Liberty All Star Equity Fund



Washington, D.C. 20549




Investment Company Act file number: 811-04809


(Exact name of registrant as specified in charter)

1290 Broadway, Suite 1100, Denver, Colorado 80203

(Address of principal executive offices) (Zip code)

Erin D. Nelson, Esq.

ALPS Fund Services, Inc.

1290 Broadway, Suite 1100

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: July 1, 2014 – September 30, 2014

Item 1 – Schedule of Investments.






Auto Components (1.47%)


Johnson Controls, Inc.

     253,564       $ 11,156,816  

TRW Automotive Holdings Corp.(a)

     62,325         6,310,406  







Automobiles (0.61%)


General Motors Co.

     157,600         5,033,744  

Tesla Motors, Inc.(a)

     8,880         2,154,999  







Hotels, Restaurants & Leisure (4.52%)


Carnival Corp.

     238,040         9,562,067  

Chipotle Mexican Grill, Inc.(a)

     8,200         5,466,038  

Marriott International, Inc., Class A

     200,781         14,034,592  

McDonald’s Corp.

     61,500         5,830,815  

Starbucks Corp.

     248,849         18,778,145  







Household Durables (2.09%)


Lennar Corp., Class A

     195,990         7,610,292  

PulteGroup, Inc.

     367,588         6,491,604  

Taylor Morrison Home Corp., Class A(a)

     71,159         1,154,199  

Toll Brothers, Inc.(a)

     307,516         9,582,198  







Internet & Catalog Retail (2.26%), Inc.(a)

     50,907         16,414,453, Inc.(a)

     7,295         8,451,841  

Shutterfly, Inc.(a)

     40,253         1,961,932  







Media (2.82%)


CBS Corp., Class B

     68,990         3,690,965  

Comcast Corp., Class A

     113,109         6,083,002  

The Interpublic Group of Cos., Inc.

     128,075         2,346,334  

News Corp., Class A(a)

     305,600         4,996,560  

News Corp., Class B(a)

     112,445         1,813,738  

Omnicom Group, Inc.

     93,825         6,460,789  

Time Warner Cable, Inc.

     16,241         2,330,421  

The Walt Disney Co.

     64,597         5,751,071  







Specialty Retail (1.97%)


The Home Depot, Inc.

     65,318         5,992,273  

Office Depot, Inc.(a)

     578,317         2,972,549  

Ross Stores, Inc.

     29,837         2,255,080  

Staples, Inc.

     437,175         5,289,818  


COMMON STOCKS (continued)


Specialty Retail (continued)


Tiffany & Co.

     70,915       $ 6,829,824  







Textiles, Apparel & Luxury Goods (0.70%)


Kate Spade & Co.(a)

     113,577         2,979,125  

NIKE, Inc., Class B

     59,396         5,298,123  









Beverages (1.49%)


The Coca-Cola Company

     98,000         4,180,680  

Diageo PLC(b)

     23,316         2,690,666  

PepsiCo, Inc.

     62,100         5,780,889  

SABMiller PLC(b)

     91,428         5,079,740  







Food & Staples Retailing (1.29%)


Costco Wholesale Corp.

     75,177         9,421,182  

CVS Caremark Corp.

     73,500         5,849,865  







Food Products (0.75%)


Mead Johnson Nutrition Co.

     71,300         6,860,486  

Whitewave Foods Co.(a)

     56,475         2,051,737  







Household Products (0.67%)


The Procter & Gamble Co.

     95,000         7,955,300  




Personal Products (0.20%)


The Estee Lauder Cos., Inc., Class A

     31,686         2,367,578  




ENERGY (13.03%)


Energy Equipment & Services (4.57%)


Baker Hughes, Inc.

     66,300         4,313,478  

Dril-Quip, Inc.(a)

     46,520         4,158,888  

Oceaneering International, Inc.

     75,875         4,944,774  

Schlumberger Ltd.

     248,338         25,253,491  

Weatherford International Ltd.(a)

     747,508         15,548,166  







Oil, Gas & Consumable Fuels (8.46%)


Anadarko Petroleum Corp.

     27,244         2,763,631  

Arch Coal, Inc.

     2,149,113         4,556,120  


     244,300         10,736,995  

Chesapeake Energy Corp.

     479,016         11,012,578  

Chevron Corp.

     58,000         6,920,560  

Cobalt International Energy, Inc.(a)

     193,032         2,625,235  


COMMON STOCKS (continued)


Oil, Gas & Consumable Fuels (continued)



     86,500       $ 6,618,980  

CONSOL Energy, Inc.

     84,687         3,206,250  

Devon Energy Corp.

     203,731         13,890,380  

Exxon Mobil Corp.

     44,775         4,211,089  

Murphy Oil Corp.

     81,475         4,636,742  

Occidental Petroleum Corp.

     85,000         8,172,750  

Peabody Energy Corp.

     752,006         9,309,834  

Royal Dutch Shell PLC, Class A(b)

     154,493         11,761,552  









Capital Markets (4.99%)


Ameriprise Financial, Inc.

