
billion; and 0.146% of average daily net assets exceeding $1.2 billion.

The foregoing fees shall be prorated for any month during which this Agreement
is in effect for only a portion of the month.

In addition, for bookkeeping and pricing services, the Fund will pay ALPS an
annual fee payable monthly consisting of:

       (i)  for fund accounting services, $25,000 plus 0.015% of the Fund's net
            asset value ("FA Fees");

       (ii)for financial reporting, $13,000 ("FR Fees");

       (iii)a multi-manager fee of $3,000 for each Portfolio Manager managing a
            portion of the Fund ("Multi-Manager Fee"); and

       (iv) an amount equal to an amount necessary for ALPS to recover its costs
            for its own  provision  of  fund  accounting,  expense budgeting and
            Sarbanes-Oxley services for the Fund (the "ALPS Services Fees");

PROVIDED, HOWEVER, that during any 12-month period, the aggregate FA Fees and FR
Fees for the Fund shall not exceed $ 140,000. (Neither the Multi-Manager Fee nor
the ALPS Services Fees are subject to the $140,000 limit.)
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2K
<SEQUENCE>10
<FILENAME>exhibit2k2.txt
<DESCRIPTION>EX-99.2K2
<TEXT>
                                  ADDENDUM TO
          ADMINISTRATION, BOOKKEEPING AND PRICING SERVICES AGREEMENT
                            DATED DECEMBER 18, 2006
                                    BETWEEN
                            ALPS FUND SERVICES, INC.
                                      AND
                          LIBERTY ALL-STAR EQUITY FUND


     THIS ADDENDUM is made as of April 9, 2007, by and between ALPS Fund
Services, Inc. ("ALPS"), and Liberty All-Star Equity Fund ("Fund").

     WHEREAS, ALPS and the Fund have entered into an Administration, Bookkeeping
and Pricing Services Agreement (the "Agreement") dated December 18, 2006;

     WHEREAS, effective April 9, 2007, ALPS will move to 1290 Broadway, Suite
1100, Denver, CO 80203.

     WHEREAS, in light of the foregoing, ALPS and the Fund wish to modify the
provisions of the Agreement to reflect ALPS' and the Fund's new address.

     NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:

      1.    NOTICES.  All references to ALPS'  address  as  1625 Broadway, Suite
            2200, Denver, CO 80202 within the Agreement shall  be  replaced with
            references  to  1290  Broadway,  Suite 1100, Denver, CO 80203.   All
            references  to  the Funds' address at  1625  Broadway,  Suite  2200,
            Denver,  CO 80202  within  the  Agreement  shall  be  replaced  with
            references to 1290 Broadway, Suite 1100, Denver, CO 80203.

      2.    REMAINDER  OF  THE AGREEMENT.  All other provisions of the Agreement
            shall remain unchanged.

     IN WITNESS WHEREOF, this Addendum has been executed by a duly authorized
representative of each of the parties hereto as of the date of the Addendum
first set forth above.


ALPS Fund Services, Inc.                         Liberty All-Star Equity Fund


By:                                              By:
    ---------------------                            ---------------------
Name:  Jeremy O. May                             Name:  Tane T. Tyler
Title: Managing Director                         Title: Secretary
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2K
<SEQUENCE>11
<FILENAME>exhibit2k3.txt
<DESCRIPTION>EX-99.2K3
<TEXT>


COMPUTERSHARE

                              COMPUTERSHARE, INC.

                              PROPOSAL TO SERVE AS

                             SUBSCRIPTION AGENT FOR

                 LIBERTY ALL-STAR EQUITY FUND'S RIGHTS OFFERING


A.     FEES FOR SERVICES *

- --------------------------------------------------------------------------------
$   12,500.00    Project Management Fee
$        9.50    Per subscription form processed (registered and beneficial)
$       12.50    Per defective subscription form received
$       12.50    Per notice of guaranteed delivery received
$        2.00    Per broker split certificate issued
$        3.00    Per sale of right (if applicable)
$        5.50    Per invoice mailed  (if applicable)
$        1.75    Per refund check issued and mailed (if applicable)
$        5.00    Per solicitation check processed and mailed (if applicable)
$       12.50    Per withdrawal of subscription certificate (if applicable)
$       50.00    Per wire (if applicable)
$    2,500.00    New York window fee for Midnight expiration(if applicable)
$    2,500.00    Per offer extension
$    5,000.00    Minimum  charge  should the project be canceled  for any reason
                 prior to the mailing of the subscription form
- --------------------------------------------------------------------------------
*EXCLUDES OUT-OF-POCKET EXPENSES AS DESCRIBED IN SECTION C, "ITEMS NOT COVERED"

B.     SERVICES COVERED

       *  Designating an operational team to carry out Subscription Agent
          duties, including document review and execution of legal agreement,
          review of subscription form and communication materials, project
          management, and on-going project updates and reporting

       *  Calculating Rights to be distributed to each shareholder and printing
          shareholder information on the subscription form

       *  Issuing and mailing subscription forms to registered shareholders

       *  Tracking and reporting the number of exercises made, as required

       *  Processing Rights received and exercised

       *  Deposit participant checks daily and forward all participant funds to
          LIBERTY ALL-STAR EQUITY FUND at the end of the offering period

       *  Providing receipt summation of checks received

       *  Affixing legends to appropriate stock certificates, where applicable

       *  Issuing and mailing stock certificates and/or checks

<PAGE>

       *  Interfacing with the Information Agent

       *  Calculating, issuing and mailing of proration and/or over-
          subscription checks if applicable

       *  Calculating, issuing, mailing and collecting invoices if applicable

       *  Calculating, issuing and mailing of solicitation checks if applicable

C.     ITEMS NOT COVERED

       *  Items not specified in the "Services Covered" section set forth in
          this Agreement, including any services associated with new duties,
          legislation or regulatory fiat which become effective after the date
          of this Agreement (these will be provided on an appraisal basis)

       *  All out-of-pocket expenses such as telephone line charges,
          overprinting, certificates, checks, postage, stationery, wire
          transfers, and excess material disposal (these will be billed as
          incurred)

       *  Reasonable legal review fees if referred to outside counsel

       *  Overtime charges assessed in the event of late delivery of material
          for mailings unless the target mail date is rescheduled

D.     ASSUMPTIONS

       *  Proposal based upon document review and information known at this time
          about the transaction.

       *  Significant changes made in the terms or requirements of this
          transaction could require modifications to this proposal

       *  Proposal must be executed prior to the initial mailing

       *  Company responsible for printing of materials (Rights Card, Prospectus
          and ancillary documents)

       *  Material to be mailed to shareholders must be received no less than
          five (5) business days prior to the start of the mailing project

       *  Interest shall accrue to the company at 85% of the Federal Funds Rate


E.     PAYMENT FOR SERVICES

       The Project Management Fee will be rendered and payable on the effective
       date of the transaction.  An invoice for any out-of-pockets and per item
       fees realized will be rendered and payable on a monthly basis, except for
       postage expenses in excess of $5,000.  Funds for such mailing expenses
       must be received one (1) business day prior to the scheduled mailing
       date, provided, however, that the Agent shall provide five (5) business
       days' notice of any such amount to be paid.

       COMPUTERSHARE, INC.                    LIBERTY ALL-STAR EQUITY FUND, INC.

       By:                                    By:
            --------------------------------       -----------------------------
               Erik Schwendenman

       Title: Director, Business Development  Title:
             -------------------------------        ----------------------------

       Date:         8/13/07                  Date:
             -------------------------------       -----------------------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2K
<SEQUENCE>12
<FILENAME>exhibit2k4.txt
<DESCRIPTION>EX-99.2K4
<TEXT>

<TABLE>
<CAPTION>
<S>                  <C>
                                                                            Winner of TOPS Award
[LOGO]TheAltmanGroup                                     - HIGHEST RATED PROXY SOLICITATION FIRM
- ------------------------------------------------------------------------------------------------
PROXY SOLICITATION . CORPORATE GOVERNANCE . SECURITY HOLDER IDENTIFICATION . BANKRUPTCY SERVICES
</TABLE>

August 3, 2007

Liberty All-Star Equity Fund
99 High Street, Suite 303
Boston, MA 02110
Attn: Mr. Mark Haley, Vice President


RE: INFORMATION FOR LIBERTY ALL-STAR EQUITY FUND'S RIGHTS OFFERING

Dear Mark:

This  letter  will  serve  as the agreement (the "Agreement") between The Altman
Group, Inc. ("The Altman Group")  and  the  Liberty  All-Star  Equity  Fund (the
"Equity Fund"), pursuant to which The Altman Group will provide the services set
forth  below  in  connection  with  the Equity Fund's rights offering, which  is
expected to commence in 2007.

   1. DESCRIPTION OF SERVICES
      -----------------------

         a) The services to be provided by The Altman Group under this agreement
            include, but are not limited to:

                i)    The contacting  of  banks,  brokers  and intermediaries to
                      determine the number of beneficial owners service by each;

                ii)   The  distribution  of  the  offering documents  to  banks,
                      brokers   and  intermediaries  and   the   forwarding   of
                      additional materials as requested;

                iii)  The printing of documents as requested;

                iv)   The set up  of  a dedicated toll-free number to respond to
                      inquiries, provide  assistance to Shareholders and monitor
                      the response to the offer;

                v)    The enclosing and mailing  of  the  offering  documents to
                      interested Shareholders;

                vi)   Providing periodic reports, as requested.


         b) If  requested  by the Equity  Fund,  The Altman  Group will,  for an
            additional  fee (set forth below),  proactively  contact  registered
            Shareholders  and/ or  non-objecting  beneficial  holders (NOBOs) to
            help promote a high level of participation in the offer.

<TABLE>
<S>     <C>

The Althman Group, Inc. .1200 Wall Street, 3rd Fl., Lyndhurst, NJ 07071 . Tel: 201.806.7300 . Fax: 201.460.0050 .www.altmangroup.com
</TABLE>

<PAGE>




2. FEES
- -------

      a) The Altman Group agrees to perform the services  described  above for a
         base fee of $5,500, plus out out-of-pocket expenses. The base fee shall
         be paid at such time as this Agreement is executed.

      b) The Equity Fund will reimburse The Altman Group for reasonable  out-of-
         pocket  expenses,  which may  include  postage,  telephone  and courier
         charges,  data transmission  charges and other expenses approved by the
         Equity Fund. Any  out-of-pocket  expenses  incurred will be invoiced to
         the Equity Fund after the completion of the rights offering.  Copies of
         supplier  invoices and other back-up  material in support of The Altman
         Group's  out-of-pocket  expenses  shall be  available  for review  upon
         reasonable  notice at the  offices of The Altman  Group  during  normal
         business hours.

      c) In  addition to the base fee there is a charge of $600 to set-up a toll
         free number to take calls from  shareholders.  $4.50 per telephone call
         fee will be charged for every  inbound  telephone  call received from a
         shareholder regarding the Equity Fund's rights offering.

      d) The additional fee for contacting NOBOs and registered shareholders, if
         requested, will
         include  a fee of $4.50 per shareholder  contacted,  and  out-of-pocket
         expenses related to telephone number lookups and line charges.

3. CONFIDENTIALITY
- ------------------

            The Altman  Group and the Equity Fund agree that all books, records,
            information and  data  pertaining to the business of the other party
            which are exchanged or received  pursuant  to the negotiation or the
            carrying out of the Agreement shall remain confidential   and  shall
            not  be voluntarily disclosed to any other person, except as may  be
            required  by  law.  The  Altman  Group shall not disclose or use any
            nonpublic information (as that term is defined in SEC Regulation S-P
            promulgated  under  Title V of the Gramm-Leach-Bliley  Act  of  1999
            relating to the customers  of the Equity Fund and/or it's affiliates
            ("Customer Information") except as may be necessary to carry out the
            purposes of this Agreement.  The Altman Group shall use best efforts
            to  safeguard  and maintain the  confidentiality  of  such  Customer
            Information and  to  limit  access  to  and  usage  of such Customer
            Information to those employees, officers, agents and representatives
            of  The Altman Group who have a need to know the information  or  as
            necessary to provide the services under this Agreement.

4. INDEMNIFICATION
- ------------------

            a) The  Altman  Group  shall be  entitled  to rely upon any  written
               instructions  or  directions  furnished  to it by an  appropriate
               Officer of the Equity Fund (President, Vice President, Secretary,
               Assistant   Secretary  or  Treasurer)  in  conformity   with  the
               provisions of this Agreement. The Altman Group shall not be under
               any duty or obligation to inquire into the validity or invalidity
               or authority or lack thereof of any instruction or direction from
               an Officer of the Equity Fund which  conforms  to the  applicable
               requirements  of  this  Agreement  and  which  The  Altman  Group
               reasonably believes to be genuine.

            b) The Equity Fund will  indemnify The Altman Group against and hold
               it harmless  from all  liability  and expense which may arise out
               of,  or,  in  connection  with  the  services  described  in this
               Agreement  or the  instructions  or  directions  furnished to The
               Altman Group relating to this Agreement by an appropriate Officer
               of the Equity Fund,  except for any  liability  or expense  which
               shall  arise  out  of  the  negligence,   bad  faith  or  willful
               misconduct of The Altman Group.

            c) The Altman Group shall be responsible for and shall indemnify and
               hold  the  Equity  Fund  harmless  from and  against  any and all
               losses, damages, costs charges, counsel fees, payments, expenses,
               and  liability  arising  out of, or,  attributable  to the Altman
               Group's negligence, bad faith, or, willful misconduct.

5. TERMINATION
- ---------------

               This Agreement shall remain in effect until the conclusion of the
               Equity Fund rights  offering,  or,  prior to that,  upon 30 days'
               written notice by either party to the other.

6. GOVERNING LAW
- ----------------

               This Agreement will be governed and construed in accordance  with
               the laws of the  State of  Massachusetts,  without  regard to the
               principles of conflicts of law.

7. AMENDMENTS
- -------------

               This Agreement, or any term of this Agreement,  may be changed or
               waived  only by  written  amendment  signed by a duly  authorized
               representative of each party to this Agreement.

8. ASSIGNMENT
- -------------

               This  Agreement  shall not be assigned  without the prior written
               consent of each party to the Agreement.

9. COUNTERPARTS
- ---------------

               This Agreement may be executed in two or more counterparts,  each
               of which  shall be deemed an  original,  but,  all of which shall
               constitute one and the same Agreement.

10. CAPTIONS
- ------------

               The captions and descriptive  headings in this Agreement are only
               for the Convenience of the parties. They do not in any way define
               or limit any of the terms of this Agreement.

11. SEVERABILITY
- ----------------

               If any of provision of this Agreement  shall be held invalid by a
               court decision,  statute rule or otherwise,  the remainder of the
               Agreement shall not be affected.

12. SURVIVAL
- ------------

               The  provisions  of  Sections  3,  4  and  6  shall  survive  any
               termination, for any reason, this Agreement.

<PAGE>

            If you are in agreement with the above, kindly  sign  a copy of this
            Agreement  in the space provided for that purpose below  and  return
            one copy to  us.  Additionally,  an  invoice  for  the  base  fee is
            attached  and  The  Altman  Group  requires that we receive this fee
            prior to the mailing of the offering materials.

            Sincerely,

            THE ALTMAN GROUP, INC.

            DRAFT



            _____________________________

            Warren Antler
            Managing Director,  Mutual Funds Services






            AGREED:

            Liberty All-Star Equity Fund


            _______________________________
            Print Authorized Name


            _______________________________
            Authorized Signature


            _______________________________
            Title


            _______________________________
            Date




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2K
<SEQUENCE>13
<FILENAME>exhibitk5.txt
<DESCRIPTION>EX-99.2K5
<TEXT>













                      TRANSFER AGENCY AND SERVICE AGREEMENT

                                     BETWEEN

                          LIBERTY ALL-STAR EQUITY FUND

                                       AND

                        COMPUTERSHARE TRUST COMPANY, N.A.

                                       AND

                    COMPUTERSHARE SHAREHOLDER SERVICES, INC.






                                       1


<PAGE>








Table of Contents

Section 1.     Certain Definitions.....................................4

Section 2.     Appointment of Agent....................................5

Section 3.     Standard Services.......................................7

Section 4.     Dividend Disbursing Services............................8

Section 5.     Shareholder Internet Account Access Services............9

Section 6.     Fee and Expenses........................................10

Section 7.     Representations and Warranties of Transfer Agent........11

Section 8.     Representations and Warranties of Customer..............13

Section 9.     Indemnification/Limitation of Liability.................13

Section 10.    Damages.................................................15

Section 11.    Responsibilites of the Transfer Agent...................16

Section 12.    Covenants of the Customer and Transfer Agent............16

Section 13.    Data Access and Proprietary Information.................17

Section 14.    Confidentiality.........................................19

Section 15.    Term and Termination....................................20

Section 16.    Assignment..............................................21

Section 17.    Unaffiliated Third Parties..............................22

Section 18.    Disaster Recovery.......................................22

Section 19.    Miscellaneous...........................................22

Section 19.1   Notice..................................................22

Section 19.2   Successors..............................................22

Section 19.3   Amendments..............................................23

                                       2


<PAGE>


Section 19.4   Severability............................................23

Section 19.5   Governing Law...........................................23

Section 19.6   Force Majeure...........................................23

Section 19.7   Descriptive Headings....................................23

Section 19.8   Third Party Beneficiaries...............................23

Section 19.9   Survival................................................23

Section 19.10  Priorities............................................. 24

Section.19.11  Merger of Agreement.....................................24

Section 19.12  Counterparts............................................24


                                       3


<PAGE>


     AGREEMENT made as of the 1st, day of August, 2007, by and between Liberty
All-Star Equity Fund, a Massachusetts Business Trust, having a principal office
and place of business at 1290 Broadway, Suite 1100, Denver, CO 80203
("Customer"), and Computershare Shareholder Services, Inc., a Delaware
corporation, and its fully owned subsidiary Computershare Trust Company, N.A., a
federally charted trust company doing business at 250 Royall Street, Canton,
Massachusetts 02021 (collectively, the "Transfer Agent" or individually "CSI"
and the "Trust Company", respectively).

