Item
1. Report of Shareholders.
Contents
A SINGLE INVESTMENT...
A DIVERSIFIED CORE PORTFOLIO
A single fund that offers:
●
|
A diversified, multi-managed portfolio of growth and
value stocks
|
●
|
Exposure to many of the industries that make the U.S.
economy one of the world’s most dynamic
|
●
|
Access to institutional quality investment managers
|
●
|
Objective and ongoing manager evaluation
|
●
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Active portfolio rebalancing
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●
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A quarterly fixed distribution policy
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Actively managed, exchange-traded, closed-end fund listed
on the New York Stock Exchange (ticker symbol: USA)
|
LIBERTY ALL-STAR® EQUITY FUND
Beginning on January 1, 2021, as permitted
by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will
no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available
on the Fund’s website at www.all-starfunds.com, and you will be notified each time a report is posted and provided with a
website link to access the report.
You may elect to receive all future shareholder
reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request
that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund and your shares are
held with the Fund’s transfer agent, Computershare, you can call 1-800-542-3863 to let the Fund know you wish to continue
receiving paper copies of your shareholder reports.
If you already elected to receive shareholder
reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder
reports and other communications from the Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer
or bank) or, if you are a direct investor you may log into your Investor Center account at www.computershare.com/investor and go
to “Communication Preferences”.
Liberty All-Star® Equity Fund
|
President’s Letter
|
(Unaudited)
Fellow Shareholders:
|
July 2020
|
In a historic about-face, key market indices
soared during the second quarter:
●
|
S&P 500® Index: -19.60 percent in
the first quarter, +20.54 percent in the second
|
●
|
Dow Jones Industrial Average (DJIA): -22.73 percent in
the first quarter, +18.51 percent in the second
|
●
|
NASDAQ Composite Index: -13.95 percent in the first quarter,
+30.95 percent in the second
|
The reversal propelled the NASDAQ Composite
to a gain of 12.67 percent for the first half of 2020, but was not quite enough to move the other two indices into positive territory,
as the S&P 500® gave up 3.08 percent while the DJIA declined 8.43 percent.
Such an outcome could hardly have been
anticipated on April 1, as stocks suffered the worst losses ever recorded for the first trading day of a new quarter—more
than 4 percent for all three indices. A day later, it was reported that jobless claims leapt a record 6.6 million at the end of
March and over the next two weeks the total would rise to 16 million jobless and an unemployment rate in excess of 10 percent (unemployment
would later rise to 14.7 percent, a post-World War II high). The University of Michigan’s consumer sentiment survey showed
its largest-ever one-month decline, retail sales in the U.S. plummeted a record 8.7 percent and the lack of demand sent the consumer
price index down 7.6 percent, the biggest drop since 1980. The Commerce Department announced that GDP fell at a 4.8 percent annual
rate in the first three months of the year, the first quarterly drop since 2014. Federal Reserve Chair Jerome Powell forecast,
“We are going to see economic data for the second quarter that is worse than any data we have seen for the economy.”
Then, even more suddenly than the pandemic
devastated financial markets, a complete reversal took hold. In the first full week of April the three key indices previously cited
all posted returns in the 10 percent range, the best weekly returns since 1974. Federal programs proved to be the catalyst in the
turnaround. The Federal Reserve engineered a broad array of actions to limit the economic damage from the pandemic, including up
to $2.3 trillion in lending to support households, employers, financial markets, and state and local governments. These included
the Paycheck Protection Program and Main Street Lending Program as well as loans to households and small businesses and direct
loans to municipal governments. The Fed also cut its target for the fed funds rate—the rate banks pay to borrow from each
other overnight—by a total of 1.5 percentage points beginning March 3, lowering it to a range of 0 percent to 0.25 percent.
The momentum continued to build as states began to implement various plans for reopening their economies after a virtual shut-down
brought businesses, especially retail, hospitality and services, to a near halt.
The S&P 500® logged
a 12.8 percent return for April; followed by a 4.8 percent advance in May, which marked the best two-month period in 11 years.
At the close of May, the stock market was some 36 percent ahead of its March low, and on June 10 the NASDAQ Composite closed above
10,000 for the first time. While actions at the federal level seeded the comeback, economic data took a decided turn for the better,
albeit after being beaten down. In May, retail sales rebounded by 17.7 percent—the largest monthly surge on record—and
housing starts climbed 4.3 percent, with building permits jumping 14.4 percent. State-level actions also began to pay off, as quarantines,
masks, social distancing and other measures began to bend the curve of new cases from upward-sloping to downward.
Semi-Annual Report (Unaudited) | June 30, 2020
|
1
|
Liberty All-Star® Equity Fund
|
President’s Letter
|
(Unaudited)
Many questioned the market’s strong
performance in the face of a dire and potentially long-lasting threat like the coronavirus. And, indeed, the market did suffer
bouts of doubt, such as June 11 when it encountered its worst decline in three months (a one-day loss of 5.9 percent for the S&P
500®). Coronavirus infections rising in more than 20 states—a trend that would continue through the end of
the quarter and beyond—and an overall atmosphere of uncertainty both played roles in the sell-off. Nevertheless, the market
quickly righted itself and buying continued through June, with the S&P 500® turning in its best quarter since
1998 and one of the 10 best quarters since 1950, according to CBS MarketWatch.
Liberty All-Star®
Equity Fund
In the strong investment environment, Liberty
All-Star Equity Fund outperformed in the second quarter of 2020. The Fund returned 23.38 percent with shares valued at net asset
value (NAV) with dividends reinvested and 21.27 percent with shares valued at market price with dividends reinvested. (Fund returns
are net of expenses.) Both were higher than returns posted by the DJIA and the S&P 500®, trailing only the outsized
gain posted by the NASDAQ Composite Index. The Fund’s return also topped that of its primary benchmark, the Lipper Large-Cap
Core Mutual Fund Average, which returned 19.40 percent.
The challenging first quarter caused Fund
returns to lag for the first half of the year. The Fund returned -5.83 percent with shares valued at NAV with dividends reinvested
and -11.17 percent with shares valued at market price with dividends reinvested. This compares to -4.41 percent for the Lipper
benchmark and to -3.08 percent, -8.43 percent and 12.67 percent, respectively, for the S&P 500®, the DJIA and
the NASDAQ Composite.
Continuing a long-term trend, growth style
stocks outperformed value stocks in the second quarter. To illustrate, the Russell 1000® Growth Index returned 27.84
percent, approaching double the 14.29 percent return posted by its value counterpart. This serves to highlight the strength of
the Fund’s second quarter outperformance, as the Fund has a 60/40 overweight to the value style (three value managers and
two growth managers). Further, it underscores the rigorous analytical work of the Fund’s managers as they execute their discrete
investment styles and strategies. Another characteristic of the second quarter—as well as the full first half—that
should be cited is the concentrated, narrow nature of the rally. Most of the return generated by the S&P 500®
can be attributed to a very few large- and mega-cap stocks, primarily in the technology sector. To illustrate how narrow the market
was, the S&P 500® generated a -3.08 percent return year to date through June 30. Yet most stocks in the index
did not fare nearly as well; the median stock in the S&P 500® had a return that was more than 800 basis points
lower, at -11.50 percent. Further to the point, the S&P 500® is a capitalization-weighted index, meaning that
stocks with large capitalizations receive a heavier weighting than those with lesser capitalizations. As a result, the -3.08 percent
cap-weighted return of the S&P 500® declines to -10.77 percent when the index is equally weighted, i.e., when
the effect of size is removed and the performance of each stock is treated equally.
Returning to Fund-specific matters, in
the second quarter Fund shares traded in a much narrower discount range relative to their underlying NAV compared to the first
quarter. For the most recent quarter, the discount ranged from -3.4 percent to -10.2 percent, whereas the range was a premium of
2.5 percent to a discount of -21.3 percent in the preceding quarter.
In accordance with the Fund’s distribution
policy, the Fund paid a distribution of $0.14 per share in the second quarter. 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 $27.86 per share for
a total of more than $3.0 billion since 1987 (the Fund’s first full calendar year of operations). We continue to emphasize
that shareholders should include these distributions when determining the total return on their investment in the Fund.
Liberty All-Star® Equity Fund
|
President’s Letter
|
(Unaudited)
In June, the Fund made a change among its
five investment managers, retaining Fiduciary Management, Inc., to replace Macquarie Investment Management as one of our value
style managers. To introduce Fiduciary Management, we have included an interview with the firm’s CEO in this semi-annual
report and invite shareholders to read it (beginning on page 9).
We are relieved that equity markets staged
such a dramatic turnaround in the second quarter and gratified, of course, that the Fund not only fully participated but outperformed
even when, as discussed earlier, three of its five investment managers adhere to value style investing, which lagged considerably
compared with the growth style. Challenges await, no doubt, as the nation and the world cope with and seek to conquer a very dangerous
pathogen. Be assured we will remain diligent in our management of the Fund and dedicated to the best long-term interests of our
shareholders.
Sincerely,
William R. Parmentier, Jr.
President and Chief Executive Officer
Liberty All-Star® Equity Fund
The views expressed in the President’s
letter and the Manager Interview reflect the views of the President and Manager as of July 2020 and may not reflect their 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.
Semi-Annual Report (Unaudited) | June 30, 2020
|
3
|
Liberty All-Star® Equity Fund
|
President’s Letter
|
(Unaudited)
Fund Statistics (Periods ended June 30, 2020)
|
|
|
|
Net Asset Value (NAV)
|
|
|
$ 6.18
|
|
Market Price
|
|
|
$ 5.72
|
|
Discount
|
|
|
-7.4
|
%
|
|
|
Quarter
|
|
Year-to-Date
|
Distributions*
|
|
$0.14
|
|
$0.31
|
Market Price Trading Range
|
|
$4.36 to $6.04
|
|
$3.67 to $7.15
|
Premium/(Discount) Range
|
|
-3.4% to -10.2%
|
|
2.5% to -21.3%
|
|
|
|
|
|
Performance (Periods ended June 30, 2020)
|
|
|
|
|
Shares Valued at NAV with Dividends Reinvested
|
|
23.38%
|
|
-5.83%
|
Shares Valued at Market Price with Dividends Reinvested
|
|
21.27%
|
|
-11.17%
|
Dow Jones Industrial Average
|
|
18.51%
|
|
-8.43%
|
Lipper Large-Cap Core Mutual Fund Average
|
|
19.40%
|
|
-4.41%
|
NASDAQ Composite Index
|
|
30.95%
|
|
12.67%
|
S&P 500® Index
|
|
20.54%
|
|
-3.08%
|
*
|
Sources of distributions to shareholders may include ordinary dividends, long-term capital gains
and return of capital. The final determination of the source of all distributions in 2020 for tax reporting purposes will be made
after year end. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment
experience during its fiscal year and may be subject to changes based on tax regulations. Based on current estimates a portion
of the distributions consist of a return of capital. Pursuant to Section 852 of the Internal Revenue Code, the taxability of these
distributions will be reported on Form 1099-DIV for 2020.
|
Performance returns for the Fund are total
returns, which include dividends. Returns are net of management fees and other Fund expenses.
The returns shown for the Lipper Large-Cap
Core Mutual Fund Average are based on open-end mutual funds’ total returns, which include dividends, and are net of fund
expenses. Returns for the unmanaged Dow Jones Industrial Average, NASDAQ Composite Index and the S&P 500® Index
are total returns, including dividends. A description of the Lipper benchmark and the market indices can be found on page 35.
