UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number: 811-04809
LIBERTY ALL-STAR EQUITY FUND
(Exact name of registrant as specified in charter)
1290 Broadway, Suite 1100, Denver, Colorado 80203
(Address of principal executive offices) (Zip code)
Sareena Khwaja-Dixon
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: September 30, 2018
Item 1 – Schedule of Investments.
| Liberty All-Star® Equity Fund | Schedule of Investments |
| September 30, 2018 (Unaudited) |
| SHARES | MARKET VALUE | |||||||
| COMMON STOCKS (97.24%) | ||||||||
| COMMUNICATION SERVICES (6.48%) | ||||||||
| Diversified Telecommunication Services (1.16%) | ||||||||
| AT&T, Inc. | 238,600 | $ | 8,012,188 | |||||
| Verizon Communications, Inc. | 153,000 | 8,168,670 | ||||||
| 16,180,858 | ||||||||
| Entertainment (0.77%) | ||||||||
| Walt Disney Co. | 91,582 | 10,709,599 | ||||||
| Interactive Media & Services (3.37%) | ||||||||
| Alphabet, Inc., Class C(a) | 24,024 | 28,671,923 | ||||||
| Facebook, Inc., Class A(a) | 81,050 | 13,329,483 | ||||||
| Twitter, Inc.(a) | 170,200 | 4,843,892 | ||||||
| 46,845,298 | ||||||||
| Media (1.18%) | ||||||||
| Interpublic Group of Cos., Inc. | 329,201 | 7,528,827 | ||||||
| News Corp., Class A | 305,600 | 4,030,864 | ||||||
| Omnicom Group, Inc. | 71,400 | 4,856,628 | ||||||
| 16,416,319 | ||||||||
| CONSUMER DISCRETIONARY (11.27%) | ||||||||
| Automobiles (0.59%) | ||||||||
| Ford Motor Co. | 885,981 | 8,195,324 | ||||||
| Hotels, Restaurants & Leisure (0.84%) | ||||||||
| Yum! Brands, Inc. | 128,494 | 11,681,390 | ||||||
| Household Durables (1.23%) | ||||||||
| Lennar Corp., Class A | 117,000 | 5,462,730 | ||||||
| Lennar Corp., Class B | 2,500 | 96,250 | ||||||
| Newell Brands, Inc. | 191,990 | 3,897,397 | ||||||
| Sony Corp.(b) | 126,400 | 7,666,160 | ||||||
| 17,122,537 | ||||||||
| Internet & Direct Marketing Retail (3.24%) | ||||||||
| Amazon.com, Inc.(a) | 15,419 | 30,884,257 | ||||||
| Booking Holdings, Inc.(a) | 7,139 | 14,163,776 | ||||||
| 45,048,033 | ||||||||
| Multiline Retail (0.53%) | ||||||||
| Dollar Tree, Inc.(a) | 90,800 | 7,404,740 | ||||||
| Specialty Retail (4.10%) | ||||||||
| Home Depot, Inc. | 80,743 | 16,725,912 | ||||||
| Lowe's Cos., Inc. | 155,726 | 17,880,459 | ||||||
| TJX Cos., Inc. | 87,660 | 9,819,673 | ||||||
| See Notes to Schedule of Investments. |
| Liberty All-Star® Equity Fund | Schedule of Investments |
| September 30, 2018 (Unaudited) |
| SHARES | MARKET VALUE | |||||||
| COMMON STOCKS (continued) | ||||||||
| Specialty Retail (continued) | ||||||||
| Ulta Beauty, Inc. | 44,863 | $ | 12,656,750 | |||||
| 57,082,794 | ||||||||
| Textiles, Apparel & Luxury Goods (0.74%) | ||||||||
| NIKE, Inc., Class B | 122,154 | 10,348,887 | ||||||
| CONSUMER STAPLES (5.87%) | ||||||||
| Beverages (0.99%) | ||||||||
| Coca-Cola Co. | 159,200 | 7,353,448 | ||||||
| Monster Beverage Corp.(a) | 109,200 | 6,364,176 | ||||||
| 13,717,624 | ||||||||
| Food & Staples Retailing (1.62%) | ||||||||
| Costco Wholesale Corp. | 29,200 | 6,858,496 | ||||||
| Kroger Co. | 200,600 | 5,839,466 | ||||||
| Walgreens Boots Alliance, Inc. | 83,100 | 6,057,990 | ||||||