     WHEREAS, the Customer desires to appoint the Transfer Agent as sole
transfer agent, registrar, administrator of dividend reinvestment plans, option
plans, and direct stock purchase plans and CSI as dividend disbursing agent,
administrator of its dividend reinvestment plan and processor of all payments
received or made by Customer under this Agreement.

     WHEREAS, the Trust Company and CSI desire to accept such respective
appointments and perform the services related to such appointments;

     WHEREAS, the Board of Trustees of Customer has approved appointment of the
Transfer Agent.

     NOW THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:

1.  CERTAIN DEFINITIONS.
    -------------------

(a) "ACCOUNT" or "ACCOUNTS" shall mean the account of each Shareholder which
account shall hold any full or fractional shares of stock held by such
Shareholder and/or outstanding funds or tax reporting to be done.

(b) "ADDITIONAL SERVICES" shall mean any and all services which are not Services
as set forth in the Fee and Service Schedule, but performed by Transfer Agent
upon request of Customer.

(c) "AGREEMENT" shall mean this agreement and any and all exhibits or schedules
attached hereto and any and all amendments or modifications, which may from time
to time be executed.

(d) "ANNUAL PERIOD" shall mean each twelve (12) month period commencing on the
Effective Date and, thereafter, on each anniversary of the Effective Date.

(e) "CLOSED ACCOUNT" shall mean an account with a zero share balance, no
outstanding funds or no reportable tax information.

(f) "CUSTOMER ID(S)" shall have the meaning set forth in SECTION 14.3.

(g) "DATA ACCESS SERVICE" shall have the meaning set forth in SECTION 14.1.



                                       4


<PAGE>

(h) "DIVIDEND REINVESTMENT PLAN" and "DIRECT STOCK PURCHASE PLAN" shall mean the
services as set forth in SECTION 4 and in the Fee and Service Schedule.

(i) "EFFECTIVE DATE" shall mean the date first stated above.

(j) "FEE AND SERVICE SCHEDULE" shall mean the fees and services set forth in the
"Fee and Service Schedule" attached hereto.

(k) "PASSWORD(S)" shall have the meaning set forth in SECTION 14.3.

(l) "PLANS" shall mean any Dividend Reinvestment, Direct Stock Purchase or other
investment programs administered for the Company.

(m) "PROPRIETARY INFORMATION" shall have the meaning set forth in Section 14.3.

(n) "SECURITY PROCEDURES" shall have the meaning set forth in Section 5.1.

(o) "SERVICES" shall mean any and all services as further described herein and
in the "Fee and Service Schedule" or other schedules attached hereto.

(p) "SHARE" shall mean Customer's common stock, par value ___ per share
authorized by the Customer's Declaration of Trust, and other classes of
Customer's stock to be designated by the Customer in writing and for which the
Transfer Agent agrees to service under this Agreement.

(q) "SHAREHOLDER" shall mean the holder of record of Shares.

(r) "SHAREHOLDER DATA" shall have the meaning set forth in Section 14.2.

(s) "SHAREHOLDER INTERNET SERVICES" shall have the meaning set forth in Section
5.1.

2.   APPOINTMENT OF AGENT.
     --------------------

     2.1 APPOINTMENTS. The Customer hereby appoints the Transfer Agent to act as
sole transfer agent and registrar for all Shares in accordance with the terms
and conditions hereof and as administrator of Plans and appoints CSI as dividend
disbursing agent and processor of all payments received or made by or on behalf
of the Customer under this Agreement, and the Transfer Agent and CSI accept the
appointments. Customer shall provide Transfer Agent with certified copies of
resolutions appointing the Trust Company as Transfer Agent.

     2.2 DOCUMENTS. In connection with the appointing of Transfer Agent as the
transfer agent and registrar for each Customer, the Customer will provide or has
previously provided each of the following documents to the Transfer Agent:

         (a)   Copies of Registration Statements and amendments thereto, filed
               with the Securities and Exchange Commission for initial public
               offerings;


                                       5
<PAGE>


         (b)   Specimens of all forms of outstanding stock certificates, in
               forms approved by the Board of Directors of the Customer, with a
               certificate of the Secretary of the Customer as to such approval;

         (c)   Specimens of the Signatures of the officers of the Customer
               authorized to sign stock certificates and individuals authorized
               to sign written instructions and requests; and

         (d)   An opinion of counsel for the Customer addressed to both the
               Trust Company and CSI or a similar opinion provided to the
               Customer or an affiliate and an appropriate reliance letter with
               respect to:

               (i)   The Customer's organization and existence under the laws of
                     its state of organization;

               (ii)  The status of all Shares of the Customer covered by the
                     appointment under the Securities Act of 1933, as amended,
                     and any other applicable federal or state statute; and

               (iii) That all issued Shares are, and all unissued Shares will
                     be, when issued, validly issued, fully paid and
                     non-assessable.

     2.3 RECORDS. Transfer Agent may adopt as part of its records all lists of
holders, records of Customer's stock, books, documents and records which have
been employed by any former agent of Customer for the maintenance of the ledgers
for the Customer's shares, provided such ledger is certified by an officer of
Customer or the prior transfer agent to be true, authentic and complete.

     2.4 SHARES. Customer shall, if applicable, inform Transfer Agent as to (i)
the existence or termination of any restrictions on the transfer of Shares and
in the application to or removal from any certificate of stock of any legend
restricting the transfer of such Shares or the substitution for such certificate
of a certificate without such legend, (ii) any authorized but unissued Shares
reserved for specific purposes, (iii) any outstanding Shares which are
exchangeable for Shares and the basis for exchange, (iv) reserved Shares subject
to option and the details of such reservation and (v) special instructions
regarding dividends and information of foreign holders.

     2.5 CUSTOMER'S AGENT. Transfer Agent represents that it is engaged in an
independent business and will perform its obligations under this Agreement as an
agent of Customer.

     2.6 CERTIFICATES. Customer shall deliver to Transfer Agent an appropriate
supply of stock certificates, which certificates shall provide a signature panel
for use by an officer of or authorized signor for Transfer Agent to sign as
transfer agent and registrar, and which shall state that such certificates are
only valid after being countersigned and registered.


                                       6


<PAGE>


3. STANDARD SERVICES.
   -----------------

     3.1 TRANSFER AGENT SERVICES. The Transfer Agent will perform the following
services:

         (a)   issue and record the appropriate number of Shares as authorized
               and hold such Shares in the appropriate Shareholder account;

         (b)   effect transfers of Shares by the registered owners thereof upon
               receipt of appropriate documentation;

         (c)   act as agent for Shareholders pursuant to the Dividend
               Reinvestment Plan, and other investment programs as amended from
               time to time in accordance with the terms of the agreements
               relating thereto to which the Transfer Agent is or will be a
               party; and

         (d)   issue replacement certificates for those certificates alleged to
               have been lost, stolen or destroyed upon receipt by the Transfer
               Agent of an open penalty surety bond satisfactory to it and
               holding it and the Customer harmless, absent notice to the
               Customer and the Transfer Agent that such certificates have been
               acquired by a bona fide purchaser. The Transfer Agent, at its
               option, may issue replacement certificates in place of mutilated
               stock certificates upon presentation thereof without such
               indemnity. Further, the Transfer Agent may at its sole option
               accept indemnification from a Customer to issue replacement
               certificates for those certificates alleged to have been lost,
               stolen or destroyed in lieu of an open penalty bond.

         (e)   provide services as outlined in the attached Fee and Service
               Schedule.

     3.2 CSI SERVICES. In accordance with procedures established from time to
time by agreement between the Customer and CSI, CSI shall:

         (a)   prepare and transmit payments for dividends and distributions
               declared by the Customer, provided good funds for said dividends
               or distributions are received by CSI prior to the scheduled
               payable date for said dividends or distributions;

         (b)   issue replacement checks and place stop orders on original checks
               based on a Shareholder's representation that a check was not
               received or was lost. Such stop orders and replacements will be
               deemed to have been made at the request of Customer, and subject
               to Section 10 hereof, Customer shall be responsible for all
               losses or claims resulting from such replacement; and

         (c)   Receive all payments made to the Customer or the Transfer Agent
               under the Dividend Reinvestment Plan, Direct Stock Purchase Plan,
               and Plans and make all payments required to be made under such
               plans, including all payments required to be made to the
               Customer.


                                       7
<PAGE>



     3.3 CUSTOMARY SERVICES. The Transfer Agent shall perform all the customary
services of a transfer agent, agent of dividend reinvestment plan, cash purchase
plan and other investment programs as described in SECTION 3.1 consistent with
those requirements in effect as of the date of this Agreement. CSI shall perform
all the customary services of a dividend disbursing agent and a processor of
payments as described in SECTION 3.2 consistently with those requirements in
effect as of the date of this Agreement. The detailed services and definition,
frequency, limitations and associated costs (if any) of the Services to be
performed by the Transfer Agent are set out in the attached Fee and Service
Schedule.

     3.4 COMPLIANCE WITH LAWS. The Customer agrees that each of the Trust
Company and CSI is obligated to and the Trust Company and CSI agree to comply
with all applicable federal, state and local laws and regulations, codes, order
and government rules in the performance of its duties under this Agreement.

     3.5 UNCLAIMED PROPERTY AND LOST SHAREHOLDERS. The Transfer Agent shall
report unclaimed property to each state in compliance with state law and shall
comply with Rule17Ad-17 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), for lost Shareholders. If the Customer is not in
compliance with applicable state laws, there will be no charge for the first two
years for this service for such Customer, other than a charge of $3.00 per due
diligence notice mailed; provided that after the first two years, the Transfer
Agent will charge such Customer its then standard fee plus any reasonable out-
of-pocket expenses.

     3.6 COMPLIANCE WITH OFFICE OF FOREIGN ASSET CONTROL ("OFAC") REGULATIONS.
The Transfer Agent shall ensure compliance with OFAC laws and regulations.

4.   DIVIDEND DISBURSING SERVICES.
     ----------------------------

     4.1 DECLARATION OF DIVIDENDS. Upon receipt of a written notice from the
President, any Vice President, Secretary, Assistant Secretary, Treasurer or
Assistant Treasurer of Customer declaring the payment of a dividend, CSI shall
disburse such dividend payments provided that in advance of such payment,
Customer furnishes CSI with sufficient funds. The payment of such funds to CSI
for the purpose of being available for the payment of dividend checks from time
to time is not intended by Customer to confer any rights in such funds on
Customer's Shareholders whether in trust or in contract or otherwise.

     4.2 STOP PAYMENTS. Customer hereby authorizes CSI to stop payment of checks
issued in payment of dividends, but not presented for payment, when the payees
thereof allege either that they have not received the checks or that such checks
have been mislaid, lost, stolen, destroyed or, through no fault of theirs, are
otherwise beyond their control and cannot be produced by them for presentation
and collection, and CSI shall issue and deliver duplicate checks in replacement
thereof, and subject to Section 10 hereof, Customer shall indemnify Transfer
Agent against any loss or damage resulting from reissuance of the checks.

     4.3. TAX WITHHOLDING. CSI is hereby authorized to deduct from all dividends
declared by a Customer and disbursed by CSI, as dividend disbursing agent, the
tax required to be withheld


                                       8
<PAGE>


pursuant to applicable provisions of the Internal Revenue Code of 1986, as
amended, or by any applicable Federal or State statutes subsequently enacted,
and to make the necessary return and payment of such tax in connection
therewith.

5.  SHAREHOLDER INTERNET ACCOUNT ACCESS SERVICES.
    --------------------------------------------

     5.1 SHAREHOLDER INTERNET SERVICES. The Transfer Agent shall provide
internet access to each Customer's shareholders through Transfer Agent's web
site, Computershare.com ("Shareholder Internet Services"), pursuant to its
established procedures ("Security Procedures"), to allow shareholders to view
their account information and perform certain on-line transaction request
capabilities. The Shareholder Internet Services shall be provided at no
additional charge at this time, other than the transaction fees currently being
charged for the different transactions as described on the Fee and Service
Schedule. The Transfer Agent reserves the right to charge a fee for this service
at any time in the future.

     5.2 SCOPE OF TRANSFER AGENT SHAREHOLDER INTERNET SERVICES OBLIGATIONS.
Transfer Agent shall at all times use reasonable care in performing Shareholder
Internet Services under this Agreement. With respect to any claims for losses,
damages, costs or expenses which may arise directly or indirectly from Security
Procedures which Transfer Agent has implemented or omitted, Transfer Agent shall
be presumed to have used reasonable care if it has followed, in all material
respects, its Security Procedures then in effect. Transfer Agent may, but shall
not be required to, modify such Security Procedures from time to time to the
extent it believes, in good faith, that such modifications will enhance the
security of Shareholder Internet Services. All data and information
transmissions accessed via Shareholder Internet Services are for informational
purposes only, and are not intended to satisfy regulatory requirements or comply
with any laws, rules, requirements or standards of any federal, state or local
governmental authority, agency or industry regulatory body, including the
securities industry, which compliance is the sole responsibility of Customer.

     5.3 NO OTHER WARRANTIES.

EXCEPT AS OTHERWISE EXPRESSLY STATED IN SECTION 5.2 OF THIS AGREEMENT, THE
SHAREHOLDER INTERNET SERVICES ARE PROVIDED "AS-IS," ON AN "AS AVAILABLE" BASIS,
AND TRANSFER AGENT HEREBY SPECIFICALLY DISCLAIMS ANY AND ALL REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, REGARDING SUCH SERVICES PROVIDED BY TRANSFER
AGENT HEREUNDER, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING
OR COURSE OF PERFORMANCE.


                                        9
<PAGE>



6.   FEES AND EXPENSES.
     -----------------

     6.1 FEE AND SERVICE SCHEDULES. Each Customer agrees to pay Transfer Agent
the fees for Services performed pursuant to this Agreement as set forth in the
Fee and Service Schedule attached hereto, for the initial term of the Agreement
(the "Initial Term").

     6.2 ADJUSTMENTS. Notwithstanding Section 6.1 above, fees, and the out-of-
pocket expenses and advances identified under Section 6.4 below, may be changed
from time to time as agreed upon in writing between the Transfer Agent and the
Customer.

     6.3 OUT-OF-POCKET EXPENSES. In addition to the fees paid under Section 6.1
above, the Customer agrees to reimburse the Transfer Agent for reasonable out-
of-pocket expenses, including but not limited to postage, forms, telephone,
microfilm, microfiche, taxes, records storage, exchange and broker fees, or
advances incurred by the Transfer Agent for the items set out in Exhibit A
attached hereto. In addition, any other expenses incurred by the Transfer Agent
at the request or with the consent of the Customer, will be reimbursed by the
Customer.

     6.4 CONVERSION FUNDS. Conversion funding required by any out of proof
condition caused by a prior agents' services shall be advanced to Transfer Agent
prior to the commencement of services.

     6.5 POSTAGE. Postage for mailing of dividends, proxies, Customer reports
and other mailings to all Shareholder Accounts shall be advanced to the Transfer
Agent by the Customer prior to commencement of the mailing date of such
materials.

     6.6 INVOICES. The Customer agrees to pay all fees and reimbursable expenses
within 30 days of the receipt of the respective billing notice, except for any
fees or expenses that are subject to good faith dispute. In the event of such a
dispute, the Customer may only withhold that portion of the fee or expense
subject to the good faith dispute. The Customer shall notify the Transfer Agent
in writing within twenty-one (21) calendar days following the receipt of each
billing notice if the Customer is disputing any amounts in good faith. If the
Customer does not provide such notice of dispute within the required time, the
billing notice will be deemed accepted by the Customer. The Customer shall
settle such disputed amounts within five (5) business days of the day on which
the parties agree on the amount to be paid by payment of the agreed amount. If
no agreement is reached, then such disputed amounts shall be settled as may be
required by law or legal process. Exceptions are subject to the interest
schedule below.

     6.7 TAXES. Customer shall pay all sales or use taxes in lieu thereof with
respect to the Services (if applicable) provided by Transfer Agent under this
Agreement.

     6.8 LATE PAYMENTS.

     (a) If any undisputed amount in an invoice of the Transfer Agent (for fees
or reimbursable expenses) is not when due, the Customer shall pay the Transfer
Agent interest thereon (from the due date to the date of payment) at a per annum
rate equal to one percent (1.0%) plus the Prime


                                       10


<PAGE>

Rate (that is, the base rate on corporate loans posted by large domestic banks)
published by the New York edition of The Wall Street Journal (or, in the event
such rate is not so published, a reasonably equivalent published rate selected
by Customer on the first day of publication during the month when such amount
was due). Notwithstanding any other provision hereof, such interest rate shall
be no greater than permitted under applicable provisions of Massachusetts law.

     (b) The failure by Customer to pay an undisputed invoice within 90 days
after receipt of such invoice and written notice to Customer that payments are
overdue or the failure by the Customer to timely pay two consecutive invoices
shall constitute a material breach pursuant to SECTION 16.4(a) below. The
Transfer Agent may terminate this Agreement for such material breach immediately
and shall not be obligated to provide the Customer with 30 days to cure such
breach.

     6.9 SERVICES REQUIRED BY LEGISLATION. Services required by legislation or
regulatory mandate that become effective after the Effective Date of this
Agreement shall not be part of the Services, and shall be billed by reasonable
appraisal.

     6.10 OVERTIME CHARGES. Overtime charges will be assessed in the event of a
late delivery to the Transfer Agent of Customer material for mailings to
Shareholders, unless the mail date is rescheduled. Such material includes, but
is not limited to, proxy statements, quarterly and annual reports, dividend
enclosures and news releases.