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
|
Table of Distributions & Rights Offerings
|
(Unaudited)
|
|
|
|
|
Rights Offerings
|
|
|
|
Year
|
|
Per Share
Distributions
|
|
Month
Completed
|
|
Shares Needed to Purchase
One Additional Share
|
|
|
Subscription Price
|
|
Tax Credits1
|
|
1987
|
|
$1.18
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
102
|
|
|
8.34
|
|
|
|
|
2005
|
|
0.87
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
0.88
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
0.90
|
|
|
December
|
|
10
|
|
|
6.51
|
|
|
|
|
2008
|
|
0.65
|
|
|
|
|
|
|
|
|
|
|
|
|
20093
|
|
0.31
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
0.31
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
0.34
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
0.32
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
0.35
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
0.39
|
|
|
|
|
|
|
|
|
|
|
|
|
20154
|
|
0.51
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
0.48
|
|
|
|
|
|
|
|
|
|
|
|
|
20175
|
|
0.56
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
0.68
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
0.66
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter
|
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
2nd Quarter
|
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$27.86
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
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.
|
2
|
The number of shares offered was increased by an additional 25 percent to cover a portion of the
over-subscription requests.
|
3
|
Effective with the second quarter distribution, the annual distribution rate was changed from 10
percent to 6 percent.
|
4
|
Effective with the second quarter distribution, the annual distribution rate was changed from 6
percent to 8 percent.
|
5
|
Effective with the fourth quarter distribution, the annual distribution rate was changed from 8
percent to 10 percent.
|
DISTRIBUTION POLICY
The current policy is to pay distributions
on its shares totaling approximately 10 percent of its net asset value per year, payable in four quarterly installments of 2.5
percent of the Fund’s net asset value at the close of the New York Stock Exchange on the Friday prior to each quarterly declaration
date. Sources of distributions to shareholders may include ordinary dividends, long-term capital gains and return of capital. The
final determination of the source of all distributions in 2020 for tax reporting purposes will be made after year end. The actual
amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during its
fiscal year and may be subject to changes based on tax regulations. If a distribution includes anything other than net investment
income, the Fund provides a Section 19(a) notice of the best estimate of its distribution sources at that time. These estimates
may not match the final tax characterization (for the full year’s distributions) contained in shareholder 1099-DIV forms
after the end of the year. If the Fund’s ordinary dividends and long-term capital gains for any year exceed the amount distributed
under the distribution policy, the Fund may, in its discretion, retain and not distribute capital gains and pay income tax thereon
to the extent of such excess
Semi-Annual Report (Unaudited) | June 30, 2020
|
5
|
Liberty All-Star® Equity Fund
|
Top 20 Holdings & Economic Sectors
|
June 30, 2020 (Unaudited)
Top 20 Holdings*
|
Percent of Net Assets
|
Adobe, Inc.
|
2.66%
|
PayPal Holdings, Inc.
|
2.65
|
Amazon.com, Inc.
|
2.61
|
Alphabet, Inc.
|
2.05
|
Microsoft Corp.
|
1.98
|
Visa, Inc.
|
1.94
|
Facebook, Inc.
|
1.85
|
salesforce.com, Inc.
|
1.71
|
Danaher Corp.
|
1.55
|
UnitedHealth Group, Inc.
|
1.54
|
JPMorgan Chase & Co.
|
1.45
|
Chubb, Ltd.
|
1.34
|
Sony Corp.
|
1.28
|
ServiceNow, Inc.
|
1.22
|
Equinix, Inc.
|
1.21
|
IHS Markit, Ltd.
|
1.18
|
Illumina, Inc.
|
1.15
|
Berkshire Hathaway, Inc.
|
1.14
|
American Tower Corp.
|
1.08
|
American International Group, Inc.
|
1.02
|
|
32.61%
|
Economic Sectors*
|
Percent of Net Assets
|
Information Technology
|
21.75%
|
Financials
|
15.72
|
Health Care
|
14.13
|
Consumer Discretionary
|
13.28
|
Industrials
|
11.25
|
Communication Services
|
5.98
|
Materials
|
4.03
|
Energy
|
3.63
|
Consumer Staples
|
3.34
|
Real Estate
|
2.78
|
Utilities
|
0.59
|
Other Net Assets
|
3.52
|
|
100.00%
|
* 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
|
(Unaudited)
The following are the major ($5 million
or more) stock changes - both purchases and sales - that were made in the Fund’s portfolio during the second quarter of 2020,
excluding transactions from the transition to Fiduciary Management, Inc.
|
|
SHARES
|
Security Name
|
|
Purchases (Sales)
|
|
Held as of 6/30/20
|
Purchases
|
|
|
|
|
American International Group, Inc.
|
|
243,318
|
|
|
430,899
|
|
Ball Corp.
|
|
78,442
|
|
|
78,442
|
|
Cognizant Technology Solutions Corp.
|
|
119,557
|
|
|
119,153
|
|
NRG Energy, Inc.
|
|
237,861
|
|
|
237,861
|
|
PNC Financial Services Group, Inc.
|
|
49,400
|
|
|
49,400
|
|
QUALCOMM, Inc.
|
|
73,812
|
|
|
73,812
|
|
Union Pacific Corp.
|
|
40,249
|
|
|
40,249
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
Adobe, Inc.
|
|
(17,068
|
)
|
|
80,410
|
|
Amazon.com, Inc.
|
|
(3,251
|
)
|
|
12,451
|
|
Amgen, Inc.
|
|
(24,387
|
)
|
|
38,000
|
|
Autodesk, Inc.
|
|
(26,110
|
)
|
|
33,713
|
|
Home Depot, Inc.
|
|
(29,040
|
)
|
|
26,980
|
|
PayPal Holdings, Inc.
|
|
(59,727
|
)
|
|
200,019
|
|
Ulta Beauty, Inc.
|
|
(27,273
|
)
|
|
16,971
|
|
Semi-Annual Report (Unaudited) | June 30, 2020
|
7
|
Liberty All-Star® Equity Fund
|
Investment Managers/
Portfolio Characteristics
|
(Unaudited)
THE FUND’S ASSETS ARE APPROXIMATELY EQUALLY DISTRIBUTED
AMONG THREE VALUE MANAGERS AND TWO GROWTH MANAGERS:
ALPS Advisors, Inc., the investment advisor
to the Fund, has the ultimate authority (subject to oversight by the Board of Trustees) to oversee the investment managers and
recommend their hiring, termination and replacement.
MANAGERS’ DIFFERING INVESTMENT STRATEGIES ARE REFLECTED
IN PORTFOLIO CHARACTERISTICS
The portfolio characteristics table below
is a regular feature of the Fund’s shareholder reports. It serves as a useful tool for understanding the value of a multi-managed
portfolio. The characteristics are different for each of the Fund’s five investment managers. These differences are a reflection
of the fact that each pursues a different investment style. The shaded column highlights the characteristics of the Fund as a
whole, while the final column shows portfolio characteristics for the S&P 500® Index.
PORTFOLIO CHARACTERISTICS As
of June 30, 2020 (Unaudited)
|
Investment Style Spectrum
|
|
|
|
Value
|
|
Growth
|
|
|
|
|
|
|
|
PZENA
|
FIDUCIARY
|
ARISTOTLE
|
SUSTAINABLE
|
TCW
|
TOTAL FUND
|
S&P 500®
INDEX
|
Number of Holdings
|
37
|
30
|
44
|
29
|
30
|
146*
|
505
|
Percent of Holdings in Top 10
|
39%
|
45%
|
38%
|
45%
|
55%
|
21%
|
27%
|
Weighted Average Market Capitalization (billions)
|
$42
|
$101
|
$144
|
$328
|
$301
|
$186
|
$389
|
Average Five-Year Earnings Per Share Growth
|
-2%
|
10%
|
12%
|
18%
|
31%
|
14%
|
13%
|
Dividend Yield
|
2.9%
|
1.7%
|
1.8%
|
0.7%
|
0.5%
|
1.5%
|
1.8%
|
Price/Earnings Ratio**
|
10x
|
18x
|
17x
|
40x
|
41x
|
20x
|
23x
|
Price/Book Value Ratio
|
0.9x
|
3.0x
|
2.2x
|
8.2x
|
9.1x
|
2.4x
|
3.6x
|
*
|
Certain holdings are held by more than one manager.
|
**
|
Excludes negative earnings
|
Liberty All-Star® Equity Fund
|
Manager Interview
|
(Unaudited)
|
Patrick J. English, CFA
Chairman, CEO & CIO
Fiduciary Management, Inc.
|
FIDUCIARY MANAGEMENT EARNS ITS RETURNS BY OUTWAITING PERIODS
OF MARKET SCHIZOPHRENIA
Fiduciary Management, Inc., is the newest
of the Fund’s five investment managers, having been retained in June 2020 to replace Macquarie Investment Management. For
the Fund, Fiduciary Management utilizes a business owner’s approach to investing, thoroughly examining the economics of the
business and the quality of the management team with the goal of investing in durable business franchises that are selling at
a discount to their underlying value. To introduce the firm to Fund shareholders, we recently spoke with Patrick J. English, CFA,
Fiduciary Management’s Chairman, CEO and CIO. The Fund’s Investment Advisor, ALPS Advisors, Inc., conducted the interview.
As this is your first manager interview
for a Liberty All-Star Equity Fund shareholder report, perhaps we could start by asking you to summarize the most important attributes
that Fund investors should know about Fiduciary Management. What do you believe are the firm’s most distinctive characteristics,
i.e., those factors that separate it from other large-cap value managers? And, a related question: Please describe key characteristics
of the firm itself… attributes such as founding/history, assets under management, staff size and composition, ownership
and culture.
Fiduciary Management, Inc. was
founded in 1980 in Milwaukee and today we manage $16 billion in assets. We are employee owned—18 out of 29
employees are owners—and our sole focus is managing money for our clients. We have one investment team, one philosophy
and one process that manifests itself in four equity strategies: U.S. Large Cap, U.S. Small Cap, U.S. All Cap and
International Equity. We are long-term investors with a bottom-up, fundamental, focused approach. The Fiduciary Large Cap
portfolio, in which Liberty All-Star Equity Fund is invested, comprises 30 high-quality business franchises that are trading
at a discount and have management teams that think and act like owners.
Several differentiating characteristics
describe Fiduciary Management. The proverbial saying “we eat our own cooking” applies to all of us at the firm. We
believe our direct investment in our portfolio, as well as the firm itself, helps properly align our interests with those of our
clients. Although that does not guarantee investment success, it does add an additional level of care and due diligence to our
research process.
Semi-Annual Report (Unaudited) | June 30, 2020
|
9
|
Liberty All-Star® Equity Fund
|
Manager Interview
|
(Unaudited)
The money management business is extremely
competitive and the barriers to entry are quite low. Many managers have the same research tools that we have in analyzing companies,
so we are not unique in that sense. The key, of course, is how we interpret and act on that information in making our investment
decisions. We have been managing money using the same philosophy and process for over 40 years. As a result, we benefit from institutional
memory in the sense that we know where different businesses have been valued over many market cycles.
Finally, we always ask ourselves before
we invest in a company, What could potentially go wrong with this investment versus what could go right? The margin of safety is
important—meaning the price of any investment should be low enough that we can profit—or simply avoid a loss—even
if things go wrong. This healthy dose of skepticism provides an effective way of limiting downside risk in our portfolios.
Can you summarize the firm’s investment process and
how it contributes to long-term portfolio results?
