Liberty All-Star Equity Fund



Period Ending March 31, 2014 (Unaudited)



Fund Statistics    1st Quarter 2014

Net Asset Value (NAV)


Market Price






Market Price Trading Range

   $5.50 to $6.02

Discount Range

   10.6% to 12.6%

Shares Valued at NAV with Dividends Reinvested


Shares Valued at Market Price with Dividends Reinvested


Dow Jones Industrial Average


Lipper Large-Cap Core Mutual Fund Average


NASDAQ Composite Index


S&P 500® Index




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 the remainder of its fiscal year and may be subject to changes based on tax regulations. Pursuant to Section 852 of the Internal Revenue Code, the taxability of this distribution will be reported on Form 1099-DIV for 2014.

Returns for the Fund are total returns, which include dividends. Performance returns are net of management fees and other Fund expenses.

The figure shown for the Lipper Large-Cap Core Mutual Fund Average is based on open-end mutual funds’ total returns, which include dividends, and are net of 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.

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.


 Liberty All-Star® Equity Fund

   President’s Letter




Fellow Shareholders:

     April 2014   

Measured by return, the first quarter of 2014 was subdued, especially when compared with 2013’s 32.39 percent gain in the S&P 500® Index, including the fourth quarter return of 10.51 percent. For the first quarter, the S&P 500® returned 1.81 percent; the widely followed Dow Jones Industrial Average was fractionally negative, losing 0.15 percent; and the technology-focused NASDAQ Composite Index advanced 0.83 percent.

The first quarter represented the fifth straight quarterly rise for the S&P 500® and the NASDAQ Composite, although it was the smallest advance for both since the fourth quarter of 2012. While the S&P 500® rose to a record high in February, it backed off in March when it appeared that the Federal Reserve might raise short-term interest rates earlier than anticipated. As the quarter closed, remarks from the new Federal Reserve Chair, Janet Yellen, eased investor concerns about the potential for an early rate increase and the second quarter opened with the S&P 500® rising to another record—its seventh of the year. Economic news remained mixed during the quarter; on balance, however, data continued to indicate moderate, but steady improvement. Investors did find cause for concern in soft economic news out of China and heightened geopolitical tensions arising from Russia’s seizure of Crimea and unrest in Ukraine.

Liberty All-Star® Equity Fund

Liberty All-Star® Equity Fund returns generally tracked broad indices over the quarter. The Fund returned 1.11 percent with shares valued at net asset value (NAV) with dividends reinvested and 0.18 percent with shares valued at market price with dividends reinvested. For the trailing 12-month period, the Fund has returned 22.83 percent with shares valued at NAV with dividends reinvested and 21.47 percent with shares valued at market price with dividends reinvested. For the quarter and trailing 12 months, the Lipper Large-Cap Core Mutual Fund Average returned 1.69 percent and 21.18 percent, respectively. 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 10.6 percent to a high of 12.6 percent.

For the quarter, value style investing generally outperformed growth style investing, which is of interest to Fund shareholders, as the Fund’s multi-management structure allocates assets between value and growth style investment managers. The Russell 1000® Value Index returned 3.02 percent for the quarter compared with 1.12 percent for the Russell 1000® Growth Index.

In keeping with policy, the Fund’s distribution for the first quarter was $0.10. 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 $24.37 since 1987 (the Fund’s first full calendar year of operations). We would emphasize that shareholders should include these distributions when determining the return on their investment in the Fund.

While markets moved sideways in the first quarter, volatility increased as the period drew to a close and the second quarter got underway. The volatility hit the NASDAQ Composite hardest—



 First Quarter Report (Unaudited) | March 31, 2014


 President’s Letter

   Liberty All-Star® Equity Fund 


specifically, high-growth information technology, biotechnology and social networking stocks—but showed some signs of spreading to other sectors of the market. One contributing factor was last year’s strong gains, as investors became concerned valuations had become stretched. A retrenchment is to be expected—and can be healthy for the long term—in the wake of the 30 percent-plus returns seen in 2013, not to mention a bull market that dates back five years to March 2009. We will monitor trends as they unfold, but continue to believe that the Fund’s philosophy, objectives and structure will serve long-term investors well through all market cycles.





