Liberty All-Star Equity Fund





Period Ending September 30, 2013 (Unaudited)


Fund Statistics

Net Asset Value (NAV)


Market Price



   Quarter    Year-to-Date


   $0.09    $0.25

Market Price Trading Range

   $5.15 to $5.72    $4.83 to $5.72

Discount Range

   9.1% to 12.8%    9.1% to 12.8%



Shares Valued at NAV with Dividends Reinvested

     7.57%    21.52%

Shares Valued at Market Price with Dividends Reinvested

     5.78%    18.93%

Dow Jones Industrial Average

     2.12%    17.64%

Lipper Large-Cap Core Mutual Fund Average

     5.60%    19.49%

NASDAQ Composite Index

   11.19%    26.12%

S&P 500® Index

     5.24%    19.79%

Figures shown for the Fund and the Lipper Large-Cap Core Mutual Fund Average are total returns, which include dividends, after deducting fund expenses. Figures 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 18.

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

The Fund is a closed-end fund and does not continuously offer shares. The Fund trades in the secondary market, investors wishing to buy or sell shares need to place orders through an intermediary or broker by using the Fund’s ticker symbol: USA. The share price of a closed-end fund is based on the market’s value. Shares of closed-end funds frequently trade at a discount to net asset value. The price of the Fund’s shares is determined by a number of factors, several of which are beyond the control of the Fund. Therefore, the Fund cannot predict whether its shares will trade at, below or above net asset value.


Liberty All-Star® Equity Fund

   President’s Letter



Fellow Shareholders:

     October 2013   

The third quarter saw equity markets build on the momentum of the first two quarters of the year, as the S&P 500® Index closed at a record high of 1725.52 on September 18. The widely followed Dow Jones Industrial Average also closed at a fresh all-time high of 15676.94 on the same date. Both averages responded positively to news that the Federal Reserve currently has no plan to “taper,” but, instead, would continue its current aggressive bond buying program.

Just eight trading days later, at quarter’s end on September 30, the mood was not nearly so ebullient as investors began to focus on prospects for a shutdown of the federal government—the first in 17 years—and, of even greater concern, an impasse over raising the debt ceiling that could potentially lead to a technical default. These worries caused the S&P 500 to close the quarter at 1681.55—2.5 percent below its high—while the Dow Jones Industrials also eased, ending the period at 15129.67.

Equity markets were choppy throughout the period—rising in July, retrenching in August and rebounding in September before slipping at quarter’s end. The net result was a quarterly return of 5.24 percent for the S&P 500 and 2.12 percent for the Dow Jones Industrials. The technology-oriented NASDAQ Composite Index turned in the best performance of the three, gaining 11.19 percent for the period.

The third quarter was good for Liberty All-Star® Equity Fund. The Fund returned 7.57 percent with shares valued at NAV with dividends reinvested and 5.78 percent with shares valued at market price with dividends reinvested. As noted, the S&P 500 returned 5.24 percent, while the Lipper Large-Cap Core Mutual Fund Average advanced 5.60 percent. Year to date through September, the Fund has returned 21.52 percent with shares valued at NAV with dividends reinvested and 18.93 percent with shares valued at market price with dividends reinvested. Comparable nine-month returns were 19.79 percent for the S&P 500® Index and 19.49 percent for the Lipper Large-Cap Core Mutual Fund Average.

For the quarter, the discount at which Fund shares traded relative to their NAV was largely unchanged from the previous quarter, ranging from a low of 9.1 percent to a high of 12.8 percent.

In keeping with policy, the Fund’s distribution for the third quarter was $0.09 per share. The Fund’s distribution policy has been in place since 1988 and is a major component of the Fund’s total return. These distributions add up to $24.17 per share since 1987 (the Fund’s first full calendar year of operations). We would emphasize that shareholders must include these distributions when determining the return on their investment in the Fund.