We take a business owners approach to investing,
which means we approach the valuation of each potential investment as if we were to purchase the company or business outright.
We are usually coming into a stock when there is some sort of controversy or cloud over the fundamentals. Our holding period is
long, so we buy a company when there is uncertainty and wait for the uncertainty to lift and the fundamentals to turn, realizing
our returns that way. In other words, we like to take advantage of the market’s schizophrenia.
“We eat our own cooking: We believe our direct investment
in our portfolio, as well as the firm itself, helps properly align our interests with those of our clients.”
In a typical calendar year, we will average
three to five new purchases. The research process into a prospective portfolio company can take several weeks, and in some cases
months. We focus on three areas: First, is this company a good business? The company should provide a product or service through
a cost-effective system that is unique and time-consuming to replicate. A good business will typically have recurring revenue through
long-term contracts or relationships. Second, is the company trading at a reasonable valuation? We focus more on what is happening
on the balance sheet than the income statement. We want to find companies that are trading at a reasonable valuation and earn their
cost of capital over a cycle. Greater emphasis is placed on the enterprise value/sales ratio rather than the P/E ratio and the
margin structure rather than the growth rate. Third, we assess company management. The key to successfully evaluating a management
team is to divorce the stock price from “management ability” and focus on the areas involved in running the company
that management can control.
As the research continues, our analysts
are trained to try and kill an idea early in the process to save time. If the idea cannot be killed, and a high level of conviction
is achieved, the appropriate weighting—considering factors such as liquidity and valuation—is determined between the
analyst, myself and Jonathan Bloom, our Director of Research, and then implemented across all of our portfolios in an equitable
manner.
Liberty All-Star® Equity Fund
|
Manager Interview
|
(Unaudited)
Please identify two portfolio holdings that serve as good
examples of the Fiduciary Management philosophy, strategy and process and, briefly, why.
Two holdings that I would cite are Berkshire Hathaway (BRK-B)
and Masco Corporation (MAS).
Berkshire Hathaway owns a high-quality
group of businesses, including those in insurance/reinsurance, freight rail transportation, utilities and energy, manufacturing,
services, retail and finance. The shares have sold off meaningfully and are at one of their widest discounts to their intrinsic
value. Berkshire has been criticized for holding too much cash, $130 billion, and not making many purchases or acquisitions in
recent years. We applaud the management team for being patient in an extremely expensive and stretched equity market. Berkshire
Hathaway’s stock price is currently $180 for the “B” shares and we estimate a conservative intrinsic value of
the business to be $228/share, meaning they are priced at a 22 percent discount. If we have a bear market that lasts more than
30 days Berkshire should be a safe haven, and Berkshire should find a home for that excess cash and further build the value of
the business.
Masco Corporation’s portfolio of
well-recognized brands includes Behr paint and Delta and Hansgrohe faucets, bath and shower fixtures. The company’s competitive
advantages include brand strength built over several decades and close alignment with advantaged retail and distribution partners.
The business is comprised mostly of low-ticket, high-impact home improvement products in growing categories with a demand profile
that has proven relatively resilient during periods of economic weakness. For example, 89 percent of sales is in the repair and
remodel segment. The business has a strong balance sheet, with $1.7 billion in cash, and low capital requirements. Masco has generated
positive free cash flow every year for more than three decades and trades at 15.5x long-term median earnings per share.
“Our holding period is long, so we buy a company when
there is uncertainty and wait for the uncertainty to lift and the fundamentals to turn … in other words, we like to take
advantage of the market’s schizophrenia.”
Many thanks for the insights into Fiduciary Management and
welcome to Liberty All-Star Equity Fund.
Semi-Annual Report (Unaudited) | June 30, 2020
|
11
|
Liberty All-Star® Equity Fund
|
Schedule of Investments
|
June 30, 2020 (Unaudited)
|
|
SHARES
|
|
|
MARKET VALUE
|
|
COMMON STOCKS (96.48%)
|
|
|
|
|
|
|
|
|
COMMUNICATION SERVICES (5.98%)
|
|
|
|
|
|
|
|
|
Interactive Media & Services (4.68%)
|
|
|
|
|
|
|
|
|
Alphabet, Inc., Class C(a)
|
|
|
19,039
|
|
|
$
|
26,913,721
|
|
Facebook, Inc., Class A(a)
|
|
|
106,872
|
|
|
|
24,267,425
|
|
Match Group Inc(a)(b)
|
|
|
53,733
|
|
|
|
5,752,118
|
|
Twitter, Inc.(a)
|
|
|
155,000
|
|
|
|
4,617,450
|
|
|
|
|
|
|
|
|
61,550,714
|
|
Media (1.30%)
|
|
|
|
|
|
|
|
|
Comcast Corp., Class A
|
|
|
224,820
|
|
|
|
8,763,484
|
|
Interpublic Group of Cos., Inc.
|
|
|
101,922
|
|
|
|
1,748,981
|
|
Omnicom Group, Inc.
|
|
|
119,755
|
|
|
|
6,538,623
|
|
|
|
|
|
|
|
|
17,051,088
|
|
CONSUMER DISCRETIONARY (13.28%)
|
|
|
|
|
|
|
|
|
Auto Components (0.78%)
|
|
|
|
|
|
|
|
|
Lear Corp.
|
|
|
94,118
|
|
|
|
10,260,744
|
|
|
|
|
|
|
|
|
|
|
Automobiles (0.74%)
|
|
|
|
|
|
|
|
|
Ford Motor Co.
|
|
|
1,607,758
|
|
|
|
9,775,169
|
|
|
|
|
|
|
|
|
|
|
Hotels, Restaurants & Leisure (0.72%)
|
|
|
|
|
|
|
|
|
Carnival Corp.(b)
|
|
|
25,012
|
|
|
|
410,697
|
|
Yum! Brands, Inc.
|
|
|
103,660
|
|
|
|
9,009,091
|
|
|
|
|
|
|
|
|
9,419,788
|
|
Household Durables (2.93%)
|
|
|
|
|
|
|
|
|
Lennar Corp., Class A
|
|
|
105,000
|
|
|
|
6,470,100
|
|
Lennar Corp., Class B
|
|
|
2,500
|
|
|
|
115,225
|
|
Mohawk Industries, Inc.(a)
|
|
|
67,886
|
|
|
|
6,908,079
|
|
Newell Brands, Inc.
|
|
|
514,605
|
|
|
|
8,171,927
|
|
Sony Corp.(c)
|
|
|
242,905
|
|
|
|
16,792,023
|
|
|
|
|
|
|
|
|
38,457,354
|
|
Internet & Direct Marketing Retail (3.35%)
|
|
|
|
|
|
|
|
|
Amazon.com, Inc.(a)
|
|
|
12,451
|
|
|
|
34,350,068
|
|
Booking Holdings, Inc.(a)
|
|
|
6,085
|
|
|
|
9,689,389
|
|
|
|
|
|
|
|
|
44,039,457
|
|
Multiline Retail (1.64%)
|
|
|
|
|
|
|
|
|
Dollar General Corp.
|
|
|
65,300
|
|
|
|
12,440,303
|
|
Dollar Tree, Inc.(a)
|
|
|
98,185
|
|
|
|
9,099,786
|
|
|
|
|
|
|
|
|
21,540,089
|
|
Specialty Retail (1.35%)
|
|
|
|
|
|
|
|
|
Home Depot, Inc.
|
|
|
26,980
|
|
|
|
6,758,759
|
|
TJX Cos., Inc.
|
|
|
149,780
|
|
|
|
7,572,877
|
|
See Notes to Financial Statements.
Liberty All-Star® Equity Fund
|
Schedule of Investments
|
June 30, 2020 (Unaudited)
|
|
SHARES
|
|
|
MARKET VALUE
|
|
COMMON STOCKS (continued)
|
|
|
|
|
|
|
|
|
Specialty Retail (continued)
|
|
|
|
|
|
|
|
|
Ulta Beauty, Inc.(a)
|
|
|
16,971
|
|
|
$
|
3,452,241
|
|
|
|
|
|
|
|
|
17,783,877
|
|
Textiles, Apparel & Luxury Goods (1.77%)
|
|
|
|
|
|
|
|
|
Gildan Activewear, Inc.
|
|
|
505,446
|
|
|
|
7,829,359
|
|
NIKE, Inc., Class B
|
|
|
110,039
|
|
|
|
10,789,324
|
|
PVH Corp.
|
|
|
97,564
|
|
|
|
4,687,950
|
|
|
|
|
|
|
|
|
23,306,633
|
|
CONSUMER STAPLES (3.34%)
|
|
|
|
|
|
|
|
|
Beverages (1.02%)
|
|
|
|
|
|
|
|
|
Coca-Cola Co.
|
|
|
142,000
|
|
|
|
6,344,560
|
|
PepsiCo, Inc.
|
|
|
53,050
|
|
|
|
7,016,393
|
|
|
|
|
|
|
|
|
13,360,953
|
|
Food & Staples Retailing (0.69%)
|
|
|
|
|
|
|
|
|
Costco Wholesale Corp.
|
|
|
20,066
|
|
|
|
6,084,212
|
|
Walgreens Boots Alliance, Inc.
|
|
|
71,000
|
|
|
|
3,009,690
|
|
|
|
|
|
|
|
|
9,093,902
|
|
Food Products (0.90%)
|
|
|
|
|
|
|
|
|
Nestle SA(c)
|
|
|
62,995
|
|
|
|
6,957,168
|
|
Tyson Foods, Inc., Class A
|
|
|
81,000
|
|
|
|
4,836,510
|
|
|
|
|
|
|
|
|
11,793,678
|
|
Personal Products (0.73%)
|
|
|
|
|
|
|
|
|
Unilever PLC(c)
|
|
|
175,925
|
|
|
|
9,654,764
|
|
|
|
|
|
|
|
|
|
|
ENERGY (3.63%)
|
|
|
|
|
|
|
|
|
Energy Equipment & Services (2.05%)
|
|
|
|
|
|
|
|
|
Baker Hughes Co.
|
|
|
537,344
|
|
|
|
8,269,724
|
|
Halliburton Co.
|
|
|
598,814
|
|
|
|
7,772,606
|
|
National Oilwell Varco, Inc.
|
|
|
593,470
|
|
|
|
7,270,007
|
|
Schlumberger, Ltd.
|
|
|
200,105
|
|
|
|
3,679,931
|
|
|
|
|
|
|
|
|
26,992,268
|
|
Oil, Gas & Consumable Fuels (1.58%)
|
|
|
|
|
|
|
|
|
Cabot Oil & Gas Corp.
|
|
|
330,000
|
|
|
|
5,669,400
|
|
Cenovus Energy, Inc.
|
|
|
528,447
|
|
|
|
2,467,848
|
|
Exxon Mobil Corp.
|
|
|
52,693
|
|
|
|
2,356,431
|
|
Phillips 66
|
|
|
66,000
|
|
|
|
4,745,400
|
|
Pioneer Natural Resources Co.
|
|
|
25,500
|
|
|
|
2,491,350
|
|
Royal Dutch Shell PLC, Class A(c)
|
|
|
91,039
|
|
|
|
2,976,065
|
|
|
|
|
|
|
|
|
20,706,494
|
|
FINANCIALS (15.72%)
|
|
|
|
|
|
|
|
|
Banks (5.06%)
|
|
|
|
|
|
|
|
|
Bank of America Corp.
|
|
|
376,330
|
|
|
|
8,937,837
|
|
See Notes to Financial Statements.
