UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act File No.: 811-04809

Liberty All-Star Equity Fund

(Exact name of registrant as specified in charter)

1290 Broadway, Suite 1000, Denver, Colorado 80203

(Address of principal executive offices) (Zip code)

Sareena Khwaja-Dixon, Esq.

ALPS Fund Services, Inc.

1290 Broadway, Suite 1000

Denver, Colorado 80203

(Name and address of agent for service)

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

Date of fiscal year end: December 31

Date of reporting period: January 1, 2021 - December 31, 2021

Item 1. Report of Shareholders.

(a)       

Contents

A SINGLE INVESTMENT...

A DIVERSIFIED CORE PORTFOLIO

A single fund that offers:

LIBERTY ALL-STAR^® EQUITY FUND

Supported by an economy showing resilience in a challenging environment, U.S. equities posted another year of strong gains in 2021. The S&P 500^® Index led the way with a return of 28.71 percent. The Dow Jones Industrial Average (DJIA) advanced 20.95 percent and the NASDAQ Composite Index gained 22.18 percent.

Consumer demand bolstered by job growth and robust economic expansion in the wake of 2020’s Covid-19 pandemic drove stronger than expected corporate profits. The hospitality, entertainment and travel industries began to reopen. The employment picture brightened considerably, as the U.S. added 6.4 million jobs in 2021, more than any year on record, according to The Wall Street Journal. These positive factors were tempered by ongoing concerns with the delta and omicron variants, inflation that was the highest since 1982 and supply chain bottlenecks that confounded buyers and sellers alike. While the Federal Reserve maintained short-term interest rates at historically low levels, there were periodic upticks in Treasury yields, as bond investors weighed the potential for higher rates in 2022 and beyond.

In the final analysis, however, investor sentiment remained positive and powered the S&P 500^® to 70 new record highs (only surpassed by 77 in 1954, according to The New York Times).

September was the poorest month of the year for the S&P 500^® Index at -4.65 percent. October, however, was the best of the year with an increase of 7.01 percent. All 11 S&P sectors posted double-digit gains for the year, ranging from 17.66 percent for utilities to 54.87 percent for energy.

As 2021 drew to a close, interest rates resumed an upward move that emerged early in the year. The yield on 10-year Treasuries started 2021 at 0.91 percent, rose to the year’s high of 1.78 percent in March and closed the year at 1.51 percent. The increase reflected expectations of action by the Federal Reserve to increase the fed funds rate in an effort to contain the outbreak of inflationary pressures; higher rates are viewed as a negative for equities, particularly high multiple technology stocks.

Growth and value style stocks’ performance, as measured by the broad market Russell 3000^® indices, finished within a half percentage point of each other in 2021. The Russell 3000^® Growth Index returned 25.85 percent, while its value counterpart returned 25.37 percent. The year opened with value style stocks outperforming by a wide margin in the first quarter. The gap narrowed as the year went on, however, and in the final quarter growth outperformed value (as measured by the Russell 3000^®) by 3.35 percentage points. A similar pattern held for the large-cap Russell 1000^® indices, where the Growth index outperformed the Value index by 2.44 percentage points for the year.

Liberty All-Star^® Equity Fund

Liberty All-Star Equity Fund generated strong returns in 2021. For the year, the Fund returned 23.95 percent when shares are valued at net asset value (NAV) with dividends reinvested and 35.30 percent when shares are valued at market price with dividends reinvested. (Fund returns are net of expenses.)

The Fund’s full-year NAV return trailed the 26.49 percent return of its primary benchmark. Against other indices the return was mixed—ahead of the DJIA and the NASDAQ Composite but behind the S&P 500®. The Fund’s market price return, however, was not only well ahead of the Lipper average, it topped all the aforementioned relevant benchmarks. The fourth quarter was the weakest quarter of the year on a relative basis, as the Fund returned 7.07 percent measured on an NAV basis and 0.64 percent when measured by market price, trailing the Fund's primary and secondary benchmarks of 9.85 and 11.03, respectively.

We note that while Fund performance was good on an absolute basis in 2021, widely followed indices, such as the S&P 500®, are becoming dominated by a handful of stocks. In other words, the investment performance of a capitalization-weighted index, like the S&P 500^®, inordinately reflects the return of a relatively few mega-cap stocks. For example, the 10 stocks that contributed the most to the full-year return of the S&P 500^® accounted for 10.10 percent of the index’s 28.71 percent annual return; in other words, 2 percent of the stocks contributed almost 39 percent of the index’s return. In the fourth quarter, this was even more concentrated, as 10 stocks contributed nearly half (49 percent) of the index’s return. This concentration within the capitalization weighted indices is among the points emphasized by the Fund’s five investment managers in the annual Roundtable discussion that begins on page 13. Their view is much the same as ours at ALPS Advisors: That rather than being a well-diversified large-cap slice of the equity market, the S&P 500^® has become concentrated in a handful of mega-cap stocks. As a result, it is less diversified and therefore potentially exposes investors to more risk than many may realize. We commend the Roundtable to shareholders and believe you will find it informative.