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 April 2014 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 


March 31, 2014 (Unaudited) 


          Rights Offerings    
              Shares Needed to        
    Per Share     Month   Purchase One   Subscription    
  Year   Distributions     Completed   Additional Share   Price   Tax Credits*










    1.07     April   10   $10.05      


    1.07     October   15   10.41   $0.18  


    1.00     September   15     9.14    




    1.18                 0.13


    1.33                 0.36


    1.40     April   20   12.83    








    0.88     May   10     8.99    




    0.89     July      10**     8.34    






    0.90     December   10     6.51    














  1st Quarter






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.



 First Quarter Report (Unaudited) | March 31, 2014


 Top 20 Holdings & Economic Sectors    Liberty All-Star® Equity Fund 
 March 31, 2014 (Unaudited)   


  Top 20 Holdings*    Percent of Net Assets    

Google, Inc., Class A


JPMorgan Chase & Co.


Schlumberger Ltd.

   2.14, Inc.


Bank of America Corp.


Hewlett-Packard Co.


Citigroup, Inc.


SunTrust Banks, Inc.

   1.53, Inc.


MetLife, Inc.


Starbucks Corp.




Visa, Inc., Class A


Devon Energy Corp.


American International Group, Inc.


State Street Corp.


Microsoft Corp.


Precision Castparts Corp.


Weatherford International Ltd.


TE Connectivity Ltd.



  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 


March 31, 2014 (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 first quarter of 2014.


  Security Name        Purchases (Sales)               Held as of 3/31/14        



  Facebook, Inc.

      80,761       80,761

  Pharmacyclics, Inc.

      37,530       37,530



  Archer-Daniels-Midland Co.

   (133,000)               0

  Citrix Systems, Inc.

   (129,054)               0

  Joy Global, Inc.

     (72,487)               0

  Morgan Stanley

   (143,475)    405,034

  Philip Morris International, Inc.

     (57,315)               0

  Praxair, Inc.

     (50,400)               0

  Ralph Lauren Corp.

     (25,726)               0



 First Quarter Report (Unaudited)  |  March 31, 2014


 Investment Managers/

 Portfolio Characteristics

   Liberty All-Star® Equity Fund 
  March 31, 2014 (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 March 31, 2014 (Unaudited)


        Investment Style Spectrum            
         Value               Growth              

  Number of Holdings

  39   39   35   47   33   164*   500

  Percent of Holdings in Top 10

  55%   37%   38%   38%   44%   19%   18%

  Weighted Average Market Capitalization (billions)

  $44   $83   $107   $64   $59   $72   $118

  Average Five-Year Earnings Per Share Growth

  7%   6%   13%   16%   13%   11%   10%

  Dividend Yield

  1.1%   1.9%   2.1%   0.8%   0.6%   1.3%   2.0%

  Price/Earnings Ratio**

  16x   13x   17x   29x   34x   19x   18x

  Price/Book Value Ratio

  1.4x   1.8x   2.2x   3.9x   5.2x   2.5x   2.8x



Certain holdings are held by more than one manager.


Excludes negative earnings.




 Liberty All-Star® Equity Fund

   Schedule of Investments 


As of March 31, 2014 (Unaudited) 







Auto Components (1.18%)


Johnson Controls, Inc.

     141,774      $ 6,708,746  

Magna International, Inc.

     22,264        2,144,246  

TRW Automotive Holdings Corp.(a)

     61,625        5,029,832  







Automobiles (0.59%)


General Motors Co.

     157,600        5,424,592  

Tesla Motors, Inc.(a)

     6,981        1,455,189  







Hotels, Restaurants & Leisure (3.57%)


Carnival Corp.

     210,805        7,981,077  

Marriott International, Inc., Class A

     204,031        11,429,817  

McDonald’s Corp.

     61,500        6,028,845  

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

     8,189        118,003  

Starbucks Corp.

     223,270        16,383,553  







Household Durables (2.35%)


Lennar Corp., Class A

     209,340        8,294,051  

PulteGroup, Inc.

     316,878        6,080,889  

Taylor Morrison Home Corp., Class A(a)

     71,159        1,672,237  

Toll Brothers, Inc.(a)

     324,226        11,639,713  







Internet & Catalog Retail (2.35%), Inc.(a)

     51,281        17,257,082, Inc.(a)

     7,295        8,694,838  

Shutterfly, Inc.(a)

     40,253        1,717,998  







Media (2.12%)


Comcast Corp., Class A

     115,461        5,775,359  

News Corp., Class A(a)

     305,600        5,262,432  

News Corp., Class B(a)

     112,445        1,877,831  

Omnicom Group, Inc.