Semi-Annual Report (Unaudited) | June 30, 2020
|
13
|
Liberty All-Star® Equity Fund
|
Schedule of Investments
|
June 30, 2020 (Unaudited)
|
|
SHARES
|
|
|
MARKET VALUE
|
|
COMMON STOCKS (continued)
|
|
|
|
|
|
|
|
|
Banks (continued)
|
|
|
|
|
|
|
|
|
BOK Financial Corp.
|
|
|
29,600
|
|
|
$
|
1,670,624
|
|
Citigroup, Inc.
|
|
|
208,819
|
|
|
|
10,670,651
|
|
Commerce Bancshares, Inc.
|
|
|
64,000
|
|
|
|
3,806,080
|
|
Cullen/Frost Bankers, Inc.
|
|
|
38,000
|
|
|
|
2,838,980
|
|
East West Bancorp, Inc.
|
|
|
94,300
|
|
|
|
3,417,432
|
|
JPMorgan Chase & Co.
|
|
|
202,031
|
|
|
|
19,003,036
|
|
Mitsubishi UFJ Financial Group, Inc.(c)
|
|
|
650,000
|
|
|
|
2,554,500
|
|
PNC Financial Services Group, Inc.
|
|
|
49,400
|
|
|
|
5,197,374
|
|
Wells Fargo & Co.
|
|
|
330,013
|
|
|
|
8,448,333
|
|
|
|
|
|
|
|
|
66,544,847
|
|
Capital Markets (3.80%)
|
|
|
|
|
|
|
|
|
Ameriprise Financial, Inc.
|
|
|
44,000
|
|
|
|
6,601,760
|
|
Charles Schwab Corp.
|
|
|
307,000
|
|
|
|
10,358,180
|
|
Goldman Sachs Group, Inc.
|
|
|
39,171
|
|
|
|
7,740,973
|
|
Morgan Stanley
|
|
|
177,414
|
|
|
|
8,569,096
|
|
Northern Trust Corp.
|
|
|
87,915
|
|
|
|
6,975,176
|
|
S&P Global, Inc.
|
|
|
17,000
|
|
|
|
5,601,160
|
|
UBS Group AG
|
|
|
361,404
|
|
|
|
4,170,602
|
|
|
|
|
|
|
|
|
50,016,947
|
|
Consumer Finance (0.86%)
|
|
|
|
|
|
|
|
|
Capital One Financial Corp.
|
|
|
180,321
|
|
|
|
11,286,291
|
|
|
|
|
|
|
|
|
|
|
Diversified Financial Services (2.10%)
|
|
|
|
|
|
|
|
|
Berkshire Hathaway, Inc., Class B(a)
|
|
|
83,925
|
|
|
|
14,981,452
|
|
Equitable Holdings, Inc.
|
|
|
398,322
|
|
|
|
7,683,631
|
|
Voya Financial, Inc.
|
|
|
105,990
|
|
|
|
4,944,434
|
|
|
|
|
|
|
|
|
27,609,517
|
|
Insurance (3.90%)
|
|
|
|
|
|
|
|
|
American International Group, Inc.
|
|
|
430,899
|
|
|
|
13,435,432
|
|
Axis Capital Holdings, Ltd.
|
|
|
165,895
|
|
|
|
6,728,701
|
|
Chubb, Ltd.
|
|
|
139,548
|
|
|
|
17,669,568
|
|
MetLife, Inc.
|
|
|
207,103
|
|
|
|
7,563,402
|
|
Progressive Corp.
|
|
|
72,795
|
|
|
|
5,831,607
|
|
|
|
|
|
|
|
|
51,228,710
|
|
HEALTH CARE (14.13%)
|
|
|
|
|
|
|
|
|
Biotechnology (1.55%)
|
|
|
|
|
|
|
|
|
Amgen, Inc.
|
|
|
38,000
|
|
|
|
8,962,680
|
|
BioMarin Pharmaceutical, Inc.(a)
|
|
|
37,200
|
|
|
|
4,588,248
|
|
Regeneron Pharmaceuticals, Inc.(a)
|
|
|
10,946
|
|
|
|
6,826,473
|
|
|
|
|
|
|
|
|
20,377,401
|
|
See Notes to Financial Statements.
Liberty All-Star® Equity Fund
|
Schedule of Investments
|
June 30, 2020 (Unaudited)
|
|
SHARES
|
|
|
MARKET VALUE
|
|
COMMON STOCKS (continued)
|
|
|
|
|
|
|
|
|
Health Care Equipment & Supplies (6.57%)
|
|
|
|
|
|
|
|
|
Abbott Laboratories
|
|
|
118,151
|
|
|
$
|
10,802,546
|
|
Alcon, Inc.(a)
|
|
|
104,500
|
|
|
|
5,989,940
|
|
Align Technology, Inc.(a)
|
|
|
21,339
|
|
|
|
5,856,275
|
|
Becton Dickinson and Co.
|
|
|
34,315
|
|
|
|
8,210,550
|
|
Boston Scientific Corp.(a)
|
|
|
160,147
|
|
|
|
5,622,761
|
|
Danaher Corp.
|
|
|
114,886
|
|
|
|
20,315,292
|
|
Intuitive Surgical, Inc.(a)
|
|
|
14,539
|
|
|
|
8,284,758
|
|
Koninklijke Philips NV(a)
|
|
|
184,970
|
|
|
|
8,663,995
|
|
Medtronic PLC
|
|
|
70,000
|
|
|
|
6,419,000
|
|
Smith & Nephew PLC(c)
|
|
|
162,720
|
|
|
|
6,202,887
|
|
|
|
|
|
|
|
|
86,368,004
|
|
Health Care Providers & Services (3.22%)
|
|
|
|
|
|
|
|
|
Cardinal Health, Inc.
|
|
|
53,609
|
|
|
|
2,797,854
|
|
McKesson Corp.
|
|
|
45,454
|
|
|
|
6,973,553
|
|
Quest Diagnostics, Inc.
|
|
|
107,710
|
|
|
|
12,274,631
|
|
UnitedHealth Group, Inc.
|
|
|
68,838
|
|
|
|
20,303,768
|
|
|
|
|
|
|
|
|
42,349,806
|
|
Life Sciences Tools & Services (1.15%)
|
|
|
|
|
|
|
|
|
Illumina, Inc.(a)
|
|
|
40,829
|
|
|
|
15,121,020
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals (1.64%)
|
|
|
|
|
|
|
|
|
Elanco Animal Health, Inc.(a)
|
|
|
220,000
|
|
|
|
4,719,000
|
|
Mylan NV(a)
|
|
|
205,038
|
|
|
|
3,297,011
|
|
Novartis AG(c)
|
|
|
68,000
|
|
|
|
5,939,120
|
|
Zoetis, Inc.
|
|
|
55,800
|
|
|
|
7,646,832
|
|
|
|
|
|
|
|
|
21,601,963
|
|
INDUSTRIALS (11.25%)
|
|
|
|
|
|
|
|
|
Aerospace & Defense (0.97%)
|
|
|
|
|
|
|
|
|
General Dynamics Corp.
|
|
|
34,000
|
|
|
|
5,081,640
|
|
Honeywell International, Inc.
|
|
|
52,620
|
|
|
|
7,608,326
|
|
|
|
|
|
|
|
|
12,689,966
|
|
Air Freight & Logistics (0.46%)
|
|
|
|
|
|
|
|
|
Expeditors International of Washington, Inc.
|
|
|
79,240
|
|
|
|
6,025,410
|
|
|
|
|
|
|
|
|
|
|
Building Products (1.85%)
|
|
|
|
|
|
|
|
|
Allegion PLC
|
|
|
61,000
|
|
|
|
6,235,420
|
|
Johnson Controls International PLC
|
|
|
156,000
|
|
|
|
5,325,840
|
|
Masco Corp.
|
|
|
254,630
|
|
|
|
12,784,972
|
|
|
|
|
|
|
|
|
24,346,232
|
|
See Notes to Financial Statements.
Semi-Annual Report (Unaudited) | June 30, 2020
|
15
|
Liberty All-Star® Equity Fund
|
Schedule of Investments
|
June 30, 2020 (Unaudited)
|
|
SHARES
|
|
|
MARKET VALUE
|
|
COMMON STOCKS (continued)
|
|
|
|
|
|
|
|
|
Commercial Services & Supplies (0.36%)
|
|
|
|
|
|
|
|
|
Waste Connections, Inc.
|
|
|
50,100
|
|
|
$
|
4,698,879
|
|
|
|
|
|
|
|
|
|
|
Electrical Equipment (0.78%)
|
|
|
|
|
|
|
|
|
Eaton Corp. PLC
|
|
|
82,515
|
|
|
|
7,218,412
|
|
Emerson Electric Co.
|
|
|
49,580
|
|
|
|
3,075,447
|
|
|
|
|
|
|
|
|
10,293,859
|
|
Industrial Conglomerates (0.91%)
|
|
|
|
|
|
|
|
|
General Electric Co.
|
|
|
1,755,143
|
|
|
|
11,987,627
|
|
|
|
|
|
|
|
|
|
|
Machinery (3.25%)
|
|
|
|
|
|
|
|
|
Oshkosh Corp.
|
|
|
81,000
|
|
|
|
5,801,220
|
|
PACCAR, Inc.
|
|
|
93,530
|
|
|
|
7,000,721
|
|
Parker-Hannifin Corp.
|
|
|
35,000
|
|
|
|
6,414,450
|
|
Stanley Black & Decker, Inc.
|
|
|
48,398
|
|
|
|
6,745,713
|
|
Wabtec Corp.
|
|
|
131,958
|
|
|
|
7,596,822
|
|
Xylem, Inc.
|
|
|
142,000
|
|
|
|
9,224,320
|
|
|
|
|
|
|
|
|
42,783,246
|
|
Professional Services (1.72%)
|
|
|
|
|
|
|
|
|
IHS Markit, Ltd.
|
|
|
205,474
|
|
|
|
15,513,287
|
|
TransUnion
|
|
|
81,200
|
|
|
|
7,067,648
|
|
|
|
|
|
|
|
|
22,580,935
|
|
Road & Rail (0.52%)
|
|
|
|
|
|
|
|
|
Union Pacific Corp.
|
|
|
40,249
|
|
|
|
6,804,898
|
|
|
|
|
|
|
|
|
|
|
Trading Companies & Distributors (0.43%)
|
|
|
|
|
|
|
|
|
HD Supply Holdings, Inc.(a)
|
|
|
162,620
|
|
|
|
5,634,783
|
|
|
|
|
|
|
|
|
|
|
INFORMATION TECHNOLOGY (21.75%)
|
|
|
|
|
|
|
|
|
IT Services (7.07%)
|
|
|
|
|
|
|
|
|
Accenture Ltd., Class A, Class A
|
|
|
32,690
|
|
|
|
7,019,197
|
|
Cognizant Technology Solutions Corp., Class A
|
|
|
119,153
|
|
|
|
6,770,273
|
|
FleetCor Technologies, Inc.(a)
|
|
|
40,719
|
|
|
|
10,242,050
|
|
Mastercard, Inc., Class A
|
|
|
28,946
|
|
|
|
8,559,332
|
|
PayPal Holdings, Inc.(a)
|
|
|
200,019
|
|
|
|
34,849,310
|
|
Visa, Inc., Class A
|
|
|
131,745
|
|
|
|
25,449,182
|
|
|
|
|
|
|
|
|
92,889,344
|
|
Semiconductors & Semiconductor Equipment (2.76%)
|
|
|
|
|
|
|
|
|
ASML Holding N.V.
|
|
|
13,925
|
|
|
|
5,124,818
|
|
Microchip Technology, Inc.
|
|
|
78,000
|
|
|
|
8,214,180
|
|
NVIDIA Corp.
|
|
|
24,243
|
|
|
|
9,210,158
|
|
QUALCOMM, Inc.
|
|
|
73,812
|
|
|
|
6,732,392
|
|
See Notes to Financial Statements.