Relative to their underlying NAV, Fund shares traded at both a discount and a premium in the fourth quarter. The range went from a discount of -0.8 percent to a premium of 15.3 percent; this compares with a premium in the third quarter that ranged from 1.1 percent to 12.1 percent. For the full year, the discount/premium range was -7.8 percent to 15.3 percent.

In accordance with the Fund’s distribution policy, the Fund paid a distribution of $0.21 per share in the fourth quarter. The Fund’s distribution policy has been in place since 1988 and is a major component of the Fund’s total return. The Fund has paid distributions of $28.99 per share for a total of more than $3.3 billion since 1987 (the Fund’s first full calendar year of operations). We continue to emphasize that shareholders should include these distributions when determining the total return on their investment in the Fund.

Turning to Fund news, the rights offering, which expired on November 22, 2021, was fully subscribed. The Fund issued 22,383,932 shares in the primary subscription plus 5,595,983 shares made available by means of the secondary over-subscription privilege for a total of 27,979,915 shares. Since there were not sufficient shares to honor all over-subscription requests, available shares were allocated among shareholders who over-subscribed based on the number of shares held as of the record date. We would like to thank shareholders for this expression of support for the Fund.

We are pleased that the Fund generated solid absolute returns for shareholders in 2021 given its broadly diversified structure during a year where equity returns were extremely dependent on a handful of mega-capitalization stocks. The Fund’s multi-manager, multi-style structure has always provided the diversification and peace of mind one would expect from a long-term, high quality core equity investment.

Sincerely,

William R. Parmentier, Jr.

President and Chief Executive Officer

Liberty All-Star^® Equity Fund

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

FUND STATISTICS AND SHORT-TERM PERFORMANCE PERIODS ENDED DECEMBER 31, 2021

FUND STATISTICS:

PERFORMANCE:

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

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

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

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

UNIQUE ATTRIBUTES OF Liberty All-Star^® Equity Fund

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

		MULTI-MANAGEMENT FOR INDIVIDUAL INVESTORS
		Liberty All-Star® Equity Fund is multi-managed, an investment discipline that is followed by large institutional investors to diversify their portfolios. In 1986, Liberty All-Star® Equity Fund became the first closed-end fund to bring multi-management to individual investors.

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

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

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

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

		DISTRIBUTION POLICY
		Since 1988, the Fund has followed a policy of paying annual distributions on its shares at a rate that approximates historical equity market returns. The current annual distribution rate is 10 percent of the Fund’s net asset value (paid quarterly at 2.5 percent per quarter), providing a systematic mechanism for distributing funds to shareholders.

GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT

The graph below illustrates the growth of a hypothetical $10,000 investment assuming the purchase of shares of beneficial interest at the closing market price (NYSE: USA) of $6.00 on December 31, 1987, and tracking its progress through December 31, 2021. For certain information, it also assumes that a shareholder exercised all primary rights in the Fund’s rights offerings (see below). This graph covers the period since the Fund commenced its distribution policy in 1988.

		The growth of the investment assuming all distributions were received in cash and not reinvested back into the Fund. The value of the investment under this scenario grew to $61,433 (including the December 31, 2021 value of the original investment of $13,967 plus distributions during the period of $46,349 and tax credits on retained capital gains of $1,117).
		The additional value realized through reinvestment of all distributions and tax credits. The value of the investment under this scenario grew to $410,893.
		The additional value realized through full participation in all the rights offerings under the terms of each offering. The value of the investment under this scenario grew to $687,770 excluding the cost to fully participate in all the rights offerings under the terms of each offering which was $116,228.

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

The following are the major ($5 million or more) stock changes - both purchases and sales - that were made in the Fund’s portfolio during the fourth quarter of 2021.

DISTRIBUTION POLICY

The current policy is to pay distributions on its shares totaling approximately 10 percent of its net asset value per year, payable in four quarterly installments of 2.5 percent of the Fund’s net asset value at the close of the New York Stock Exchange on the Friday prior to each quarterly declaration date. Sources of distributions to shareholders may include ordinary dividends, long-term capital gains and return of capital. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during its fiscal year and may be subject to changes based on tax regulations. If a distribution includes anything other than net investment income, the Fund provides a Section 19(a) notice of the best estimate of its distribution sources at that time. These estimates may not match the final tax characterization (for the full year’s distributions) contained in shareholder 1099-DIV forms after the end of the year. If the Fund’s ordinary dividends and long-term capital gains for any year exceed the amount distributed under the distribution policy, the Fund may, in its discretion, retain and not distribute capital gains and pay income tax thereon to the extent of such excess.