We are pleased that the Fund has delivered solid absolute and relative performance for the third quarter and year to date through September. Although the fourth quarter began with the shadow of a government shutdown and potential default hanging over it, the negotiated agreement in Washington averted a deeper crisis—at least until the winter. We are hopeful that, going forward, decisions will be made in Washington with the country’s best long-term interests first and




  Third Quarter Report (Unaudited)  |  September 30, 2013


President’s Letter

   Liberty All-Star® Equity Fund


foremost. Such a conclusion will enable investors to focus once again on business and economic fundamentals and companies with attractive long-term prospects.




William R. Parmentier, Jr.

President and Chief Executive Officer

Liberty All-Star® Equity Fund

The views expressed in the President’s letter reflect the views of the President as of October 2013 and may not reflect his views on the date this report is first published or anytime thereafter. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the Fund disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for the Fund are based on numerous factors, may not be relied on as an indication of trading intent.



Liberty All-Star® Equity Fund

   Table of Distributions & Rights Offerings
   September 30, 2013 (Unaudited)


        Rights Offerings    

Per Share






Shares Needed to

Purchase One

Additional Share




  Tax Credits*
1988   $0.64                
1989     0.95                
1990     0.90                
1991     1.02                
1992     1.07   April   10   $10.05    
1993     1.07   October   15     10.41   $0.18
1994     1.00   September   15       9.14    
1995     1.04                
1996     1.18                 0.13
1997     1.33                 0.36
1998     1.40   April   20     12.83    
1999     1.39                
2000     1.42                
2001     1.20                
2002     0.88   May   10       8.99    
2003     0.78                
2004     0.89   July     10**       8.34    
2005     0.87                
2006     0.88                
2007     0.90   December   10       6.51    
2008     0.65                
2009***     0.31                
2010     0.31                
2011     0.34                
2012     0.32                

1st Quarter

2nd Quarter     0.08        
3rd Quarter     0.09                
Total   $22.99        



The Fund’s net investment income and net realized capital gains exceeded the amount to be distributed under the Fund’s distribution policy. In each case, the Fund elected to pay taxes on the undistributed income and passed through a proportionate tax credit to shareholders.


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


Effective with the second quarter distribution, the annual distribution rate was changed from 10 percent to 6 percent.



Liberty All-Star® Equity Fund’s current policy is to pay distributions on its shares totaling approximately 6 percent of its net asset value per year, payable in four quarterly installments of 1.5 percent of the Fund’s net asset value at the close of the New York Stock Exchange on the Friday prior to each quarterly declaration date. The fixed distributions are not related to the amount of the Fund’s net investment income or net realized capital gains or losses and may be taxed as ordinary income up to the amount of the Fund’s current and accumulated earnings and profits. If, for any calendar year, the total distributions made under the distribution policy exceed the Fund’s net investment income and net realized capital gains, the excess will generally be treated as a non-taxable return of capital, reducing the shareholder’s adjusted basis in his or her shares. If the Fund’s net investment income and net realized capital gains for any year exceed the amount distributed under the distribution policy, the Fund may, in its discretion, retain and not distribute net realized capital gains and pay income tax thereon to the extent of such excess. The Fund retained such excess gains in 1993, 1996 and 1997.


  Third Quarter Report (Unaudited)  |  September 30, 2013


Top 20 Holdings & Economic Sectors

   Liberty All-Star® Equity Fund

September 30, 2013 (Unaudited)



Top 20 Holdings*    Percent of Net Assets



Google, Inc., Class A


JPMorgan Chase & Co.


Schlumberger Ltd.

       2.02, Inc.


Citigroup, Inc.


Bank of America Corp.


MetLife, Inc.


Morgan Stanley


Starbucks Corp.


Devon Energy Corp.


SunTrust Banks, Inc.

       1.38, Inc.


Microsoft Corp.


Visa, Inc., Class A


American International Group, Inc.


Hewlett-Packard Co.