     93,825        6,811,695  

The Walt Disney Co.

     65,697        5,260,359  







Specialty Retail (1.85%)


The Home Depot, Inc.

     96,954        7,671,970  

Office Depot, Inc.(a)

     129,348        534,207  

Staples, Inc.

     437,175        4,957,565  

Tiffany & Co.

     70,915        6,109,327  

The TJX Cos., Inc.

     41,340        2,507,271  








 See Notes to Schedule of Investments.


 First Quarter Report (Unaudited)  |  March 31, 2014


 Schedule of Investments

   Liberty All-Star® Equity Fund 
 As of March 31, 2014 (Unaudited)   



COMMON STOCKS (continued)


Textiles, Apparel & Luxury Goods (0.86%)


Kate Spade & Co.(a)

     49,068      $ 1,819,932  

Lululemon Athletica, Inc.(a)

     11,650        612,674  

NIKE, Inc., Class B

     62,128        4,588,774  

PVH Corp.

     24,930        3,110,516  









Beverages (1.21%)


The Coca-Cola Company

     84,000        3,247,440  

Diageo PLC(b)

     46,460        5,788,451  

PepsiCo, Inc.

     62,100        5,185,350  







Food & Staples Retailing (1.58%)


Costco Wholesale Corp.

     65,226        7,284,440  

CVS Caremark Corp.

     76,500        5,726,790  

Whole Foods Market, Inc.

     110,598        5,608,424  







Food Products (0.81%)


Kellogg Co.

     30,600        1,918,926  

Mead Johnson Nutrition Co.

     71,300        5,927,882  

Whitewave Foods Co.(a)

     60,196        1,717,994  







Household Products (0.65%)


The Procter & Gamble Co.

     95,000        7,657,000  




Personal Products (0.19%)


The Estee Lauder Cos., Inc., Class A

     33,326        2,228,843  




ENERGY (14.06%)


Energy Equipment & Services (4.95%)


Baker Hughes, Inc.

     139,950        9,099,549  

Dril-Quip, Inc.(a)

     44,320        4,968,272  

Oceaneering International, Inc.

     71,675        5,150,565  

Schlumberger Ltd.

     257,772        25,132,770  

Weatherford International Ltd.(a)

     801,353        13,911,488  







Oil, Gas & Consumable Fuels (9.11%)


Anadarko Petroleum Corp.

     32,898        2,788,434  

Arch Coal, Inc.

     1,960,666        9,450,410  


     223,450        10,747,956  

Chesapeake Energy Corp.

     453,393        11,615,929  

Chevron Corp.

     54,000        6,421,140  

Cobalt International Energy, Inc.(a)

     193,032        3,536,346  


 See Notes to Schedule of Investments.



 Liberty All-Star® Equity Fund

   Schedule of Investments 


As of March 31, 2014 (Unaudited) 



COMMON STOCKS (continued)


Oil, Gas & Consumable Fuels (continued)



     92,600      $ 6,514,410  

CONSOL Energy, Inc.

     122,942        4,911,533  

Devon Energy Corp.

     226,106        15,133,275  

Exxon Mobil Corp.

     44,775        4,373,622  

Occidental Petroleum Corp.

     88,000        8,385,520  

Peabody Energy Corp.

     596,066        9,739,718  

Royal Dutch Shell PLC(b)

     152,675        11,154,436  

WPX Energy, Inc.(a)

     136,844        2,467,297  









Capital Markets (5.38%)


The Charles Schwab Corp.

     324,100        8,857,653  

Franklin Resources, Inc.

     85,600        4,637,808  

The Goldman Sachs Group, Inc.

     37,450        6,136,182  

Invesco Ltd.

     133,575        4,942,275  

Morgan Stanley

     405,034        12,624,910  

State Street Corp.

     205,875        14,318,606  

T. Rowe Price Group, Inc.

     64,682        5,326,563  


     313,400        6,493,648  







Commercial Banks (5.49%)


Barclays PLC(b)

     263,601        4,138,536  

BB&T Corp.

     205,000        8,234,850  

Comerica, Inc.