THE FUND’S ASSETS ARE APPROXIMATELY EQUALLY DISTRIBUTED AMONG

THREE VALUE MANAGERS AND TWO GROWTH MANAGERS:

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

MANAGERS’ DIFFERING INVESTMENT STRATEGIES

ARE REFLECTED IN PORTFOLIO CHARACTERISTICS

The portfolio characteristics table below is a regular feature of the Fund’s shareholder reports. It serves as a useful tool for understanding the value of a multi-managed portfolio. The characteristics are different for each of the Fund’s five investment managers. These differences are a reflection of the fact that each pursues a different investment style. The shaded column highlights the characteristics of the Fund as a whole, while the final column shows portfolio characteristics for the S&P 500^® Index.

	INVESTMENT STYLE SPECTRUM
PORTFOLIO CHARACTERISTICS	VALUE		GROWTH
AS OF DECEMBER 31, 2021

MANAGER ROUNDTABLE

Going beyond the financial market news headlines to hear from investment managers who build portfolios from the bottom up, one stock at a time.

Liberty All-Star Equity Fund’s five investment managers represent long experience, deep knowledge, proven track records and, given that they represent both growth and value styles of investing, a broad point of view on the stock market and equity investing generally. While macro-issues—like GDP, inflation and employment—dominate the business and financial news, these managers are at work on the micro level, building portfolios one stock at a time based on their style, strategy and intensive research. We asked the managers to take us inside their thinking, using the larger context of the current market environment as a backdrop. The Fund’s Investment Advisor, ALPS Advisors, serves as moderator of the roundtable. Participating investment management firms, the portfolio manager for each and their respective styles and strategies are:

ARISTOTLE CAPITAL MANAGEMENT, LLC

Portfolio Manager/Howard Gleicher, CFA

CEO and Chief Investment Officer

Investment Style/Value – Aristotle seeks to invest in high quality companies that it believes are selling at a significant discount to their intrinsic value and where catalysts exist that will lead to a realization by the market of this true value. Aristotle practices a fundamental, bottom-up research-driven process and invests with a long-term perspective.

FIDUCIARY MANAGEMENT, INC.

Portfolio Manager/Patrick J. English, CFA

Chairman, CEO and CIO

Investment Style/Value – Fiduciary utilizes a business owner’s approach to investing by thoroughly examining the economics of the business and the quality of the management team, seeking to invest in durable business franchises that are selling at a discount to their underlying value.

PZENA INVESTMENT MANAGEMENT, LLC

Portfolio Manager/Benjamin S. Silver, CFA, CPA

Principal and Portfolio Manager

Investment Style/Value – Pzena uses fundamental research and a disciplined process to identify good companies with a sustainable business advantage that the firm believes are undervalued on the basis of current price to an estimated normal level of earnings.

SUSTAINABLE GROWTH ADVISERS, LP

Portfolio Manager/Kishore D. Rao

Principal and Portfolio Manager

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

TCW INVESTMENT MANAGEMENT COMPANY

Portfolio Manager/Craig C. Blum, CFA

Group Managing Director

Investment Style/Growth – TCW invests in companies that have superior sales growth, leading and/or rising market shares, and high and/or rising profit margins. TCW’s concentrated growth equity strategy seeks companies with distinct advantages in their business model.

Make the case for active management and stock picking over passive, index-based investing in 2022. Nearly 40 percent of the S&P 500’s capitalization is accounted for by just 20 mega-cap companies. That would appear to be opportune for astute stock pickers, as does the challenge key indices face in matching their outsized returns of 2019, 2020 and 2021. Let’s ask the growth managers to start us off and hear first from Sustainable.

Rao (Sustainable – Growth): From the inception of our firm in 2003, we have never seen the Russell 1000^® Growth Index more concentrated than it is today with 49 percent of its weight in the 10 largest-weight stocks. For a benchmark-indifferent manager such as ourselves that constructs its portfolio based purely on a three- to five-year investment horizon, this concentration creates an attractive long-term opportunity. This is particularly the case following periods like 2021 when a few stocks with large benchmark weights generated huge returns, in some cases due mainly to earnings multiple appreciation or cyclical tailwinds that are unlikely to be repeated. Remaining disciplined in our focus on attractively valued companies that, from a free cash flow standpoint, are generating sustainable, predictable above-average revenue and earnings growth, and taking meaningful positions in them has been a successful approach to growth investing historically. We are excited by the opportunity we see ahead following the cyclical rebound of 2021.

“We have never seen the Russell 1000^® Growth Index more concentrated than it is today … for a benchmark-indifferent manager such as ourselves that constructs its portfolio based purely on a three- to five-year investment horizon, this concentration creates an attractive long-term opportunity.”