     34,980         4,315,832  

The Charles Schwab Corp.

     267,000         7,847,130  

Franklin Resources, Inc.

     85,600         4,674,616  

The Goldman Sachs Group, Inc.

     37,450         6,874,697  

Morgan Stanley

     379,600         13,122,772  

State Street Corp.

     230,100         16,937,661  


     313,400         5,443,758  







Commercial Banks (4.85%)


Barclays PLC(b)

     258,421         3,827,215  

BB&T Corp.

     205,000         7,628,050  

Comerica, Inc.

     70,225         3,501,419  

First Republic Bank

     102,030         5,038,242  

Huntington Bancshares, Inc.

     115,822         1,126,948  

The PNC Financial Services Group, Inc.

     70,666         6,047,596  

Regions Financial Corp.

     408,078         4,097,103  

SunTrust Banks, Inc.

     444,978         16,922,513  

Wells Fargo & Co.

     181,000         9,388,470  







Consumer Finance (2.53%)


American Express Co.

     42,500         3,720,450  

Capital One Financial Corp.

     101,000         8,243,620  

Visa, Inc., Class A

     84,736         18,080,120  







Diversified Financial Services (6.93%)


Bank of America Corp.

     1,274,064         21,722,791  

Citigroup, Inc.

     408,754         21,181,632  

CME Group, Inc.

     72,045         5,760,358  

JPMorgan Chase & Co.

     451,000         27,168,240  

Voya Financial, Inc.

     163,575         6,395,783  








COMMON STOCKS (continued)


Insurance (6.56%)


ACE Ltd.

     86,700       $ 9,092,229  

The Allstate Corp.

     109,067         6,693,442  

American International Group, Inc.

     303,891         16,416,192  

Assured Guaranty Ltd.

     256,286         5,679,298  

Axis Capital Holdings Ltd.

     156,000         7,383,480  

First American Financial Corp.

     102,242         2,772,803  

The Hartford Financial Services Group, Inc.

     231,645         8,628,776  

MetLife, Inc.

     304,725         16,369,827  

Willis Group Holdings PLC

     115,350         4,775,490  







Real Estate Investment Trusts (1.43%)


American Tower Corp.

     120,360         11,269,307  

Columbia Property Trust, Inc.

     68,027         1,623,804  

NorthStar Realty Finance Corp.

     234,000         4,134,780  







HEALTH CARE (10.29%)


Biotechnology (2.11%)


Alexion Pharmaceuticals, Inc.(a)

     22,259         3,690,987  

BioMarin Pharmaceutical, Inc.(a)

     80,245         5,790,479  

Celgene Corp.(a)

     87,430         8,286,616  

Gilead Sciences, Inc.(a)

     12,500         1,330,625  

Pharmacyclics, Inc.(a)

     50,927         5,980,358  







Health Care Equipment & Supplies (1.80%)


Becton, Dickinson & Co.

     43,350         4,933,663  

Hologic, Inc.(a)

     340,000         8,272,200  

Zimmer Holdings, Inc.

     80,500         8,094,275  







Health Care Providers & Services (1.91%)


Catamaran Corp.(a)

     248,244         10,463,485  

Cigna Corp.

     80,500         7,300,545  

Laboratory Corp. of America Holdings(a)

     48,350         4,919,612  







Health Care Technology (1.38%)


athenahealth, Inc.(a)

     47,600         6,268,444  

Cerner Corp.(a)

     170,168         10,136,908  







Life Sciences Tools & Services (1.02%)


Illumina, Inc.(a)

     36,800         6,032,256  

Thermo Fisher Scientific, Inc.

     50,000         6,085,000  








COMMON STOCKS (continued)


Pharmaceuticals (2.07%)


Abbott Laboratories

     107,925       $ 4,488,601  

Allergan, Inc.

     30,955         5,515,871  

Johnson & Johnson

     69,000         7,354,710  

Teva Pharmaceutical Industries Ltd.(b)

     134,200         7,213,250  









Aerospace & Defense (1.97%)


The Boeing Co.

     9,225         1,175,081  

Bombardier, Inc., Class B

     870,308         2,924,235  

Precision Castparts Corp.

     65,006         15,398,621  

Textron, Inc.

     109,217         3,930,720  







Building Products (0.48%)


Masco Corp.

     238,725         5,710,302  




Electrical Equipment (0.63%)


Eaton Corp. PLC

     118,500         7,509,345  




Machinery (1.26%)


Caterpillar, Inc.

     62,000         6,139,860  

Navistar International Corp.(a)

     20,020         658,858  

Parker-Hannifin Corp.

     52,825         6,029,974  

Pentair PLC

     31,548         2,066,078  







Professional Services (0.13%)


Verisk Analytics, Inc., Class A(a)

     25,928         1,578,756  




Trading Companies & Distributors (1.22%)


Fastenal Co.

     244,830         10,992,867  

United Rentals, Inc.(a)

     30,762         3,417,658  







Transportation Infrastructure (0.21%)


Aegean Marine Petroleum Network, Inc.