     70,225        3,637,655  

First Republic Bank

     90,032        4,860,828  

Huntington Bancshares, Inc.

     232,402        2,317,048  


     176,125        2,508,020  

The PNC Financial Services Group, Inc.

     70,666        6,147,942  

Regions Financial Corp.

     427,593        4,750,558  

SunTrust Banks, Inc.

     452,203        17,993,157  

Wells Fargo & Co.

     202,500        10,072,350  







Consumer Finance (2.35%)


American Express Co.

     46,500        4,186,395  

Capital One Financial Corp.

     98,700        7,615,692  

Visa, Inc., Class A

     73,268        15,815,631  







Diversified Financial Services (6.43%)


Bank of America Corp.

     1,169,708        20,118,978  

Citigroup, Inc.

     396,439        18,870,496  

CME Group, Inc.

     60,544        4,480,861  

ING US, Inc.

     159,425        5,782,345  


 See Notes to Schedule of Investments.


 First Quarter Report (Unaudited)  |  March 31, 2014


 Schedule of Investments

   Liberty All-Star® Equity Fund 
 As of March 31, 2014 (Unaudited)   



COMMON STOCKS (continued)


Diversified Financial Services (continued)


JPMorgan Chase & Co.

     434,645      $ 26,387,298  







Insurance (6.15%)


ACE Ltd.

     86,700        8,588,502  

The Allstate Corp.

     111,842        6,328,020  

American International Group, Inc.

     287,216        14,363,672  

Assured Guaranty Ltd.

     242,789        6,147,417  

Axis Capital Holdings Ltd.

     156,000        7,152,600  

The Hartford Financial Services Group, Inc.

     229,380        8,090,233  

MetLife, Inc.

     313,725        16,564,680  

Willis Group Holdings PLC

     115,350        5,090,396  







Real Estate Investment Trusts (0.92%)


American Tower Corp.

     120,360        9,853,873  

Columbia Property Trust, Inc.

     35,337        962,933  







Real Estate Management & Development (0.42%)


Zillow, Inc., Class A(a)

     56,285        4,958,709  




HEALTH CARE (10.50%)


Biotechnology (1.90%)


Alexion Pharmaceuticals, Inc.(a)

     6,998        1,064,606  

BioMarin Pharmaceutical, Inc.(a)

     80,245        5,473,511  

Celgene Corp.(a)

     43,715        6,102,614  

Gilead Sciences, Inc.(a)

     83,823        5,939,698  

Pharmacyclics, Inc.(a)

     37,530        3,761,257  







Health Care Equipment & Supplies (2.30%)


Becton, Dickinson & Co.

     43,350        5,075,418  

Edwards Lifesciences Corp.(a)

     88,872        6,591,636  

Hologic, Inc.(a)

     344,000        7,396,000  

Zimmer Holdings, Inc.

     84,500        7,992,010  







Health Care Providers & Services (1.99%)


Brookdale Senior Living, Inc.(a)

     103,973        3,484,135  

Catamaran Corp.(a)

     205,607        9,202,969  

Cigna Corp.

     70,375        5,892,499  

Laboratory Corp. of America Holdings(a)

     48,350        4,748,454  







Health Care Technology (1.34%)


athenahealth, Inc.(a)

     38,700        6,201,288  


 See Notes to Schedule of Investments.



 Liberty All-Star® Equity Fund

   Schedule of Investments 


As of March 31, 2014 (Unaudited) 



COMMON STOCKS (continued)


Health Care Technology (continued)


Cerner Corp.(a)

     170,168      $ 9,571,950  







Life Sciences Tools & Services (0.76%)


Illumina, Inc.(a)

     19,900        2,958,334  

Thermo Fisher Scientific, Inc.

     50,000        6,012,000  







Pharmaceuticals (2.21%)


Abbott Laboratories

     107,925        4,156,192  

Allergan, Inc.

     52,255        6,484,845  

Johnson & Johnson

     84,500        8,300,435  

Teva Pharmaceutical Industries Ltd.(b)

     134,200        7,091,128  









Aerospace & Defense (1.82%)


The Boeing Co.

     15,455        1,939,448  

Bombardier, Inc., Class B

     834,458        3,098,593  

Precision Castparts Corp.

     55,812        14,107,041  

Textron, Inc.