     6.11 BANK ACCOUNTS. The Customer acknowledges that the bank accounts
maintained by CSI in connection with the Services will be in its name and that
CSI may receive investment earnings in connection with the investment at CSI's
risk and for its benefit of funds held in those accounts from time to time.

7.   REPRESENTATIONS AND WARRANTIES OF TRANSFER AGENT.
     ------------------------------------------------

     7.1 GOVERNANCE. The Trust Company is a federally chartered limited purpose
national bank duly organized under the laws of the United States and CSI is a
corporation validly existing and in good standing under the laws of the State of
Delaware and each has full corporate power, authority and legal right to
execute, deliver and perform this Agreement. The execution, delivery and
performance of this Agreement by Transfer Agent has been duly authorized by all
necessary corporate action and constitutes the legal valid and binding
obligation of Transfer Agent enforceable against Transfer Agent in accordance
with its terms.

     7.2 TRANSFER AGENT REGISTRATION. CSI and the Trust Company represent that
they are both currently registered with the appropriate regulatory agency for
the registration of transfer agents, that they will remain so registered for the
duration of this Agreement, and that they will comply with all applicable laws
and regulations governing transfer agents, including rules relating to record
retention. CSI and the Trust Company agree that they will promptly notify the
Customer in the event that either is no longer registered as a transfer agent.

     7.3 TRANSFER AGENT QUALIFICATION. CSI and the Trust Company represent that
they are both duly qualified to carry out their business in the Commonwealth of
Massachusetts and with


                                       11

<PAGE>

the New York Stock Exchange. CSI and the Trust Company agree that they will
promptly notify the Customer in the event that either is no longer so qualified.

     7.4 COMPLIANCE. The execution, delivery and performance of the Agreement by
Transfer Agent will not violate, conflict with or result in the breach of any
material term, condition or provision of, or require the consent of any other
party to, (i) any existing law, ordinance, or governmental rule or regulation to
which Transfer Agent is subject, (ii) any judgement, order, writ, injunction,
decree or award of any court, arbitrator or governmental or regulatory official,
body or authority which is applicable to Transfer Agent, (iii) the incorporation
documents or by-laws of , or any material agreement to which Transfer Agent is a
party.

     7.5 FACILITIES. The Transfer Agent has and will continue to have access to
the necessary facilities, equipment and personnel to perform its duties and
obligations under this Agreement.

     7.6 COMPUTER SERVICES. DATA ACCESS SERVICE AND ALL COMPUTER PROGRAMS AND
SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS,
AS AVAILABLE BASIS. TRANSFER AGENT EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT
THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CUSTOMER
HEREBY ACKNOWLEDGES THAT THE DATA ACCESS SERVICE MAY NOT BE OR BECOME AVAILABLE
DUE TO ANY NUMBER OF FACTORS INCLUDING WITHOUT LIMITATION PERIODIC SYSTEM
MAINTENANCE, SCHEDULED OR UNSCHEDULED, ACTS OF GOD, TECHNICAL FAILURE,
TELECOMMUICATIONS INFRASTRUCTURE OR DELAY OR DISRUPTION ATTRIBUTATLE TO VIRUSES,
DENIAL OF SERVICE ATTACKS, INCREASED OR FLUCTUATING DEMAND, AND ACTIONS AND
OMISSIONS OF THIRD PARTIES. THEREFORE TRANSFER AGENT EXPRESSLY DISCLAIMS ANY
EXPRESS OR IMPLIED WARRANTY REGARDING SYSTEM AND/OR DATA ACCESS SERVICE
AVAILABILITY, ACCESSABILITY, OR PERFORMANCE.

     7.7 THE COMPLIANCE RULE. CSI and the Trust Company represent that they will
provide reasonable assistance to and cooperate with the Customer and its agents
and representatives in connection with the Customer's efforts to comply with
Rule 38a-1 under the Investment Company Act of 1940 (the "Compliance Rule"). The
Transfer Agent agrees to provide: (a) from time to time, and not less than once
per year, a copy and/or detailed summary of the Transfer Agent's compliance
policies and procedures and an accompanying certification certifying the
Transfer Agent's compliance with its policies and procedures; (b) a SAS 70 Type
II or similar, conducted for the Transfer Agent determining the adequacy and
effectiveness of the Transfer Agent's compliance policies and procedures; (c)
reasonable access to other information as may otherwise be necessary or
appropriate for the Customer to perform the due diligence required by the
Compliance Rule; (d) prompt responses to reasonable requests made by the
Customer and its agents and representatives for information regarding the
Transfer Agent's compliance policies and procedures; and (e) appropriate
interfaces with the Customer and its agents and representatives to promote the
efficient exchange of information with respect to the Transfer Agent's
compliance policies and procedures. The Transfer Agent agrees that it will


                                       12
<PAGE>


promptly notify the Customer in the event that the Transfer Agent becomes aware
of any material inadequacy in its internal controls, policies and procedures.

8.   REPRESENTATIONS AND WARRANTIES OF CUSTOMER.
     ------------------------------------------

     Each Customer represents and warrants to the Transfer Agent that:

     8.1 ORGANIZATIONS. It is a corporation duly organized and existing and in
good standing under the laws of Massachusetts;

     8.2 GOVERNANCE. It is empowered under applicable laws and by its
Declaration of Trust and By-Laws to enter into and perform this Agreement. All
corporate proceedings required by said Declaration of Trust, By-Laws and
applicable law have been taken to authorize it to enter into and perform this
Agreement; and

     8.3 SECURITIES ACT OF 1933. To the extent applicable, a registration
statement under the Securities Act of 1933, as amended (the "1933 Act") has been
filed and is currently effective, or will be effective prior to the sale of any
Shares, and will remain so effective, for such period of time as is required and
all required state securities law filings, if any, have been made with respect
to all the Shares of the Customer being offered for sale except for any Shares
which are offered in a transaction or series of transactions which are exempt
from the registration requirements of the 1933 Act and state securities laws;
information to the contrary will result in immediate notification to the
Transfer Agent.

9.   INDEMNIFICATION/LIMITATION OF LIABILITY.
     ---------------------------------------

     9.1 STANDARD OF CARE. The Transfer Agent shall at all times act in good
faith and agrees to use its best efforts within reasonable time limits to ensure
the accuracy of all services performed under this Agreement, but assumes no
responsibility and shall not be liable for loss or damage due to errors unless
said errors are caused by its negligence, bad faith or willful misconduct or
that of its employees as set forth and subject to the limitations set forth in
SECTION 9.4 below.

     9.2 CUSTOMER INDEMNITY. The Transfer Agent shall not be responsible for,
and the Customer shall indemnify and hold the Transfer Agent harmless from and
against, any and all losses, claims, damages, costs, charges, counsel fees and
expenses, payments, expenses and liability arising out of or attributable to:

     (a) All actions of the Transfer Agent or its agents or subcontractors
required to be taken pursuant to this Agreement, provided such actions are taken
in good faith and without negligence or willful misconduct;

     (b) The Customer's lack of good faith, negligence or willful misconduct or
the breach of any representation or warranty of the Customer hereunder;


                                       13
<PAGE>


     (c) The reliance or use by the Transfer Agent or its agents or
subcontractors of information, records and documents which (i) are received by
the Transfer Agent or its agents or subcontractors and furnished to it by or on
behalf of the Customer, and (ii) have been prepared and /or maintained by the
Customer or any other person or firm on behalf of the Customer.

     (d) The reliance or use by the Transfer Agent or its agents or
subcontractors of any paper or document reasonably believed to be genuine and to
have been signed by the proper person or persons including Shareholders or
electronic instruction from Shareholders submitted through the Shareholder
Internet Services or other electronic means pursuant to commercially reasonable
security procedures established by the Transfer Agent;

     (e) The reliance on, or the carrying out by the Transfer Agent or its
agents or subcontractors of any instructions or requests of the Customer's
representatives;

     (f) The offer or sale of Shares in violation of any federal or state
securities laws requiring that such Shares be registered or in violation of any
stop order or other determination or ruling by any federal or state agency with
respect to the offer or sale of such Shares;

     (g) The negotiations and processing of all checks, including checks made
payable to prospective or existing shareholders which are tendered to the
Transfer Agent for the purchase of Shares (commonly known as "third party
checks");

     (h) Any actions taken or omitted to be taken by any former agent of
Customer and arising from Transfer Agent's reliance on the certified list of
holders; and

     (i) The negotiation, presentment, delivery or transfer of Shares through
the Direct Registration System Profile System.

     9.3 INSTRUCTIONS. Subject to the provisions of Section 9.2 (a) above, at
any time the Transfer Agent may apply to any officer of the Customer for
instruction, and may consult with legal counsel for the Customer with respect to
any matter arising in connection with the services to be performed by the
Transfer Agent under this Agreement, and Transfer Agent and its agents and
subcontractors shall not be liable and shall be indemnified by the Customer for
any action taken or omitted by it in reliance upon such instructions of
Customer's Counsel. The Transfer Agent, its agents and subcontractors shall be
protected and indemnified in acting upon any paper or document reasonably
believed to be genuine and to have been signed by the proper person or persons,
or upon any instruction, information, data, records or documents provided the
Transfer Agent or its agents or subcontractors by telephone, in person, machine
readable input, telex, CRT data entry or similar means authorized by the
Customer, and shall not be held to have notice of any change of authority of any
person, until receipt of written notice thereof from the Customer. The Transfer
Agent, its agents and subcontractors shall also be protected and indemnified in
recognizing stock certificates which are reasonably believed to bear the proper
manual or facsimile signatures of officers of the Customer, and the proper
countersignature of any former


                                       14
<PAGE>

transfer agent or former registrar, or of a co- transfer agent or co-registrar.


     9.4 TRANSFER AGENT INDEMNIFICATION/LIMITATION OF LIABILITY. Transfer Agent
shall be responsible for and shall indemnify and hold the Customer harmless from
and against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to Transfer Agent's
refusal or failure to comply with the terms of this Agreement, or which arise
out of Transfer Agent's bad faith, negligence or willful misconduct or which
arise out of the breach of any representation or warranty of Transfer Agent
hereunder, for which Transfer Agent is not entitled to indemnification under
this Agreement; provided, however, that Transfer Agent's aggregate liability
during any term of this Agreement with respect to, arising from, or arising in
connection with this Agreement, or from all services provided or omitted to be
provided under this Agreement, whether in contract, or in tort, or otherwise, is
limited to, and shall not exceed, the amounts paid hereunder by the Customer to
Transfer Agent as fees and charges, but not including reimbursable expenses,
during the five (5) calendar years immediately preceding the event for which
recovery from the Transfer Agent is being sought.

     9.5 NOTICE. In order that the indemnification provisions contained in this
Section shall apply, upon the assertion of a claim for which one party may be
required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The
indemnifying party shall have the option to participate with the indemnified
party in the defense of such claim or to defend against said claim in its own
name or the name of the indemnified party. The indemnified party shall in no
case confess any claim or make any compromise in any case in which the
indemnifying party may be required to indemnify it except with the indemnifying
party's prior written consent.

     9.6 LIMITATION OF LIABILITY OF TRUSTEES AND OFFICERS. A copy of the Equity
Fund's Declaration of Trust is on file with the Secretary of the Commonwealth of
Massachusetts and notice is hereby given that this Agreement is executed on
behalf of the Customer's Trustees as Trustees under the Declaration of Trust and
not individually. The Transfer Agent acknowledges and agrees that the
obligations of the Customer hereunder are not personally binding upon any of the
Trustees and the shareholders of the Customer.

10.  DAMAGES.
     -------

     NO PARTY SHALL BE LIABLE FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES OF ANY NATURE WHATSOEVER, INCLUDING, BUT NOT LIMITED TO,
LOSS OF ANTICIPATED PROFITS, OCCASIONED BY A BREACH OF ANY PROVISION OF THIS
AGREEMENT EVEN IF APPRISED OF THE POSSIBILITY OF SUCH DAMAGES.


                                       15
<PAGE>


11.  RESPONSIBILITIES OF THE TRANSFER AGENT.
     --------------------------------------

     The Transfer Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Customer,
by its acceptance hereof, shall be bound:

     11.1 Whenever in the performance of its duties hereunder the Transfer Agent
shall deem it necessary or desirable that any fact or matter be proved or
established prior to taking or suffering any action hereunder, such fact or
matter may be deemed to be conclusively proved and established by a certificate
signed by the Chairman of the Board, the President, any Vice President, the
Treasurer, any Assistant treasurer, the Secretary or any Assistant Secretary of
the Customer and delivered to the Transfer Agent. Such certificate shall be full
authorization to the recipient for any action taken or suffered in good faith by
it under the provisions of this Agreement in reliance upon such certificate.

     11.2 The Customer agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Transfer Agent for the carrying out, or performing by the Transfer Agent
of the provisions of this Agreement.

     11.3 Transfer Agent, any of its affiliates or subsidiaries, and any
stockholder, director, officer or employee of the Transfer Agent may buy, sell
or deal in the securities of the Customer or become pecuniarily interested in
any transaction in which the Customer may be interested, or contract with or
lend money to the Customer or otherwise act as fully and freely as though it
were not appointed as agent under this Agreement. Nothing herein shall preclude
the Transfer Agent from acting in any other capacity for the Customer or for any
other legal entity.

     11.4 No provision of this Agreement shall require the Transfer Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
it shall believe in good faith that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.

12.  COVENANTS OF THE CUSTOMER AND TRANSFER AGENT.
     --------------------------------------------

     12.1 CUSTOMER CORPORATE AUTHORITY. The Customer shall furnish to the
Transfer Agent the following:

     (a) A copy of the Declaration of Trust and By-Laws of the Customer;

     (b) Copies of all material amendments to its Declaration of Trust or
By-Laws made after the date of this Agreement, promptly after such amendments
are made; and



                                       16
<PAGE>


     (c) A certificate of the Customer as to the Shares authorized, issued and
outstanding, as well as a description of all reserves of unissued Shares
relating to the exercise of options, warrants or a conversion of debentures or
otherwise.

     12.2 TRANSFER AGENT FACILITIES. The Transfer Agent hereby agrees to
establish and maintain facilities and procedures reasonably acceptable to the
Customer for the safekeeping of stock certificates, check forms and facsimile
signature imprinting devices, if any, and for the preparation, use, and
recordkeeping of such certificates, forms and devices.

     12.3 RECORDS. The Transfer Agent shall keep records relating to the
services to be performed hereunder as required by applicable law and, in the
form and manner as it may deem advisable. The Transfer Agent agrees that all
such records prepared or maintained by it relating to the services performed
hereunder are the property of the Customer and will be preserved, maintained and
made available in accordance with the requirements of law, and will be
surrendered promptly to the Customer on and in accordance with its request.
Computershare Trust Company, N.A. maintains records as required by Rules 17Ad-6
& 7 under the Securities Exchange Act of 1934 which records include, but are not
limited to, the master securityholder file of the Fund, reflecting all
registered shareholders of the fund and the relevant information attendant
thereto.

     12.4 CONFIDENTIALITY. The Transfer Agent and the Customer agree that all
books, records, information and data pertaining to the business of the other
party which are exchanged or received pursuant to the negotiation or the
carrying out of this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except as may be requested by a
governmental entity or as may be required by law. The foregoing shall not apply
to information which (a) is in the public domain at the time of the disclosure,
(b) is within the legitimate possession of the other party prior to disclosure,
(c) becomes known to the Transfer Agent or the Customer from a third party
without restriction, or (d) is approved for release by written authorization of
the other party.

     12.5 NON-SOLICITATION OF TRANSFER AGENT EMPLOYEES. Customer shall not
attempt to hire or assist with the hiring of an employee of Transfer Agent or
affiliated companies, for a period of one year following the termination of the
employee's relationship with the Transfer Agent or its affiliated companies, or
encourage any employee to terminate their relationship with Transfer Agent or
its affiliated companies.

     12.6 NOTIFICATION. Customer shall notify Transfer Agent as soon as possible
in advance of any stock split, stock dividend similar event which may affect the
Shares, and any bankruptcy, insolvency, moratorium or other proceeding regarding
Customer affecting the enforcement of creditors' rights. Notwithstanding any
other provision of the Agreement to the contrary, Transfer Agent will have no
obligation to perform any Services under the Agreement subsequent to the
commencement of any voluntary bankruptcy, insolvency, moratorium or other
proceeding regarding Customer affecting the enforcement of creditor' rights
unless Transfer Agent receives assurance satisfactory to it that it will receive
full payment for such services. Further, Customer may not reasonably assume the
Agreement after the filing of a bankruptcy petition without


                                       17
<PAGE>

Transfer Agents' written consent.

13.  DATA ACCESS SERVICE AND PROPRIETARY INFORMATION.
     -----------------------------------------------

     13.1 Transfer Agent has developed a data access service that enables the
Customer to access the Customer's Shareholder records maintained on Transfer
Agent's computer system through the Internet or remote access, as the case may
be (the "Data Access Service"). The Customer wishes to use such Data Access
Service subject to the terms and conditions set forth herein. Therefore, the
Customer and Transfer Agent agree as follows:

     13.2 ACCESS TO SHAREHOLDER DATA.

     The Service provided to the Customer pursuant to this Agreement shall
include granting the Customer access to the Shareholder, Customer and proxy
information ("Shareholder Data") maintained on the records database for the
purpose of examining, maintaining, editing, or processing transactions with
respect to Shareholder Data.

     13.3 PROCEDURES FOR ACCESS.

     To use the Data Access Service, the Customer must access through the
Internet or remote terminal, as the case may be, pursuant to the procedures
provided by Transfer Agent. Such access is accomplished by entering a unique
Customer identification ("Customer ID(s)") and passwords ("Password(s)")
assigned to the Customer by Transfer Agent. Each Customer ID and Password
assigned to the Customer is for use only by the Customer. The Customer shall
establish and maintain reasonable security and control over all such Customer
IDs and Passwords. Transfer Agent shall maintain reasonable security and control
over each Customer ID. After Transfer Agent assigns the Customer a Password, the
Customer shall change the Password. The Customer recognizes that Transfer Agent
does not have knowledge of the Password, which is selected by the Customer and
is within the Customer's exclusive control after the necessary change. The
Customer may change any Password thereafter at any time. Customer agrees to
notify Transfer Agent immediately if any employee of Customer granted access to
the Data Access Service leaves the employ of the Customer, in order to enable
Transfer Agent to terminate such employee's access.