| Walmart, Inc. | 40,303 | 3,784,855 | ||||||
| 22,540,807 | ||||||||
| Food Products (2.17%) | ||||||||
| Archer-Daniels-Midland Co. | 177,300 | 8,912,871 | ||||||
| Mondelez International, Inc., Class A | 496,279 | 21,320,146 | ||||||
| 30,233,017 | ||||||||
| Personal Products (1.09%) | ||||||||
| Estee Lauder Cos., Inc., Class A | 60,748 | 8,827,899 | ||||||
| Unilever NV | 114,000 | 6,332,700 | ||||||
| 15,160,599 | ||||||||
| ENERGY (7.23%) | ||||||||
| Energy Equipment & Services (2.36%) | ||||||||
| Halliburton Co. | 429,727 | 17,416,835 | ||||||
| National Oilwell Varco, Inc. | 118,906 | 5,122,471 | ||||||
| Schlumberger, Ltd. | 169,673 | 10,336,479 | ||||||
| 32,875,785 | ||||||||
| Oil, Gas & Consumable Fuels (4.87%) | ||||||||
| BP PLC(b) | 126,501 | 5,831,696 | ||||||
| Cenovus Energy, Inc. | 528,447 | 5,300,324 | ||||||
| Concho Resources, Inc.(a) | 23,500 | 3,589,625 | ||||||
| ConocoPhillips | 118,600 | 9,179,640 | ||||||
| Exxon Mobil Corp. | 66,865 | 5,684,862 | ||||||
| Marathon Oil Corp. | 405,810 | 9,447,257 | ||||||
| Occidental Petroleum Corp. | 98,700 | 8,110,179 | ||||||
| Phillips 66 | 70,000 | 7,890,400 | ||||||
| Pioneer Natural Resources Co. | 25,500 | 4,441,845 | ||||||
| See Notes to Schedule of Investments. |
| Liberty All-Star® Equity Fund | Schedule of Investments |
| September 30, 2018 (Unaudited) |
| SHARES | MARKET VALUE | |||||||
| COMMON STOCKS (continued) | ||||||||
| Oil, Gas & Consumable Fuels (continued) | ||||||||
| Royal Dutch Shell PLC, Class A(b) | 120,795 | $ | 8,230,971 | |||||
| 67,706,799 | ||||||||
| FINANCIALS (15.05%) | ||||||||
| Banks (5.40%) | ||||||||
| Banco Bilbao Vizcaya Argentaria SA(b)(c) | 810,000 | 5,103,000 | ||||||
| Bank of America Corp. | 572,857 | 16,876,367 | ||||||
| BB&T Corp. | 159,300 | 7,732,422 | ||||||
| BOK Financial Corp. | 42,000 | 4,085,760 | ||||||
| Citigroup, Inc. | 113,986 | 8,177,356 | ||||||
| Cullen/Frost Bankers, Inc. | 38,000 | 3,968,720 | ||||||
| East West Bancorp, Inc. | 94,300 | 5,692,891 | ||||||
| JPMorgan Chase & Co. | 108,487 | 12,241,673 | ||||||
| Mitsubishi UFJ Financial Group, Inc.(b)(c) | 650,000 | 4,023,500 | ||||||
| Wells Fargo & Co. | 137,987 | 7,252,597 | ||||||
| 75,154,286 | ||||||||
| Capital Markets (3.77%) | ||||||||
| Ameriprise Financial, Inc. | 48,500 | 7,161,510 | ||||||
| Bank of New York Mellon Corp. | 152,200 | 7,760,678 | ||||||
| Charles Schwab Corp. | 128,900 | 6,335,435 | ||||||
| Franklin Resources, Inc. | 168,889 | 5,135,915 | ||||||
| Goldman Sachs Group, Inc. | 27,035 | 6,062,328 | ||||||
| KKR & Co., Inc. | 140,872 | 3,841,579 | ||||||
| Morgan Stanley | 134,105 | 6,245,270 | ||||||
| S&P Global, Inc. | 24,804 | 4,846,454 | ||||||
| UBS Group AG(a) | 325,600 | 5,121,688 | ||||||
| 52,510,857 | ||||||||
| Consumer Finance (1.01%) | ||||||||
| Capital One Financial Corp. | 147,440 | 13,996,479 | ||||||
| Diversified Financial Services (0.92%) | ||||||||
| AXA Equitable Holdings, Inc. | 248,482 | 5,329,939 | ||||||
| Voya Financial, Inc. | 150,003 | 7,450,649 | ||||||
| 12,780,588 | ||||||||
| Insurance (3.95%) | ||||||||
| Allstate Corp. | 83,300 | 8,221,710 | ||||||