     57,407        2,255,521  







Building Products (0.41%)


Masco Corp.

     218,425        4,851,219  




Construction & Engineering (0.40%)


Fluor Corp.

     60,709        4,718,911  




Electrical Equipment (0.35%)


Eaton Corp. PLC

     55,500        4,169,160  




Machinery (1.27%)


Caterpillar, Inc.

     68,000        6,757,160  

Navistar International Corp.(a)

     97,762        3,311,199  

Parker Hannifin Corp.

     41,150        4,926,066  







Professional Services (0.49%)


Verisk Analytics, Inc., Class A(a)

     96,200        5,768,152  




Trading Companies & Distributors (1.50%)


Fastenal Co.

     242,255        11,948,017  

United Rentals, Inc.(a)

     59,400        5,639,436  








 See Notes to Schedule of Investments.


 First Quarter Report (Unaudited)  |  March 31, 2014


 Schedule of Investments

   Liberty All-Star® Equity Fund 
 As of March 31, 2014 (Unaudited)   



COMMON STOCKS (continued)


Transportation Infrastructure (0.24%)


Aegean Marine Petroleum Network, Inc.

     281,245      $ 2,773,076  






Communications Equipment (1.99%)


Cisco Systems, Inc.

     321,000        7,193,610  


     206,000        16,245,160  







Computers & Peripherals (1.89%)


Hewlett-Packard Co.

     592,500        19,173,300  

Stratasys Ltd.(a)

     28,501        3,023,671  







Electronic Equipment & Instruments (1.71%)


Corning, Inc.

     316,500        6,589,530  

LG Display Co. Ltd.(a)(b)

     18,097        226,213  

TE Connectivity Ltd.

     220,325        13,265,768  







Internet Software & Services (4.62%)


Equinix, Inc.(a)

     37,345        6,902,850  

Facebook, Inc.(a)

     80,761        4,865,043  

Google, Inc., Class A(a)

     24,046        26,799,507  

LinkedIn Corp., Class A(a)

     48,522        8,973,659  

Rackspace Hosting, Inc.(a)

     208,341        6,837,751  







Semiconductors & Semiconductor Equipment (1.77%)


Altera Corp.

     69,541        2,520,166  

ARM Holdings PLC(b)

     139,420        7,106,237  

Intel Corp.

     236,125        6,094,386  

Micron Technology, Inc.(a)

     217,545        5,147,115  







Software (5.37%)


Microsoft Corp.

     345,775        14,173,318  

Oracle Corp.

     191,025        7,814,833, Inc.(a)

     394,258        22,508,189  

ServiceNow, Inc.(a)

     61,900        3,709,048  

Splunk, Inc.(a)

     84,700        6,055,203  

Symantec Corp.

     134,732        2,690,598  

VMware, Inc., Class A(a)

     57,600        6,221,952  









Chemicals (0.99%)


EI du Pont de Nemours & Co.

     95,000        6,374,500  


 See Notes to Schedule of Investments.



 Liberty All-Star® Equity Fund

   Schedule of Investments 


As of March 31, 2014 (Unaudited) 



COMMON STOCKS (continued)


Chemicals (continued)


The Sherwin-Williams Co.

     26,793       $ 5,281,704   







Metals & Mining (0.56%)


Alcoa, Inc.

     127,565         1,641,762   

Freeport-McMoRan Copper & Gold, Inc.

     75,660         2,502,076   

Silver Wheaton Corp.

     109,820         2,492,914   









Electric Utilities (0.54%)


Entergy Corp.

     80,975         5,413,179   

FirstEnergy Corp.

     28,355         964,920   







(COST OF $923,520,476)







Exchange Traded Fund (0.10%)


iShares® Russell 1000 Value

     11,845         1,143,042   




(COST OF $1,103,205)









Repurchase agreement with State Street Bank & Trust Co., dated 3/31/14, due 04/01/14

at 0.01%, collateralized by Federal Home Loan Mortgage Corp., 3.00%, 03/15/43, market value

of $30,200,406 and par value of $33,380,000. (Repurchase proceeds of $29,597,008).

(COST OF $29,597,000)

   $ 29,597,000       $ 29,597,000   




(COST OF $954,220,681)(c)







NET ASSETS (100.00%)

      $ 1,176,766,963   





      $ 6.67   





 See Notes to Schedule of Investments.