     13.4 PROPRIETARY INFORMATION.

     The Customer acknowledges that the databases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals furnished to the Customer by the Transfer Agent as part of the Data
Access Service to access Shareholder Data maintained by the Transfer Agent on
data bases under the control and ownership of the Transfer Agent or other third
party constitute copyrighted, trade secret, or other proprietary information
(collectively, "Proprietary Information") of substantial value to the Transfer
Agent or other third party. In no event shall Proprietary Information be deemed
Shareholder Data. The Customer and the Transfer Agent agree that Proprietary
Information shall not include all or any portion of any of the foregoing items
that; (i) become publicly available without breach of this Agreement; (ii) are
released for general disclosure by a written release by the Transfer Agent;
(iii) are already in the


                                       18
<PAGE>

possession of the receiving party at the time of receipt without obligation of
confidentiality or breach of this Agreement. The Customer agrees to treat all
Proprietary Information as proprietary to the Transfer Agent and further agrees
that it shall not divulge any Proprietary Information to any person or
organization except as may be provided hereunder. Without limiting the
foregoing, the Customer agrees for itself and its employees and agents:

    (a)    to refrain from copying or duplicating in any way the Proprietary
           Information, other than to print out pages reflecting Shareholder
           Data to provide to Shareholders or for Customer's internal use;

    (b)    to refrain from obtaining unauthorized access to any portion of the
           Proprietary Information, and if such access is inadvertently
           obtained, to inform Transfer Agent in a timely manner of such fact
           and dispose of such information in accordance with Transfer Agent's
           instructions;

    (c)    to refrain from causing or allowing the Proprietary Information from
           being retransmitted to any other computer facility or other location,
           except with the prior written consent of Transfer Agent;

    (d)    that the Customer shall have access only to those authorized
           transactions agreed upon by the parties; and

    (e)    to honor all reasonable written requests made by Transfer Agent to
           protect at  Transfer Agent's expense the rights of Transfer Agent
           Proprietary Information at common law, under federal copyright law
           and under other federal or state law.

Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this SECTION 13.

     13.5 CONTENT. If the Customer notifies the Transfer Agent that any part of
the Data Access Service does not operate in material compliance with the user
documentation provided by the Transfer Agent for such service, the Transfer
Agent shall endeavor in a timely manner to correct such failure. Organizations
from which the Transfer Agent may obtain certain data included in the Services
are solely responsible for the contents of such data and the Customer agrees to
make no claim against the Transfer Agent arising out of the contents of such
third party data, including, but not limited to, the accuracy thereof.

     13.6 TRANSACTIONS. If the transactions available to the Customer include
the ability to originate electronic instructions to the Transfer Agent in order
to (i) effect the transfer or movement of Shares or direct CSI to transfer cash
or (ii) transmit Shareholder information or other information, then in such
event the Transfer Agent shall be entitled to rely on the validity and
authenticity of such instructions without undertaking any further inquiry as
long as such instructions are undertaken in good faith in conformity with
security procedures established by the Transfer Agent from time to time.


                                       19
<PAGE>


14.  CONFIDENTIALITY.
     ---------------

     14.1 COVENANT. The Transfer Agent and the Customer agree that they will
not, at any time during the term of this Agreement or after its termination,
reveal, divulge, or make known to any person, firm, corporation or other
business organization, any customers' lists, trade secrets, cost figures and
projections, profit figures and projections, or any other secret or confidential
information whatsoever, whether of the Transfer Agent or of the Customer, used
or gained by the Transfer Agent or the Customer during performance under this
Agreement unless required to do so by law. The Customer and the Transfer Agent
further covenant and agree to retain all such knowledge and information acquired
during and after the term of this Agreement respecting such lists, trade
secrets, or any secret or confidential information whatsoever in trust for the
sole benefit of the Transfer Agent or the Customer and their successors and
assigns. The above prohibition of disclosure shall not apply to the extent that
the Transfer Agent must disclose such data to its sub-contractor or agent for
purposes of providing services under this Agreement. The above prohibition of
disclosure also shall not apply to the extent that such information (a) is in
the public domain at the time of the disclosure or obligation or (b) becomes
known to the Transfer Agent or Customer from a third party who came into
possession of such information without obligation of confidentiality.

     14.2 SHAREHOLDER NON-PUBLIC PERSONAL INFORMATION.

     (a) The Transfer Agent shall maintain as part of the Data Access Services (
and in furtherance of all of the services provided under this Agreement)
policies and procedures for safeguarding any of the Customer's data received,
processed or stored by the Transfer Agent constituting shareholder records and
information (collectively, "personal information"), which policies and
procedures shall be reasonably designed to (a) insure the security and
confidentiality of the personal information; (b) protect against anticipated
threats or hazards to the security and integrity of the personal information;
and (c) protect against unauthorized access to or use of the personal
information that could result in substantial harm or inconvenience to any
shareholder of the Customer.

     (b) At the request of the Customer, and not less than once during each year
of the term of this Agreement, the Transfer Agent shall meet with the Customer
at Computershare's Canton, Massachusetts facility and deliver to the Customer a
written and oral presentation regarding the policies and procedures in place
under Section 14.2(a); such written and oral presentations shall address the
suitability of those policies and procedures for safeguarding the personal
information, taking account of the requirements of Section 14.2(a) and ongoing
changes in information security, computing and related fields.

     (c) In performing the Data Access Services under this Agreement, the
Transfer Agent shall cause such services to be performed pursuant to the
policies and procedures then in effect. The Transfer Agent shall, in accordance
with applicable law, report to the Customer promptly any unauthorized access to
personal information, any unauthorized attempts to access personal information
or the discovery of a flaw in the procedures in place under Section 14.2(a) that
could subject personal information to unauthorized access or (release) and
cooperate with the Customer


                                       20
<PAGE>


in conducting any related investigation activities,regulatory examinations, or
remedial changes. The Transfer Agent will provide quarterly certifications with
respect to compliance with its internal controls and procedures.

     14.3 REQUEST FOR RECORDS. In the event that any requests or demands are
made for the inspection of the Shareholder records of the Customer, other than
request for records of Shareholders pursuant to standard subpoenas from state or
federal government authorities (e.g., in divorce and criminal actions), the
Transfer Agent will endeavor to notify the Customer and to secure instructions
from an authorized officer of the Customer as to such inspection. Upon prior
written notice to Customer, the Transfer Agent expressly reserves the right,
however, to exhibit the Shareholder records to any person whenever it is advised
by counsel that such disclosure is lawful and it may be held liable for the
failure to exhibit the Shareholder records to such person or if required by law
or court order.

15.  TERM AND TERMINATION.
     --------------------

     15.1 TERM. The Initial Term of this Agreement shall be one (1) year from
the date first stated above unless terminated pursuant to the provisions of this
SECTION 15. Unless a terminating party gives written notice to the other party
sixty (60) days before the expiration of the Initial Term this Agreement will
renew automatically from year to year ("Renewal Term").

     15.2 EARLY TERMINATION. Notwithstanding anything contained in this
Agreement to the contrary, should Customer desire to move any of its Services
provided by the Transfer Agent hereunder to a successor service provider prior
to the expiration of the then current Initial or Renewal Term, or without the
required notice period, the Transfer Agent shall make a good faith effort to
facilitate the conversion on such prior date, however, there can be no guarantee
that the Transfer Agent will be able to facilitate a conversion of Services on
such prior date.

     15.3 EXPIRATION OF TERM. After the expiration of the Initial Term or
Renewal Term whichever currently in effect, should either party exercise its
right to terminate, all reasonable out-of-pocket expenses or costs associated
with the movement of records and material will be borne by the Customer.

     15.4 TERMINATION.

     This Agreement may be terminated in accordance with the following:

            (a)  at any time by any party upon a material breach of a
            representation, covenant or term of this Agreement by any other
            unaffiliated party which is not cured within a period not to exceed
            thirty (30) days after the date of written notice thereof by one of
            the other parties; and

            (b)  by any party, at any time, in the event that during the term of
            this Agreement, a bankruptcy or insolvency proceeding is filed by or
            against the other party or a trustee or receiver is appointed for
            any substantial part of the other party property (and in a case of
            involuntary bankruptcy, insolvency or receivership proceeding,


                                       21
<PAGE>

            there is entered an order for relief, or order appointing a receiver
            or some similar order or decree and the other party does not succeed
            in having such order lifted or stayed within sixty (60) days from
            the date of its entry), or the other party makes an assignment of
            all or substantially all of its property for the benefit of
            creditors or ceases to conduct its operations in the normal course
            or business.

            (c)  Upon thirty (30) days prior written notice to the Transfer
            Agent by the Customer in the event the Customer dissolves,
            liquidates or merges into another entity.

     15.5 RECORDS. Upon receipt of written notice of termination, the parties
will use commercially practicable efforts to effect an orderly termination of
this Agreement. Without limiting the foregoing, Transfer Agent will deliver
promptly to Customer, in machine readable form on media as reasonably requested
by Customer, all Shareholder and other records, files and data supplied to or
compiled by Transfer Agent on behalf of Customer.

16.  ASSIGNMENT.
     ----------

     16.1 AFFILIATES. The Transfer Agent may, without further consent of the
Customer assign its rights and obligations hereunto to any affiliated transfer
agent registered under Section 17A(c)(2) of the Exchange Act, that the Transfer
Agent represents is qualified to perform the duties required under this
Agreement. Neither party will assign its rights and obligations to any
unaffiliated third party without the other party's prior written consent.

     16.2 SUB-CONTRACTORS. Transfer Agent may, without further consent on the
part of Customer, subcontract with other subcontractors for telephone and
mailing services as may be required from time to time; provided, however, that
the Transfer Agent shall be as fully responsible to the Customer for the acts
and omissions of any subcontractor as it is for its own acts and omissions.

17.  UNAFFILIATED THIRD PARTIES.
     --------------------------

     Nothing herein shall impose any duty upon the Transfer Agent in connection
with or make the Transfer Agent liable for the actions or omissions to act of
unaffiliated third parties such as, by way of example and not limitation,
airborne services, the U.S. mails and telecommunication companies, provided, if
the Transfer Agent selected such company, the Transfer Agent shall have
exercised due care in selecting the same.

18. DISASTER RECOVERY/INSURANCE. The Transfer Agent agrees to maintain in effect
at all times during the term of this Agreement a commercially reasonable
disaster recovery/business continuity plan. The Transfer Agent agrees to
maintain commercially reasonable insurance coverage during the initial Term of
this Agreement and during any subsequent Renewal Term.


                                       22
<PAGE>



19.  MISCELLANEOUS.
     -------------

     19.1 NOTICES.

     Any notice or communication by the Transfer Agent or the Customer to the
other is duly given if in writing and delivered in person or mailed by first
class mail, postage prepaid, telex, telecopier or overnight air courier
guaranteeing next day delivery, to the other's address:

            If to the Customer:

            Liberty All-Star Equity Fund
            1290 Broadway, Suite 1100
            Denver, CO  80203
            Telecopy No.:  (303) 623-7850
            Attn:    Secretary

            If to the Transfer Agent:

            Computershare Trust Company, N.A.
            c/o Computershare Shareholder Services, Inc.
            250 Royall Street
            Canton, MA  02021
            Telecopy No.: (781) 575-4188
            Attn:  General Counsel

     The Transfer Agent and the Customer may, by notice to the other, designate
additional or different addresses for subsequent notices or communications.

     19.2 SUCCESSORS.

    All the covenants and provisions of this agreement by or for the benefit of
the Customer or the Transfer Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.

     19.3 AMENDMENTS.

     This Agreement may be amended or modified by a written amendment executed
by the parties hereto and, to the extent required, authorized or approved by a
resolution of the Board of Trustees.

     19.4 SEVERABILITY.

     If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provision, covenants and restrictions
of this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.


                                       23
<PAGE>

     19.5 GOVERNING LAW.

     This Agreement shall be governed by the laws of Commonwealth of
Massachusetts.

     19.6 FORCE MAJEURE.

     Notwithstanding anything to the contrary contained herein, Transfer Agent
shall not be liable for any delays or failures in performance resulting from
acts beyond its reasonable control including, without limitation, acts of God,
terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions or
malfunction of computer facilities, or loss of data due to power failures or
mechanical difficulties with information storage or retrieval systems, labor
difficulties, war, or civil unrest.

     19.7 DESCRIPTIVE HEADINGS.

     Descriptive headings of the several sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning or construction
of any of the provisions hereof.

     19.8 THIRD PARTY BENEFICIARIES.

     The provisions of this Agreement are intended to benefit only the Transfer
Agent, the Customer and their respective permitted successors and assigns. No
rights shall be granted to any other person by virtue of this agreement, and
there are no third party beneficiaries hereof.

     19.9 SURVIVAL.

     All provisions regarding indemnification, warranty, liability and limits
thereon, and confidentiality and protection of proprietary rights and trade
secrets shall survive the termination of this Agreement.


     19.10 PRIORITIES.

     In the event of any conflict, discrepancy, or ambiguity between the terms
and conditions contained in this Agreement and any schedules or attachments
hereto, the terms and conditions contained in this Agreement shall take
precedence.

     19.11 MERGER OF AGREEMENT.

     This agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter hereof,
whether oral or written, including, but not limited to, that certain Internet
Access Service Agreement dated January 12, 2007 between the parties hereto.


                                       24
<PAGE>


     19.12 COUNTERPARTS.

     This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.


          IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by one of its officers thereunto duly authorized, all
as of the date first written above.






COMPUTERSHARE SHAREHOLDER SERVICES, INC. AND
COMPUTERSHARE TRUST COMPANY, N. A.              LIBERTY ALL-STAR  EQUITY FUND

ON BEHALF OF BOTH ENTITIES:


By: /s/ Dennis V. Moccia                         By: /s/ Jeremy O. May
    ------------------------------------             -----------------
Name: Dennis V. Moccia                           Name: Jeremy O. May
      ----------------------------------              --------------
Title: Managing Director                         Title: Treasurer
       ----------------------------------               ---------


                                       25
<PAGE>





                                    EXHIBIT B
                                    ---------





                      LIBERTY ALL-STAR EQUITY FUND (C3703)












                                       26
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2K
<SEQUENCE>14
<FILENAME>exhibitk6.txt
<DESCRIPTION>EX-99.2K6
<TEXT>
              FEE AND SERVICE SCHEDULE FOR STOCK TRANSFER SERVICES

                                     BETWEEN



                          LIBERTY ALL-STAR EQUITY FUND

                                       AND



                               COMPUTERSHARE INC.

                                       AND



                        COMPUTERSHARE TRUST COMPANY, N.A.



This Fee and Service Schedule is by and between, Computershare Inc.
("Computershare") and Computershare Trust Company, N.A. (the "Trust Company"),
(collectively, "Transfer Agent") and Liberty All-Star Equity Fund (the
"Company"), whereby the Transfer Agent will perform the following services for
the Company. This Fee and Service Schedule ("Schedule") is an attachment to the
Agreement.  Terms used, but not otherwise defined in this Schedule, shall have
the same meaning as those terms in the Agreement.


TERM

The fees set forth in this Schedule shall be effective for a period of ONE (1)
YEAR, commencing from the effective date of AUGUST 1, 2007 (the "Initial Term").
Sixty (60) days before the expiration of the Initial Term or a Renewal Term,
whichever is applicable, the parties to this Agreement will agree upon a Fee
Schedule for the upcoming Renewal Term.  If no new fee schedule is agreed upon,
provided that service mix and volumes remain constant, the fees listed in the
Schedule shall be increased (a) by the accumulated change in the National
Employment Cost Index for Service Producing Industries (Finance, Insurance, Real
Estate) for the preceding years of the contract, as published by the Bureau of
Labor Statistics of the United States Department of Labor; or (b) to the
Transfer Agent's minimum fees then in effect, whichever is greater.  Fees will
be increased on this basis for each successive Agreement anniversary thereafter.

FEES

ONGOING ACCOUNT MANAGEMENT*
- ---------------------------
This fee covers all administration of the services listed in the services
section except as noted below.  Out of pocket costs associated with providing
these services will be charged separately.

$5,665.00     Liberty All-Star Equity Fund -  Monthly Administrative Fee
$     .75     Per DRP Transaction
$    1.00     Per Fulfillment package

      * If the average volume of transactions, inquiries, or telephone calls
      significantly increases during the term of this Agreement as a result of
      outside factors or unforeseen circumstances for which the Transfer Agent
      is not the proximate cause, the Transfer Agent and the Company shall
      negotiate an additional fee.