Chesapeake Energy Corp.


TE Connectivity Ltd.


State Street Corp.

Economic Sectors*    Percent of Net Assets



Information Technology




Consumer Discretionary


Health Care




Consumer Staples






Other Net Assets




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





Liberty All-Star® Equity Fund

   Major Stock Changes in the Quarter
     September 30, 2013 (Unaudited)


The following are the major ($4 million or more) stock changes - both purchases and sales - that were made in the Fund’s portfolio during the third quarter of 2013.


Security Name    Purchases (Sales)   Held as of 9/30/13



athenahealth, Inc.

       45,900         45,900  

Catamaran Corp.

       109,198         170,979  

Cigna Corp.

       70,375         70,375  

The Home Depot, Inc.

       61,907         61,907  

PulteGroup, Inc.

       264,739         264,739  

TRW Automotive Holdings Corp.

       61,625         61,625  

Delphi Automotive PLC

       (82,650 )       76,275  

LinkedIn Corp., Class A

       (21,858 )       37,216  

NetApp, Inc.

       (127,724 )       0  

NVR, Inc.

       (4,580 )       604  

State Street Corp.

       (58,800 )       170,675  

TE Connectivity Ltd.

       (129,450 )       217,325  

Tidewater, Inc.

       (143,000 )       0  

The Western Union Co.

       (238,241 )       219,722  



  Third Quarter Report (Unaudited)  |  September 30, 2013


Investment Managers/

Portfolio Characteristics

   Liberty All-Star® Equity Fund

September 30, 2013 (Unaudited)










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.

PORTFOLIO CHARACTERISTICS As of September 30, 2013 (Unaudited)




S&P 500®


Number of Holdings

   41   39   35   48   32   164*   500

Percent of Holdings in Top 10

   51%   37%   38%   36%   44%   19%   18%

Weighted Average Market


Capitalization (billions)

   $38   $73   $94   $63   $57   $65   $105

Average Five-Year Earnings


Per Share Growth

   (3)%   6%   10%   16%   19%   10%   12%

Dividend Yield

   1.2%   2.0%   2.4%   1.1%   0.7%   1.5%   2.1%

Price/Earnings Ratio**

   14x   14x   16x   23x   28x   18x   17x

Price/Book Value Ratio

   1.0x   2.6x   2.5x   4.8x   8.5x   3.9x   4.0x



Certain holdings are held by more than one manager.


Excludes negative earnings.




Liberty All-Star® Equity Fund

   Schedule of Investments
   As of September 30, 2013 (Unaudited)







Auto Components (1.93%)


Delphi Automotive PLC

     76,275       $ 4,455,986   

Johnson Controls, Inc.

     217,343         9,019,734   

Magna International, Inc.

     36,207         2,989,250   

TRW Automotive Holdings Corp.(a)

     61,625         4,394,479   







Hotels, Restaurants & Leisure (2.90%)


Carnival Corp.

     138,685         4,526,678   

Marriott International, Inc., Class A

     177,681         7,473,263   

McDonald’s Corp.

     26,000         2,501,460   

Orient-Express Hotels Ltd., Class A(a)

     124,147         1,611,428   

Starbucks Corp.

     198,127         15,249,835   







Household Durables (2.17%)


Lennar Corp., Class A

     179,220         6,344,388   

NVR, Inc.(a)

     604         555,191   

PulteGroup, Inc.

     264,739         4,368,194   

Taylor Morrison Home Corp.(a)

     52,079         1,179,589   

Toll Brothers, Inc.(a)

     340,291         11,035,637   







Internet & Catalog Retail (2.13%), Inc.(a)

     47,550         14,866,032, Inc.(a)

     6,975         7,051,376   

Shutterfly, Inc.(a)

     19,627         1,096,757   







Media (1.46%)


Comcast Corp., Class A

     70,440         3,180,366   

News Corp.(a)

     59,645         979,967   

Omnicom Group, Inc.