Liberty All-Star® Equity Fund
|
Schedule of Investments
|
June 30, 2020 (Unaudited)
|
|
SHARES
|
|
|
MARKET VALUE
|
|
COMMON STOCKS (continued)
|
|
|
|
|
|
|
|
|
Semiconductors & Semiconductor Equipment (continued)
|
|
|
|
|
|
|
|
|
Xilinx, Inc.
|
|
|
71,594
|
|
|
$
|
7,044,134
|
|
|
|
|
|
|
|
|
36,325,682
|
|
Software (11.34%)
|
|
|
|
|
|
|
|
|
Adobe, Inc.(a)
|
|
|
80,410
|
|
|
|
35,003,277
|
|
ANSYS, Inc.(a)
|
|
|
36,000
|
|
|
|
10,502,280
|
|
Autodesk, Inc.(a)
|
|
|
33,713
|
|
|
|
8,063,812
|
|
Intuit, Inc.
|
|
|
19,134
|
|
|
|
5,667,299
|
|
Microsoft Corp.
|
|
|
128,225
|
|
|
|
26,095,070
|
|
salesforce.com, Inc.(a)
|
|
|
119,733
|
|
|
|
22,429,583
|
|
ServiceNow, Inc.(a)
|
|
|
39,481
|
|
|
|
15,992,174
|
|
Splunk, Inc.(a)
|
|
|
41,955
|
|
|
|
8,336,459
|
|
Trade Desk, Inc., Class A(a)
|
|
|
17,954
|
|
|
|
7,298,301
|
|
Workday, Inc., Class A(a)
|
|
|
51,822
|
|
|
|
9,709,370
|
|
|
|
|
|
|
|
|
149,097,625
|
|
Technology Hardware, Storage & Peripherals (0.58%)
|
|
|
|
|
|
|
|
|
Hewlett Packard Enterprise Co.
|
|
|
790,520
|
|
|
|
7,691,760
|
|
|
|
|
|
|
|
|
|
|
MATERIALS (4.03%)
|
|
|
|
|
|
|
|
|
Chemicals (3.19%)
|
|
|
|
|
|
|
|
|
Corteva, Inc.
|
|
|
225,000
|
|
|
|
6,027,750
|
|
Dow Chemical Co.
|
|
|
184,991
|
|
|
|
7,540,233
|
|
Ecolab, Inc.
|
|
|
38,335
|
|
|
|
7,626,749
|
|
Linde PLC
|
|
|
38,529
|
|
|
|
8,172,386
|
|
PPG Industries, Inc.
|
|
|
62,350
|
|
|
|
6,612,841
|
|
RPM International, Inc.
|
|
|
80,000
|
|
|
|
6,004,800
|
|
|
|
|
|
|
|
|
41,984,759
|
|
Construction Materials (0.42%)
|
|
|
|
|
|
|
|
|
Martin Marietta Materials, Inc.
|
|
|
27,000
|
|
|
|
5,577,390
|
|
|
|
|
|
|
|
|
|
|
Containers & Packaging (0.42%)
|
|
|
|
|
|
|
|
|
Ball Corp.
|
|
|
78,442
|
|
|
|
5,450,934
|
|
|
|
|
|
|
|
|
|
|
REAL ESTATE (2.78%)
|
|
|
|
|
|
|
|
|
Equity Real Estate Investment Trusts (REITs) (2.78%)
|
|
|
|
|
|
|
|
|
American Tower Corp.
|
|
|
54,700
|
|
|
|
14,142,138
|
|
Equinix, Inc.
|
|
|
22,628
|
|
|
|
15,891,644
|
|
Equity LifeStyle Properties, Inc.
|
|
|
52,600
|
|
|
|
3,286,448
|
|
Sun Communities, Inc.
|
|
|
23,800
|
|
|
|
3,229,184
|
|
|
|
|
|
|
|
|
36,549,414
|
|
See Notes to Financial Statements.
Semi-Annual Report (Unaudited) | June 30, 2020
|
17
|
Liberty All-Star® Equity Fund
|
Schedule of Investments
|
June 30, 2020 (Unaudited)
|
|
SHARES
|
|
|
MARKET VALUE
|
|
COMMON STOCKS (continued)
|
|
|
|
|
|
|
|
|
UTILITIES (0.59%)
|
|
|
|
|
|
|
|
|
Electric Utilities (0.59%)
|
|
|
|
|
|
|
|
|
NRG Energy, Inc.
|
|
|
237,861
|
|
|
$
|
7,744,754
|
|
|
|
|
|
|
|
|
|
|
TOTAL COMMON STOCKS
|
|
|
|
|
|
|
|
|
(COST OF $1,114,209,582)
|
|
|
|
|
|
|
1,268,448,975
|
|
|
|
|
|
|
|
|
|
|
SHORT TERM INVESTMENTS (3.87%)
|
|
|
|
|
|
|
|
|
MONEY MARKET FUND (3.36%)
|
|
|
|
|
|
|
|
|
State Street Institutional US Government Money Market Fund, 0.119%(d)
|
|
|
|
|
|
|
|
|
(COST OF $44,236,880)
|
|
|
44,236,880
|
|
|
|
44,236,880
|
|
|
|
|
|
|
|
|
|
|
INVESTMENTS PURCHASED WITH COLLATERAL FROM SECURITIES LOANED (0.51%)
|
|
|
|
|
|
|
|
|
State Street Navigator Securities Lending Government Money Market Portfolio, 0.13%
|
|
|
|
|
|
|
|
|
(COST OF $6,670,771)
|
|
|
6,670,771
|
|
|
|
6,670,771
|
|
|
|
|
|
|
|
|
|
|
TOTAL SHORT TERM INVESTMENTS
|
|
|
|
|
|
|
|
|
(COST OF $50,907,651)
|
|
|
|
|
|
|
50,907,651
|
|
|
|
|
|
|
|
|
|
|
TOTAL INVESTMENTS (100.35%)
|
|
|
|
|
|
|
|
|
(COST OF $1,165,117,233)
|
|
|
|
|
|
|
1,319,356,626
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES IN EXCESS OF OTHER ASSETS (-0.35%)
|
|
|
|
|
|
|
(4,632,502
|
)
|
|
|
|
|
|
|
|
|
|
NET ASSETS (100.00%)
|
|
|
|
|
|
$
|
1,314,724,124
|
|
|
|
|
|
|
|
|
|
|
NET ASSET VALUE PER SHARE
|
|
|
|
|
|
|
|
|
(212,852,729 SHARES OUTSTANDING)
|
|
|
|
|
|
$
|
6.18
|
|
(a)
|
Non-income producing security.
|
(b)
|
Security, or a portion of the security position, is currently
on loan. The total market value of securities on loan is $6,761,759.
|
(c)
|
American Depositary Receipt.
|
(d)
|
Rate reflects seven-day effective yield on June 30, 2020.
|
See Notes to Financial Statements.
Liberty
All-Star® Equity Fund
|
Statement
of Assets and Liabilities
|
|
|
June
30, 2020 (Unaudited)
|
ASSETS:
|
|
|
Investments
at market value (Cost $1,165,117,233)(a)
|
|
$
|
1,319,356,626
|
|
Cash
|
|
|
19,028
|
|
Receivable
for investment securities sold
|
|
|
2,301,689
|
|
Dividends
and interest receivable
|
|
|
2,581,698
|
|
Tax
reclaim receivable
|
|
|
257,823
|
|
Prepaid
and other assets
|
|
|
191,948
|
|
TOTAL
ASSETS
|
|
|
1,324,708,812
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
Payable
for investments purchased
|
|
|
1,877,111
|
|
Investment
advisory fee payable
|
|
|
767,890
|
|
Payable
for administration, pricing and bookkeeping fees
|
|
|
376,989
|
|
Payable
for collateral upon return of securities loaned
|
|
|
6,670,771
|
|
Accrued
expenses
|
|
|
291,927
|
|
TOTAL
LIABILITIES
|
|
|
9,984,688
|
|
NET
ASSETS
|
|
$
|
1,314,724,124
|
|
|
|
|
|
|
NET
ASSETS REPRESENTED BY:
|
|
|
|
|
Paid-in
capital
|
|
$
|
1,165,285,394
|
|
Total
distributable earnings
|
|
$
|
149,438,730
|
|
NET
ASSETS
|
|
$
|
1,314,724,124
|
|
|
|
|
|
|
Shares
of common stock outstanding (unlimited number of shares of beneficial interest without par value authorized)
|
|
|
212,852,729
|
|
NET
ASSET VALUE PER SHARE
|
|
$
|
6.18
|
|
|
(a)
|
Includes
securities on loan of $6,761,759.
|
See
Notes to Financial Statements.
|
|
Semi-Annual
Report (Unaudited) | June 30, 2020
|
19
|
Liberty
All-Star® Equity Fund
|
Statement
of Operations
|
For
the Six Months Ended June 30, 2020 (Unaudited)
|
INVESTMENT
INCOME:
|
|
|
Dividends
(Net of foreign taxes withheld at source which amounted to $71,824)
|
|
$
|
10,669,037
|
|
Securities
lending income
|
|
|
148,703
|
|
TOTAL
INVESTMENT INCOME
|
|
|
10,817,740
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
Investment
advisory fee
|
|
|
4,528,363
|
|
Administration
fee
|
|
|
1,132,094
|
|
Pricing
and bookkeeping fees
|
|
|
81,294
|
|
Audit
fee
|
|
|
25,555
|
|
Custodian
fee
|
|
|
56,230
|
|
Insurance
expense
|
|
|
26,526
|
|
Legal
fees
|
|
|
130,162
|
|
NYSE
fee
|
|
|
112,603
|
|
Shareholder
communication expenses
|
|
|
69,547
|
|
Transfer
agent fees
|
|
|
56,738
|
|
Trustees'
fees and expenses
|
|
|
149,109
|
|
Miscellaneous
expenses
|
|
|
67,314
|
|
TOTAL
EXPENSES
|
|
|
6,435,535
|
|
NET
INVESTMENT INCOME
|
|
|
4,382,205
|
|
|
|
|
|
|
REALIZED
AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
|
|
|
|
|
Net
realized gain on investment transactions
|
|
|
91,508,998
|
|
Net
realized loss on foreign currency transactions
|
|
|
(515
|
)
|
Net
change in unrealized appreciation on investments
|
|
|
(180,923,043
|
)
|
Net
change in unrealized appreciation on foreign currency transactions
|
|
|
359
|
|
NET
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
|
|
|
(89,414,201
|
)
|
NET
DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
|
$
|
(85,031,996
|
)
|
See
Notes to Financial Statements.