<PAGE>



LOST OWNER/SHAREHOLDER SEARCH SERVICES
- --------------------------------------
   o  SEC Electronic Database Search             $2.00 per account searched
   o  National Change of Address (NCOA) Search   $.01 per account (all accounts)

SERVICES

      ADMINISTRATIVE SERVICES
      -----------------------
      o  Annual administrative services as Transfer Agent and Registrar for the
         common stock of the company
      o  Assignment of relationship manager

      ACCOUNT MAINTENANCE
      -------------------
      o  Maintain 7,500 registered shareholder accounts for Liberty All-Star
         Equity Fund (additional accounts to be billed at $6.00 each per year)
      o  Maintain registered shareholder accounts
      o  Create new shareholder accounts
      o  Post and acknowledge address changes
      o  Process other routine file maintenance adjustments
      o  Post all transactions, including debit and credit certificates, to the
         shareholder file
      o  Respond to requests for audit confirmations
      o  Perform OFAC (Office of Foreign Asset Control) and Patriot Act
         reporting
      o  Obtain tax certifications

      SHARE ISSUANCE
      --------------
      o  Issuance, cancellation and registration of shares
      o  Process all legal transfers as appropriate
      o  Combine certificates into larger and/or smaller denominations
      o  Replace lost certificates in accordance with UCC guidelines and
         Computershare policy (subject to shareholder-paid fee and bond premium)
      o  Place, maintain and remove stop-transfer notations

      SHAREHOLDER COMMUNICATIONS
      --------------------------
      o  Provide company-specific Shareholder contact number;
      o  Provide IVR 24/7 (subject to system maintenance);
      o  Respond to Shareholder inquiries (written, e-mail and web);
      o  Record all Shareholder calls;
      o  Scan and image incoming correspondence from Shareholders;

      DIRECT REGISTRATION SYSTEM
      --------------------------
      o  Register, issue and transfer certificates electronically per the terms
         and conditions of the DRS appointment letter and the sales order
         processing facility
      o  Process Web, IVR and telephone sales for Shares held in direct
         registration (sale fees charged to Shareholder), pursuant to the terms
         and conditions, including applicable fees, of the sales facility


<PAGE>


      ONLINE ACCESS
      -------------
      o  Provide Internet access to "Issuer Online," desktop access to corporate
         and Shareholder information administered by Computershare, which
         permits data management including running standard reports such as Top
         10 - 200 Shareholder lists, submitting real-time inquiries such as an
         issued capital query, and reporting by holding range
      o  Provide Internet access to "Investor Centre," which provides
         Shareholder account information, transaction capabilities, and
         downloadable forms and FAQs

      MAILING SERVICES
      ----------------
      o  Coordinate the mailing of company-provided reports, three (3) per annum
         for registered Shareholders

      ANNUAL MEETING SERVICES
      -----------------------
      o  Prepare a full Shareholder list as of the Annual Meeting Record Date
      o  Address proxy cards for all registered Shareholders
      o  Coordinate the mailing of the proxy card, proxy statement, return
         envelope and Annual Report to all registered Shareholders
      o  Receive, open and examine returned proxies
      o  Tabulate returned proxies
      o  Provide on-line access to proxy vote status
      o  Attend Annual Meeting as Inspector of Election (travel expenses billed
         as incurred)
      o  Prepare a final Annual Meeting list reflecting how each account has
         voted on each proposal


      ADDITIONAL ANNUAL MEETING SERVICES (SUBJECT TO ADDITIONAL FEES)
      ---------------------------------------------------------------

      o  Electronic delivery of proxy material ($0.35 each, $250 minimum)
      o  Provide financial printing of 10ks, proxy statements and other related
         documents (at bid)
      o  Accept and load other related proxy files, 401K, ESPP and other stock
         issues not on our recordkeeping system ($300 per file)
      o  Match load related proxy files to registered Shareholder base to
         eliminate duplicate mailings ($300 per file)
      o  Provide householding of materials to the same address ($500 set-up fees
         plus $0.50 for each suppressed package)
      o  Provide Internet and telephone voting ($1,000 set-up plus $0.28 per
         telephone vote and $0.10 per web vote)


      DIVIDEND SERVICES
      -----------------
      o  Receive all funds before or on mailing date by 11:00 A.M., EASTERN
         STANDARD TIME via Federal Funds Wire, ACH or Demand Deposit Account
         debit
      o  Coordinate the mailing of quarterly dividends with an additional
         enclosure with each dividend check
      o  Prepare and file Federal Information Returns (Form 1099) of dividends
         paid in a year
      o  Prepare and file State Information Returns of dividends paid in a year
         to Shareholders resident within such state
      o  Prepare and file annual withholding return (Form 1042) and payments to
         the government of income taxes withheld from Non-Resident Aliens
      o  Coordinate the mailing of Form 1099 to Shareholders
      o  Replace lost dividend checks
      o  Reconcile paid and outstanding checks
      o  Code "undeliverable" accounts to suppress mailing dividend checks to
         same
      o  Keep records of accumulated uncashed dividends
      o  Perform the following duties as required by the Interest and Dividend
         Tax Compliance Act of 1983:
         o  Withhold tax from Shareholder accounts not in compliance with the
            provisions of the Act
         o  Reconcile and report taxes withheld, including additional 1099
            reporting requirements, to the Internal Revenue Service


<PAGE>

         o  Mail to new accounts who have had taxes withheld, to inform them of
            procedures to be followed to curtail subsequent back-up withholding
         o  Perform Shareholder file adjustments to reflect certification of
            accounts

      ACH SERVICES
      ------------
      o  Review cards for accuracy and completeness and identifying cards with
         incomplete information
      o  Mail cure letter to Shareholders with incomplete cards
      o  Identify cards received after the cut-off date
      o  Code accounts for ACH and performing pre-note test
      o  Identify rejected ACH transmissions mail dividend check and explanation
         letter to Shareholders with rejected transmissions
      o  Respond to Shareholder inquiries concerning the ACH Program
      o  Code cards received after cut-off date
      o  Calculate on a quarterly basis the Share breakdown for ACH vs. other
         dividend payments and notifying the Company of funding amount for ACH
         transmissions and other payable date funds
      o  Credit ACH designated bank accounts automatically on dividend payable
         date
      o  Maintenance of ACH participant file, including coding new ACH accounts
      o  Process termination requests
      o  Keep adequate records including retention of authorization cards

      GLOBAL PAYMENTS SERVICE
      -----------------------
      o  Allow shareholders to elect to receive sale proceeds and dividend
         payments in foreign currencies (subject to certain geographic
         restrictions) by check or by electronic funds transfer in accordance
         with Transfer Agent's guidelines (fees paid by Shareholders)

      DIVIDEND REINVESTMENT SERVICES
      ------------------------------
      o  Invest Dividend Reinvestment and Optional Cash Purchases per the plan
         document
      o  Reinvestment and/or cash investment transactions of Dividend
         Reinvestment Plan participant accounts
      o  Coordinate the mailings statement to Plan participant when activity
         occurs
      o  Process automatic monthly investments via ACH
      o  Maintain DRP accounts and establishing new participant accounts
      o  Process sale, termination and withdrawal requests
      o  Supply summary reports for each reinvestment/investment
      o  Provide certificate safekeeping
      o  Coordinate the mailing of Form 1099 to participants, including DRP
         participants and related filings with the IRS

      DIRECT FILING OF ABANDONED PROPERTY
      -----------------------------------
      o   Coordinate the mailing of due diligence notices to all qualifying
          Shareholder accounts as defined by the State filing matrix
      o   Process returned Due Diligence notices and remitting property to
          Shareholders prior to escheatment
      o   Prepare and file Preliminary and Final Abandoned Property Reports
      o   Prepare and file checks for each state covering unclaimed funds as per
          state requirements
      o   Issue and file stock certificate(s) registered to the applicable
          state(s) representing returned (RPO) certificates and underlying Share
          positions
      o   Retain, as required by law or otherwise, records of property escheated
          to the several States and responding, after appropriate research, to
          Shareholder inquiries relating to same


<PAGE>


      LOST OWNER/SHAREHOLDER SEARCH SERVICES
      --------------------------------------
      o  Perform electronic database searches in accordance with SEC
         requirements
      o  Update new addresses provided by search firm
      o  Send verification form to Shareholder to validate address
      o  Reissue abandoned property held to Shareholders upon receipt of signed
         verification form



ADDITIONAL SERVICES
- -------------------
Items not included in the fees and services set forth in this Schedule
including, but not limited to, services associated with the payment of a stock
dividend, stock split, corporate reorganization, or any services associated with
a special project are to be billed separately, on an appraisal basis.

Services required by legislation or regulatory fiat which become effective after
the date of acceptance of this Schedule shall not be a part of the Standard
Services and shall be billed by appraisal.  All additional services not
specifically covered under this Schedule will be billed by appraisal, as
applicable.

BILLING DEFINITION OF NUMBER OF ACCOUNTS
- ----------------------------------------
For billing purposes, the number of accounts will be based on open accounts on
file at the beginning of each billing period, plus any new accounts added during
that period.  An open account shall mean the account of each Shareholder which
account shall hold any full or fractional Shares of stock held by such
Shareholder, outstanding funds, or reportable tax information.

OUT-OF-POCKET EXPENSES
- ----------------------
In addition to the fees above, the Company agrees to reimburse the Transfer
Agent for out-of-pocket expenses, including but not limited to postage, forms,
telephone, taxes, records storage, exchange and broker fees, or advances
incurred by the Transfer Agent for the items set out in Exhibit A attached
hereto.  In addition, any other expenses incurred by the Transfer Agent at the
request or with the consent of the Company, will be reimbursed by the Company.


<PAGE>


                                   ACCEPTANCE

In witness whereof, the parties hereto have caused this Fee and Service Schedule
to be executed by their respective officers, hereunto duly agreed and
authorized, as of the effective date of this Fee and Service Schedule.


COMPUTERSHARE INC.
COMPUTERSHARE TRUST COMPANY, N. A.       LIBERTY ALL-STAR EQUITY FUND

ON BEHALF OF BOTH ENTITIES:


By:    /s/ Dennis V. Moccia              By:    /s/ Jeremy O. May
       ----------------------------             -----------------

Name:  Dennis V. Moccia                  Name:  Jeremy O. May
       ----------------------------             -------------

Title: Managing Director                 Title: Treasurer
       ----------------------------             ---------










THIS FEE AND SERVICE SCHEDULE SHALL SERVE AS AN ATTACHMENT TO THE TRANSFER
AGENCY AND STOCK TRANSFER SERVICES AGREEMENT DATED AUGUST 1, 2007.

<PAGE>

                                   Exhibit A
                            Out of Pocket Expenses

Out of pocket expenses associated with, but not limited to, the following are
not included in the fees quoted in this Fee and Service Schedule and are
billable as incurred.

      o  Postage (outgoing and business reply)
      o  Envelopes
      o  Forms and stationery
      o  Printing
      o  Enclosing (proxy cards, dividend checks, etc.)
      o  Fulfillment (transfer packages, new account packages, DRIP enrollment
         packages)
      o  Proxy proof set-up
      o  Record retention
      o  Insurance premiums (mailing certificates)
      o  Delivery and freight charges (including overnight delivery; Airborne
         Express, FedEx, etc.)
      o  Destruction of excess/obsolete material
      o  Telephone usage and line expenses
      o  SAS 70 reports
      o  SEC lost shareholder electronic search

PLEASE NOTE:

Good funds to cover postage expenses in excess of $10,000 for Shareholder
mailings must be received in full by 12:00 p.m. Eastern Time on the scheduled
mailing date.  Postage expenses less than $10,000 will be billed as incurred.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2R
<SEQUENCE>15
<FILENAME>coe.txt
<DESCRIPTION>EX-99.2R
<TEXT>
                               ALPS ADVISERS, INC.
                                 CODE OF ETHICS
                                NOVEMBER 29, 2006



I. INTRODUCTION
   ------------

The Code of Ethics (the "Code") is designed to reinforce ALPS Adviser, Inc.'s
("AAI's") reputation for integrity by avoiding even the appearance of
impropriety in the conduct of our business. The Code sets forth procedures and
limitations which govern the personal securities transactions of every AAI
employee.

AAI and our employees are subject to certain laws and regulations governing
personal securities trading. We have developed this Code to promote the highest
standards of behavior and ensure compliance with applicable laws.

Employees should be aware that they may be held personally liable for any
improper or illegal acts committed during their course of employment, and that
"ignorance of the law" is not a defense. Employees may be subject to civil
penalties such as fines, regulatory sanctions including suspensions, as well as
criminal penalties.

Employees must read the Code and comply with it. Failure to comply with the
provisions of the Code may result in serious sanctions including, but not
limited to: disgorgement of profits, dismissal, substantial personal liability
and referral to law enforcement agencies or other regulatory agencies. Employees
should retain a copy of the Code in their records for future reference. Any
questions regarding the Code should be directed to the Chief Compliance Officer.

General Principles
- ------------------

Each AAI employee is responsible for maintaining the very highest ethical
standards when conducting business. More specifically, this means:

   o Each employee has a duty at all times to place the interests of our clients
   first;

   o All personal securities transactions must be conducted consistent with the
   Code and in such a manner as to avoid any actual or potential conflict of
   interest or other abuse of the employee's position of trust and
   responsibility; and

   o No employee should take inappropriate advantage of his/her position or
   engage in any fraudulent or manipulative practice with respect to our
   clients' accounts.

II. APPLICABILITY
    -------------

AAI Employees
- -------------

This Code is applicable to all AAI employees. This includes full-time, part-
time, benefited and non-benefited, officers, directors, exempt and non-exempt
personnel. Additionally, each new employee's offer letter will include a copy of
the Code of Ethics and a statement advising the individual that he/she will be
subject to the Code of Ethics if he/she accepts the offer of employment.

Family Members and Related Parties
- ----------------------------------

<PAGE>

                               ALPS ADVISERS, INC.
                                 CODE OF ETHICS
                                NOVEMBER 29, 2006

The Code applies to the accounts of the employee, his/her spouse or domestic
partner, his/her minor children, his/her adult children living at home, and any
relative, person or entity for whom the employee directs the investments. Joint
accounts will also need to be included if an AAI employee is one of the joint
account holders.

Contractors and Consultants
- ---------------------------

Each AAI contractor/consultant/temporary employee contract will include the Code
as an addendum, and each contractor/consultant/temporary employee will be
required to sign an acknowledgement that he/she has read the Code and will abide
by it except for the pre-clearance and reporting provisions.

Investment Clubs
- ----------------

An employee who is a member of an investment club is subject to the pre-
clearance and reporting requirements of the Code with respect to the
transactions of the investment club. Additionally, memberships in Investment
Clubs will require prior approval of the Chief Compliance Officer.

III. KEY DEFINITIONS
     ---------------

BENEFICIAL OWNERSHIP
- --------------------

For purposes of the Code, "Beneficial Ownership" shall be interpreted in the
same manner as it would be in Rule 16a-1(a)(2) under the Securities Exchange Act
of 1934 ("Exchange Act") in determining whether a person is subject to the
provisions of Section 16 under the Exchange Act and the rules and regulations
thereunder.

COVERED SECURITIES
- ------------------

For purposes of the Code, "Security" shall have the meaning set forth in Section
2(a)(36) of the Investment Company Act of 1940 ("1940 Act"). This definition of
"Security" includes, but is not limited to: any note, stock, treasury stock,
bond, debenture, evidence of indebtedness, certificates of interest or
participation in any profit-sharing agreement, any put, call, straddle, option
or privilege on any Security or on any group or index of Securities, or any put,
call, straddle, option or privilege entered into on a national securities
exchange relating to foreign currency. Further, for the purpose of the Code,
"Security" shall include any commodity contracts as defined in Section
2(a)(1)(A) of the Commodity Exchange Act. This definition includes but is not
limited to futures contracts on equity indices.

Covered securities will also include exchange traded funds ("ETFs") advised or
sub-advised by AAI or any equivalents in local non-US jurisdictions, single
stock futures and both the U.S. Securities and Exchange Commission ("SEC") and
Commodity Futures Trading Commission ("CFTC") regulated futures.

"Security" shall NOT include direct obligations of the government of the United
States or any other sovereign country or supra-national agency, bankers'
acceptances, bank certificates of deposit, commercial paper and high quality
short-term debt instruments, including repurchase agreements, variable and fixed
insurance products, and interests in IRC Section 529 plans.

<PAGE>

                               ALPS ADVISERS, INC.
                                 CODE OF ETHICS
                                NOVEMBER 29, 2006


IV. PRE-CLEARANCE OF PERSONAL SECURITIES TRANSACTIONS
    -------------------------------------------------

Unless the investment type is exempted for pre-clearance purposes, all employees
must request and receive pre-clearance prior to engaging in the purchase or sale
of a security. Although a request may need to be pre-cleared, it may be subject
to the de minimis exception which would permit a trade to be automatically pre-
approved due to its size. All pre-clearance requests will be made by submitting
a Pre-Trade Authorization Form which is located in Appendix A to this Code.

Pre-clearance approval is only good until midnight local time of the day when
approval is obtained. "Good-till-cancelled" orders are not permitted. "Limit"
orders must receive pre-clearance every day the order is open.

As there could be many reasons for pre-clearance being granted or denied,
employees should not infer from the pre-clearance response anything regarding
the security for which pre-clearance was requested.

De Minimis Exception
- --------------------

Employee transactions effected pursuant to the de minimis exception remain
subject to the pre-clearance and reporting requirements of the Code. A "de
minimis transaction" is a personal trade that meets the following conditions: A
transaction of less than US $30,000 or the local country equivalent, 2,000
shares or units, and not more than 1% of the average daily trading volume in the
security for the preceding 5 trading days.

Exempted Securities
- -------------------

Pre-clearance by employees is not required for the following transactions:

   o Transactions made in an account where the employee pursuant to a valid
   legal instrument has given full investment discretion to an
   unaffiliated/unrelated third party;

   o Purchases or sales of direct obligations of the government of the United
   States or other sovereign government or supra-national agency, high quality
   short-term debt instruments, bankers acceptances, certificates of deposit
   ("CDs"), commercial paper, repurchase agreements, and securities issued by
   open-end investment companies (e.g., mutual funds) not advised or sub-advised
   by AAI;

   o Automatic investments in programs where the investment decisions are non-
   discretionary after the initial selections by the account owner (although the
   initial selection requires pre-clearance);

   o Investments in dividend reinvestment plans;

   o Purchases or sales of variable and fixed insurance products and IRC Section
   529 plans;

   o Exercised rights, warrants or tender offers;

<PAGE>

                               ALPS ADVISERS, INC.
                                 CODE OF ETHICS
                                NOVEMBER 29, 2006

   o General obligation municipal bonds, transactions in Employee Stock
   Ownership Programs ("ESOPs), and Share Builder and similar services; and

   o Securities received via a gift or inheritance.