     115,525         7,328,906   

The Walt Disney Co.

     66,897         4,314,188   







Specialty Retail (2.10%)


Dick’s Sporting Goods, Inc.

     69,643         3,717,544   

The Home Depot, Inc.

     61,907         4,695,646   

Staples, Inc.

     448,100         6,564,665   

Tiffany & Co.

     69,610         5,333,518   

The TJX Cos., Inc.

     41,562         2,343,681   







Textiles, Apparel & Luxury Goods (1.02%)


Michael Kors Holdings Ltd.(a)

     18,353         1,367,666   

NIKE, Inc., Class B

     44,625         3,241,560   

PVH Corp.

     28,454         3,377,205   



  See Notes to Schedule of Investments.


  Third Quarter Report (Unaudited)  |  September 30, 2013


Schedule of Investments

   Liberty All-Star® Equity Fund

As of September 30, 2013 (Unaudited)




COMMON STOCKS (continued)


Textiles, Apparel & Luxury Goods (continued)


Ralph Lauren Corp.

     18,399       $ 3,030,867   









Beverages (1.17%)


The Coca-Cola Company

     80,000         3,030,400   

Diageo PLC(b)

     47,600         6,049,008   

PepsiCo, Inc.

     45,000         3,577,500   







Food & Staples Retailing (0.88%)


Costco Wholesale Corp.

     43,900         5,053,768   

CVS Caremark Corp.

     78,000         4,426,500   







Food Products (1.47%)


Archer-Daniels-Midland Co.

     175,000         6,447,000   

Kellogg Co.

     47,000         2,760,310   

Mead Johnson Nutrition Co.

     43,400         3,222,884   

Mondelez International, Inc., Class A

     109,209         3,431,347   







Household Products (0.62%)


The Procter & Gamble Co.

     89,000         6,727,510   




Tobacco (0.62%)


Philip Morris International, Inc.

     77,152         6,680,591   




ENERGY (14.17%)


Energy Equipment & Services (4.43%)


Baker Hughes, Inc.

     168,650         8,280,715   

Dril-Quip, Inc.(a)

     22,600         2,593,350   

National-Oilwell Varco, Inc.

     46,400         3,624,304   

Oceaneering International, Inc.

     66,400         5,394,336   

Schlumberger Ltd.

     246,598         21,789,399   

Weatherford International Ltd.(a)

     404,385         6,199,222   







Oil, Gas & Consumable Fuels (9.74%)


Anadarko Petroleum Corp.

     14,000         1,301,860   

Arch Coal, Inc.

     1,990,156         8,179,541   


     223,450         9,391,613   

Chesapeake Energy Corp.

     527,776         13,658,843   

Chevron Corp.

     52,900         6,427,350   

Cobalt International Energy, Inc.(a)

     236,150         5,870,689   


     92,600         6,436,626   

CONSOL Energy, Inc.

     106,216         3,574,168   


  See Notes to Schedule of Investments.



Liberty All-Star® Equity Fund

   Schedule of Investments
   As of September 30, 2013 (Unaudited)



COMMON STOCKS (continued)


Oil, Gas & Consumable Fuels (continued)


Devon Energy Corp.

     262,023       $ 15,134,449   

Exxon Mobil Corp.

     44,775         3,852,441   

Occidental Petroleum Corp.

     85,000         7,950,900   

Peabody Energy Corp.

     450,788         7,776,093   

Royal Dutch Shell PLC(b)

     148,763         9,770,741   

WPX Energy, Inc.(a)

     308,920         5,949,799   









Capital Markets (5.28%)


The Charles Schwab Corp.

     420,100         8,880,914   

Franklin Resources, Inc.

     85,600         4,327,080   

The Goldman Sachs Group, Inc.

     37,450         5,924,965   

Invesco Ltd.

     169,475         5,406,253   

Morgan Stanley

     573,312         15,450,758   

State Street Corp.