|
|
20
|
www.all-starfunds.com
|
Liberty
All-Star® Equity Fund
|
Statements
of Changes in Net Assets
|
|
|
For
the
Six Months Ended
June 30, 2020
(Unaudited)
|
|
For
the
Year Ended
December 31, 2019
|
FROM
OPERATIONS:
|
|
|
|
|
|
|
|
|
Net
investment income
|
|
$
|
4,382,205
|
|
|
$
|
9,709,918
|
|
Net
realized gain on investment transactions
|
|
|
91,508,483
|
|
|
|
120,574,073
|
|
Net
change in unrealized appreciation/(depreciation) on investments
|
|
|
(180,922,684
|
)
|
|
|
211,449,980
|
|
Net
Increase/(Decrease) in Net Assets From Operations
|
|
|
(85,031,996
|
)
|
|
|
341,733,971
|
|
|
|
|
|
|
|
|
|
|
DISTRIBUTIONS
TO SHAREHOLDERS:
|
|
|
|
|
|
|
|
|
From
distributable earnings
|
|
|
(65,008,590
|
)
|
|
|
(130,361,118
|
)
|
Return
of capital
|
|
|
—
|
|
|
|
(4,161,021
|
)
|
Total
Distributions
|
|
|
(65,008,590
|
)
|
|
|
(134,522,139
|
)
|
|
|
|
|
|
|
|
|
|
CAPITAL
SHARE TRANSACTIONS:
|
|
|
|
|
|
|
|
|
Dividend
reinvestments
|
|
|
24,477,828
|
|
|
|
49,999,516
|
|
Net
increase resulting from Capital Share Transactions
|
|
|
24,477,828
|
|
|
|
49,999,516
|
|
Total
Increase/(Decrease) in Net Assets
|
|
|
(125,562,758
|
)
|
|
|
257,211,348
|
|
|
|
|
|
|
|
|
|
|
NET
ASSETS:
|
|
|
|
|
|
|
|
|
Beginning
of period
|
|
|
1,440,286,882
|
|
|
|
1,183,075,534
|
|
End
of period
|
|
$
|
1,314,724,124
|
|
|
$
|
1,440,286,882
|
|
See
Notes to Financial Statements.
|
|
Semi-Annual
Report (Unaudited) | June 30, 2020
|
21
|
Liberty
All-Star® Equity Fund
Financial
Highlights
PER
SHARE OPERATING PERFORMANCE:
|
Net
asset value at beginning of period
|
INCOME
FROM INVESTMENT OPERATIONS:
|
Net
investment income(a)
|
Net
realized and unrealized gain/(loss) on investments
|
Total
from Investment Operations
|
|
LESS
DISTRIBUTIONS TO SHAREHOLDERS:
|
Net
investment income
|
Net
realized gain on investments
|
Return
of capital
|
Total
Distributions
|
Net
asset value at end of period
|
Market
price at end of period
|
|
TOTAL
INVESTMENT RETURN FOR SHAREHOLDERS:(b)
|
Based
on net asset value
|
Based
on market price
|
|
RATIOS
AND SUPPLEMENTAL DATA:
|
Net
assets at end of period (millions)
|
Ratio
of expenses to average net assets
|
Ratio
of net investment income to average net assets
|
Portfolio
turnover rate
|
(a)
|
Calculated
using average shares outstanding during the period.
|
(b)
|
Calculated
assuming all distributions are reinvested at actual reinvestment prices. The net asset
value and market price returns will differ depending upon the level of any discount from
or premium to net asset value at which the Fund's shares traded during the period. Past
performance is not a guarantee of future results.
|
See
Notes to Financial Statements.
|
|
22
|
www.all-starfunds.com
|
Financial
Highlights
For
the Six
Months Ended
June 30, 2020
|
|
For
the Year Ended December 31,
|
(Unaudited)
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6.90
|
|
|
$
|
5.89
|
|
|
$
|
6.87
|
|
|
$
|
6.13
|
|
|
$
|
6.18
|
|
|
$
|
6.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.02
|
|
|
|
0.05
|
|
|
|
0.05
|
|
|
|
0.04
|
|
|
|
0.04
|
|
|
|
0.04
|
|
|
(0.43
|
)
|
|
|
1.62
|
|
|
|
(0.35
|
)
|
|
|
1.26
|
|
|
|
0.39
|
|
|
|
(0.19
|
)
|
|
(0.41
|
)
|
|
|
1.67
|
|
|
|
(0.30
|
)
|
|
|
1.30
|
|
|
|
0.43
|
|
|
|
(0.15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.31
|
)
|
|
|
(0.05
|
)
|
|
|
(0.05
|
)
|
|
|
(0.04
|
)
|
|
|
(0.05
|
)
|
|
|
—
|
|
|
—
|
|
|
|
(0.59
|
)
|
|
|
(0.51
|
)
|
|
|
(0.45
|
)
|
|
|
(0.38
|
)
|
|
|
(0.51
|
)
|
|
—
|
|
|
|
(0.02
|
)
|
|
|
(0.12
|
)
|
|
|
(0.07
|
)
|
|
|
(0.05
|
)
|
|
|
—
|
|
|
(0.31
|
)
|
|
|
(0.66
|
)
|
|
|
(0.68
|
)
|
|
|
(0.56
|
)
|
|
|
(0.48
|
)
|
|
|
(0.51
|
)
|
$
|
6.18
|
|
|
$
|
6.90
|
|
|
$
|
5.89
|
|
|
$
|
6.87
|
|
|
$
|
6.13
|
|
|
$
|
6.18
|
|
$
|
5.72
|
|
|
$
|
6.77
|
|
|
$
|
5.38
|
|
|
$
|
6.30
|
|
|
$
|
5.16
|
|
|
$
|
5.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5.8
|
%)(c)
|
|
|
30.1
|
%
|
|
|
(4.5
|
%)
|
|
|
23.4
|
%
|
|
|
9.1
|
%
|
|
|
(1.0
|
%)
|
|
(11.2
|
%)(c)
|
|
|
39.7
|
%
|
|
|
(4.9
|
%)
|
|
|
34.4
|
%
|
|
|
6.1
|
%
|
|
|
(2.0
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,315
|
|
|
$
|
1,440
|
|
|
$
|
1,183
|
|
|
$
|
1,330
|
|
|
$
|
1,161
|
|
|
$
|
1,137
|
|
|
1.01
|
%(d)
|
|
|
0.99
|
%
|
|
|
1.00
|
%
|
|
|
1.01
|
%
|
|
|
1.07
|
%
|
|
|
1.04
|
%
|
|
0.69
|
%(d)
|
|
|
0.73
|
%
|
|
|
0.72
|
%
|
|
|
0.64
|
%
|
|
|
0.76
|
%
|
|
|
0.60
|
%
|
|
36
|
%(c)
|
|
|
23
|
%
|
|
|
22
|
%
|
|
|
21
|
%
|
|
|
46
|
%
|
|
|
76
|
%
|
Semi-Annual
Report (Unaudited) | June 30, 2020
|
23
|
Liberty
All-Star® Equity Fund
|
Notes
to Financial Statements
|
June
30, 2020 (Unaudited)
|
NOTE
1. ORGANIZATION
Liberty
All-Star® Equity Fund (the “Fund”) is a Massachusetts business trust registered under the Investment
Company Act of 1940 (the “1940 Act”), as amended, as a diversified, closed-end management investment company.
Investment
Goal
The
Fund seeks total investment return comprised of long-term capital appreciation and current income through investing primarily
in a diversified portfolio of equity securities.
Fund
Shares
The
Fund may issue an unlimited number of shares of beneficial interest.
NOTE
2. SIGNIFICANT ACCOUNTING POLICIES
The
following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial
statements. The Fund is considered an investment company under U.S. generally accepted accounting principles (“GAAP”)
and follows the accounting and reporting guidance applicable to investment companies in the Financial Accounting Standards Board
Accounting Standards Codification Topic 946.
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates.
Security
Valuation
Equity
securities are valued at the last sale price at the close of the principal exchange on which they trade, except for securities
listed on the NASDAQ Stock Market LLC (“NASDAQ”), which are valued at the NASDAQ official closing price. Unlisted
securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges
or over-the-counter markets.
Cash
collateral from securities lending activity is reinvested in the State Street Navigator Securities Lending Government Money Market
Portfolio (“State Street Navigator”), a registered investment company under the 1940 Act, which operates as a money
market fund in compliance with Rule 2a- 7 under the 1940 Act. Shares of registered investment companies are valued daily at that
investment company’s net asset value per share.
The
Fund’s investments are valued at market value or, in the absence of market value with respect to any portfolio securities,
at fair value according to procedures adopted by the Fund’s Board of Trustees (the “Board”). When market quotations
are not readily available, or in management’s judgment they do not accurately reflect fair value of a security, or an event
occurs after the market close but before the Fund is priced that materially affects the value of a security, the securities will
be valued by the Fund’s Fair Valuation Committee using fair valuation procedures established by the Board. Examples of potentially
significant events that could materially impact the value of a security include, but are not limited to: single issuer events
such as corporate actions, reorganizations, mergers, spin-offs, liquidations, acquisitions and buyouts; corporate announcements
on earnings or product offerings; regulatory news; and litigation and multiple issuer events such as governmental actions; natural
disasters or armed conflicts that affect a country or a region; or significant market fluctuations. Potential significant events
are monitored by the Advisor ALPS Advisors Inc. (the “Advisor” and “AAI”), Sub-Advisers and/or the Valuation
Committee through independent reviews of market indicators, general news sources and communications from the Fund’s custodian.
As of June 30, 2020, the Fund held no securities that were fair valued.
Liberty
All-Star® Equity Fund
|
Notes
to Financial Statements
|
June
30, 2020 (Unaudited)
|
Security
Transactions
Security
transactions are recorded on trade date. Cost is determined and gains/(losses) are based upon the specific identification method
for both financial statement and federal income tax purposes.
Income
Recognition
Interest
income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date.
The
Fund estimates components of distributions from real estate investment trusts (“REITs”). Distributions received in
excess of income are recorded as a reduction of the cost of the related investments. Once the REIT reports annually the tax character
of its distributions, the Fund revises its estimates. If the Fund no longer owns the applicable securities, any distributions
received in excess of income are recorded as realized gains.
Lending
of Portfolio Securities
The
Fund may lend its portfolio securities only to borrowers that are approved by the Fund’s securities lending agent, State
Street Bank & Trust Co. (“SSB”). The Fund will limit such lending to not more than 30% of the value of its total
assets. The borrower pledges and maintains with the Fund collateral consisting of cash (U.S. Dollar only), securities issued or
guaranteed by the U.S. government or its agencies or instrumentalities, or by irrevocable bank letters of credit issued by a person
other than the borrower or an affiliate of the borrower. The initial collateral received by the Fund is required to have a value
of no less than 102% of the market value of the loaned securities for securities traded on U.S. exchanges and a value of no less
than 105% of the market value for all other securities. The collateral is maintained thereafter, at a market value equal to no
less than 100% of the current value of the securities on loan. The market value of the loaned securities is determined at the
close of each business day and any additional required collateral is delivered to the Fund on the next business day. During the
term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities. Loans of securities
are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time
period for settlement of securities transactions.
Any
cash collateral received is reinvested in State Street Navigator. Non-cash collateral, in the form of securities issued or guaranteed
by the U.S. government or its agencies or instrumentalities, is not disclosed in the Fund’s Statements of Assets and Liabilities
as it is held by the lending agent on behalf of the Fund and the Fund does not have the ability to re-hypothecate these securities.
Income earned by the Fund from securities lending activity is disclosed in the Statement of Operations.
Semi-Annual
Report (Unaudited) | June 30, 2020
|
25
|
Liberty
All-Star® Equity Fund
|
Notes
to Financial Statements
|
|
|
June
30, 2020 (Unaudited)
|
Market
Value of
Securities on Loan
|
|
Cash
Collateral Received
|
|
Non-Cash
Collateral Received
|
|
Total
Collateral Received
|
$
|
6,761,759
|
|
|
$
|
6,670,771
|
|
|
$
|
182,943
|
|
|
$
|
6,853,714
|
|
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.
