-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Oe5pys49+QxnS6ykZq26D3WGQK+ytfb7AEbP0pWgztHUT13hVk/OdniGnbVt5lVs WadRk8cj3n5Gu9N9R77f+w== 0000201801-95-000009.txt : 19951202 0000201801-95-000009.hdr.sgml : 19951202 ACCESSION NUMBER: 0000201801-95-000009 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951130 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY MUNICIPAL SECURITIES FUND INC CENTRAL INDEX KEY: 0000201801 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 251304971 STATE OF INCORPORATION: PA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-02677 FILM NUMBER: 95597933 BUSINESS ADDRESS: STREET 1: FEDERATED INVESTORS TWR CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4122886520 FORMER COMPANY: FORMER CONFORMED NAME: FEDERATED TAX FREE INCOME FUND INC DATE OF NAME CHANGE: 19920703 N-30D 1 [LOGO] FEDERATED INVESTORS Liberty Municipal Securities Fund, Inc. 19th Semi-Annual Report September 30, 1995 Established 1976 MUNICIPAL President's Message - -------------------------------------------------------------------------------- Dear Fellow Shareholder: I am please to present the 19th Semi-Annual Report to Shareholders for the Liberty Municipal Securities Fund, Inc. which covers the six-month period from April 1, 1995 to September 30, 1995. This report begins with an interview with the fund's portfolio manager Jonathan C. Conley, Vice President, Federated Advisers. Following this interview, there are three items of shareholder interest: a complete listing of the fund's tax-free municipal securities, a series of graphs showing investment performance, and the fund's financial statements. Although the first few months of the past year were still a difficult time for municipal funds because of 1994's series of interest-rate hikes, 1995 in general has been less harsh on the municipal market. As a result, the fund's net asset value increased slightly from $10.92 to $11.00 over the six-month reporting period. Dividends earned per share during that time frame totaled $0.33 for Class A Shares, $0.29 for Class B Shares, and $0.29 for Class C Shares. Established in 1976, Liberty Municipal Securities Fund, Inc., has total assets of $734.4 million. For nineteen years, the fund has provided tax-free income from a broadly diversified list of municipal issues. These tax-free securities are issued by municipalities in twenty-eight states across our country. The fund currently holds over ninety issues. The fund's average maturity is currently 8.2 years. The fund has over 55% of its assets in issues rated A or better. Those securities help finance important public projects such as health care facilities, utilities, airports, educational facilities, and housing. The tax-free income you can earn is your reward for helping make these projects possible. You can see the advantage of this type of investing over the long term when you review the investment performance charts later in this report. Thank you for selecting Liberty Municipal Securities Fund, Inc. Please remember we always welcome your comments, questions, and suggestions. Very sincerely yours, J. Christopher Donahue President November 15, 1995 Investment Review - -------------------------------------------------------------------------------- Jonathan C. Conley Vice President Federated Advisers Q. Jonathan, can you tell us what has occurred in the long-term fixed-income markets during the period covered by this report? A. Interest rates exhibited considerable volatility. On March 31, 1995, the yield for the current 30-year U.S. Treasury issue (7.625% due 15-Feb-2025) stood at 7.44%. From there, it declined to 6.48% by June 22, 1995; it escalated to 7.06% by August 11, 1995; and ended the six-month reporting period at 6.62%. As for the long-term municipal market, the Bond Buyer 40 Index*, (representing on a daily basis "A" to "AAA" long-term municipal yields) registered 6.37% on March 31, 1995. It then descended to 6.09% by June 22, 1995; climbed to 6.30% by August 11, 1995; and closed the six-month span at 6.07%. Q. How have these interest rate changes translated to bond price movements? A. From March 31, 1995 to June 22, 1995, the price of the bell-wether U.S. Treasury bond rose from $102.19 to $115.03. By August 11, 1995, its price declined to $107.03. A recovery to $112.97 was achieved by September 30, 1995. Over the same time, the Municipal Bond Index (reset version**) initially rose from $113.44 to $116.53 by June 22, 1995; then dipped to $112.00 by August 11, 1995, before an advance to $115.25 by September 30, 1995. Q. Why did the long-term municipal bond market underperform the U.S. Treasury bond market? A. The primary influence behind that relative performance lay in the continued discussion of significant tax reform--whether to pursue a flat tax or a consumption tax. In either case, the preferential treatment accorded to interest on municipal bonds would be under scrutiny, if not disallowed. Because of expected lengthy lead times for resolution and enactment, if any, of such reform, investors such as advisers, bank trust departments, and individuals have limited their municipal involvement to maturities well beyond ten years. This concentration caused long-term municipal yields to rise from 85.6% to 91.7% of long-term Treasury yields. * This index is unmanaged. ** Reset on March 31, 1995; n.b., the index is not expressed in percentages of bond face value and is unmanaged. Q. What has an investor in Liberty Municipal Securities Fund, Inc. experienced during this period? A. For the six months ended September 30, 1995, an investor in the fund's Class A Shares experienced a total return on net asset value of 3.97%.