     170,675         11,221,881   


     284,025         5,828,193   







Commercial Banks (4.43%)


BB&T Corp.

     205,000         6,918,750   

First Republic Bank

     47,064         2,194,594   

Huntington Bancshares, Inc.

     283,211         2,339,323   


     227,950         2,598,630   

The PNC Financial Services Group, Inc.

     70,666         5,119,752   

Regions Financial Corp.

     505,548         4,681,374   

SunTrust Banks, Inc.

     460,443         14,927,562   

Wells Fargo & Co.

     222,000         9,173,040   







Consumer Finance (0.80%)


American Express Co.

     91,500         6,910,080   

Capital One Financial Corp.

     25,200         1,732,248   







Diversified Financial Services (6.07%)


Bank of America Corp.

     1,150,846         15,881,675   

Citigroup, Inc.

     377,074         18,291,860   

CME Group, Inc.

     64,636         4,775,308   

ING US, Inc.

     137,250         4,009,072   

JPMorgan Chase & Co.

     437,965         22,638,411   







Insurance (6.50%)


ACE Ltd.

     92,479         8,652,335   

The Allstate Corp.

     119,680         6,049,824   

American International Group, Inc.

     288,641         14,036,612   


  See Notes to Schedule of Investments.


  Third Quarter Report (Unaudited)  |  September 30, 2013


Schedule of Investments

   Liberty All-Star® Equity Fund

As of September 30, 2013 (Unaudited)





COMMON STOCKS (continued)


Insurance (continued)


Assured Guaranty Ltd.

     247,204       $ 4,635,075   

Axis Capital Holdings Ltd.

     156,000         6,756,360   

Genworth Financial, Inc., Class A(a)

     81,639         1,044,163   

The Hartford Financial Services Group, Inc.

     226,310         7,042,767   

MetLife, Inc.

     336,675         15,806,891   

Willis Group Holdings PLC

     115,350         4,998,116   

WR Berkley Corp.

     27,976         1,199,051   







Real Estate Investment Trusts (1.18%)


American Tower Corp.

     120,260         8,914,874   

Camden Property Trust

     62,419         3,835,023   







Real Estate Management & Development (0.21%)


Zillow, Inc., Class A(a)

     26,972         2,275,628   






Biotechnology (1.55%)


BioMarin Pharmaceutical, Inc.(a)

     81,945         5,918,068   

Celgene Corp.(a)

     38,900         5,987,877   

Gilead Sciences, Inc.(a)

     77,224         4,852,756   







Health Care Equipment & Supplies (1.91%)


Becton, Dickinson & Co.

     43,350         4,335,867   

Edwards Lifesciences Corp.(a)

     75,815         5,278,998   

Hologic, Inc.(a)

     186,452         3,850,234   

Zimmer Holdings, Inc.

     87,000         7,146,180   







Health Care Providers & Services (2.55%)


Brookdale Senior Living, Inc.(a)

     232,492         6,114,540   

Catamaran Corp.(a)

     170,979         7,856,485   

Cigna Corp.

     70,375         5,409,022   

Express Scripts Holding Co.(a)

     54,800         3,385,544   

Laboratory Corp. of America Holdings(a)

     47,850         4,743,849   







Health Care Technology (1.29%)


athenahealth, Inc.(a)

     45,900         4,982,904   

Cerner Corp.(a)

     170,968         8,984,369   







Life Sciences Tools & Services (0.44%)


Thermo Fisher Scientific, Inc.

     52,000         4,791,800   





  See Notes to Schedule of Investments.



Liberty All-Star® Equity Fund

   Schedule of Investments
   As of September 30, 2013 (Unaudited)



COMMON STOCKS (continued)


Pharmaceuticals (2.05%)


Abbott Laboratories

     97,525       $ 3,236,855   

Allergan, Inc.