| American International Group, Inc. | 257,456 | 13,706,957 | ||||||
| Axis Capital Holdings, Ltd. | 89,225 | 5,149,175 | ||||||
| Chubb, Ltd. | 93,600 | 12,508,704 | ||||||
| Marsh & McLennan Cos., Inc. | 93,200 | 7,709,504 | ||||||
| MetLife, Inc. | 166,053 | 7,757,996 | ||||||
| 55,054,046 | ||||||||
| See Notes to Schedule of Investments. |
| Liberty All-Star® Equity Fund | Schedule of Investments |
| September 30, 2018 (Unaudited) |
| SHARES | MARKET VALUE | |||||||
| COMMON STOCKS (continued) | ||||||||
| HEALTH CARE (16.60%) | ||||||||
| Biotechnology (3.03%) | ||||||||
| AbbVie, Inc. | 50,469 | $ | 4,773,358 | |||||
| Alexion Pharmaceuticals, Inc.(a) | 34,200 | 4,754,142 | ||||||
| Amgen, Inc. | 68,005 | 14,096,757 | ||||||
| BioMarin Pharmaceutical, Inc.(a) | 52,100 | 5,052,137 | ||||||
| Celgene Corp.(a) | 40,200 | 3,597,498 | ||||||
| Regeneron Pharmaceuticals, Inc.(a) | 24,436 | 9,873,121 | ||||||
| 42,147,013 | ||||||||
| Health Care Equipment & Supplies (3.74%) | ||||||||
| Abbott Laboratories | 226,265 | 16,598,800 | ||||||
| Align Technology, Inc.(a) | 13,493 | 5,278,732 | ||||||
| Becton Dickinson and Co. | 32,580 | 8,503,380 | ||||||
| Danaher Corp. | 79,000 | 8,584,140 | ||||||
| Medtronic PLC | 84,000 | 8,263,080 | ||||||
| West Pharmaceutical Services, Inc. | 38,700 | 4,778,289 | ||||||
| 52,006,421 | ||||||||
| Health Care Providers & Services (4.70%) | ||||||||
| Acadia Healthcare Co., Inc.(a) | 112,000 | 3,942,400 | ||||||
| Cardinal Health, Inc. | 192,857 | 10,414,278 | ||||||
| CVS Health Corp. | 116,900 | 9,202,368 | ||||||
| Express Scripts Holding Co.(a) | 175,104 | 16,636,631 | ||||||
| McKesson Corp. | 48,431 | 6,424,372 | ||||||
| Quest Diagnostics, Inc. | 71,900 | 7,758,729 | ||||||
| UnitedHealth Group, Inc. | 41,742 | 11,105,042 | ||||||
| 65,483,820 | ||||||||
| Life Sciences Tools & Services (0.46%) | ||||||||
| Illumina, Inc.(a) | 17,376 | 6,378,035 | ||||||
| Pharmaceuticals (4.67%) | ||||||||
| Johnson & Johnson | 62,300 | 8,607,991 | ||||||
| Merck & Co., Inc. | 227,690 | 16,152,328 | ||||||
| Mylan NV(a) | 271,736 | 9,945,538 | ||||||
| Novartis AG(b) | 68,000 | 5,858,880 | ||||||
| Novo Nordisk A/S(b) | 180,259 | 8,497,409 | ||||||
| Pfizer, Inc. | 207,400 | 9,140,118 | ||||||
| Zoetis, Inc. | 74,400 | 6,812,064 | ||||||
| 65,014,328 | ||||||||
| INDUSTRIALS (6.38%) | ||||||||
| Aerospace & Defense (1.69%) | ||||||||
| General Dynamics Corp. | 36,000 | 7,369,920 | ||||||
| Northrop Grumman Corp. | 24,900 | 7,902,513 | ||||||
| See Notes to Schedule of Investments. |
| Liberty All-Star® Equity Fund | Schedule of Investments |
| September 30, 2018 (Unaudited) |
| SHARES | MARKET VALUE | |||||||
| COMMON STOCKS (continued) | ||||||||
| Aerospace & Defense (continued) | ||||||||
| Raytheon Co. | 39,800 | $ | 8,225,068 | |||||
| 23,497,501 | ||||||||
| Building Products (0.44%) | ||||||||
| Johnson Controls International PLC | 174,000 | 6,090,000 | ||||||
| Commercial Services & Supplies (1.01%) | ||||||||
| Waste Connections, Inc. | 70,200 | 5,599,854 | ||||||
| Waste Management, Inc. | 94,500 | 8,539,020 | ||||||
| 14,138,874 | ||||||||
| Industrial Conglomerates (0.41%) | ||||||||