V. RESTRICTIONS
   ------------

BLACKOUT PERIODS
- ----------------

Subject to the de minimis exception, employees may not trade in a covered
security on any day that a client account/fund has a pending buy or sell order
in the same covered security.
In addition, subject to the de minimis exception, an employee may not buy or
sell a security that a client account/fund has traded within 7 calendar days on
either side of the fund's/ account's execution date.

INITIAL PUBLIC OFFERINGS AND PRIVATE PLACEMENTS
- -----------------------------------------------

Employees are prohibited from acquiring securities through an allocation by the
underwriter of an initial public offering ("IPO"). There is an exception for a
situation where the spouse/domestic partner, with prior written disclosure to
and written approval from the Chief Compliance Officer, could acquire shares in
an IPO of his/her employer.

In addition, employees are prohibited from purchasing securities in a private
offering unless the purchase is approved in writing by the Chief Compliance
Officer. Private placements include certain co-operative investments in real
estate, commingled investment vehicles such as hedge funds, and investments in
family owned businesses. Time-shares and cooperative investments in real estate
used as a primary or secondary residence are not considered to be private
placements.

OPTIONS
- -------

Employees are prohibited from buying or selling options. There is an exception
for employees who have received options from a prior employer. In those
instances, the exercising or selling of
options received from the prior employer are subject to the pre-clearance and
reporting requirements of this Code.

MUTUAL FUNDS
- ------------

AAI employee investments in any mutual funds that are advised or sub-advised by
AAI or certain affiliates are subject to a ninety (90) calendar day holding
period. These transactions are also subject to the pre-clearance and reporting
requirements of this Code.

The current list of AAI advised and sub-advised mutual funds are maintained by
the Compliance Department. If AAI advised or sub-advised money market or short-
term income funds, investments in these funds would be exempt from these
requirements.

SHORT-TERM TRADING AND OTHER RESTRICTIONS
- -----------------------------------------

The following restrictions apply to all securities transactions by employees:

<PAGE>

                               ALPS ADVISERS, INC.
                                 CODE OF ETHICS
                                NOVEMBER 29, 2006

   o SHORT-TERM TRADING. Employees are prohibited from the purchase and sale or
   sale and purchase of the same securities within sixty (60) calendar days.
   Mutual funds advised or sub-advised by AAI are subject to a ninety (90) day
   holding period.

   o EXCESS TRADING. While active personal trading may not in and of itself
   raise issues under applicable laws and regulations, we believe that a very
   high volume of personal trading can be time consuming and can increase the
   possibility of actual or apparent conflicts with portfolio transactions.
   Accordingly, an unusually high level of personal trading activity is strongly
   discouraged and may be monitored by the Compliance Department to the extent
   appropriate for the category of person, and a pattern of excessive trading
   may lead to the taking of appropriate action under the Code.

   o FRONT RUNNING. Employees may not engage in "front running," that is, the
   purchase or sale of securities for their own accounts on the basis of their
   knowledge of AAI's trading positions or plans.

   o MATERIAL NONPUBLIC INFORMATION. Employees possessing material nonpublic
   information regarding any issuer of securities must refrain from purchasing
   or selling securities of that issuer until the information becomes public or
   is no longer considered material.

   o SHORTING OF SECURITIES. Employees may not engage in the practice of
   shorting securities.

VI. REPORTING REQUIREMENTS
    ----------------------

All Securities are subject to the reporting requirements of the Code except the
following:

   o Direct Obligations of any sovereign government or supra-national agency;

   o Bankers' acceptances, bank certificates of deposit, commercial paper and
     high quality short-term debt instruments, including repurchase agreements;

   o Shares issued by open-end mutual funds and ETFs NOT advised or sub-
     advised by;

   o Investments in dividend reinvestment plans; and

   o Variable and fixed insurance products and IRC Section 529 plans.


IRC 401(k) plans are also exempt from the reporting requirements except if self-
directed brokerage accounts. Employees must report holdings of or transactions
in ESOPs or pension or retirement plans if they have a direct or indirect
Beneficial Ownership interest in any Covered Securities held by the plan.

Additionally, securities received via a gift or inheritance are required to be
reported, but are NOT subject to the pre-clearance requirements of the Code.

   a.  Initial Holdings Reports
       ------------------------

<PAGE>

                               ALPS ADVISERS, INC.
                                 CODE OF ETHICS
                                NOVEMBER 29, 2006

       Within ten (10) calendar days of being hired by AAI, each employee must
       provide the Compliance Department with a statement of reportable
       securities holdings and brokerage accounts. More specifically, each
       employee must provide the following information:

          o The title, number of shares and principal amount of each Security in
          which the employee had any direct or indirect Beneficial Ownership
          when the person became an employee;
          o The name of any broker, dealer or bank with whom the employee
          maintained an account in which any securities were held for the direct
          or indirect benefit of the employee as of the date the person became
          an employee; and

          o The date the report is submitted by the employee.

   b.  Duplicate Statements and Confirmations
       --------------------------------------

       Upon AAI employment and for any accounts opened during employment, an
       employee must instruct his/her broker-dealer, trust account manager or
       other entity through which he/she has a securities trading account to
       send directly to our Compliance Department:

          o Trade confirmation summarizing each transaction; and
          o Periodic statements.

       This applies to all accounts in which an employee has direct or indirect
       Beneficial Ownership. A sample letter with the Compliance address is
       located under Appendix B of this Code.

   c.  Quarterly Transaction Reports
       -----------------------------

       Each employee is required to submit quarterly his/her Quarterly
       Securities Report within ten (10) calendar days of each calendar quarter
       end to the Compliance. The form for making this report is located under
       Appendix C of this Code.

       Specific information to be provided includes:

            1. With respect to any transaction during the quarter in a Security
            in which any employee had any direct or indirect Beneficial
            Ownership:

             o The date of the transaction, the title, the interest rate and
             maturity date (if applicable), the number of shares and the
             principal amount of each Security involved;

             o The nature of the transaction, (i.e., purchase, sale, or other
             type of acquisition or disposition);

             o The price of the Security at which the transaction was effected;

             o The name of the broker, dealer or bank with or through which
             transaction was effected; and

             o The date that the report is submitted by the employee.

<PAGE>

                               ALPS ADVISERS, INC.
                                 CODE OF ETHICS
                                NOVEMBER 29, 2006


          2. With respect to any account established by the employee in which
          any securities were held during the quarter for the direct or indirect
          benefit of the employee:

             o The name of the broker, dealer, or bank with whom the employee
             established the account;

             o The date the account was established; and
             o The date the report is submitted by the employee.

   d.  Annual Holdings Reports
       -----------------------

       Each employee is required to submit annually (i.e., once each and every
       calendar year) a list of holdings, which is current as of a date no more
       than thirty (30) days before the report is submitted. In addition, each
       employee is required to certify ANNUALLY that he/she has reviewed and
       understands the provisions of the Code. The form for making these reports
       is provided under Appendix D of this Code.

       Specific information to be provided includes:

          o The title, number of shares and principal amount of each Covered
          Security in which the employee had any direct or indirect beneficial
          ownership;

          o The name of any broker, dealer or bank with whom the employee
          maintains an account in which any securities are held for the direct
          or indirect benefit of the employee; and

          o  The date that the report is submitted by the employee.


VII. STANDARD OF CONDUCT
     -------------------

PROTECTING CONFIDENTIAL INFORMATION
- -----------------------------------

Employees may receive information about AAI, its clients and other parties that,
for various reasons, should be treated as confidential. All employees are
expected to strictly comply with measures necessary to preserve the
confidentiality of the information.

Insider Trading and Tipping
- ---------------------------

The misuse of material nonpublic information, or inside information, constitutes
a fraud under the securities laws of the United States and many other countries.
Fraudulent misuse of inside information includes buying or selling securities
while in possession of material nonpublic information for an employee or
employee-related account, a proprietary account or for the account of any
client. Fraudulent misuse of inside information also includes disclosing or
tipping such information to someone else who then trades on it, or using such
information as a basis for recommending the purchase or sale of a security.
Information is material when it has market significance and there is a
likelihood that a reasonable investor would consider the information important

<PAGE>

                               ALPS ADVISERS, INC.
                                 CODE OF ETHICS
                                NOVEMBER 29, 2006

in deciding whether to buy or sell the securities of the company involved. It is
nonpublic if it has not been broadly disseminated.

In no event, may any employee who receives inside information use that
information to trade or recommend securities affected by such information for
personal benefit, the benefit of AAI or any affiliate or the benefit of a third
party. More specifically:

   o No employee may, while in possession of inside information affecting a
   security, purchase or sell such security for the account of such employee, a
   client or any other person or entity.
   o No employee may disclose inside information to any person outside of AAI.
   However, discussions with legal counsel and disclosures authorized by the
   client in furtherance of a related project or transaction are permitted.

   o No employee may recommend or direct the purchase from or sale of a security
   to anyone while in the possession of inside information, however obtained.

GIFTS AND ENTERTAINMENT
- -----------------------

All employees are required to follow the following standards regarding gifts and
entertainment:

   o Employees should avoid any excessive or disreputable entertainment that
   would reflect unfavorably on AAI;

   o Employees do not offer or accept cash or its equivalent as a gift;

   o Employees recognize that promotional gifts such as those that bear the logo
   of a company's name or that routinely are made available to the general
   public are generally acceptable business gifts;

   o Employees fully, fairly and accurately account on the books and records of
   AAI for any expense associated with a gift or entertainment; and

   o Employees do not accept any gift or bequest under a will or trust from a
   client of AAI.

For purposes of the AAI Code, the gifts and entertainment limit will be $250.00
or the local equivalent. In order for an employee to accept a gift above the
limit, he/she must obtain prior written approval from the Chief Compliance
Officer.  A copy of the Gift Disclosure Form may be found under Appendix E of
this Code.

SERVICE AS A DIRECTOR/OUTSIDE EMPLOYMENT AND ACTIVITIES
- -------------------------------------------------------

All employees are required to comply with the following provisions:

   o Employees are to avoid any business activity, outside employment or
   professional service that competes with AAI or conflicts with the interests
   of AAI or its clients.

   o An employee is required to obtain the approval from the Chief Compliance
   Officer before becoming a director, officer, employee, partner or sole
   proprietor of a "for profit" organization. The request for approval should
   disclose the name of the organization, the nature of the business, whether
   any conflicts of interest could reasonably result from the association,

<PAGE>

                               ALPS ADVISERS, INC.
                                 CODE OF ETHICS
                                NOVEMBER 29, 2006

   whether fees, income or other compensation will be earned and whether there
   are any relationships between the organization and AAI. The request for
   approval the final review and approval of AAI's President.

   o Employees do not accept any personal fiduciary appointments such as
   administrator, executor or trustee other than those arising from family or
   other close personal relationships.

   o Employees do not use AAI resources, including computers, software,
   proprietary information, letterhead and other property in connection with any
   employment or other activity outside AAI.

   o Employees disclose to the Compliance Department a conflict of interest or
   the appearance of a conflict with AAI and discuss how to control the risk.

When completing their annual certification acknowledging receipt and
understanding of the Code of Ethics, AAI employees will be asked to disclose all
outside affiliations. Any director/trustee positions with public companies or
companies likely to become public are prohibited without prior written approval
the Chief Compliance Officer.  A copy of the Annual Certification and
Acknowledgement is provided under Appendix F of this Code.

VIII. SANCTIONS
      ---------

Upon discovering a violation of this Code by an employee or his/her family
member or related party, the Chief Compliance Officer may impose such sanctions
as it deems appropriate, including, among other things, the following:

   o A letter of censure to the violator;
   o A monetary fine levied on the violator;
   o Suspension of the employment of the violator;
   o Termination of the employment of the violator;
   o Civil referral to the SEC or other civil regulatory authorities determined
   by AAI; or
   o Criminal referral - determined by AAI.

Examples of possible sanctions include, but are not limited to:

   o A warning letter, with a cc: to the employee's direct report, for a first
   time pre-clearance or reporting violation;

   o Monetary fines and disgorgement of profits when an employee profits on the
   purchase of a security he/she should not purchase; and

   o Recommendation for suspension or termination if an employee is a serial
   violator of the Code.

Appeals Process
- ---------------

If an employee decides to appeal a sanction, he/she should contact the Chief
Compliance Officer who will refer the issue to the Compliance Risk Management
Committee for their review and consideration.

<PAGE>

                               ALPS ADVISERS, INC.
                                 CODE OF ETHICS
                                NOVEMBER 29, 2006

APPENDIX A - PERSONAL TRADING AUTHORIZATION FORM



1. Name of Access Person:
- -----------------------------------------------------------------

2. Name and symbol of Security:
- -----------------------------------------------------------------

3. Maximum quantity to be purchased or sold:
- -----------------------------------------------------------------

4. Name, account # & phone # of broker to effect transaction:
- -----------------------------------------------------------------



5. Check if applicable:

Purchase          Market Order           Sale         Limit Order
         ----                  -----          -----               -----
(Limit Order Price:            )    Not Held Order
                   -----------                    -----

6. In connection with the foregoing transaction, I hereby make the following
representations and warranties:

     (a) I do not possess any material nonpublic information regarding the
         Security or the issuer of the Security.

     (b) To my knowledge:

         (1)  The Securities or "EQUIVALENT" securities (i.e., securities
              issued by the same issuer)  [ ARE / ARE NOT ] (CIRCLE  ONE) held
              by any investment  companies or other accounts managed by AAI;
         (2)  There are no outstanding purchase or sell orders for this
              Security (or any equivalent security)  by any  investment
              companies or other accounts managed by AAI; and
         (3)  None  of  the  Securities  (or  equivalent   securities)  is/are
              actively  being considered  for  purchase  or  sale  by any
              investment companies or other accounts managed by AAI.

     (c) The Securities are not being acquired in an initial public offering.

     (d) The Securities are not being acquired in a private placement or, if
         they are, I have reviewed Section V. of the Code and have attached
         hereto a written authorization of such transaction.

<PAGE>

                               ALPS ADVISERS, INC.
                                 CODE OF ETHICS
                                NOVEMBER 29, 2006

     (e)  If I am a Portfolio Manager, none of the accounts I manage purchased
          or sold these Securities (or equivalent securities) within the past
          seven calendar days and I do not expect any such client accounts to
          purchase or sell these Securities (or equivalent securities) within
          seven calendar days of my purchase or sale.

     (f)  If I am purchasing these Securities, I have not directly or indirectly
          (through any member of my Immediate Family, any account in which I
          have a Beneficial Interest or otherwise) sold these Securities (or
          equivalent securities) in the prior 60 days.

     (g)  If I am selling these Securities, I have not directly or indirectly
          (through any member of my Immediate Family, any account in which I
          have a Beneficial Interest or otherwise) purchased these Securities
          (or equivalent securities) in the prior 60 days.

     (h)  I have read the AAI Code of Ethics within the prior 12 months and
          believe that the proposed trade fully complies with the requirements
          of the Code.


- ----------------------------        ---------------------------------
       Access Person                            Print Name



<PAGE>
                               ALPS ADVISERS, INC.
                                 CODE OF ETHICS
                                NOVEMBER 29, 2006

APPENDIX B - BROKER/DEALER DUPLICATE STATEMENT/CONFIRMATION REQUEST LETTER

[Date]

[Address of Broker-Dealer]

Re:    [Employee Name]
       [Account Number, if available]

Dear Sir or Madam:

       Please be advised that [employee name] is considered an access person of
ALPS Advisers, Inc., which is an SEC registered investment adviser.

       I have no objections if [employee name] opens a personal account with
your firm. Please provide me with duplicate copies of all statements and
confirmations generated on this account.  These duplicate statements and
confirmations should be forwarded to:

             ALPS Advisers, Inc.
             Attn: Compliance Department
             1625 Broadway, Suite 2200
             Denver, Colorado 80202


       If you have any questions, please feel free to contact me at 303-623-
       2577.

                                        Sincerely,



                                        Bradley J. Swenson
                                        Chief Compliance Officer



<PAGE>
                               ALPS ADVISERS, INC.
                                 CODE OF ETHICS
                                NOVEMBER 29, 2006

APPENDIX C - QUARTERLY TRANSACTION REPORT


                 For the Calendar Quarter Ended Month DD, YYYY
                                                --------------

To:    ALPS Advisers, Inc. employees

A.     SECURITIES TRANSACTIONS.  Unless otherwise reported below, I acknowledge
       that, in the ordinary course of fulfilling my official duties as a Fund
       director/trustee, I had no knowledge that during the 15-day period
       immediately before or after any of my personal securities transactions in
       a Covered Security, the Fund purchased or sold the Covered Security, or
       the Fund or its investment adviser considered purchasing or selling the
       Covered Security.  I understand that this information must be reported no
       later than DATE.

<TABLE>
<CAPTION>
Title of   Date of      Number of      Dollar    Interest Rate and Maturity  Nature of Transaction   Price Broker/Dealer or Bank
Security Transaction    Shares or     Amount of     Date (if applicable)    (Purchase, Sale, Other)        Through Whom Effected
                        Principal    Transaction
                         Amount
<S>      <C>         <C>             <C>         <C>                        <C>                      <C>   <C>
</TABLE>





B.     NEW BROKERAGE ACCOUNTS.  During the quarter referred to above, I
established the following accounts in which securities were held during the
quarter for my direct or indirect benefit:
- --------------------------------------------------------------------------------
|Name of Broker, Dealer or Bank         |       Date Account Was Established:
- --------------------------------------------------------------------------------





C.     OTHER MATTERS.  This report (i) excludes transactions with respect to
which I had no direct or indirect influence or control, (ii) excludes other
transactions not required to be reported, and (iii) is not an admission that I
have or had any direct or indirect beneficial ownership in the securities listed
above.