     59,900         5,417,955   

Johnson & Johnson

     86,500         7,498,685   

Teva Pharmaceutical Industries Ltd.(b)

     159,000         6,007,020   









Aerospace & Defense (2.22%)


The Boeing Co.

     26,970         3,168,975   

L-3 Communications Holdings, Inc.

     53,950         5,098,275   

Northrop Grumman Corp.

     34,450         3,281,707   

Precision Castparts Corp.

     46,768         10,627,560   

Textron, Inc.

     65,841         1,817,870   







Airlines (0.26%)


US Airways Group, Inc.(a)

     145,200         2,752,992   




Building Products (0.43%)


Masco Corp.

     218,425         4,648,084   




Construction & Engineering (0.47%)


Fluor Corp.

     71,685         5,086,768   




Electrical Equipment (0.64%)


Emerson Electric Co.

     107,500         6,955,250   




Machinery (1.67%)


Caterpillar, Inc.

     61,800         5,152,266   

Joy Global, Inc.

     77,083         3,934,316   

Navistar International Corp.(a)

     123,127         4,491,673   

Parker Hannifin Corp.

     41,150         4,473,828   







Professional Services (0.59%)


Verisk Analytics, Inc., Class A(a)

     98,300         6,385,568   




Trading Companies & Distributors (1.12%)


Fastenal Co.

     130,082         6,536,620   

United Rentals, Inc.(a)

     95,716         5,579,286   







Transportation Infrastructure (0.31%)


Aegean Marine Petroleum Network, Inc.

     286,345         3,396,052   





  See Notes to Schedule of Investments.


  Third Quarter Report (Unaudited)  |  September 30, 2013


Schedule of Investments

   Liberty All-Star® Equity Fund
As of September 30, 2013 (Unaudited)   



COMMON STOCKS (continued)




Communications Equipment (3.29%)


Cisco Systems, Inc.

     361,577       $ 8,468,134   


     402,353         27,102,498   







Computers & Peripherals (2.12%)


Dell, Inc.

     433,522         5,969,598   

Hewlett-Packard Co.

     655,850         13,759,733   

Stratasys Ltd.(a)

     31,393         3,178,855   







Electronic Equipment & Instruments (1.70%)


Corning, Inc.

     455,000         6,638,450   

LG Display Co. Ltd.(b)

     43,560         519,671   

TE Connectivity Ltd.

     217,325         11,253,088   







Internet Software & Services (4.45%)


eBay, Inc.(a)

     63,026         3,516,221   

Equinix, Inc.(a)

     36,145         6,638,029   

Google, Inc., Class A(a)

     30,083         26,350,000   

LinkedIn Corp., Class A(a)

     37,216         9,157,369   

Rackspace Hosting, Inc.(a)

     47,037         2,481,672   







IT Services (1.69%)


Visa, Inc., Class A

     73,968         14,135,285   

The Western Union Co.

     219,722         4,100,012   







Semiconductors & Semiconductor Equipment (1.03%)


Altera Corp.

     110,360         4,100,978   

ARM Holdings PLC(b)

     146,300         7,039,956   







Software (5.24%)


Citrix Systems, Inc.(a)

     76,074         5,371,585   

Microsoft Corp.

     437,100         14,559,801   

Oracle Corp.

     233,875         7,757,634, Inc.(a)

     369,300         19,170,363   

Splunk, Inc.(a)

     83,300         5,001,332   

VMware, Inc., Class A(a)

     58,900         4,765,010   









Chemicals (1.49%)


EI du Pont de Nemours & Co.

     65,000         3,806,400   

Praxair, Inc.

     50,400         6,058,584   


  See Notes to Schedule of Investments.



Liberty All-Star® Equity Fund

   Schedule of Investments
   As of September 30, 2013 (Unaudited)



COMMON STOCKS (continued)


Chemicals (continued)


The Sherwin-Williams Co.