* On an offering price basis, the total return for Class A Shares was -0.67%.* Class A Shares investors received $0.33 in exempt-interest dividends. Meanwhile, the fund's net asset value grew from $10.92 per share on March 31, 1995 to $11.00 on September 30, 1995--reflecting a long-term capital gain distribution of $0.02 per share on September 22, 1995. For Class B Shares, the six-month total return based on net asset value and offering price were 3.52%* and -2.13%*, respectively. Dividends amounted to $0.29 per share. For Class C Shares, the six-month total return based on net asset value and offering price were 3.52%* and 2.49%*, respectively. Dividends amounted to $0.29 per share. Q. As the portfolio manager, how do you control the volatility of the fund's share price? A. I favor, in a variety of interest rate environments, issues that have coupons or yields greater than the Bond Buyer 40 Index. For equal credit quality and maturity, that issue with the higher coupon rate or market yield will be less price sensitive to market rate changes. The fund, therefore, would swap into higher coupon (or yield) issues to secure coupon and price protection and to book attractive income streams for distribution to shareholders. On March 31, 1995, the average coupon rate of the issues in the fund was 7.42%; on September 30, 1995, the average coupon rate of fund holdings stood at 7.45%. These coupon rates helped to keep the portfolio duration of the fund rather low--averaging 5.80 years versus 12.94 years for the Bond Buyer 40 Index--during the six months ended September 30, 1995. Q. In what areas of the municipal market has the fund invested over the past six months? A. Between March 31, 1995 and September 30, 1995, the fund purchased $42.3 million (face amount) of medium- to upper-grade municipal issues. These transactions were financed by shareholder purchases of fund shares and by the sale of $25.4 million (face amount) of higher-grade issues. Sectors represented in the activity of the fund included hospital revenue issues, pollution control revenue obligations of investor-owned utilities, industrial development bonds of non-financial corporations, college and university tuition revenue issues, single-family housing mortgage revenue issues, and resource recovery project obligations. * Performance quoted represents past performance. Investment return and principal value will fluctuate, so an investor's shares, when redeemed, may be worth more or less than their original cost. The average market yield and coupon rate on issues acquired by the fund during the past six months were 7.02% and 6.32%, respectively. For issues sold from the fund over the period, the average market yield and coupon rate were 6.07% and 6.00%. Q. What is the portfolio composition by credit quality? A. Let's look at the composition at the beginning and the end of the six-month reporting period: March 31, 1995 September 30, 1995 -------------- ------------------ AAA 20.7% 28.1% AA 24.2% 19.8% A 11.7% 7.2% BBB 27.4% 29.0% Non Rated 16.0% 15.9% ------- ------ 100.0% 100.0% Q. Why was the credit quality of the portfolio moved downward? A. Medium and lower grade issues tend to outperform higher grade issues during periods of economic recovery. As state and local governments receive greater tax revenue--from sales, income, use and property--and as corporations generally improve profitability and cash flow generation, the potential for credit rating upgrades increases. This augurs well for medium and lower grade issues as a class of debt instruments. The fund, in the past six months, has been investing in what we consider to be upgrade candidates. Because their higher-than-general-market coupons/yields at issue, medium and lower grade bonds have shorter durations than their higher grade counterparts. Furthermore, the former issues tend to be core holdings; municipal bond portfolio managers typically accommodate shareholder purchases and redemptions with transactions involving higher grade issues. Consequently, assuming stable credit quality, secondary market pricing for medium and lower grade bonds is less volatile than that for higher grade issues. A portfolio that holds a diversified