—Kishore Rao

(Sustainable – Growth)

Blum (TCW – Growth): Passive investments give little consideration to the fundamentals of the companies in a given index, ignore valuation metrics and “lock in” relative valuations between securities. Buy programs are simply concentrated on companies with the largest market caps in the index, which then lifts those market caps higher, which then further intensifies the concentration on those same names when the next buying wave occurs. As the circular logic accelerates, equity prices become increasingly controlled by blind flows into and out of passive vehicles and further detached from any semblance of long-term value. And an investment in a passive investment guarantees an investor will suffer 100 percent of the next bear market’s decline. As active stock pickers, we believe valuation and fundamentals matter and, as the Fed eventually “removes the punch bowl,” we believe equity market volatility will ensue—an environment ripe for active management.

“A passive investment guarantees an investor will suffer 100 percent of the next bear market’s decline. As active stock pickers, we believe valuation and fundamentals matter and, as the Fed eventually “removes the punch bowl” equity market volatility will ensue—an environment ripe for active management.”

—Craig Blum

(TCW – Growth)

Very relevant points in light of the first few trading days of 2022, as investors are riveted by potential Federal Reserve tightening. Let’s turn to the value managers and ask Ben Silver to lead off for Pzena.

Silver (Pzena – Value): Investors indexing the top-heavy S&P 500^® are effectively betting that the handful of mega-caps that have been driving the benchmark’s performance will keep rising in perpetuity—an assumption that may prove painful should it not pan out. Active managers who leverage their deep fundamental research expertise to gain an information edge on the market possess the flexibility to reduce exposure to, or completely avoid, the potentially overvalued corners of the market in favor of more attractive prospects. We believe that active strategies adhering to a consistent style offer investors the probability of meaningful alpha over the totality of a cycle despite higher fees and inevitable periods of volatility.

“Active managers who leverage their deep fundamental research expertise to gain an information edge on the market possess the flexibility to reduce exposure to, or completely avoid, the potentially overvalued corners of the market in favor of more attractive prospects.”

—Benjamin Silver

(Pzena – Value)

Shorter-term price fluctuations that often arise from investors’ overreactions to nearer-term information and uncertainties provide opportunities for active value managers to reposition portfolios, sowing the seeds for future outperformance—a benefit that passive investors miss out on. In fact, our research on value cycles spanning the past 50 years has shown that value stocks outperform the broad cap-weighted index in the U.S. by about four percentage points per year.

Another highly salient point. Let’s hear from Fiduciary.

English (Fiduciary – Value): We believe this pillar about “indexing” being cheaper, easier and less risky will erode significantly in the back half of this market cycle. We can’t say this strongly enough: If someone offered you a stock trading at 38.2 times the last 12 months’ earnings, 7.5 times revenue, 28.5 times EBITDA¹, and that has averaged less than 3 percent sales growth over the past decade, you’d run for the hills! Yet, based on the S&P 500^® Index, that is the asset that investors are buying today. This has been driven mainly by mega-cap growth stocks that have reached extreme valuation levels. The Fiduciary large-cap portfolio trades at a 46 percent discount to the S&P 500^® and a 23 percent discount to the Russell 1000^® Value Index. The companies have better fundamentals and higher quality balance sheets. We are optimistic that when the cycle turns, our companies will outperform the indices as valuations revert to the mean.

“If someone offered you a stock trading at 38.2 times the last 12 months’ earnings, 7.5 times revenue, 28.5 times EBITDA, and that has averaged less than 3 percent sales growth over the past decade, you’d run for the hills! Yet that is the asset that investors are buying today.”

—Patrick English

(Fiduciary – Value)

Howard, round out the value perspective and share Aristotle’s thoughts, please.

Gleicher (Aristotle – Value): The comfort of running with the herd is a behavioral bias that has a well-documented history of leading to poor outcomes. Yet again this past year the U.S. market was led by a relatively concentrated “herd” of companies. This “herd mentality” has been amplified with the continued rise of indexation and increasing concentration of many indices, including the S&P 500^®. Apple, Microsoft and Amazon alone represent 17 percent of the index, or $7 trillion in market capitalization. The market capitalization of the S&P 500^® crossed $3 trillion for the first time in 1993. Today, Apple alone is worth the same $3 trillion. Shades of the late 1990s speculative era are beginning to emerge and the benefits of thinking independently are perhaps as fruitful today as in any time in recent history.

“The comfort of running with the herd is a behavioral bias that has a well-documented history of leading to poor outcomes. Yet again this past year the U.S. market was led by a relatively concentrated ‘herd’ of companies. This ‘herd mentality’ has been amplified with the continued rise of indexation and increasing concentration of many indices.”