The
following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of
collateral pledged or securities loaned, and the remaining contractual maturity of those transactions as of June 30, 2020:
|
|
Remaining contractual maturity of the agreements
|
Securities Lending
Transactions
|
|
Overnight &
Continuous
|
|
Up to
30 days
|
|
30-90
days
|
|
Greater than
90 days
|
|
Total
|
Common Stocks
|
|
$
|
6,670,771
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,670,771
|
|
Total Borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,670,771
|
|
Gross amount of recognized liabilities for securities lending (collateral received)
|
|
$
|
6,670,771
|
|
Fair
Value Measurements
The
Fund discloses the classification of its fair value measurements following a three-tier hierarchy based on the inputs used to
measure fair value. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability,
including assumptions about risk. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants
would use in pricing the asset or liability that are developed based on market data obtained from sources independent of the reporting
entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would
use in pricing the asset or liability that are developed based on the best information available.
Valuation
techniques used to value the Fund’s investments by major category are as follows:
Equity
securities that are valued based on unadjusted quoted prices in active markets are categorized as Level 1 in the hierarchy. In
the event there were no sales during the day or closing prices are not available, securities are valued at the mean of the most
recent quoted bid and ask prices on such day and are generally categorized as Level 2 in the hierarchy. Investments in open-end
mutual funds are valued at their closing NAV each business day and are categorized as Level 1 in the hierarchy.
Liberty
All-Star® Equity Fund
|
Notes
to Financial Statements
|
June
30, 2020 (Unaudited)
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 June 30, 2020:
|
|
Valuation Inputs
|
|
|
|
|
|
Investments in Securities at Value
|
|
|
Level 1
|
|
|
|
Level 2
|
|
|
|
Level 3
|
|
|
|
Total
|
|
Common Stocks*
|
|
$
|
1,268,448,975
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,268,448,975
|
|
Short Term Investments
|
|
|
50,907,651
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,907,651
|
|
Total
|
|
$
|
1,319,356,626
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,319,356,626
|
|
|
*
|
See
Schedule of Investments for industry classifications.
|
The
Fund did not have any securities that used significant unobservable inputs (Level 3) in determining fair value during the period.
Distributions
to Shareholders
The
Fund currently has a policy of paying distributions on its shares of beneficial interest totaling approximately 10% of its net
asset value per year. The distributions are payable in four quarterly distributions of 2.5% of the Fund’s net asset value
at the close of the New York Stock Exchange on the Friday prior to each quarterly declaration date. Distributions to shareholders
are recorded on ex-date.
NOTE
3. RISKS
Investment
and Market Risk
An
investment in shares is subject to investment risk, including the possible loss of the entire amount invested. An investment in
shares represents an indirect investment in the securities owned by the Fund, most of which are anticipated to be traded on a
national securities exchange or in the over-the-counter markets. The value of these securities, like other market investments,
may move up or down, sometimes rapidly and unpredictably. Shares at any point in time may be worth less than their original cost,
even after taking into account the reinvestment of dividends and other distributions.
Semi-Annual Report (Unaudited)
| June 30, 2020
|
27
|
Liberty All-Star®
Equity Fund
|
Notes
to Financial Statements
|
June
30, 2020 (Unaudited)
Common
Stock Risk
The
Fund is not limited in the percentage of its assets that may be invested in common stocks and other equity securities, and therefore
a risk of investing in the Fund is common stock or equity risk. Equity risk is the risk that the market value of securities held
by the Fund will fall due to general market or economic conditions, perceptions regarding the industries in which the issuers
of securities held by the Fund participate, and the particular circumstances and performance of particular companies whose securities
the Fund holds. In addition, common stock of an issuer in the Fund’s portfolio may decline in price if the issuer fails
to make anticipated dividend payments because, among other reasons, the issuer of the security experiences a decline in its financial
condition. Common equity securities in which the Fund will invest are structurally subordinated to preferred stocks, bonds and
other debt instruments in a company’s capital structure, in terms of priority to corporate income, and therefore will be
subject to greater payment risk than preferred stocks or debt instruments of such issuers. In addition, while broad market measures
of common stocks have historically generated higher average returns than fixed income securities, common stocks have also experienced
significantly more volatility in their returns.
Growth
stocks are stocks of companies believed to have above-average potential for growth in revenue and earnings. In certain market
conditions, prices of growth stocks may be more sensitive to changes in current or expected earnings than the prices of other
stocks. Growth stocks may not perform as well as the stock market in general.
Market
Disruption and Geopolitical Risk
Social,
political, and economic events, such as natural disasters and health emergencies (e.g., epidemics and pandemics, such as the recent
COVID-19 outbreak), ongoing U.S military activities and political developments, as well as the threat of terrorist attacks, could
have significant adverse effects on the U.S. economy, the stock market, world economies and markets generally, and may lead to
volatility in the value of the Fund’s investments. These types of events may develop quickly and unexpectedly and could
significantly impact issuers, industries, governments and other systems, including financial markets. Global systems are increasingly
interconnected, and an event in one area of the world may have adverse effects in other economies and financial markets. It is
difficult to predict the timing or duration of an event, or its impact on the Fund and its shareholders.
NOTE
4. FEDERAL TAX INFORMATION AND TAX BASIS INFORMATION
The
timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which
may differ from GAAP. Reclassifications are made to the Fund’s capital accounts for permanent tax differences to reflect
income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. If, for any
calendar year, the total distributions made under the distribution policy exceed the Fund’s net investment income and net
realized capital gains, the excess will generally be treated as a non-taxable return of capital, reducing the shareholder’s
adjusted basis in his or her shares. If the Fund’s net investment income and net realized capital gains for any year exceed
the amount distributed under the distribution policy, the Fund may, in its discretion, retain and not distribute net realized
capital gains and pay income tax thereon to the extent of such excess.
Liberty All-Star®
Equity Fund
|
Notes
to Financial Statements
|
June
30, 2020 (Unaudited)
Classification
of Distributions to Shareholders
Net
investment income/(loss) and net realized gain/(loss) may differ for financial statement and tax purposes. The character of distributions
made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal
income tax purposes. Due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ
from the fiscal year in which the income or realized gain was recorded by the Fund. The amounts and characteristics of tax basis
distributions and composition of distributable earnings/(accumulated losses) are determined at the time in which distributions
are paid, which may occur after the fiscal year end. Accordingly, tax basis balances have not been determined as of June 30, 2020.
The
tax character of distributions paid during the year ended December 31, 2019 were as follows:
Distributions Paid From:
|
|
December 31, 2019
|
|
Ordinary Income
|
|
$
|
12,794,142
|
|
Long-term capital gains
|
|
|
117,566,976
|
|
Return of Capital
|
|
|
4,161,021
|
|
Total
|
|
$
|
134,522,139
|
|
As
of June 30, 2020, the cost of investments for federal income tax purposes and accumulated net unrealized appreciation/(depreciation)
on investments was as follows:
Cost of Investments
|
|
|
Gross unrealized
Appreciation (excess of
value over tax cost)
|
|
|
Gross unrealized
Depreciation (excess of
tax cost over value)
|
|
|
Net Unrealized
Appreciation
|
|
$
|
1,165,726,041
|
|
|
$
|
265,555,699
|
|
|
$
|
(111,925,114
|
)
|
|
$
|
153,630,585
|
|
The
differences between book-basis and tax-basis are primarily due to deferral of losses from wash sales and the differing treatment
of certain other investments.
Federal
Income Tax Status
For
federal income tax purposes, the Fund currently qualifies, and intends to remain qualified, as a regulated investment company
under the provisions of Subchapter M of the Internal Revenue Code of 1986, as amended, by distributing substantially all of its
investment company taxable net income including realized gain, not offset by capital loss carryforwards, if any, to its shareholders.
Accordingly, no provision for federal income or excise taxes has been made.
As
of and during the six months ended June 30, 2020, the Fund did not have a liability for any unrecognized tax benefits. The Fund
files U.S. federal, state, and local tax returns as required. The Fund’s tax returns are subject to examination by the relevant
tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of
the tax return. Tax returns for open years have incorporated no uncertain tax positions that require a provision for income taxes.
Semi-Annual Report (Unaudited)
| June 30, 2020
|
29
|
Liberty All-Star®
Equity Fund
|
Notes
to Financial Statements
|
June
30, 2020 (Unaudited)
NOTE
5. FEES AND COMPENSATION PAID TO AFFILIATES
Investment
Advisory Fee
AAI
serves as the investment advisor to the Fund. AAI receives a monthly investment advisory fee based on the Fund’s average
daily net assets at the following annual rates:
Average
Daily Net Assets
|
Annual
Fee Rate
|
First $400 million
|
0.800%
|
Next $400 million
|
0.720%
|
Next $400 million
|
0.648%
|
Over $1.2 billion
|
0.584%
|
Investment
Advisory Fees for the six months ended June 30, 2020 are reported on the Statement of Operations.
AAI
retains multiple Portfolio Managers to manage the Fund’s investments in various asset classes. AAI pays each Portfolio Manager
a portfolio management fee based on the assets of the investment portfolio that they manage. The portfolio management fee is paid
from the investment advisory fees collected by AAI and is based on the Fund’s average daily net assets at the following
annual rates:
Average
Daily Net Assets
|
Annual
Fee Rate
|
First $400 million
|
0.400%
|
Next $400 million
|
0.360%
|
Next $400 million
|
0.324%
|
Over $1.2 billion
|
0.292%
|
Administration,
Bookkeeping and Pricing Services
ALPS
Fund Services, Inc. (“ALPS”) serves as the administrator to the Fund and the Fund has agreed to pay expenses incurred
in connection with this service. Pursuant to an Administrative, Bookkeeping and Pricing Services Agreement, ALPS provides operational
services to the Fund including, but not limited to, fund accounting and fund administration and generally assists in the Fund’s
operations. Officers of the Trust are employees of ALPS. The Fund’s administration fee is accrued on a daily basis and paid
monthly. Administration, Pricing and Bookkeeping fees paid by the Fund for the six months ended June 30, 2020 are disclosed in
the Statement of Operations.
The
Fund also reimburses ALPS for out-of-pocket expenses and charges, including fees payable to third parties for pricing the Fund’s
portfolio securities and direct internal costs incurred by ALPS in connection with providing fund accounting oversight and monitoring
and certain other services.
Liberty All-Star®
Equity Fund
|
Notes
to Financial Statements
|
June
30, 2020 (Unaudited)
Fees
Paid to Officers
All
officers of the Fund, including the Fund’s Chief Compliance Officer, are employees of AAI or its affiliates, and receive
no compensation from the Fund. The Board of Trustees has appointed a Chief Compliance Officer to the Fund in accordance with federal
securities regulations.
NOTE
6. PORTFOLIO INFORMATION
Purchases
and Sales of Securities
For
the six months ended June 30, 2020, the cost of purchases and proceeds from sales of securities, excluding short-term obligations,
were $460,202,487 and $526,581,168, respectively.
NOTE
7. CAPITAL TRANSACTIONS
During
the six months ended June 30, 2020 and year ended December 31, 2019, distributions in the amounts of $24,477,828 and $49,999,516,
respectively, were paid in newly issued shares valued at market value or net asset value, but not less than 95% of market value.
Such distributions resulted in the issuance of 4,015,152 and of 8,025,673 shares, respectively.