Date:_____________________                     Signature:_______________________

                                               Print Name:______________________



<PAGE>
                               ALPS ADVISERS, INC.
                                 CODE OF ETHICS
                                NOVEMBER 29, 2006

APPENDIX D - ANNUAL HOLDINGS DISCLOSURE REPORT


             For the following period: January 1 200X - December 31, 200X
                                       ----------------------------------

To:  ALPS Advisers, Inc. Employee

       As of the period referred to above, I have a direct or indirect
beneficial ownership interest in the securities listed below which are required
to be reported pursuant to the Code of Ethics:


 Security               Number of Shares                Principal Amount
 --------               ----------------                ----------------





       The name of any broker, dealer or bank with whom I maintain an account in
which my securities are held for my direct or indirect benefit are as follows:





       This report (i) excludes transactions with respect to which I had no
direct or indirect influence or control, (ii) excludes other transactions not
required to be reported, and (iii) is not an admission that I have or had any
direct or indirect beneficial ownership in the securities listed above.




______________________________________         ________________________________
Date                                           Print Name


                                               _________________________________
                                               Signature



<PAGE>
                               ALPS ADVISERS, INC.
                                 CODE OF ETHICS
                                NOVEMBER 29, 2006

APPENDIX E - GIFT DISCLOSURE FORM



                            AAI GIFT DISCLOSURE FORM
- --------------------------------------------------------------------------------
NAME OF AAI EMPLOYEE
- --------------------------------------------------------------------------------
GIFT DESCRIPTION



- --------------------------------------------------------------------------------
RECEIVED OR GIVEN
- --------------------------------------------------------------------------------
FROM OR TO WHOM
- --------------------------------------------------------------------------------
ESTIMATED VALUE OF GIFT
- --------------------------------------------------------------------------------




<PAGE>
                               ALPS ADVISERS, INC.
                                 CODE OF ETHICS
                                NOVEMBER 29, 2006

APPENDIX F - ANNUAL CERTIFICATION AND ACKNOWLEDGMENT


Pursuant to the requirements of the Code of Ethics of ALPS Advisers, Inc.,
("AAI") the undersigned hereby certifies as follows:

           1. I have read the AAI's Code of Ethics.

           2. I understand the Code of Ethics and acknowledge that I am subject
                 to it.

           3. Since the date of the last Annual Certificate (if any) given
              pursuant to the Code of Ethics, I have reported all personal
              securities transactions and provided any securities holding
              reports required to be reported under the requirements of the
              Code of Ethics.

           4. I have disclosed all outside affiliations.








- --------------------------                     ---------------------------------

Date                                           Print Name

                                               ---------------------------------
                                               Signature




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2R
<SEQUENCE>16
<FILENAME>exhibitr2coe.txt
<DESCRIPTION>EX-99.2R
<TEXT>
                             LIBERTY ALL-STAR FUNDS


                              17j-1 CODE OF ETHICS
                              --------------------







OVERVIEW AND STATEMENT
- ----------------------

Section 17(j) of the 1940 Act makes it unlawful for any affiliated person of or
principal underwriter for a registered investment company, or any affiliated
person of an investment adviser of or principal underwriter for an investment
company, to engage in any act, practice or course of business in connection with
the purchase or sale, directly or indirectly, by such person of any security
held or to be acquired by such investment company in contravention of such rules
as the SEC may adopt to prevent any such acts, practices and courses of business
as are fraudulent, deceptive or manipulative. Section
17(j) is intended to permit the SEC to create guidelines to prohibit persons
affiliated with investment companies and their investment advisers and principal
underwriters from engaging in securities transactions for their personal
accounts when such transactions are likely to conflict with the investment
programs of such investment companies. In response to Section 17(j), the SEC
adopted Rule 17j-1 under the 1940 Act. Rule 17j-1
(1) prescribes an anti-fraud standard for affiliated persons of investment
companies, their investment advisers and principal underwriters, (2) requires
investment companies, their investment advisers and principal underwriters to
adopt codes of ethics applicable to certain affiliated persons known as "access
persons", subject to certain exceptions and
(3) requires "access persons" to report to the investment company all
transactions in securities of which they are the beneficial owners, subject to
certain exceptions.

The Code of Ethics (the "Code") set forth below shall apply to each Fund advised
by AAI whose Board specifically adopts the Code with respect to such Fund. A
person who is an "access person" of the Fund and an "access person" of the
Adviser (including any Sub-adviser) or principal underwriter of the Fund is only
required to report under and otherwise comply with the Adviser's, Sub-adviser's
or principal underwriter's Rule 17j-1 code of ethics, provided that such code
has been adopted pursuant to and in compliance with Rule 17j-1 and that the
Board of the Fund has also approved such code pursuant to
Rule 17j-1. Such persons, however, are still subject to the principles and
prohibitions contained in Section A of the Fund's Code.

<PAGE>

FUND LEVEL POLICIES AND PROCEDURES

A.     Legal Requirements.
       -------------------

Rule 17j-l(b) under the 1940 Act makes it unlawful for any officer or Board
member of a Fund (as well as other persons who are "Access Persons"(1), in
connection with the purchase or sale, directly or indirectly, by such person of
a security "held or to be acquired"(2) by the Fund:

       1. To employ any device, scheme or artifice to defraud the Fund;

       2. To make any untrue statement of a material fact to the Fund or omit to
       state a   material fact necessary in order to make the statements made to
       the Fund, in light of the circumstances under which they are made, not
       misleading;

       3. To engage in any act, practice or course of business that operates or
       would operate as a fraud or deceit on the Fund; or

       4. To engage in any manipulative practice with respect to the Fund.
       The policies, restrictions and procedures included in this Code are
       designed to prevent violations of these prohibitions (SEE RULE 17j-1(b)).

In addition, the Investment Company Institute (the "ICI") has suggested that
investment companies adopt additional measures to obviate conflicts, prevent and
detect abusive practices and preserve the confidence of investors. The policies,
restrictions and procedures included in this Code are intended to substantially
conform to the additional measures suggested by the ICI.

B.     Fund Policies.
       --------------

It is the policy of the Fund that no Access Person of the Fund shall engage in
any act, practice or course of conduct that would violate the provisions of Rule
17j-1(b) set forth above. In this regard, each Access Person has a duty at all
times to place the interests of Fund shareholders first and is required to
conduct all personal securities transactions consistent with the letter and
spirit of this Code and in such a manner as to avoid any actual or potential
conflicts of interest or any abuse of the Access Person's position of trust and
responsibility. It is a fundamental standard that Access Persons should not take
inappropriate advantage of their positions (SEE REPORT OF ADVISER GROUP ON
PERSONAL INVESTING, MAY 9, 1994).

C.      Restrictions.
        -------------

       1. No Access Person shall purchase or sell, directly or indirectly, any
       "Covered security" where he or she has, or by reason of such transaction
       acquires or disposes of, any direct or indirect "Beneficial Ownership"
       and where he or she knows or should have known, at the time of such
<PAGE>

       purchase or sale, that the Covered Security:

             (a)    is being considered for purchase or sale by the Fund; or

             (b)    is being purchased or sold by the Fund.

       2. All Investment Personnel must obtain approval from the Chief
       Compliance Officer, or designee, before directly or indirectly acquiring
       Beneficial Ownership in any securities in an "Initial Public Offering"(5)
       or in a "Limited Offering"(5)

       3. This Code sets forth additional requirements and restrictions that
       "Investment personnel" must comply with under this Code. To review such
       requirements and restrictions, please refer to Section H of this Code.

       4. The restrictions set forth in Section C. 1. shall not apply to:

             (a)    purchases or sales of any Covered Securities that are not
                    eligible for purchase or sale by the Fund;

             (b)    purchases or sales over which the Access Person has no
                    direct or indirect influence or control (i.e., non-
                    volitional trades);

             (c)    purchases which are part of an "Automatic Investment
plan"(8)


             (d)    purchases which are effected upon the exercise of rights
                    issued by an issuer pro rata to all holders of a class of
                    its securities, to the extent such rights were acquired from
                    the issuer, and sales of such rights;

             (e)    sales which are effected pursuant to a tender offer or
                    similar transaction involving an offer to acquire all or a
                    significant portion of a class of securities; or

             (f)    purchases or sales in an investment advisory account of the
                    Access Person (either alone or with others) over which the
                    investment adviser for the account exercises investment
                    discretion if the Access Person did not have knowledge of
                    the transaction before it was executed.

In addition, the restrictions set forth in Section C.1. shall not apply to
purchases or sales which are only remotely potentially harmful to the Fund, as
determined by the Chief Compliance Officer, or designee, because they would be
very unlikely to affect a highly institutional market. Any request to purchase
or sell securities which are only remotely potentially harmful to the Fund must

<PAGE>

be made in writing. Similarly, the related approval or denial of such a request
will be provided in writing.

D.     Procedures.
       -----------

       1. In order to provide the Fund with information to enable it to
       determine with reasonable assurance whether the provisions of Rule 17j-
       l(b) are being observed by its Access Persons, each Access Person shall
       file the following reports with the Fund, unless the Access Person is
       exempt as described above in the introduction or under Section D. 1(d)
       from reporting:

       (a)Initial Holdings Report

       Except in the case of Independent Board Members as provided in Section
       D(1) below, each Access Person of the Fund shall submit a report in the
       form attached here to as Appendix A to the Chief Compliance Officer, or
       designee, showing all holdings in Covered Securities in which the Access
       Person had any direct or indirect Beneficial Ownership and all accounts
       maintained at brokers, dealers, and/or banks where securities are held
       (or accounts where securities could have been held) for the direct or
       indirect benefit of the Access Person as of the date the person became an
       Access Person. Such report shall be filed not later than 10 days after
       the person becomes an Access Person. Information in the initial report
       must be current as of a date no more than 45 days prior to the date the
       person became an Access Person. In lieu of providing such a report, an
       Access Person may provide account statements to the Chief Compliance
       Officer, or designee, (See Rule l7j-1(d)(1)(i))

       (b)Quarterly Transaction Report

       Except in the case of Independent Board Members as provided in Section
       D(l) below, each Access Person of the Fund shall submit a report in the
       form attached hereto as Appendix B to the Chief Compliance Officer, or
       designee, showing all transactions effected during the quarter in Covered
       Securities in which the person had any direct or indirect Beneficial
       Ownership and all accounts established at brokers, dealers, and/or banks
       that held any securities during the quarter for the direct or indirect
       benefit of the Access Person. Such report shall be filed not later than
       30 days after the end of each calendar quarter. In lieu of providing such
       a report, an Access Person may arrange for broker trade confirmations and
       account statements to be provided directly to the Chief Compliance
       Officer, or designee,. (See Rule 17j-1(d)(1)(ii)).

       (c)Annual Holdings Report

       Except in the case of Independent Board Members as provided in Section
       D(l) below, each Access Person of the Fund shall submit a report in the

<PAGE>

       form attached here to as Appendix C to the Chief Compliance Officer, or
       designee, showing all holdings of Covered Securities in which the Access
       Person had direct or indirect Beneficial Ownership and all accounts
       maintained at brokers, dealers, and for banks where securities are held
       (or accounts where securities could have been held) for the direct or
       indirect benefit of the Access Person as of the calendar year end.
       Information in the annual report must be current as of a date no more
       than 45 days before the report is submitted to the Fund. Such report
       shall be filed not later than 30 days after the end of each calendar
       year. In lieu of providing such a report, an Access Person may provide
       account statements to the Chief Compliance Officer, or designee, (SEE
       RULE I7j-1(d)(1)(ii)).

       (d) Exceptions from Reporting Requirements

             (i) A person need not make a report that would otherwise be
             required by Section D with respect to transactions effected-for,
             and Covered Securities held in, any account over which the person
             has no direct or indirect influence or control.


             (ii) Each Fund Board member who is an Independent Board Member and
             who would be required to make a report solely by reason of  being a
             Fund Board member, need not make an initial holdings report or
             annual holdings report as would otherwise be required by Section
             (a) or D.1 .(c) above. An Independent Board Member is also exempt
             from the requirement to-submit a quarterly transaction report as
             required by Section D.l.(b), but only if during the applicable
             calendar quarter there has not occurred any transaction by the
             Independent Board Member in a Covered Security where the
             Independent Board Member knew or, in the ordinary course of
             fulfilling the Independent Board Member's official duties as an
             Independent Board Member, should have known that during the 15-day
             period immediately before or after the date of the Independent
             Board Member's transaction in the Covered Security, the Fund
             purchased or sold the Covered Security, or the Fund or its Adviser
             considered purchasing or selling the Covered Security.

             (iii) An Access Person need not make a quarterly transaction report
             under Section D.1.(b) with respect to transactions effected
             pursuant to an Automatic Investment Plan (unless such transaction
             would override or otherwise depart from any pre-set schedule or
             allocation). (See Rule 17j-1(d)(2)).

       2. Every Access Person of the Fund shall provide an annual certification
       in the form of Appendix D to the Chief Compliance Officer, or designee.
       This requirement applies to all Fund Board members, including those who
       are Independent Board Members.

<PAGE>

       3. The Board shall appoint the Chief Compliance Officer, or designee, to
       be responsible for administering this Code. In addition, an appropriate
       management or compliance person shall be responsible for reviewing the
       reports of the Chief Compliance Officer, or designee, submitted pursuant
       to this Code (SEE RULE 17j-l(d)(3)).

       4. The Chief Compliance Officer, or designee, shall notify each Access
       Person of the Fund who may be required to make reports pursuant to this
       Code that such person is subject to reporting requirements and shall
       deliver a copy of this Code to each such person. Any amendments to this
       Code shall be similarly furnished to each person to whom this Code is
       applicable. (Rule 17j-l(d)(4)).

       5. The Chief Compliance Officer, or designee, shall report to the Board
       at the next regularly scheduled Board meeting:

             (a) apparent violations of the requirements stated herein; and

             (b) any transaction that the Chief Compliance Officer, or designee,
             believes, while in technical compliance with the requirements
             stated herein, nonetheless may evidence a violation of this Code.

       6.  Each year the Chief Compliance Officer, or designee, on behalf of the
       Fund, must furnish to the Board, and the Board must consider, a written
       "annual issues and certification report" that:

             (a) describes any issues arising under the Code or associated
             procedures, or the code of ethics and associated procedures of the
             Adviser, any Sub-Adviser or principal underwriter of the Fund since
             the last report to the Board, including, but not limited to,
             information about material violations of such Code/codes or
             procedures and sanctions imposed in response to such violations;
             and

             (b) certifies that the Fund, its Adviser (including any Sub-
             Adviser) and principal underwriter, as applicable, have adopted
             procedures reasonably necessary to prevent Access Persons from
             violating the code (SEE RULE 17j-l(c)(2)).

       7. The Board shall consider reports made to it hereunder and shall
       determine whether the policies established in Sections A and B of this
       Code have been violated, and what sanctions, if any, should be imposed.
       The Board shall review the operation of this Code at least once a year,
       and shall make and approve such changes to the Code as it deems necessary
       (SEE RULE 17j-1 (c)).

       8. The Fund will maintain, at its principal place of business, and make
       the following records available to the SEC or any representative of the
       SEC at any time and from time to time for reasonable periodic, special or
       other examination:

<PAGE>

             (a) a copy of each code of ethics for the Fund that is in effect,
             or at any time within the past five years was in effect, in an
             easily accessible place;

             (b) a record of any violation of the code of ethics, and of any
             action taken as a result of the violation, in an easily accessible
             place for at least five years after the end of the fiscal year in
             which the violation occurs;

             (c) a copy of each report made under Section D.1, of this Code by
             an Access Person, including any information provided in lieu of
             these reports, for at least five years after the end of the fiscal
             year in which the report is made or the information is provided,
             the first two years in an easily accessible place;

             (d) a record of all persons, currently or within the past five
             years, who are or were required to submit reports under Section
             D.1. of this Code, or who are or were responsible for reviewing
             those reports, in an easily accessible place;

             (e) a copy of each report required under Section D.6. of this Code
             for at least five years after the end of the fiscal year in which
             it is made, the first two years in an easily accessible place; and

             (f) a record of any decision, and the reasons supporting the
             decision, to approve the acquisition by Investment Personnel of
             securities under Part A, paragraph 1 below, for at least five years
             after the end of the fiscal year in which the approval is granted
             (See Rule 17j-1(f)).

E.     Adoption and Approval of Codes of Ethics.
       -----------------------------------------

The Board, including a majority of the Independent Board Members, shall approve
the Code of the Fund, the code of ethics of each Adviser, Sub-Adviser and
principal underwriter of the Fund upon the initial engagement of any of them,
and any material changes to these codes no later than six months after the
adoption of the material change. (See Rule 17j-1(c)(1)).

F.      Insider Trading and Conflicts of Interest
        -----------------------------------------

The board has adopted a policy statement on insider trading and conflicts of
interests (the "Policy Statement"), a copy of which is attached hereto as
Appendix E. All Access Persons are required by this Code to read and familiarize
themselves with their responsibilities under the Policy Statement.

G.     Sanctions.
       ----------

<PAGE>

The Board may impose such sanctions as it deems appropriate for violations of
this Code.

H.     Investment Personnel.
       ---------------------

       In addition to the requirements and restrictions contained in Sections
       A-G of this Code, Investment Personnel are also subject to the following
       requirements and restrictions:

       1.    Any profits realized by Investment Personnel from "Short-term
             trading"9 of a Covered Security shall be disgorged to the Fund or
             Funds holding such Covered Security at the time of such Short-term
             Trading.

       2.    Investment Personnel are prohibited from receiving any gift or item
             valued at more than $100 per donor per year from any person or
             entity that does business with or on behalf of the Fund.

       3.     Investment Personnel are prohibited from serving on the board of
             directors of a company whose stock is publicly traded, absent prior
             authorization from the Chief Compliance Officer, or designee, based
             upon a determination that the board service would be consistent
             with the interests of the Fund and its shareholders.