| General Electric Co. | 511,809 | 5,778,323 | ||||||
| Machinery (1.74%) | ||||||||
| Dover Corp. | 88,705 | 7,853,054 | ||||||
| Oshkosh Corp. | 90,500 | 6,447,220 | ||||||
| Parker-Hannifin Corp. | 36,828 | 6,773,774 | ||||||
| Xylem, Inc. | 38,900 | 3,106,943 | ||||||
| 24,180,991 | ||||||||
| Professional Services (0.70%) | ||||||||
| IHS Markit, Ltd.(a) | 55,200 | 2,978,592 | ||||||
| TransUnion | 92,200 | 6,784,076 | ||||||
| 9,762,668 | ||||||||
| Road & Rail (0.39%) | ||||||||
| JB Hunt Transport Services, Inc. | 45,700 | 5,435,558 | ||||||
| INFORMATION TECHNOLOGY (20.64%) | ||||||||
| Communications Equipment (0.69%) | ||||||||
| Cisco Systems, Inc. | 197,000 | 9,584,050 | ||||||
| IT Services (6.73%) | ||||||||
| Alliance Data Systems Corp. | 35,100 | 8,289,216 | ||||||
| Automatic Data Processing, Inc. | 57,500 | 8,662,950 | ||||||
| Cognizant Technology Solutions Corp., Class A | 95,884 | 7,397,451 | ||||||
| FleetCor Technologies, Inc.(a) | 53,574 | 12,206,300 | ||||||
| Mastercard, Inc., Class A | 40,855 | 9,094,731 | ||||||
| PayPal Holdings, Inc.(a) | 206,400 | 18,130,176 | ||||||
| Visa, Inc., Class A | 199,356 | 29,921,342 | ||||||
| 93,702,166 | ||||||||
| Semiconductors & Semiconductor Equipment (1.61%) | ||||||||
| Intel Corp. | 168,600 | 7,973,094 | ||||||
| Microchip Technology, Inc.(c) | 89,000 | 7,022,990 | ||||||
| See Notes to Schedule of Investments. |
| Liberty All-Star® Equity Fund | Schedule of Investments |
| September 30, 2018 (Unaudited) |
| SHARES | MARKET VALUE | |||||||
| COMMON STOCKS (continued) | ||||||||
| Semiconductors & Semiconductor Equipment (continued) | ||||||||
| NVIDIA Corp. | 26,458 | $ | 7,435,227 | |||||
| 22,431,311 | ||||||||
| Software (10.86%) | ||||||||
| Adobe Systems, Inc.(a) | 112,845 | 30,462,508 | ||||||
| ANSYS, Inc.(a) | 45,000 | 8,400,600 | ||||||
| Autodesk, Inc.(a) | 74,376 | 11,610,837 | ||||||
| CA, Inc. | 182,300 | 8,048,545 | ||||||
| Microsoft Corp. | 192,780 | 22,048,249 | ||||||
| Oracle Corp. | 339,700 | 17,514,932 | ||||||
| Red Hat, Inc.(a) | 76,632 | 10,443,409 | ||||||
| salesforce.com, Inc.(a) | 156,320 | 24,859,570 | ||||||
| ServiceNow, Inc.(a) | 57,897 | 11,326,390 | ||||||
| Splunk, Inc.(a) | 53,700 | 6,492,867 | ||||||
| 151,207,907 | ||||||||
| Technology Hardware, Storage & Peripherals (0.75%) | ||||||||
| Hewlett Packard Enterprise Co. | 446,563 | 7,283,443 | ||||||
| HP, Inc. | 119,208 | 3,071,990 | ||||||
| 10,355,433 | ||||||||
| MATERIALS (2.85%) | ||||||||
| Chemicals (2.41%) | ||||||||
| DowDuPont, Inc. | 115,331 | 7,416,937 | ||||||
| Ecolab, Inc. | 73,157 | 11,469,554 | ||||||
| PPG Industries, Inc. | 66,000 | 7,202,580 | ||||||
| Praxair, Inc. | 46,195 | 7,424,922 | ||||||
| 33,513,993 | ||||||||
| Construction Materials (0.44%) | ||||||||
| Martin Marietta Materials, Inc. | 34,100 | 6,204,495 | ||||||
| REAL ESTATE (3.28%) | ||||||||
| Equity Real Estate Investment Trusts (REITs) (3.28%) | ||||||||
| American Tower Corp. | 76,600 | 11,129,980 | ||||||
| Equinix, Inc. | 43,155 | 18,681,368 | ||||||
| Equity LifeStyle Properties, Inc. | 36,800 | 3,549,360 | ||||||
| Equity Residential | 131,000 | 8,680,060 | ||||||