array of medium- and lower grade issues should exhibit that characteristic. Two Ways You May Seek to Invest for Success in Liberty Municipal Securities Fund, Inc. - -------------------------------------------------------------------------------- Initial Investment: If you had made an initial investment of $19,000 in the Class A Shares of Liberty Municipal Securities Fund, Inc. on 10/4/76, reinvested your dividends and capital gains, and didn't redeem any shares, your account would be worth $62,230 on 9/30/95. You would have earned a 6.45%* average annual total return for the 19-year investment life span. One key to investing wisely is to reinvest all tax-free distributions in fund shares. This increases the number of shares on which you can earn future tax-free dividends, and you gain the benefit of compounding tax-free. As of 9/30/95, the Class A Shares' average annual one-year, five-year and ten-year total returns were 3.69%, 7.04%, and 8.51%, respectively. Class B Shares' average annual one-year and since inception (7/26/94) were 1.71% and 1.75%, respectively. Class C Shares' average annual one-year and since inception (4/21/93) total returns were 6.51% and 3.53%, respectively.* [GRAPHIC APPEARS HERE] * Total return represents the change in the value of an investment in Class A Shares after reinvesting all income and capital gains, and takes into account the 4.50% sales charge applicable to an initial investment in Class A Shares. Data quoted represents past performance and does not guarantee future results. Investment return and principal value will fluctuate, so an investor's shares, when redeemed, may be worth more or less than their original cost. Liberty Municipal Securities Fund, Inc. - ----------------------------------------------------------------------------- One Step at a Time: $1,000 invested each year for 19 years (reinvesting all dividends and capital gains) grew to $43,337. With this approach, the key is consistency. If you had started investing $1,000 annually in the Class A Shares of Liberty Municipal Securities Fund, Inc. on 10/4/76, reinvested your dividends and capital gains and didn't redeem any shares, you would have invested only $19,000 but your account would have reached a total value of $43,337* by 9/30/95. You would have earned an average annual total return of 7.71%. A practical investment plan helps you pursue a high level of income through tax-free municipal bonds. Through systematic investing, you buy shares on a regular basis and reinvest all tax-free earnings. An investment plan works for you when you invest only $1,000 annually. You can take it one step at a time. Put time, money, and compounding to work! [GRAPHIC APPEARS HERE] * No method of investing can guarantee a profit or protect against loss in down markets. However, by investing regularly over time and buying shares at various prices, investors can purchase more shares at lower prices, and all accumulated shares have the ability to pay income to the investor. Because such a plan involves continuous investment, regardless of changing price levels, the investor should consider whether or not to continue purchases through periods of low price levels. Liberty Municipal Securities Fund, Inc.-- Hypothetical Investor Profile: Investing for Tax-Free Income - ------------------------------------------------------------------------------- Larry and Barbara Bartlett are a fictional couple who, like all other tax-sensitive shareholders, want to keep more of what they earn. Larry owns a successful architectural firm and Barbara is a marketing executive. Their combined income puts them in the 39.6% federal tax bracket. On September 30, 1985, the Bartletts invested $25,000 in the Class A Shares of Liberty Municipal Securities Fund, Inc. As this chart shows, in 10 years, their original $25,000 investment has grown to $56,579-that's $26,653 in tax-free income.* This represents an 8.51% average annual total return. As far as the Bartletts are concerned, this fund has made all the difference. *Income may be subject to the federal alternative minimum tax and state and local taxes. [GRAPHIC APPEARS HERE] This hypothetical scenario is provided for illustrative purposes only and does not represent the results obtained by any particular shareholder. Past performance does not guarantee future results. Liberty Municipal Securities Fund, Inc. Portfolio of Investments - -------------------------------------------------------------------------------- September 30, 1995 (unaudited)