—Howard Gleicher

(Aristotle – Value)

Based on your respective style, can you briefly present the case for growth or value stocks in light of all the variables in play for the foreseeable future? We refer to the coronavirus, higher inflation, the employment picture, supply chain disruption, housing demand and related topics. We’ll stay with value and go in reverse order with Howard Gleicher starting off.

Gleicher (Aristotle – Value): The growth versus value debate can typically be summed up as a comparison of consensus valuation multiples and growth forecasts for the next calendar year. We believe that, while some investors try to analyze stocks in those terms, it is current price and true net worth that drive share prices. As such, we look for high quality companies whose current stock prices do not reflect our estimate of the intrinsic value of their enterprises. In assessing intrinsic value, we focus on the normalized cash earnings power of a business over the next three to five years. The past few years have been anything but normal, yet many investors may be conditioned otherwise. We believe our normalization approach to intrinsic value remains as important today as ever.

Pat and Ben, please share the perspective as you see it at Fiduciary and Pzena.

English (Fiduciary – Value): The high inflation and interest rates of the late 1970s and early 1980s are not in investors’ muscle memory. Natural resource dependency, labor mobility, supply chain efficiency and technology have fundamentally changed and these factors helped keep inflation low in recent decades. Today, that is no longer the case. Wages and input costs are rising and companies are raising prices. Central bank money printing, government spending and low productivity are also fueling higher prices. It appears a change in the interest rate environment is underway. The fed funds rate moved from 5 percent in 1976 to 20 percent in 1980. Going from today’s low rate to something even remotely close to 5 percent would change the character of what works, and what does not, in the stock market. The Fiduciary portfolio is not built with the notion that interest rates will stay low forever. We remain optimistic that good quality, reasonably-valued businesses with solid balance sheets will prevail.

Silver (Pzena – Value): Although the recent rise in Covid-19 infections cannot be ignored, value stocks are still priced for a particularly painful outcome. Global output and consumption may be temporarily hindered, but our conviction is that the expansion is not over, but rather prolonged; and if the global economy keeps gaining steam, then cyclical stocks, which are synonymous with value these days, should stand to benefit disproportionally.

Inflationary pressures are also very real, but we remain invested in companies trading at compelling valuations that have the capability and wherewithal to adjust their operations and pass through higher input costs to consumers. Given the solid state of consumer balance sheets, we expect demand to remain robust, thereby leaving the aggregate long-term earnings stream in our value portfolio largely unimpaired. What’s more, we have found that cheap stocks historically performed relatively well during periods of high inflation, generating about six percentage points in annualized excess return over expensive stocks going back 60 years.

Let’s turn to the growth managers and ask Craig Blum to start for TCW.

Blum (TCW – Growth): Growth investors like us tend to own companies growing more rapidly and carrying higher forward multiples than those in the value index. Our long-held belief is that just because a company carries a lower multiple it does not mean it is underpriced. With the likely increase in interest rates, the consensus appears to be that deep cyclicals, in other words value, will trounce growth stocks going forward, with an expected reversion to the mean. While a near-term call can be difficult, we do not agree that value stocks will meaningfully outperform growth stocks longer term. The pandemic accelerated secular trends that we are heavily exposed to such as digital transformation, artificial intelligence (AI) and the electronification of payments. Ironically, our companies’ offerings are the very drivers cited for improved outlooks for many “value” stocks. Of course, the key for any investor, growth or value, is not overpaying for the cash flow produced by a company.

Rao (Sustainable – Growth): In 2021 we saw a surge in more cyclical stocks rebounding off pandemic lows with investors expecting a significant surge in earnings growth from the Russell 1000^® Growth Index. With earnings growth expected to moderate in 2022 due to less fiscal stimulus, monetary policy tapering, higher rates, ongoing Covid-19 pressures, and higher regulatory and other costs for businesses, the more predictable and sustainable mid-teens growth generated by our portfolio should look more attractive to investors. Historically, cyclical periods such as 2021 have been among the most difficult for our approach, but this is mitigated by the fact that the periods are typically short-lived and have historically led to a renewed focus on business fundamentals and improved performance by quality growth businesses. Over the coming three years, the portfolio is expected to generate 20.7 percent earnings growth relative to 13.1 percent growth for the Russell 1000^® Growth Index.

With so many factors at play—such as those in the previous question—it is useful to revisit for Fund investors the fundamental, bottom-up, well-researched stock selection and portfolio construction practiced by the Fund’s managers—in other words, adhering to one’s style, investment philosophy and process through changing market cycles and economic/business conditions. Please cite a stock in the portion of the Liberty All-Star Equity Fund portfolio that you manage that illustrates this point. Kishore Rao, we started with you so let’s ask you to take this one first and then have Craig Blum wrap it up for the growth managers.