| Sun Communities, Inc. | 35,100 | 3,564,054 | ||||||
| 45,604,822 | ||||||||
| UTILITIES (1.59%) | ||||||||
| Electric Utilities (1.20%) | ||||||||
| Edison International | 246,704 | 16,696,927 | ||||||
| See Notes to Schedule of Investments. |
| Liberty All-Star® Equity Fund | Schedule of Investments |
| September 30, 2018 (Unaudited) |
| SHARES | MARKET VALUE | |||||||
| COMMON STOCKS (continued) | ||||||||
| Gas Utilities (0.39%) | ||||||||
| National Fuel Gas Co. | 97,000 | $ | 5,437,820 | |||||
| TOTAL COMMON STOCKS | ||||||||
| (COST OF $1,022,015,353) | 1,353,419,122 | |||||||
| SHORT TERM INVESTMENTS (3.22%) | ||||||||
| MONEY MARKET FUND (2.74%) | ||||||||
| State Street Institutional US Government Money Market Fund, 1.936%(d) | ||||||||
| (COST OF $38,206,046) | 38,206,046 | 38,206,046 | ||||||
| INVESTMENTS PURCHASED WITH COLLATERAL FROM SECURITIES LOANED (0.48%) | ||||||||
| State Street Navigator Securities Lending Government Money Market Portfolio, 2.19% | ||||||||
| (COST OF $6,687,164) | 6,687,164 | 6,687,164 | ||||||
| TOTAL SHORT TERM INVESTMENTS | ||||||||
| (COST OF $44,893,210) | 44,893,210 | |||||||
| TOTAL INVESTMENTS (100.46%) | ||||||||
| (COST OF $1,066,908,563) | 1,398,312,332 | |||||||
| LIABILITIES IN EXCESS OF OTHER ASSETS (-0.46%) | (6,433,512 | ) | ||||||
| NET ASSETS (100.00%) | $ | 1,391,878,820 | ||||||
| NET ASSET VALUE PER SHARE | ||||||||
| (198,727,586 SHARES OUTSTANDING) | $ | 7.00 | ||||||
| (a) | Non-income producing security. |
| (b) | American Depositary Receipt. |
| (c) | Security, or a portion of the security position, is currently on loan. The total market value of securities on loan is $12,086,632. |
| (d) | Rate reflects seven-day effective yield on September 30, 2018. |
| See Notes to Schedule of Investments. |
| Liberty All-Star® Equity Fund | Notes to Schedule of Investments |
| September 30, 2018 (Unaudited) |
Security Valuation
Equity securities are valued at the last sale price at the close of the principal exchange on which they trade, except for securities listed on the NASDAQ Stock Market LLC (“NASDAQ”), which are valued at the NASDAQ official closing price. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets.
Cash collateral from securities lending activity is reinvested in the State Street Navigator Securities Lending Government Money Market Portfolio, a registered investment company under the Investment Company Act of 1940 (the “1940 Act”), which operates as a money market fund in compliance with Rule 2a-7 under the 1940 Act. Shares of registered investment companies are valued daily at that investment company’s net asset value per share.
The Fund’s investments are valued at market value or, in the absence of market value with respect to any portfolio securities, at fair value according to procedures adopted by the Fund's Board of Trustees (the "Board"). When market quotations are not readily available, or in management’s judgment they do not accurately reflect fair value of a security, or an event occurs after the market close but before the Fund is priced that materially affects the value of a security, the security will