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- --------- -------------- SHORT-TERM MUNICIPAL SECURITIES--0.8% - -------------------------------------------------------------------------------------- LOUISIANA--0.8% ----------------------------------------------------------------------- $ 5,900,000 Louisiana PFA, 5.00% CP (Our Lady of Lake)/(FSA INS), Mandatory Tender 10/10/1995 A-1 $ 5,900,000 ----------------------------------------------------------------------- -------------- TOTAL SHORT-TERM MUNICIPAL SECURITIES (AT AMORTIZED COST) 5,900,000 ----------------------------------------------------------------------- -------------- LONG-TERM MUNICIPAL SECURITIES--97.7% - -------------------------------------------------------------------------------------- ARIZONA--3.3% ----------------------------------------------------------------------- 12,000,000 Salt River Project, AZ Agricultural Improvement & Power District, Electric System Revenue Bonds (Series A), 7.875% (United States Treasury PRF)/(Original Issue Yield: 7.916%), 1/1/1998 (@102) Aaa 13,159,680 ----------------------------------------------------------------------- 10,500,000 Salt River Project, AZ Agricultural Improvement & Power District, Electric System Revenue Bonds (Series E), 8.25% (United States Treasury PRF)/(Original Issue Yield: 8.40%), 1/1/1998 (@100) Aaa 11,407,305 ----------------------------------------------------------------------- -------------- Total 24,566,985 ----------------------------------------------------------------------- -------------- CALIFORNIA--2.2% ----------------------------------------------------------------------- 13,800,000 Foothill/Eastern Transportation Corridor Agency, CA, (Series 1995A) Senior Lien Toll Road Revenue Bonds, 6.50% (Original Issue Yield: 6.78%), 1/1/2032 BBB- 13,740,936 ----------------------------------------------------------------------- 2,000,000 Southern California Public Power Authority, Transmission Project Revenue Bonds, 7.875% (United States Treasury PRF)/(Original Issue Yield: 7.94%), 7/1/1996 (@103) Aaa 2,119,040 ----------------------------------------------------------------------- -------------- Total 15,859,976 ----------------------------------------------------------------------- -------------- COLORADO--1.3% ----------------------------------------------------------------------- 1,500,000 Colorado Springs, CO Utility System, Revenue Bonds (Series A), 9.50% (Original Issue Yield: 9.55%), 11/15/2015 AA 1,510,785 ----------------------------------------------------------------------- 7,810,000 Colorado Springs, CO Utility System, Revenue Bonds, 8.00% (United States Treasury PRF), 11/15/1997 (@100) Aaa 8,289,378 ----------------------------------------------------------------------- -------------- Total 9,800,163 ----------------------------------------------------------------------- --------------
Liberty Municipal Securities Fund, Inc. - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- --------- -------------- LONG-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------------------- DISTRICT OF COLUMBIA--6.0% ----------------------------------------------------------------------- $ 12,775,000 District of Columbia Hospital Authority, Revenue Refunding Bonds (Series A) Washington Hospital Center, 7.125% (Medlantic Healthcare Group)/(Original Issue Yield: 7.30%), 8/15/2019 Baa1 $ 12,737,186 ----------------------------------------------------------------------- 2,000,000 District of Columbia Hospital Authority, Revenue Refunding Bonds (Series B), 7.00% (Medlantic Healthcare Group)/(Original Issue Yield: 7.282%), 8/15/2015 Baa1 1,989,160 ----------------------------------------------------------------------- 22,250,000 District of Columbia, Revenue Bonds (Series B), 7.15% (Georgetown University)/(Original Issue Yield: 7.191%), 4/1/2021 A+ 24,040,235 ----------------------------------------------------------------------- 4,765,000 Georgetown University, 8.25%, 4/1/2018 AA- 5,308,925 ----------------------------------------------------------------------- -------------- Total 44,075,506 ----------------------------------------------------------------------- -------------- FLORIDA--6.3% ----------------------------------------------------------------------- 4,335,000 Florida State Board of Education Administration, UT GO Capital Outlay Bonds, 9.125% (Florida State)/(Original Issue Yield: 9.173%), 6/1/2014 AA 6,039,652 ----------------------------------------------------------------------- 665,000 Florida State Board of Education Administration, UT GO Capital Outlay Bonds, 9.125% (Florida State)/(United States Treasury COL)/(Original Issue Yield: 9.173%), 6/1/2014 Aaa 937,171 ----------------------------------------------------------------------- 3,000,000 Florida State, UT GO Bonds, Broward County Expressway Authority, 10.00% (Original Issue Yield: 10.105%), 7/1/2014 AA 4,478,490 ----------------------------------------------------------------------- 10,500,000 Jacksonville, FL Electric Authority, Revenue Bonds (Series 3-A), 7.70% (United States Treasury PRF)/(Original Issue Yield: 7.74%), 10/1/1996 (@101.5) Aaa 11,057,235 ----------------------------------------------------------------------- 15,000,000 Orlando & Orange County Expressway Authority, FL, Jr. Lien Revenue Bonds, 7.50% (United States Treasury PRF), 7/1/1996 (@102) AAA 15,705,600 ----------------------------------------------------------------------- 7,500,000 Tampa, FL Utilities Authority, Revenue Refunding Bonds, 8.125% (United States Treasury PRF)/(Original Issue Yield: 8.17%), 10/1/1997 (@102) Aaa 8,232,150 ----------------------------------------------------------------------- -------------- Total 46,450,298 ----------------------------------------------------------------------- --------------