 First Quarter Report (Unaudited)  |  March 31, 2014


 Schedule of Investments

   Liberty All-Star® Equity Fund 
 As of March 31, 2014 (Unaudited)   



Non-income producing security.


American Depositary Receipt.


Cost of investments for federal income tax purposes is $961,172,501.

Gross unrealized appreciation and depreciation at March 31, 2014 based on cost of investments for federal income tax purposes is as follows:


Gross unrealized appreciation

   $     272,702,584       

Gross unrealized depreciation




Net unrealized appreciation

   $ 210,251,831       



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 


March 31, 2014 (Unaudited) 


Security Valuation

Equity securities including common stocks and exchange traded funds 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.

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.

Repurchase agreements are valued at cost, which approximates fair 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 Fund’s 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 devaluation 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 March 31, 2014, 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. These collateral agreements mitigate the counterparty credit risk by providing for a single net settlement with a counterparty of all financial transactions covered by the agreement in an event of default as defined under such agreement.

Repurchase agreements are entered into by the Fund under a Master Repurchase Agreement (“MRA”) which permits the Fund, under certain circumstances, including an event of default (such as bankruptcy or insolvency), to offset payables and/or receivables under the MRA with collateral held and/or posted to the counterparty and create one single net payment due or from the Fund.



 First Quarter Report (Unaudited) | March 31, 2014


 Notes to Schedule of Investments

   Liberty All-Star® Equity Fund 
 March 31, 2014 (Unaudited)   


Income Recognition

Interest income is recorded on the accrual basis. Premiums and discounts are amortized and accreted, respectively, on all debt securities. 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.

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 and exchange-traded funds, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and 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. Repurchase agreements are valued at cost, which approximates fair value, and are categorized as Level 2 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:


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




 Liberty All-Star® Equity Fund

   Notes to Schedule of Investments 


March 31, 2014 (Unaudited) 


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 March 31, 2014. 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


   Level 1      Level 2      Level 3      Total  

Common Stocks

   $   1,140,684,290       $       $   –       $   1,140,684,290   

Exchange Traded Fund

     1,143,042                         1,143,042   

Short Term Investment

             29,597,000                 29,597,000   


   $ 1,141,827,332       $   29,597,000       $       $ 1,171,424,332   



 See Schedule of Investments for industry classifications.

For the period ended March 31, 2014, 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.


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.



 First Quarter Report (Unaudited) | March 31, 2014


 Description of Lipper Benchmark

 And Market Indicies

   Liberty All-Star® Equity Fund 
 March 31, 2014 (Unaudited)    


Dow Jones Industrial Average

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

Lipper Large-Cap Core Mutual Fund Average

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.

NASDAQ Composite Index

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

Russell 1000® Growth Index

Measures the performance of those Russell 1000® companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000® Index measures the performance of the 1,000 largest companies in the Russell 3000® Index.

Russell 1000® Value Index

Measures the performance of those Russell 1000® companies with lower price-to-book ratios and lower forecasted growth values. The Russell 1000® Index measures the performance of the 1,000 largest companies in the Russell 3000® Index.

Russell 3000® Index

Measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity 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.

An investor cannot invest directly in an index.



 First Quarter Report (Unaudited)  |  March 31, 2014








ALPS Advisors, Inc.


K&L Gates LLP


1290 Broadway, Suite 1100


1601 K Street, NW


Denver, Colorado 80203


Washington, DC 20006




John A. Benning*


Thomas W. Brock*


Edmund J. Burke


George R. Gaspari*


Deloitte & Touche LLP


Richard W. Lowry*, Chairman


555 Seventeenth Street, Suite 3600


Dr. John J. Neuhauser*


Denver, Colorado 80202


Richard C. Rantzow*


State Street Bank & Trust Company


William R. Parmentier, Jr., President

One Lincoln Street


Mark T. Haley, CFA, Senior Vice President

Boston, Massachusetts 02111


Edmund J. Burke, Vice President


Kimberly R. Storms, Treasurer


Erin D. Nelson, Secretary


Alex J. Marks, Assistant Secretary


Melanie H. Zimdars, Chief Compliance Officer


Computershare Trust Company, N.A.


* Member of the Audit Committee


P.O. Box 30170


College Station, Texas 77842-3170


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


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

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.

LAS000592 11/30/14