be valued by the Fund’s Valuation Committee using fair valuation procedures established by the Board. Examples of potentially significant events that could materially impact a Fund’s net asset value include, but are not limited to: single issuer events such as corporate actions, reorganizations, mergers, spin-offs, liquidations, acquisitions and buyouts; corporate announcements on earnings or product offerings; regulatory news; and litigation and multiple issuer events such as governmental actions; natural disasters or armed conflicts that affect a country or a region; or significant market fluctuations. Potential significant events are monitored by the Advisor, ALPS Advisors, Inc. (the “Advisor”), Sub-Advisers and/or the Valuation Committee through independent reviews of market indicators, general news sources and communications from the Fund’s custodian. As of September 30, 2018, the Fund held no securities that were fair valued.
Security Transactions
Security transactions are recorded on trade date. Cost is determined and gains/(losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income Recognition
Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date.
The Fund estimates components of distributions from real estate investment trusts (“REITs”). Distributions received in excess of income are recorded as a reduction of the cost of the related investments. Once the REIT reports annually the tax character of its distributions, the Fund revises its estimates. If the Fund no longer owns the applicable securities, any distributions received in excess of income are recorded as realized gains.
Lending of Portfolio Securities
The Fund may lend its portfolio securities only to borrowers that are approved by the Fund’s securities lending agent, State Street Bank & Trust Co. (“SSB”). The Fund will limit such lending to not more than 30% of the value of its total assets. The borrower pledges and maintains with the Fund collateral consisting of cash (U.S. Dollar only), securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, or by irrevocable bank letters of credit issued by a person other than the borrower or an affiliate of the borrower. The initial collateral received by the Fund is required to have a value of no less than 102% of the market value of the loaned securities for securities traded on U.S. exchanges and a value of no less than 105% of the market value for all other securities. The collateral is maintained thereafter, at a market value equal to no less than 100% of the current value of the securities on loan. The market value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.
| Liberty All-Star® Equity Fund | Notes to Schedule of Investments |
| September 30, 2018 (Unaudited) |
Any cash collateral received is reinvested in a money market fund managed by SSB as disclosed in the Fund’s Schedule of Investments. Non-cash collateral, in the form of securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, is not disclosed in the Fund’s Schedule of Investments as it is held by the lending agent on behalf of the Fund, and the Fund does not have the ability to re-hypothecate these securities.