Liberty Municipal Securities Fund, Inc. - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- --------- -------------- LONG-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------------------- GEORGIA--3.2% ----------------------------------------------------------------------- $ 5,000,000 Georgia Municipal Electric Authority, Power Revenue Bonds (Series O), 8.125%, 1/1/2017 A $ 5,490,400 ----------------------------------------------------------------------- 5,000,000 Georgia Municipal Electric Authority, Revenue Bonds (Series A), 8.375%, 1/1/2020 A 5,354,750 ----------------------------------------------------------------------- 4,200,000 Georgia Municipal Electric Authority, Revenue Bonds (Series M), 8.375%, 1/1/2020 A 4,497,990 ----------------------------------------------------------------------- 2,500,000 Georgia Municipal Electric Authority, Revenue Refunding Bonds (Series Q), 8.375% (Original Issue Yield: 8.397%), 1/1/2016 A 2,759,050 ----------------------------------------------------------------------- 5,000,000 Metropolitan Atlanta Rapid Transit Authority, Sales Tax Revenue Bonds (Series J), 8.00% (United States Treasury PRF)/(Original Issue Yield: 8.043%), 7/1/1998 (@102) Aaa 5,579,600 ----------------------------------------------------------------------- -------------- Total 23,681,790 ----------------------------------------------------------------------- -------------- ILLINOIS--6.0% ----------------------------------------------------------------------- 5,000,000 Illinois Development Finance Authority, Housing Revenue Bonds, 6.10% (Catholic Charities Housing Development Corp), 1/1/2020 NR 4,472,300 ----------------------------------------------------------------------- 14,500,000 Illinois Health Facilities Authority, Hospital Revenue Bonds (Series A), 9.25% (Edgewater Hospital & Medical Center, IL), 7/1/2024 NR 14,752,735 ----------------------------------------------------------------------- 10,250,000 Illinois Health Facilities Authority, Revenue Bonds, 7.00% (Trinity Medical Center, IL)/(Original Issue Yield: 7.24%), 7/1/2012 Baa1 10,382,020 ----------------------------------------------------------------------- 2,860,000 Illinois Health Facilities Authority, Revenue Refunding Bonds, 6.125% (Lutheran Social Services of Illinois)/ (Original Issue Yield: 6.269%), 8/15/2010 NR 2,645,558 ----------------------------------------------------------------------- 6,250,000 Illinois State Sales Tax, Revenue Bonds (Series H), 7.625% (United States Treasury PRF)/(Original Issue Yield: 7.645%), 6/15/1998 (@102) Aaa 6,905,875 ----------------------------------------------------------------------- 4,565,000 Illinois State Sales Tax, Revenue Bonds (Series B), 7.625% (United States Treasury PRF)/(Original Issue Yield: 7.711%), 6/15/1996 (@102) Aaa 4,773,849 ----------------------------------------------------------------------- -------------- Total 43,932,337 ----------------------------------------------------------------------- --------------
Liberty Municipal Securities Fund, Inc. - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- --------- -------------- LONG-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------------------- INDIANA--6.9% ----------------------------------------------------------------------- $ 6,200,000 Indiana Health Facilities Finance Authority, Hospital Revenue Bonds, 6.625% (Floyd Memorial Hospital, IN)/ (Original Issue Yield: 6.902%), 2/15/2022 A $ 6,284,754 ----------------------------------------------------------------------- 33,000,000 Indianapolis, IN Airport Authority, Special Facilities Revenue Bonds, 7.10% (Federal Express Corp.)/(Original Issue Yield: 7.178%), 1/15/2017 BBB 34,934,460 ----------------------------------------------------------------------- 10,000,000 Kokomo, IN Hospital Authority, Revenue Refunding Bonds, 6.35% (St. Joseph Hospital, IN)/(Original Issue Yield: 6.40%), 8/15/2013 BBB 9,769,600 ----------------------------------------------------------------------- -------------- Total 50,988,814 ----------------------------------------------------------------------- -------------- LOUISIANA--3.4% ----------------------------------------------------------------------- 6,000,000 De Soto Parish, LA Environmental Improvement Authority, Revenue Bonds, 7.70% (International Paper Co.), 11/1/2018 A- 6,731,220 ----------------------------------------------------------------------- 5,000,000 St. Charles Parish, LA, Environmental Improvement Revenue Bonds (Series A), 6.20% (Louisiana Power & Light Co.)