LIBERTY ALL-STAR EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 2007
NOTE 1. ORGANIZATION
Liberty All-Star Equity Fund (the “Fund”) is a Massachusetts business trust registered under the Investment
Company Act of 1940 (the “Act”), as amended, as a diversified, closed-end management investment company.
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.
The Fund may issue an unlimited number of shares of beneficial interest.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting period. Actual results could
differ from those estimates. The following is a summary of significant accounting policies consistently followed by
the Fund in the preparation of its financial statements.
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, 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.
Debt securities generally are valued by pricing services approved by the Fund’s Board of Trustees (the “Board”),
based upon market transactions for normal, institutionalsize trading units of similar securities. The services may
use various pricing techniques which take into account appropriate factors such as y