The following is a summary of the Fund’s securities lending positions and related cash and non-cash collateral received as of September 30, 2018:
| Market
Value of Securities on Loan |
Cash Collateral Received |
Non-Cash
Collateral Received |
Total Collateral Received |
| $ 12,086,632 | $ 6,687,164 | $ 5,832,056 | $ 12,519,220 |
The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by SSB. SSB’s indemnity allows for full replacement of securities lent wherein SSB will purchase the unreturned loaned securities on the open market by applying the proceeds of the collateral, or to the extent such proceeds are insufficient or the collateral is unavailable, SSB will purchase the unreturned loan securities at SSB’s expense. However, the Fund could suffer a loss if the value of the investments purchased with cash collateral falls below the value of the cash collateral received.
Fair Value Measurements
The Fund discloses the classification of its fair value measurements following a three-tier hierarchy based on the inputs used to measure fair value. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability that are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability that are developed based on the best information available.
| Liberty All-Star® Equity Fund | Notes to Schedule of Investments |
| September 30, 2018 (Unaudited) |
Valuation techniques used to value the Fund’s investments by major category are as follows:
Equity securities that are valued based on unadjusted quoted prices in active markets are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the mean of the most recent quoted bid and ask prices on such day and are generally categorized as Level 2 in the hierarchy. Investments in shares of registered investment companies are valued at their closing NAV each business day and are categorized as Level 1 in the hierarchy.
Various inputs are used in determining the value of the Fund’s investments as of the end of the reporting period. When inputs used fall into different levels of the fair value hierarchy, the level in the hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The designated input levels are not necessarily an indication of the risk or liquidity associated with these investments.
These inputs are categorized in the following hierarchy under applicable financial accounting standards:
| 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, 2018:
| Valuation Inputs | ||||||||||||||||
| Investments in Securities at Value* | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Common Stocks | $ | 1,353,419,122 | $ | – | $ | – | $ | 1,353,419,122 | ||||||||
| Short Term Investments | $ | 44,893,210 | $ | – | $ | – | $ | 44,893,210 | ||||||||
| Total | $ | 1,398,312,332 | $ | – | $ | – | $ | 1,398,312,332 | ||||||||
| * | See Schedule of Investments for industry classifications. |
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, 2018 (Unaudited) |
Indemnification
In the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnities. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims against the Fund. Also, under the Fund’s organizational documents and by contract, the Trustees and Officers of the Fund are indemnified against certain liabilities that may arise out of their duties to the Fund. However, based on experience, the Fund expects the risk of loss due to these warranties and indemnities to be minimal.
Recent Accounting Pronouncement
In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, which changes the fair value measurement disclosure requirements of FASB Accounting Standards Codification Topic 820, Fair Value Measurement. The update to Topic 820 includes new, eliminated, and modified disclosure requirements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods. Early adoption is permitted for any eliminated or modified disclosures. Management is currently evaluating the impact of the ASU.
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 Rule 30a-2(a) under the Investment Company Act of 1940, are attached as Ex99.CERT.
SIGNATURES
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.
|
LIBERTY ALL-STAR EQUITY FUND |
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| By: | /s/ William Parmentier | ||
| William Parmentier | |||
| President (principal executive officer) | |||
| Date: | November 21, 2018 | ||
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 21, 2018 | ||
| By: | /s/ Kimberly R. Storms | ||
| Kimberly R. Storms | |||
| Treasurer (principal financial officer) | |||
| Date: | November 21, 2018 |