/(Original Issue Yield: 6.25%), 5/1/2023 BBB+ 4,698,950 ----------------------------------------------------------------------- 3,550,000 St. Charles Parish, LA, Solid Waste Disposal Revenue Bonds (Series A), 7.00% (Louisiana Power & Light Co.)/ (Original Issue Yield: 7.04%), 12/1/2022 BBB+ 3,631,366 ----------------------------------------------------------------------- 10,000,000 St. James Parish, LA, Solid Waste Disposal Revenue Bonds, 7.70% (Freeport McMoRan, Inc.)/(Original Issue Yield: 7.75%), 10/1/2022 NR 10,234,100 ----------------------------------------------------------------------- -------------- Total 25,295,636 ----------------------------------------------------------------------- -------------- MARYLAND--2.1% ----------------------------------------------------------------------- 12,230,000 Maryland State Community Development Administration, SFM Revenue Bonds (5th Series), 6.75%, 4/1/2026 Aa 12,563,023 ----------------------------------------------------------------------- 3,000,000 Maryland State Health & Higher Educational Facilities, Revenue Bonds, 5.50% (Howard County General Hospital, MD)/(Original Issue Yield: 5.80%), 7/1/2025 Baa1 2,558,340 ----------------------------------------------------------------------- -------------- Total 15,121,363 ----------------------------------------------------------------------- --------------
Liberty Municipal Securities Fund, Inc. - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- --------- -------------- LONG-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------------------- MASSACHUSETTS--5.3% ----------------------------------------------------------------------- $ 4,700,000 Massachusetts HEFA, Revenue Bonds (Series B), 6.50% (Holyoke Hospital, MA)/(Original Issue Yield: 6.75%), 7/1/2015 Baa1 $ 4,522,669 ----------------------------------------------------------------------- 33,800,000 Massachusetts, IFA, Solid Waste Disposal Sr. Lien Revenue Bonds (Series A), 9.00% (Massachusetts Recycling Association), 8/1/2016 NR 34,211,684 ----------------------------------------------------------------------- -------------- Total 38,734,353 ----------------------------------------------------------------------- -------------- MICHIGAN--0.1% ----------------------------------------------------------------------- 500,000 Michigan State Hospital Finance Authority, Revenue Bonds, Providence Hospital, 7.00% (Daughters of Charity)/(Original Issue Yield: 7.04%), 11/1/2021 Aa 536,635 ----------------------------------------------------------------------- -------------- MINNESOTA--1.6% ----------------------------------------------------------------------- 11,900,000 St. Paul, MN Housing & Redevelopment Authority , Hospital Revenue Refunding Bonds ( Series A), 6.625% (Healtheast, MN)/(Original Issue Yield: 6.687%), 11/1/2017 BBB- 11,636,058 ----------------------------------------------------------------------- -------------- NEW JERSEY--1.1% ----------------------------------------------------------------------- 8,000,000 New Jersey State Educational Facilities Authority, Revenue Bonds (Series C), 6.625% (Fairleigh Dickinson University)/ (Original Issue Yield: 6.703%), 7/1/2023 NR 7,776,560 ----------------------------------------------------------------------- -------------- NEW MEXICO--0.7% ----------------------------------------------------------------------- 5,000,000 Farmington, NM PCA, PCR Refunding Bonds (Series A), 7.20% (Southern California Edison Co.)/(Original Issue Yield: 7.30%), 4/1/2021 Aa3 5,470,700 ----------------------------------------------------------------------- -------------- NEW YORK--6.1% ----------------------------------------------------------------------- 3,000,000 Municipal Assistance Corp of New York, Revenue Bonds (Series 67), 7.625% (Original Issue Yield: 7.698%), 7/1/2008 AA- 3,362,190 ----------------------------------------------------------------------- 2,000,000 New York State Mortgage Agency, Mortgage Revenue Bonds ( Series 30-B), 6.65% (FHA GTD), 10/1/2025 Aa 2,033,420 ----------------------------------------------------------------------- 13,000,000 New York State Power Authority, Revenue Bonds (Series V), 8.00%, 1/1/1998 (@102) AA 14,290,900 -----------------------------------------------------------------------