     271,629         2,490,838  






Communications Equipment (1.99%)


Cisco Systems, Inc.

     321,000         8,079,570  


     207,500         15,514,775  







Computers & Peripherals (1.88%)


Hewlett-Packard Co.

     490,500         17,398,035  


COMMON STOCKS (continued)


Computers & Peripherals (continued)


Stratasys Ltd.(a)

     40,642       $ 4,908,741  







Electronic Equipment & Instruments (1.36%)


Corning, Inc.

     229,200         4,432,728  

TE Connectivity Ltd.

     150,475         8,319,763  

Trimble Navigation Ltd.(a)

     111,215         3,392,057  







Internet Software & Services (6.03%)


Alibaba Group Holding Ltd.(a)(b)

     32,166         2,857,949  

CoStar Group, Inc.(a)

     23,783         3,699,208  

eBay, Inc.(a)

     59,928         3,393,723  

Equinix, Inc.(a)

     32,545         6,915,161  

Facebook, Inc., Class A(a)

     123,026         9,723,975  

Google, Inc., Class A(a)

     13,981         8,226,560  

Google, Inc., Class C(a)

     31,353         18,101,968  

LinkedIn Corp., Class A(a)

     33,820         7,027,458  

Mercadolibre, Inc.

     32,920         3,576,758  

Rackspace Hosting, Inc.(a)

     249,540         8,122,527  







IT Services (0.27%)


Teradata Corp.(a)

     76,500         3,206,880  




Semiconductors & Semiconductor Equipment (1.76%)


ARM Holdings PLC(b)

     139,420         6,091,260  

Intel Corp.

     218,275         7,600,335  

Micron Technology, Inc.(a)

     210,577         7,214,368  







Software (5.81%)


Microsoft Corp.

     317,775         14,732,049  

Oracle Corp.

     191,025         7,312,437, Inc.(a)

     416,122         23,939,499  

ServiceNow, Inc.(a)

     97,400         5,725,172  

Splunk, Inc.(a)

     101,300         5,607,968  

Symantec Corp.

     265,482         6,241,482  

VMware, Inc., Class A(a)

     57,600         5,405,184  









Chemicals (0.59%)


EI du Pont de Nemours & Co.

     97,500         6,996,600  





COMMON STOCKS (continued)


Metals & Mining (0.10%)


Alcoa, Inc.

     72,225       $ 1,162,100  






Electric Utilities (0.08%)


FirstEnergy Corp.

     27,905         936,771  






(COST OF $932,007,424)







Exchange Traded Fund (0.09%)


iShares® Russell 1000 Value

     10,000         1,000,900  






(COST OF $1,023,103)




     PAR VALUE         





Repurchase agreement with State Street Bank & Trust

Co., dated 9/30/14, due 10/01/14 at 0.01%,

collateralized by Federal Home Loan Mortgage Corp.,

3.00%, 03/15/43, market value of $35,375,812 and par

value of $42,525,000. (Repurchase proceeds of



(COST OF $34,668,000)

   $ 34,668,000       $ 34,668,000  



(COST OF $967,698,527)(c)







NET ASSETS (100.00%)


$  1,186,902,286








      $ 6.66  






Non-income producing security.


American Depositary Receipt.


Cost of investments for federal income tax purposes is $974,610,233.

Gross unrealized appreciation and depreciation at September 30, 2014 based on cost of investments for federal income tax purposes is as follows:


Gross unrealized appreciation

     $    282,104,956  

Gross unrealized depreciation




Net unrealized appreciation

     $    214,972,679  



See Notes to Schedule of Investments.

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 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, 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.

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.

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


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, 2014:

     Valuation Inputs       

Investments in Securities at


   Level 1      Level 2    Level 3    Total  

Common Stocks

   $   1,153,914,012       $                  –    $         –    $   1,153,914,012   

Exchange Traded Fund

     1,000,900                           –               –      1,000,900   

Short Term Investment

                           –           34,668,000               –      34,668,000   




   $ 1,154,914,912       $  34,668,000    $         –    $ 1,189,582,912   




* See Schedule of Investments for industry classifications.

The Fund recognizes transfers between levels as of the end of the period. For the period ended September 30, 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.

Item 2 - Controls and Procedures.


  (a) The registrant’s Principal Executive Officer and Principal Financial Officer have evaluated the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) within 90 days of this filing and have concluded that the registrant’s disclosure controls and procedures were effective, as of that date.


  (b) There was no change in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) during registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 3 – Exhibits.

Separate certifications for the registrant’s Principal Executive Officer and Principal Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached as Ex99.CERT.




Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


By:   /s/ William Parmentier
  William Parmentier
  President (principal executive officer)
Date:     November 26, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By:   /s/ William Parmentier
  William Parmentier
  President (principal executive officer)
Date:   November 26, 2014
By:   /s/ Kimberly Storms
  Kimberly Storms
  Treasurer (principal financial officer)
Date:     November 26, 2014