     34,318       $ 6,252,053   







Metals & Mining (0.91%)


Alcoa, Inc.

     124,420         1,010,291   

Freeport-McMoRan Copper & Gold, Inc.

     152,235         5,035,934   

Silver Wheaton Corp.

     150,520         3,728,380   









Electric Utilities (0.48%)


Entergy Corp.

     80,975         5,116,810   

FirstEnergy Corp.

     2,200         80,190   







Independent Power Producers & Energy Traders (0.15%)


NRG Energy, Inc.

     57,831         1,580,521   





(COST OF $912,909,294)




     PAR VALUE         





Repurchase agreement with State Street Bank & Trust Co., dated 09/30/13, due 10/01/13 at 0.01%, collateralized by Federal National Mortgage Association 3.00%, 03/15/43, market value of $31,806,098 (Repurchase proceeds of $31,163,009)

(COST OF $31,163,000)

     $31,163,000       $ 31,163,000   





(COST OF $944,072,294)(c)







NET ASSETS (100.00%)

      $ 1,080,859,696   






      $ 6.20   






Non-income producing security.


American Depositary Receipt.


Cost of investments for federal income tax purposes is $951,973,799.


  See Notes to Schedule of Investments.


  Third Quarter Report (Unaudited)  |  September 30, 2013


Schedule of Investments

   Liberty All-Star® Equity Fund
As of September 30, 2013 (Unaudited)   


Gross unrealized appreciation and depreciation at September 30, 2013 based on cost of investments for federal income tax purposes is as follows:


Gross unrealized appreciation

   $     209,304,626       

Gross unrealized depreciation




Net unrealized appreciation

   $ 129,316,491       



For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease. Industries are shown as a percent of net assets.


  See Notes to Schedule of Investments.



Liberty All-Star® Equity Fund

   Notes to Schedule of Investments
   September 30, 2013 (Unaudited)


Security Valuation

Equity securities including common stocks are valued at the last sale price at the close of the principal exchange on which they trade, except for securities listed on the National Association of Securities Dealers Automated Quotations (“NASDAQ”) exchange, 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.

Short-term debt obligations maturing in more than 60 days for which market quotations are readily available are valued at current market value. Short-term debt obligations maturing within 60 days are valued at amortized cost, which approximates market value.

Investments for which market quotations are not readily available are valued at fair value as determined in good faith under consistently applied procedures approved by and under the general supervision of the Board of Trustees.

Foreign Securities

The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible reevaluation of currencies, the inability to repatriate foreign currency, less complete financial information about companies and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. issuers. For the period ended September 30, 2013, the Fund only held American Depositary Receipts and did not hold any securities denominated in foreign currencies.

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.

Repurchase Agreements

The Fund engages in repurchase agreement transactions with institutions that the Fund’s investment advisor has determined are creditworthy. The Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon a Fund’s ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights.

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



  Third Quarter Report (Unaudited)  |  September 30, 2013


Notes to Schedule of Investments

   Liberty All-Star® Equity Fund
September 30, 2013 (Unaudited)   


its estimates. If the Fund no longer owns the applicable securities, any distributions received in excess of income are recorded as realized gains.

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.

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:


Level 1



Unadjusted quoted prices in active markets for identical investments, unrestricted assets or liabilities that a Fund has the ability to access at the measurement date;

Level 2



Quoted prices which are not active, quoted prices for similar assets or liabilities in active markets or inputs other than quoted prices that are observable (either directly or indirectly) for substantially the full term of the asset or liability; and

Level 3



Significant unobservable prices or inputs (including the Fund’s own assumptions in determining the fair value of investments) where there is little or no market activity for the asset or liability at the measurement date.

The following is a summary of the inputs used to value the Fund’s investments as of September 30, 2013. The Fund recognizes transfers between the levels as of the beginning of the annual period in which the transfer occurred.