Liberty Municipal Securities Fund, Inc. - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- --------- -------------- LONG-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------------------- NEW YORK--CONTINUED ----------------------------------------------------------------------- $ 2,750,000 Triborough Bridge & Tunnel Authority, NY, 7.875% (United States Treasury PRF)/(Original Issue Yield: 7.895%), 1/1/1998 (@101.5) Aaa $ 3,008,225 ----------------------------------------------------------------------- 7,000,000 Triborough Bridge & Tunnel Authority, NY, General Purpose Revenue Bonds (Series I), 7.625% (United States Treasury PRF)/(Original Issue Yield: 7.713%), 1/1/1996 (@102) Aaa 7,206,430 ----------------------------------------------------------------------- 9,000,000 Triborough Bridge & Tunnel Authority, NY, General Purpose Revenue Bonds (Series O), 7.70% (United States Treasury PRF), 1/1/1999 (@101.5) Aaa 10,054,530 ----------------------------------------------------------------------- 4,300,000 Triborough Bridge & Tunnel Authority, NY, Revenue Refunding Bonds (Series L), 8.125% (Original Issue Yield: 8.22%), 1/1/2012 Aa 4,766,034 ----------------------------------------------------------------------- -------------- Total 44,721,729 ----------------------------------------------------------------------- -------------- NORTH CAROLINA--2.9% ----------------------------------------------------------------------- 6,000,000 North Carolina Municipal Power Agency No. 1, Catawba Electric Revenue Bonds (Series B), 8.50% (United States Treasury PRF)/(Original Issue Yield: 9.00%), 1/1/1996 (@102) Aaa 6,190,080 ----------------------------------------------------------------------- 13,500,000 North Carolina Municipal Power Agency No. 1, Catawba Electric Revenue Refunding Bonds, 7.875% (United States Treasury PRF), 1/1/1998 (@102) Aaa 14,829,210 ----------------------------------------------------------------------- -------------- Total 21,019,290 ----------------------------------------------------------------------- -------------- OHIO--2.0% ----------------------------------------------------------------------- 1,200,000 Cuyahoga County, OH Hospital Authority, Revenue Refunding Bonds, 8.00% (Cleveland Clinic)/(Original Issue Yield: 8.068%), 12/1/2015 Aa 1,291,584 ----------------------------------------------------------------------- 1,000,000 Franklin County, OH Hospital Facility Authority, Hospital Revenue Refunding & Improvement Bonds, 7.25% (Riverside United Methodist Hospital)/(MBIA Insurance Corporation INS)/(Original Issue Yield: 7.29%), 5/15/2020 Aaa 1,115,240 -----------------------------------------------------------------------
Liberty Municipal Securities Fund, Inc. - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- --------- -------------- LONG-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------------------- OHIO--CONTINUED ----------------------------------------------------------------------- $ 14,000,000 Ohio State Air Quality Development Authority, PCR Refunding Bonds (Series A), 5.95% (Ohio Edison Co.), 5/15/2029 Baa2 $ 12,602,380 ----------------------------------------------------------------------- -------------- Total 15,009,204 ----------------------------------------------------------------------- -------------- OKLAHOMA--1.7% ----------------------------------------------------------------------- 4,585,000 Jackson County, OK Hospital Authority, Hospital Revenue Refunding Bonds, 7.30% (Jackson County Memorial Hospital, OK)/(Original Issue Yield: 7.40%), 8/1/2015 BBB- 4,570,053 ----------------------------------------------------------------------- 7,500,000 Tulsa, OK Municipal Airport, Revenue Bonds, 7.60% (American Airlines)/(Original Issue Yield: 7.931%), 12/1/2030 Baa2 7,977,225 ----------------------------------------------------------------------- -------------- Total 12,547,278 ----------------------------------------------------------------------- -------------- PENNSYLVANIA--9.4% ----------------------------------------------------------------------- 750,000 Geisinger Authority, PA Health System, Revenue Bonds, 7.625% (United States Treasury PRF)/(Original Issue Yield: 7.697%), 7/1/1999 (@102) AA 846,667 ----------------------------------------------------------------------- 1,300,000 Latrobe, PA Industrial Development Authority, College Revenue Bonds, 6.75% (St. Vincent College, PA)/(Original Issue Yield: 7.00%), 5/1/2024 Baa1 1,321,502 ----------------------------------------------------------------------- 5,000,000 Montgomery County, PA Higher Education and Health Authority, Hospital Revenue Bonds, 9.375% (Bryn Mawr Hospital)/(United States Treasury PRF)/(Original Issue Yield: 9.472%), 12/1/1997 (@102) Aaa 5,638,350 ----------------------------------------------------------------------- 6,250,000 Pennsylvania Economic Development Finance Authority, Series 1993-C, Revenue Bonds, 7.60% (Macmillan Bloedel LTD)/(Original Issue Yield: 7.65%), 12/1/2020 Baa2 6,782,813 ----------------------------------------------------------------------- 20,500,000 Pennsylvania Economic Development Finance Authority, Series 1993-C, Wastewater Treatment Revenue Bonds (Series A), 7.60% (Sun Co., Inc.)/(Original Issue Yield: 7.653%), 12/1/2024 Baa1 22,414,085 ----------------------------------------------------------------------- 12,000,000 Pennsylvania Housing Finance Authority, SFM Revenue Bond Bonds (Series 39B), 6.875%, 10/1/2024 AA 12,431,040 -----------------------------------------------------------------------