Rao (Sustainable – Growth): Danaher (DHR) manufactures and sells scientific instruments and consumables used for testing/manufacturing across multiple industries. Its products advance life-saving research, improve health and safety, and reduce energy waste. Its largest focus is in the life sciences area. Its products offer high margins and are difficult to replace in established and complex testing processes. With a large installed base, 75 percent of Danaher’s revenues are derived from captive consumables with mission-critical applications. With increased testing of food, drugs, people and myriad other things, the company is in a strong position to continue to grow its sales in the U.S. and internationally. The company fits our quality growth criteria well with an attractive cash-flow-based valuation. We have increased our position in the stock amid the market’s focus on more economically sensitive companies in the recent pandemic rebound.

Blum (TCW – Growth): DexCom (DXCM) is an example of one of our defensive/uncorrelated growth stocks, i.e., less cyclical, less correlated to GDP, that we believe may grow through various market cycles. DexCom is a medical device company primarily focused on the design, development and commercialization of continuous glucose monitoring (CGM) systems for use by health care providers and people with diabetes. Its competitive advantages include its strong products, which last longer and have better accuracy and convenience relative to its competition, technology, through investment in robotics, automation and scale. The company’s total addressable market continues to grow as the company expands internationally and moves beyond Type 1 and Type 2 insulin-intensive patients and we believe the stock price understates DXCM’s long-term earnings power.

Value managers, tell us about a stock that exemplifies your bottom-up investment process. Howard Gleicher, let’s hear from Aristotle.

Gleicher (Aristotle – Value): “Quality – Value – Catalyst” is at the heart of our approach. We identify what we perceive to be quality businesses where others may not recognize their value and where catalysts exist to propel the companies forward. With that as background we are pleased to discuss Crown Castle International Corp. (CCI), a company we added to the portfolio in 2021.

CCI is one of the largest owners of cellular towers and other infrastructure, primarily in the U.S. This country is somewhat unique in that a majority of cell towers are owned by third parties, such as CCI, allowing AT&T, Verizon, T-Mobile and others to share as multiple “tenants” per site. This leads to far higher returns on capital for tower companies than in other countries. The ongoing rollout of 5G services will necessitate more towers and more equipment per tower. For higher-frequency penetration, “small cells” and fiber to connect them will also be required. This is an area of unique expertise for CCI and one which, we believe, will separate the company from its closest competitors. Legally organized as a real estate investment trust (REIT) due to its ownership of its tower assets—plus about one-third of the land they sit upon—CCI pays out a significant portion of its earnings in the form of dividends.

Ben Silver, what’s a stock that reflects Pzena’s approach?

Silver (Pzena – Value): At its core, deep value investing entails buying businesses at highly discounted prices relative to the present value of their future earnings streams. These opportunities present themselves when the market misinterprets temporary headwinds as long-term structural problems. Lear (LEA), a major supplier of seating modules and electrical wiring systems to multiple marques, is a prime example of a good business that went on sale due to the global semiconductor shortage. Auto suppliers like Lear were hit both on the volume side and from rising raw material costs. Volumes are expected to normalize as the semiconductor shortage abates and OEMs ramp up production. Regarding higher input costs, Lear is most exposed to rising prices of leather hides and steel in its seating business, which can only be passed through with a lag. In the face of these headwinds, however, the company continues to reduce its operating costs and will likely emerge with higher margins in the future as volumes recover and prices are adjusted. Lear trades at 10.4 times our normal earnings estimate.

Pat English, we’ll ask you to conclude for Fiduciary.

English (Fiduciary – Value): PACCAR, Inc. (PCAR) makes commercial trucks and related parts. The business is very efficient and often generates negative working capital, that is, cash in before delivery, with solid margins. PCAR’s return on invested capital averages 20 percent, which is better than most industrial businesses. The company’s ongoing product updates should drive solid price realization, market share gains and earnings. The company is also investing in alternative powertrain and autonomous driving technology. PCAR’s truck parts business is growing at 6 percent-plus as the company increases proprietary content on trucks and enhances the distribution network. Supply chain issues have weighed on PCAR’s stock and it trades at 13.8 times 2022 EPS, which is a discount to its history and a significant discount to the market. We believe the supply chain issues are temporary and are masking a solid mid-term financial outlook from new products and continued growth.

Many thanks to all for sharing your insights, and for illustrating the long-term value in a bottom-up approach to investing that begins, and ends, with in-depth analysis of companies that align with your style and strategy and exhibit sound fundamentals for the long term.

NOTE 1. ORGANIZATION

Liberty All-Star® Equity Fund (the “Fund”) is a Massachusetts business trust registered under the Investment Company Act of 1940 (the “1940 Act”), as amended, as a diversified, closed-end management investment company.

Investment Goal

The Fund seeks total investment return comprised of long-term capital appreciation and current income through investing primarily in a diversified portfolio of equity securities.

Fund Shares

The Fund may issue an unlimited number of shares of beneficial interest.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

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

Accounting Standards Codification Topic 946.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates.