     Valuation Inputs         
Investments in Securities at Value*    Level 1      Level 2      Level 3      Total  



Common Stocks

   $ 1,050,127,290       $       $       $ 1,050,127,290   

Short Term Investment

             31,163,000                 31,163,000   




   $   1,050,127,290       $   31,163,000       $       $   1,081,290,290   



* See Schedule of Investments for industry classifications.

For the period ended September 30, 2013, the Fund did not have any transfers between Level 1 and Level 2 securities. The Fund did not have any securities which used significant unobservable inputs (Level 3) in determining fair value during the period.



Liberty All-Star® Equity Fund

   Notes to Schedule of Investments
   September 30, 2013 (Unaudited)



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

Capital Transactions

On July 29, 2013, the Fund’s Board of Trustees authorized the Fund to conduct a tender offer for up to 7.5% of its outstanding shares of beneficial interest at a price equal to 96% of its net asset value per share (“NAV”) as determined on the day of the tender offer expiration of September 23, 2013. Approximately 64,581,723 shares of beneficial interest or approximately 34.2% of the Fund’s outstanding shares were properly tendered and not withdrawn. The Fund accepted 14,143,225 shares for payment at a price equal to $5.98 per share, which represents 96% of the Fund’s net asset value per share as of September 23, 2013. Because the tender offer was oversubscribed, all tenders of shares were subject to proration in accordance with the terms of the tender offer, including adjustments to avoid purchase of fractional shares. Accordingly, on a pro rata basis, the Fund accepted and purchased approximately 21.9% of the shares properly tendered in the tender offer.



  Third Quarter Report (Unaudited)  |  September 30, 2013


Description of Lipper Benchmark And Market Indices

   Liberty All-Star® Equity Fund
September 30, 2013 (Unaudited)   




A price-weighted measure of 30 U.S. blue-chip companies.



The average of funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) above Lipper’s U.S. domestic equity large-cap floor. These funds typically have an average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P 500® Index.



Measures all NASDAQ domestic and international based common type stocks listed on the NASDAQ Stock Market.

S&P 500® INDEX


A large cap U.S. equities index that includes 500 leading companies and captures approximately 80% coverage of available market capitalization.

You cannot invest directly in an index.











ALPS Advisors, Inc.

1290 Broadway, Suite 1100

Denver, Colorado 80203





Deloitte & Touche LLP

555 Seventeenth Street, Suite 3600

Denver, Colorado 80202



State Street Bank & Trust Company

One Lincoln Street

Boston, Massachusetts 02111





Computershare Trust Company, N.A.

P.O. Box 43078

Providence, Rhode Island 02940-3078

1-800-LIB-FUND (1-800-542-3863)



K&L Gates LLP

1601 K Street, NW

Washington, DC 20006



John A. Benning*

Thomas W. Brock*

Edmund J. Burke

George R. Gaspari*

Richard W. Lowry*, Chairman

Dr. John J. Neuhauser*

Richard C. Rantzow*



William R. Parmentier, Jr., President

Mark T. Haley, CFA, Senior Vice President

Edmund J. Burke, Vice President

Kimberly R. Storms, Treasurer

Alex J. Marks, Assistant Secretary

Melanie H. Zimdars, Chief Compliance Officer


* Member of the Audit Committee

A description of the Fund’s proxy voting policies and procedures is available (i) on the Securities and Exchange Commission’s (“SEC”) website at, and (ii) without charge, upon request, by calling 1-800-542-3863. Information regarding how the Fund voted proxies relating to portfolio securities during the 12-month period ended June 30th is available from the SEC’s website at Information regarding how the Fund voted proxies relating to portfolio securities is also available at

The Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q’s are available on the SEC’s website at and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that the Fund may purchase at market prices from time to time shares of its own common stock in the open market.

This report is transmitted to shareholders of Liberty All-Star® Equity Fund for their information. It is not a prospectus or other document intended for use in the purchase of Fund shares.

LAS000558 5/31/14