Under
the Fund’s Automatic Dividend Reinvestment and Direct Purchase Plan (the “Plan”), shareholders automatically
participate and have all their Fund dividends and distributions reinvested. Under the Plan, all dividends and distributions will
be reinvested in additional shares of the Fund. Distributions declared payable in cash will be reinvested for the accounts of
participants in the Plan in additional shares purchased by the Plan Agent on the open market at prevailing market prices, subject
to certain limitations as described more fully in the Plan. Distributions declared payable in shares are paid to participants
in the Plan entirely in newly issued full and fractional shares valued at the lower of market value or net asset value per share
on the valuation date for the distribution (but not at a discount of more than 5 percent from market price). Dividends and distributions
are subject to taxation, whether received in cash or in shares.
NOTE
8. INDEMNIFICATION
In
the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties and which
provide general indemnities. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future
claims against the Fund. Also, under the Fund’s organizational documents and by contract, the Trustees and Officers of the
Fund are indemnified against certain liabilities that may arise out of their duties to the Fund. However, based on experience,
the Fund expects the risk of loss due to these warranties and indemnities to be minimal.
Semi-Annual Report (Unaudited)
| June 30, 2020
|
31
|
Liberty
All-Star® Equity Fund
|
Board
Consideration of the Initial Approval of the Portfolio
Management
Agreement with Fiduciary Management, Inc.
|
(Unaudited)
The
Investment Company Act of 1940 and applicable rules require that the Board of Trustees (“Board”) of the Liberty All-Star
Equity Fund (“Equity Fund”), including all of the Trustees who are not “interested persons” of the Equity
Fund (“Independent Trustees”), consider on an initial basis and annually thereafter, at a meeting called for such
purpose, whether to approve the Equity Fund’s investment advisory and portfolio management agreements. At its meeting on
June 4, 2020, the Board, including a majority of the Independent Trustees, conducted such a review and approved the initial Portfolio
Management Agreement (“Agreement”) among the Equity Fund, ALPS Advisors, Inc., investment adviser to the Equity Fund
(“AAI”), and Fiduciary Management, Inc. (“Fiduciary”), an independent investment management firm.
Prior
to the Board’s action at the June meeting, the Trustees met to consider management’s recommendations with respect
to the initial approval of the Agreement. In reaching its decision to approve the Agreement, the Board considered the overall
fairness of the Agreement and whether the Agreement was in the best interest of the Equity Fund. The Board further considered
factors it deemed relevant with respect to the Equity Fund, including, but not limited to: (1) the nature, extent and quality
of the services to be provided to the Equity Fund under the Agreement; (2) Fiduciary’s investment performance; (3) the fees to
be paid by the Equity Fund and the fees charged by Fiduciary to other clients, as applicable;(4) whether fee rate levels reflect
economies of scale for the benefit of investors; (5) the costs of the services provided and profits to be realized by Fiduciary
from its relationship with the Equity Fund; and (6) any other benefits to be derived by Fiduciary because of its relationship
with the Equity Fund. In considering the Agreement, the Board did not consider any single factor or particular information most
relevant to its consideration to approve the Agreement and each Trustee might have afforded different weight to the various factors.
The
Board considered these factors in the context of the Equity Fund’s multi-manager methodology, which seeks to achieve more
consistent and less volatile performance over the long term than if a single investment sub-adviser (each, a “Portfolio
Manager”) was employed. The Equity Fund allocates its portfolio assets among Portfolio Managers recommended by AAI and approved
by the Board, currently five for the Equity Fund. The Board considered that each Portfolio Manager employs a different investment
style and/or strategy, and from time to time AAI rebalances the Equity Fund’s portfolio assets among the Portfolio Managers.
The Board also took into account that AAI continuously analyzes and evaluates each Portfolio Manager’s investment performance
and portfolio composition and, from time to time, recommends changes in the Portfolio Managers.
In
connection with its deliberations, the Board considered information furnished throughout the year at regular Board meetings, as
well as information prepared specifically in connection with the annual renewal and approval process. Information furnished and
discussed throughout the year included AAI’s analysis of the Equity Fund’s investment performance and related financial
information for the Equity Fund, presentations given by the Equity Fund’s Portfolio Managers, as well as periodic reports
on legal, compliance, brokerage commissions and execution and other services provided by AAI, the Portfolio Managers and their
affiliates.
As
part of the process to consider the Agreement, legal counsel to the Independent Trustees requested certain information from AAI
and Fiduciary. In response to these requests, the Board received reports from AAI and Fiduciary that addressed specific factors
to be considered by the Board in approving the Agreement. Counsel also provided the Independent Trustees and the Board with a
memorandum discussing the legal standards applicable to their consideration of the Agreement and their responsibilities in connection
therewith. Based on its evaluation of all material factors, the Board unanimously concluded that the terms of the Agreement were
reasonable and fair and that the initial approval of the Agreement was in the best interests of the Fund and its shareholders.
The Independent Trustees also determined that entering into the Agreement in advance of the next scheduled meeting of the shareholders
of the Equity Fund and without prior shareholder approval was in furtherance of the multi-management methodology as applied to
the Equity Fund’s multi-managed assets and was in the best interests of the Fund’s shareholders.
Liberty
All-Star® Equity Fund
|
Board
Consideration of the Initial Approval of the Portfolio
Management
Agreement with Fiduciary Management, Inc.
|
(Unaudited)
The
following is a summary of the Board’s considerations.
Nature,
Extent and Quality of Services
The
Board considered information regarding Fiduciary’s investment philosophy and investment style and the services to be provided
by Fiduciary. In addition, the Board reviewed information regarding Fiduciary’s financial condition and the background and
experience of the personnel who would be responsible for managing a large cap value equity allocation of the Equity Fund’s
portfolio pursuant to Fiduciary’s U.S. large cap value equity strategy. The Board also considered information regarding
Fiduciary’s compliance program and compliance record. The Board concluded that the nature, extent and quality of the services
to be provided by Fiduciary were consistent with the terms of the Agreement and that the Equity Fund was likely to benefit from
services provided by Fiduciary under the Agreement.
Investment
Performance
The
Board considered the performance of Fiduciary’s U.S. large cap value equity composite (“Composite”) relative
to the Russell 1000® Value Index (“Russell Index”). The Composite includes all discretionary accounts managed
in the U.S. large cap value equity strategy.
The
Board considered that, as of March 31, 2020, the Composite was ranked in the 26th percentile or higher relative to the Peer Group
for the 1-year, 5-year, 7-year, 10-year, and 15-year periods. The Board also considered that the Composite outperformed the Russell
Index for the since inception period, and that the Composite outperformed the Russell Index for the 1-year, 3-year, 5-year, 7-
year, 10-year, and 15-year periods. Therefore, the Board considered that the long-term performance of the Composite generally
ranked favorably to the Peer Group and the Russell Index. The Board concluded that the investment performance of Fiduciary’s
U.S. large cap value equity strategy has been good.
Fees
and Expenses
In
evaluating the Agreement, the Board reviewed the proposed fee rate for services to be performed by Fiduciary on behalf of the
Equity Fund. The Board considered Fiduciary’s representation that the fee rate under the Agreement is less than the fee
schedule for most of Fiduciary’s accounts managed pursuant to the U.S. large cap value equity strategy. The Board also considered
that the fee schedule for the Agreement has breakpoints at which the fee rate declines as Equity Fund assets allocated to Fiduciary
increase above a certain threshold. The Board concluded that the fees payable to Fiduciary under the Agreement were reasonable
in relation to the nature and quality of the services expected to be provided, taking into account the fee rates that Fiduciary
charges to other clients.
Semi-Annual Report (Unaudited)
| June 30, 2020
|
33
|
Liberty
All-Star® Equity Fund
|
Board
Consideration of the Initial Approval of the Portfolio
Management
Agreement with Fiduciary Management, Inc.
|
(Unaudited)
Economies
of Scale
The
Board considered Fiduciary’s representation that Fiduciary does not anticipate experiencing economies of scale in connection
with the services that it provides to the Equity Fund. The Board took into consideration that there might be economies of scale
in the future in the event that the Equity Fund’s assets increase.
Costs
of Services
The
Board considered that the fee under the Agreement would be paid to Fiduciary by AAI, not the Equity Fund, and noted the arm’s-length
nature of the relationship between AAI and Fiduciary with respect to the negotiation of the fee rate on behalf of the Equity Fund.
Accordingly, the Board determined that AAI’s costs and profitability in providing services to the Equity Fund were generally
more relevant to the Board’s evaluation of the fees and expenses paid by the Equity Fund than Fiduciary’s costs and
profitability. The Board also noted that it had considered AAI’s costs and profitability in connection with its review of
the Equity Fund’s Management Agreement in September 2019.
Other
Benefits to be Derived By Fiduciary
The
Board considered the potential “fall-out” benefits (including the receipt of research from unaffiliated brokers) that
Fiduciary might receive in connection with its association with the Equity Fund. Based on the foregoing information, the Board
concluded that the potential benefits accruing to Fiduciary by virtue of its relationship with the Equity Fund, if any, appear
to be fair and reasonable.
Conclusions
Based
on its evaluation, the Board unanimously concluded that the terms of the Agreement were reasonable and fair and that the approval
of the Agreement was in the best interests of the Equity Fund and its shareholders. The Board unanimously voted to approve and
recommend to the shareholders of the Equity Fund that they approve the Agreement.
Liberty All-Star® Equity Fund
|
Description
of Lipper
Benchmark
and Market Indices
|
(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 average
characteristics 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 lower book-to-price ratios and higher 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 higher book-to-price ratios and lower growth values. The
Russell 1000® Index measures the performance of the 1,000 largest companies in the Russell 3000®
Index.
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.
Semi-Annual Report (Unaudited)
| June 30, 2020
|
35
|
Intentionally
Left Blank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTMENT
ADVISOR
ALPS
Advisors, Inc.
1290
Broadway, Suite 1000
Denver,
Colorado 80203
303-623-2577
www.all-starfunds.com
INDEPENDENT
REGISTERED
PUBLIC
ACCOUNTING FIRM
Deloitte
& Touche LLP
1601
Wewatta Street, Suite 400
Denver,
Colorado 80202
CUSTODIAN
State
Street Bank & Trust Company
One
Lincoln Street
Boston,
Massachusetts 02111
INVESTOR
ASSISTANCE,
TRANSFER
& DIVIDEND
DISBURSING
AGENT & REGISTRAR
Computershare
Trust Company, N.A.
P.O.
Box 505000
Louisville,
Kentucky 40233
1-800-LIB-FUND
(1-800-542-3863)
www.computershare.com
|
|
LEGAL
COUNSEL
K&L
Gates LLP
1601
K Street, NW
Washington,
DC 20006
DIRECTORS
Thomas
W. Brock*, Chairman
Edmund
J. Burke
George
R. Gaspari*
Milton
M. Irvin*
Dr.
John J. Neuhauser*
Maureen
K. Usifer*
OFFICERS
William
R. Parmentier, Jr., President
Mark
T. Haley, CFA, Senior Vice President
Jill
Kerschen, Treasurer
Sareena
Khwaja-Dixon, Secretary
Jennifer
Craig, Assistant Secretary
Matthew
Sutula, 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 www.sec.gov, 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 30 is available from the SEC’s website at www.sec.gov.
The
Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year
in Form N-PORT. The Fund’s Form N-PORTs are available on the SEC’s website at www.sec.gov 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.
|
|
|
|
|
|
|
|