Security Valuation

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

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

The Fund’s investments are valued at market value or, in the absence of market value with respect to any portfolio securities, at fair value according to procedures adopted by the Fund’s Board of Trustees (the “Board”). When market quotations are not readily available, or in management’s judgment they do not accurately reflect fair value of a security, or an event occurs after the market close but before the Fund is priced that materially affects the value of a security, the securities will be valued by the Fund’s Fair Valuation Committee using fair valuation procedures established by the Board. Examples of potentially significant events that could materially impact the value of a security include, but are not limited to: single issuer events such as corporate actions, reorganizations, mergers, spin-offs, liquidations, acquisitions and buyouts; corporate announcements on earnings or product offerings; regulatory news; and litigation and multiple issuer events such as governmental actions; natural disasters or armed conflicts that affect a country or a region; or significant market fluctuations. Potential significant events are monitored by the Advisor ALPS Advisors Inc. (the “Advisor” and “AAI”), Sub-Advisers and/or the Valuation Committee through independent reviews of market indicators, general news sources and communications from the Fund’s custodian. As of December 31, 2021, the Fund held no securities that were fair valued.

Security Transactions

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

Income Recognition

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

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

Lending of Portfolio Securities

The Fund may lend its portfolio securities only to borrowers that are approved by the Fund’s securities lending agent, State Street Bank & Trust Co. (“SSB”). The Fund will limit such lending to not more than 30% of the value of its total assets. The borrower pledges and maintains with the Fund collateral consisting of cash (U.S. Dollar only), securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, or by irrevocable bank letters of credit issued by a person other than the borrower or an affiliate of the borrower. The initial collateral received by the Fund is required to have a value of no less than 102% of the market value of the loaned securities for securities traded on U.S. exchanges and a value of no less than 105% of the market value for all other securities. The collateral is maintained thereafter, at a market value equal to no less than 100% of the current value of the securities on loan. The market value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

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

The following is a summary of the Fund's securities lending positions and related cash and non-cash collateral received as of December 31, 2021:

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

Fair Value Measurements

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

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

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

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

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

The following is a summary of the inputs used to value the Fund’s investments as of December 31, 2021:

The Fund did not have any securities that used significant unobservable inputs (Level 3) in determining fair value during the period. There were no transfers into or out of Level 3 during the year ended December 31, 2021.

Distributions to Shareholders

The Fund currently has a policy of paying distributions on its shares of beneficial interest totaling approximately 10% of its net asset value per year. The distributions are payable in four quarterly distributions of 2.5% of the Fund’s net asset value at the close of the New York Stock Exchange on the Friday prior to each quarterly declaration date. Distributions to shareholders are recorded on ex-date.

NOTE 3. RISKS

Investment and Market Risk

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

Common Stock Risk

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

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

Market Disruption and Geopolitical Risk

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

NOTE 4. FEDERAL TAX INFORMATION AND TAX BASIS INFORMATION

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

Classification of Distributions to Shareholders

Net investment income/(loss) and net realized gain/(loss) may differ for financial statement and tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Fund. The amounts and characteristics of tax basis distributions and composition of distributable earnings/(accumulated losses) are determined at the time in which distributions are paid, which may occur after the fiscal year end. Accordingly, tax basis balances have not been determined as of December 31, 2021.

The tax character of distributions paid during the years ended December 31, 2021 and December 31, 2020 were as follows:

The Fund declared a distribution of $47,006,257 with an ex-date in 2021 that was paid in 2022. Such amount is not included above, and the tax character of such distributions will be determined at the end of 2022.

As of December 31, 2021, the components of distributable earnings on a tax basis were as follows:

As of December 31, 2021, the cost of investments for federal income tax purposes and accumulated net unrealized appreciation/(depreciation) on investments was as follows:

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

Federal Income Tax Status

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

As of and during the year ended December 31, 2021, the Fund did not have a liability for any unrecognized tax benefits. The Fund files U.S. federal, state, and local tax returns as required. The Fund’s tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return. Tax returns for open years have incorporated no uncertain tax positions that require a provision for income taxes.

NOTE 5. FEES AND COMPENSATION PAID TO AFFILIATES

Investment Advisory Fee

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

Investment Advisory Fees for the year ended December 31, 2021 are reported on the Statement of Operations.

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

Administration, Bookkeeping and Pricing Services

ALPS Fund Services, Inc. (“ALPS”) serves as the administrator to the Fund and the Fund has agreed to pay expenses incurred in connection with this service. Pursuant to an Administrative, Bookkeeping and Pricing Services Agreement, ALPS provides operational services to the Fund including, but not limited to, fund accounting and fund administration and generally assists in the Fund’s operations. The Fund’s administration fee is accrued on a daily basis and paid monthly. Administration, Pricing and Bookkeeping fees paid by the Fund for the year ended December 31, 2021 are disclosed in the Statement of Operations.