       4.    Investment Personnel are required to provide copies of all
             brokerage statements and confirmations to the Chief Compliance
             Officer, or designee. All Investment Personnel shall disclose all
             personal securities holdings upon commencement of employment with
             the Fund and annually thereafter.

Coordination With Overview and Implementation Statement
- -------------------------------------------------------

This policy and procedures statement should be read and interpreted in
conjunction with the Overview and Implementation of Compliance Policies and
Procedures statement at the beginning of this compliance manual.

___________________________________

(1)    "Access Person" means: (i) any "Advisory Person" of the Fund or its
Adviser (which term includes, for purposes of this Code, any Sub-Adviser); (ii)
all of the Adviser's directors and officers; (iii) all of the Fund's Board
members and officers; and (iv) any director or officer of any principal
underwriter of the Fund who, in the ordinary course of business, makes,
participates in or obtains information regarding the purchase or sale of
"Covered Securities" (defined below) by the Fund, or whose functions or duties
in the ordinary course of business relate to the making of any recommendations
with respect to such purchases or sales. Categories (ii) and (iii) are based
upon a presumption that such persons are Advisory Persons of the Fund or its
Adviser, which may be rebutted in light of pertinent facts and circumstances. An
"Advisory Person" of the Fund or its Adviser means any Board member, director,
officer or employee of the Fund or its Adviser (or of any entity in a control
(as defined in Section 2(a)(9) of the 1940 Act) relationship to the Fund or its

<PAGE>

Adviser) who, in connection with his or her regular functions or duties, makes,
participates in or obtains information regarding the purchase or sale of
"Covered Securities" (defined below) by the Fund, or whose functions relate to
the making of any recommendations to the Fund with respect to such purchases or
sales. "Advisory Person" also includes any natural person in a control
relationship to the Fund or its Adviser who obtains information concerning
recommendations made to the Fund with regard to the purchase or sale of "Covered
Securities" by the Fund

(2)    A security "held or to be acquired" by the Fund means any "Covered
Security" (defined below) which, within the most recent 15 days: (i) is or has
been held by the Fund; or (ii) is being or has been considered by the Fund or
its Adviser for purchase by the Fund; and any option to purchase or sell, and
any security convertible into or exchangeable for, a 'Covered Security."

(3)    A "Covered Security" (or "Covered Securities") means a security as
defined in section 2(a)(36) of the 1940 Act, other than (i) direct obligations
of the Government of the United States; (ii) bankers' acceptances, bank
certificates of deposit, commercial paper and high quality short-term debt
instruments, including repurchase agreements; and (iii) shares issued by open-
end investment companies.

(4)    A person will be treated as the beneficial Owner" of a security under
this policy only if be or she has a direct or indirect pecuniary interest in the
security, as interpreted by reference to Rule 16a-l(a)(2) under the 1934 Act.

       (1) A direct pecuniary interest is the opportunity, directly or
indirectly, to profit, or to share the profit, from the transaction.

       (2) An indirect pecuniary interest is any nondirect financial interest,
but is specifically defined in Rule 16a-1 of the 1934 Act to include securities
held by members of the person's immediate family sharing the same household;
securities held by a partnership of which the person is a general partner;
secwities held by a t m t of which the person is a trustee and has both
investment control and a pecuniary interest, the settler if the person can
revoke the trust, or a beneficiary if the person has or shares investment
control with the trustee; and equity securities which may he acquired upon
exercise of an option or other right, or through conversion.

       For interpretive guidance on whether a person has a direct or indirect
pecuniary interest in a transaction, the person should consult the Chief
Compliance Officer, or designee,. A report shall not be construed as an
admission by the person making the report thrtt he or she has any direct or
indirect beneficial ownership in the security.

(5)     In this Code, 'Initial Public Offering" shall mean an offering of
securities registered under the 1933 Act, the issuer of which, immediately
before the registration, was not subject to the reporting requirements of
Sections 13 or 15(d) of the 1934 Act.

(6)     In this Code, "Limited Offering" shall mean an offering that is exempt
from registration under the 1933 Act pursuant to Section 4(2) or Section 4(6)
of, or Rule 504, Rule 505 or Rule 506 under, 1933 Act.

(7)     "Investment Personnel" includes any employee of the Fund or its Adviser
(or of any company in a control relationship to the Fund or its Adviser) who, in
connection with his or her regular functions or duties, makes or participates in
making recommendations regarding the purchase or sale of securities by the Fund.
Investment Personnel also includes any natural person who controls the Fund or
its Adviser and who obtains information concerning recommendations made to the
Fund regarding the purchase or sale of securities by the Fund.

(8)    An "Automatic Investment Plan" means a program in which regular periodic
purchases (or withdrawals) are made automatically in (or from) investment
accounts in accordance with a predetermined schedule and allocation. An
Automatic Investment Plan includes a dividend reinvestment plan.

<PAGE>

(9)    For purposes of this Code, "Short-term Trading" is defined as a purchase
and sale, or sale and purchase, of the same (or equivalent) securities which
both occur within any 60-day period.

<PAGE>

                                   APPENDIX A
                             (NAME OF FUND COMPLEX)
                            Initial Holdings Report*

                 Pursuant to Section D.l.a of the Code of Ethics

To the Chief Compliance Officer:

       I have reported below** all holdings of "Covered Securities" in which I
had any direct or indirect "Beneficial Ownership" and all accounts maintained at
brokers, dealers, and or banks that held any securities directly or indirectly
for my benefit on ____________________, 200__, the day I became an "Access
Person." I understand that I am required to report my own holdings. and
accounts, and holdings and accounts of: (a) immediate family members who live
with me, (b) partnerships of which I am a general partner, (c) trusts of which I
am a trustee if I have investment control and either I have a pecuniary interest
or an immediate family member is a beneficiary (whether or not they live with
me), (d) revocable trusts of which I am a settlor, and (e) trusts of which I am
a beneficiary IF have any investment control.

"Covered Securities" (direct or indirect "Beneficial Ownership")
- --------------------------------------------------------------------------------
Title of Security                       Number of shares (equity security) or
                                           Principle Amount(debt security)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------


Security Accounts (holding securities for my direct or indirect benefit)
- --------------------------------------------------------------------------------
|Broker, Dealer or Bank Name                    Name(s) on Account
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

This report may exclude holdings and accounts as to which I had no direct or
indirect influence or control, and is not an admission that I have or had any
direct or indirect "Beneficial Ownership" in the holdings and accounts listed
above.

Dated:__________________         Signature:____________________________________

* Please complete and submit this form no later than 10 days, after you became
an "Access Person".
** You may attach account statements instead of listing holdings and security
accounts.

<PAGE>

                                   APPENDIX B
                             [NAME OF FUND COMPLEX]
                         Quarterly Transaction Report *

                 Pursuant to Section D.1.b of the Code of Ethics

To the Chief Compliance Officer:

       I have reported below" all transactions effected in "Covered Securities"
in which I had any direct or indirect "Beneficial Ownership" and all accounts
established at brokers, dealers, and or banks that held any securities directly
or indirectly for my benefit during the calendar quarter ended _______,200__. I
understand that I am required to report my own transactions and accounts, and
transactions and accounts of: (a) immediate family members  who live with me,
(b) partnerships of which I am a general partner, (c) trusts of which I am a
trustee if I have investment control and either I have a pecuniary interest or
an immediate family member is a beneficiary (whether or not they live with me),
(d) revocable trusts of which I am a settlor, and (e) trusts of which I am a
beneficiary if I have any investment control.

<TABLE>
<CAPTION>
"Covered Securities" (direct or indirect "Beneficial Ownership")
- ------------------------------------------------------------------------------------------
<S>       <C>           <C>         <C>         <C>           <C>        <C>       <C>
Security    Date of       Number    Interest     Nature of    Price of   Broker    Ticker
  Name    Transaction   of shares   rate and    transaction   covered    dealer    symbol
                           or       maturity    (buy, sale    security   or bank     or
                        principle     date.      or other)                name      CUSIP
                          amount
- ------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------
</TABLE>


Security Accounts (holdings securities for my direct or indirect benefit)
- --------------------------------------------------------------------------------
Broker, Dealer or Bank         Name(s) on Account          Date Account was
         Name                                                 Established
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

This report may exclude transactions and accounts as to which I had no direct or
indirect control, and is not an admission that I have or had any direct or
indirect "Beneficial in the securities and accounts listed above.

Dated:                                  Signature:
      ------------------------------              ------------------------------

* Please complete and submit this form no later than 10 days after the end of
each calendar quarter.

<PAGE>

** You may attach account statements instead of listing transactions and
security accounts.

<PAGE>

                                   Appendix C
                             (NAME OF FUND COMPLEX)
                             Annual Holdings Report*

                Pursuant to Section .D.1.c of the Code of Ethics

To the Chief Compliance Officer:

       I have reported below" all holdings i f "covered Securities" in which I
had any direct or indirect "Beneficial Ownership" and all accounts maintained at
brokers, dealers, and or banks that held any securities directly or indirectly
for my benefit on December 31 , 200   .  I understand that I am required to
report my own holdings and accounts, and holdings and accounts of (a) immediate
family members who live with me, (b) partnership so f which I am a general
partner, (c) trusts of which I am a trustee if1 have investment control and
either I have a pecuniary interest or an immediate family member is a
beneficiary (whether or not they live with me), (d) revocable trusts of which I
am a settlor, and (e) trusts of which I am a beneficiary if I have any
investment control.

"Covered Securities" (direct or indirect "Beneficial Ownership")
- --------------------------------------------------------------------------------
Name of Security        Number of shares(equity         Ticker Symbol or CUSIP
                        security) or Principle                  Number
                        amount (debt security)
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------


Security Accounts (holding securities for my direct or indirect benefit)
- --------------------------------------------------------------------------------
Broker, Dealer or Bank Name                     Name(s) on Account
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------



This report may exclude holdings and accounts as to which I had no direct or
indirect influence or control, and is not an admission that I have or had any
direct or indirect "Beneficial Ownership" in the holdings and accounts listed
above.

Dated:                                  Signature:
       ------------------------------             ------------------------------

* Please complete and submit this form no later than 30 days after the end of
each calendar year.
** You may attach account statements instead of listing holdings and accounts.

<PAGE>

                                   APPENDIX D
                             [NAME OF FUND COMPLEX]
                       Annual Certification of Compliance
                      Calendar Year Ended December 31,2006

                  Pursuant to Section D.2 of the Code of Ethics



To the Chief Compliance Officer:

I hereby certify that, during the calendar year specified above, I have complied
with the requirements of the Code of Ethics and have disclosed or reported all
accounts, holdings and personal securities transactions, if any, that I am
required to disclose or report pursuant to the requirements of the Code of
Ethics. I have read and understand the Code of Ethics and recognize that I am
subject thereto.



Dated:                                  Signature:
      --------------------------------            ------------------------------

<PAGE>

                                   APPENDIX E
                       POLICY STATEMENT ON INSIDER TRADING


A.     Introduction.

       The Fund seeks to foster a reputation for integrity and professionalism.
That reputation is a vital business asset. The confidence and trust placed in us
by investors the Fund is something we should value and endeavor to protect. To
further that goal, this Policy Statement implements procedures to deter the
misuse of material, nonpublic information in securities transactions.

       Trading securities while in possession of material, nonpublic information
or improperly communicating that information to others may expose you to
stringent penalties. Criminal sanctions may include a f i e of up to $1,000,000
and or ten years imprisonment. The SEC can recover the profits gained or losses
avoided though the violative trading, impose a penalty of up to three times the
illicit windfall and issue an order permanently banning you from the securities
industry. Finally, you may be sued by investors seeking to recover damages for
insider trading violations.

       Regardless of whether a government inquiry occurs, the Fund views
seriously any violation of this Policy Statement. Such violations constitute
grounds for disciplinary sanctions, including dismissal.

B.     Scope of the Policy Statement.

       This Policy Statement is drafted broadly; it will be applied and
interpreted in a similar manner. This Policy Statement applies to securities
trading and information handling by Access Persons, as defined in the Fund's
Code of Ethics.

       The law of insider trading is unsettled; an individual legitimately may
be uncertain about the application of the Policy Statement in a particular
circumstance. Often, a single question can forestall disciplinary action or
complex legal problems. You should direct any questions relating to the Policy
Statement to the Chief Compliance Officer, or designee,. You also must notify
the Chief Compliance Officer, or designee, immediately if you have any reason to
believe that a violation of the Policy Statement has occurred or is about to
occur.

C.     Policy Statement.

       No person to whom this Policy Statement applies may trade, either
personally or on behalf of others, while in possession of material, nonpublic
information; nor may the Fund's Access Persons communicate material, nonpublic
information to others in violation of the law. This section reviews principles
important to the Policy Statement.

<PAGE>

       1.    What is Material Information?

       Information is "Material" when there is a substantial likelihood that a
reasonable investor would consider it important in making his or her investment
decisions. Generally, this is information disclosure of which will have a
substantial effect on the price of a company's securities. No simple "bright
line" test exists to determine when information is material; assessments of
materiality involve a highly fact-specific inquiry. For this reason, you should
direct any questions about whether information is material to the Chief
Compliance Officer, or designee.

       Material information often relates to a company's results and operations
including, for example, dividend changes, earnings results, changes in
previously released earnings estimates, significant merger or acquisition
proposals or agreements, major litigation, liquidation problems, and
extraordinary management developments.

       Material information also may relate to the market for a company's
securities. Information about a significant order to purchase or sell securities
may, in some contexts, be deemed material. Similarly, prepublication information
regarding reports in the financial press also may be deemed material. For
example, the Supreme Court upheld the criminal convictions of insider trading
defendants who capitalized on prepublication information about the Wall Street
Journal's "Heard on the Street" column.

       2.    What is Nonpublic Information?

       Information is "Public" when it has been disseminated broadly to
investors in the marketplace. Tangible evidence of such dissemination is the
best indication that the information is public. For example, information is
public after it has become available to the general public through a public
filing with the SEC or other government agency, the Dow Jones "tape" or the Wall
Street Journal or some other publication of general circulation, and after
sufficient time has passed so that the information has been disseminated widely.


       3.    Identifying Inside Information

       Before executing any trade for yourself or others, including the Fund,
you must determine whether you have access to material, nonpublic information.
If you think that you might have access to material, nonpublic information, you
should take the following steps:

       (i)   Report the information and proposed trade immediately to the Senior
Compliance Manager.

       (ii)   Do not purchase or sell the securities on behalf of yourself or
others, including the Fund.

<PAGE>

       (iii)  Do not communicate the information inside or outside the Fund,
other than to the Chief Compliance Officer, or designee,.

       (iv)   After the Chief Compliance Officer, or designee, has reviewed the
issue, the Fund will determine whether the information is material and nonpublic
and, if so; what action the Fund should take.

You should consult with the Chief Compliance Officer, or designee, before taking
any action. This degree of caution will protect you and the Fund.

       4.    Contact with Public Companies

       The Fund's contacts with public companies represent an important part of
our research efforts. The Fund may make investment decisions on the basis of the
Fund's conclusions formed through such contacts and analysis of publicly-
available information. Difficult legal issues arise, however, when, in the
course of these contacts, a Fund employee or other person subject to this Policy
Statement becomes aware of material, nonpublic information. This could happen,
for example, if a company's Chief Financial Officer prematurely disclosed
quarterly results to an analyst or an investor relations representative makes a
selective disclosure of adverse news to a handful of investors. In such
situations, the Fund must make a judgment as to its further conduct. To protect
yourself and the Fund, you should contact the Chief Compliance Officer, or
designee, immediately if you believe that you may have, received material,
nonpublic information.

       5.    Tender Offers

       Tender offers represent a particular concern in the law of insider
trading for two reasons. First, tender offer activity often produces
extraordinary gyrations in the price of the target company's securities. Trading
during this time period is more likely to attract regulatory attention (and
produces a disproportionate percentage of insider trading cases). Second, the
SEC has adopted a rule that expressly forbids trading and "tipping" while in
possession of material, nonpublic information regarding a tender offer received
from the tender offer or, the target company or anyone acting on behalf of
either. Fund employees and others subject to this Policy Statement should
exercise particular caution any time they become aware of nonpublic information
relating to a tender offer.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>17
<FILENAME>exhibit-99.txt
<DESCRIPTION>EX-99
<TEXT>


POWER OF ATTORNEY FOR SIGNATURE



The undersigned constitutes Clifford J. Alexander and Tane T. Tyler
individually, as my true and lawful attorney, with full power to each of them to
sign for me and in my name, any and all registration statements and any and all
amendments to the registration statements filed under the Securities Act of 1933
or the Investment Company Act of 1940 with the Securities and Exchange
Commission for the purpose of complying with such registration requirements in
my capacity as a trustee/ or officer of Liberty All-Star Equity Fund ("Equity
Fund"). This Power of Attorney authorizes the above individuals to sign my name
and will remain in full force and effect until specifically rescinded by me.

I specifically permit this Power of Attorney to be filed, as an exhibit to a
registration statement or amendment to a registration statement of the Equity
Fund, with the Securities and Exchange Commission and I request that this Power
of Attorney then constitutes authority to sign additional amendments and
registration statements by virtue of its incorporation by reference into the
registration statements and amendments for the Equity Fund.

In witness, I have signed this Power of Attorney on this 21st day of August,
2007.



 /s/ John A. Benning                               /s/ Thomas W. Brock
- ---------------------------------                  -------------------
John A. Benning                                    Thomas W. Brock


/s/ Edmund J. Burke                                /s/ George R. Gaspari
- ---------------------------------                  ---------------------
Edmund J. Burke                                    George R. Gaspari


/s/ Richard W. Lowry                               /s/ John J. Neuhauser
- ---------------------------------                  ---------------------
Richard W. Lowry                                   John J. Neuhauser


/s/ Richard C. Rantzow
- ---------------------------------
Richard C. Rantzow



</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