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

Fees Paid to Officers

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

NOTE 6. PORTFOLIO INFORMATION

Purchases and Sales of Securities

For the year ended December 31, 2021, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $494,238,924 and $384,749,606, respectively.

NOTE 7. CAPITAL TRANSACTIONS

On August 9, 2021, the Board of the Fund authorized and set the terms of an offering to the Fund’s shareholders of rights to purchase additional shares of the Fund. Record date shareholders, at the close of business on October 15, 2021 were issued non-transferable rights entitling them to subscribe for one additional share for every ten shares held (the “Primary Subscription”), with the right to subscribe for additional shares not subscribed for by others in the Primary Subscription. The rights offering commenced on October 21, 2021 and expired on November 22, 2021 (the “Expiration Date”). Shareholders exercised rights to purchase 27,979,915 shares at a subscription price of $7.78 per share for proceeds, net of expenses of $450,000, of $217,233,738. If the shares would have been issued at the NAV the proceeds would have been $228,705,504, net of expenses. The subscription price represents 95 percent of the average of the last reported sales price of a share on the NYSE on the Expiration Date and the four preceding trading days.

During the years ended December 31, 2021 and December 31, 2020, distributions in the amounts of $72,142,876 and $51,405,785, respectively, were paid in newly issued shares valued at market value or net asset value, but not less than 95% of market value. Such distributions resulted in the issuance of 9,175,859 and of 8,254,107 shares, respectively.

NOTE 8. INDEMNIFICATION

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

NOTE 9. SUBSEQUENT EVENTS

Effective January 1, 2022, the Fund's Administrative fee schedule includes an additional breakpoint on average daily net assets over $1.6 billion at 0.117% and the Fund Accounting fee, Financial Reporting fee and Multi-Manager fee included in the Fund’s Administration Agreement have been removed.

To the shareholders and the Board of Trustees of Liberty All-Star^® Equity Fund

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of Liberty All-Star® Equity Fund (the "Fund"), including the schedule of investments, as of December 31, 2021, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2021, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund's financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2021, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

DELOITTE & TOUCHE LLP

Denver, Colorado

February 25, 2022

We have served as the auditor of one or more investment companies advised by ALPS Advisors, Inc. since 2007.

Under the Fund’s Automatic Dividend Reinvestment and Direct Purchase Plan (the “Plan”), shareholders automatically participate and have all their Fund dividends and distributions reinvested by Computershare Trust Company, N.A., as agent for participants in the Plan (the “Plan Agent”), in additional shares of the Fund. For further information, call Investor Assistance at 1-800-LIB-FUND (1-800-542-3863) weekdays between 9 a.m. and 5 p.m. Eastern Time.

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

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

Plan participants have the option of making additional investments of $100 or more on a monthly basis up to a maximum of $120,000 in a calendar year. These direct purchases will be invested on or shortly after the 15th of each month and direct purchases should be sent so as to be received by the Plan Agent at least two business days prior to the next investment date. Barring suspension of trading, direct purchases will be invested within 35 days after such date. Alternatively, participants can authorize an automatic monthly deduction from a checking or savings account at a U.S. bank or other financial institution. A participant may withdraw a direct purchase by written notice received by the Plan Agent at least two business days before such payment is to be invested.

The Plan Agent maintains all shareholder accounts in the Plan and furnishes 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 book-entry or noncertificated form in the name of the participant, and each shareholder’s proxy will include those shares purchased or received pursuant to the Plan.

There is no charge to participants for reinvesting distributions pursuant to the Plan. The Plan Agent’s fees are paid by the Fund, therefore indirectly by shareholders. There are no brokerage charges with respect to shares issued directly by the Fund as a result of dividends or distributions declared payable in shares. However, each participant bears a per share fee (which includes any brokerage commissions the Plan Agent is required to pay) 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 direct purchases, the Plan Agent will charge $1.25 for purchase by check and $2.00 for automatic investment transactions, plus a per share fee (which includes any brokerage commissions the Plan Agent is required to pay). Sales of shares held in the Plan will also be subject to a service fee of $2.50 and a per share fee currently $0.10. All fees described in this summary are subject to change. Please contact the Plan Agent for the current fees.

Shareholders may terminate their participation in the Plan by notifying the Plan Agent by telephone, through the Internet or in writing. Such termination will be effective immediately if notice is received by The Plan Agent prior to any dividend record date.

The Fund reserves the right to amend or terminate the Plan.

The full text of the Plan may be found on the Fund’s website at www.all-starfunds.com.

TAX INFORMATION

All 2021 distributions whether received in cash or shares of the Fund consist of the following:

The table below details the breakdown of each 2021 distribution for federal income tax purposes.