Liberty Municipal Securities Fund, Inc. - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- --------- -------------- LONG-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED ----------------------------------------------------------------------- $ 4,000,000 Pennsylvania State Higher Education Facilities Authority, Hospital Revenue Bonds (Series A), 7.25% (Allegheny General Hospital)/(Original Issue Yield: 7.40%), 9/1/2017 AA- $ 4,279,480 ----------------------------------------------------------------------- 12,865,000 Pennsylvania State Higher Education Facilities Authority, Revenue Bonds (Series A), 7.375% (Medical College of Pennsylvania)/(Original Issue Yield: 7.45%), 3/1/2021 Baa1 13,094,897 ----------------------------------------------------------------------- 2,000,000 Sayre, PA, Health Care Facilities Authority, Revenue Bonds (Series A), 7.10% (Guthrie Healthcare System, PA)/ (AMBAC INS)/(Original Issue Yield: 7.175%), 3/1/2017 Aaa 2,217,740 ----------------------------------------------------------------------- -------------- Total 69,026,574 ----------------------------------------------------------------------- -------------- SOUTH CAROLINA--2.5% ----------------------------------------------------------------------- 2,430,000 South Carolina State Public Service Authority, Revenue Bonds, 7.875% (United States Treasury PRF), 1/1/1996 (@102) Aaa 2,502,730 ----------------------------------------------------------------------- 3,685,000 South Carolina State Public Service Authority, Revenue Bonds, 7.875% (United States Treasury PRF), 1/1/1996 (@102) Aaa 3,795,292 ----------------------------------------------------------------------- 11,495,000 South Carolina State Public Service Authority, Revenue Bonds, 7.875%, 7/1/2021 A+ 11,836,286 ----------------------------------------------------------------------- -------------- Total 18,134,308 ----------------------------------------------------------------------- -------------- TENNESSEE--2.8% ----------------------------------------------------------------------- 5,000,000 Springfield, TN Health & Educational Facilities Board, Hospital Revenue Bonds, 8.25% (Jesse Holman Jones Hospital Corp, TN)/(Original Issue Yield: 8.50%), 4/1/2012 NR 5,197,850 ----------------------------------------------------------------------- 15,000,000 Springfield, TN Health & Educational Facilities Board, Hospital Revenue Bonds, 8.50% (Jesse Holman Jones Hospital Corp, TN)/(Original Issue Yield: 8.875%), 4/1/2024 NR 15,347,700 ----------------------------------------------------------------------- -------------- Total 20,545,550 ----------------------------------------------------------------------- --------------
Liberty Municipal Securities Fund, Inc. - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- --------- -------------- LONG-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------------------- TEXAS--11.6% ----------------------------------------------------------------------- $ 4,000,000 Brazos River Authority, TX, PCR Revenue Bonds (Series A), 7.875% (Texas Utilities Electric Co.), 3/1/2021 BBB $ 4,441,800 ----------------------------------------------------------------------- 14,500,000 Brazos River Authority, TX, Revenue Refunding Bonds (Series C), 8.10% (Houston Light & Power Company)/ (MBIA Insurance Corporation INS)/(Original Issue Yield: 8.121%), 5/1/2019 Aaa 16,110,370 ----------------------------------------------------------------------- 12,750,000 Dallas-Fort Worth, TX International Airport Facilities, Revenue Bonds, 7.25% (American Airlines)/(Original Issue Yield: 7.428%), 11/1/2030 Baa2 13,370,670 ----------------------------------------------------------------------- 2,000,000 Gulf Coast, TX Waste Disposal Authority, Revenue Bonds (Series A), 6.875% (Champion International Corp.)/(Original Issue Yield: 7.15%), 12/1/2028 Baa1 2,065,440 ----------------------------------------------------------------------- 3,700,000 Red River Authority, TX, PCR Bonds, 6.875% (Hoechst Celanese Corp.)/(Original Issue Yield: 6.939%), 4/1/2017 AA- 3,873,086 ----------------------------------------------------------------------- 7,500,000 Richardson, TX Hospital Authority, Hospital Refunding & Improvement Bonds, 6.50% (Richardson Medical Center, TX)/(Original Issue Yield: 6.72%), 12/1/2012 BBB- 7,295,250 ----------------------------------------------------------------------- 1,000,000 Richardson, TX Hospital Authority, Hospital Refunding & Improvement Bonds, 6.75% (Richardson Medical Center, TX)/(Original Issue Yield: 6.82%), 12/1/2023 BBB- 964,540 ----------------------------------------------------------------------- 16,500,000 Sabine River Authority, TX , PCR Bonds, 8.20% (Southwestern Electric Power Co.), 7/1/2014 Aa3 17,377,140 ----------------------------------------------------------------------- 420,000 Texas Housing Agency, SFM Revenue Bonds (Series B), 9.375%, 9/1/2015 Aa 430,727 ----------------------------------------------------------------------- 3,000,000 Texas State, UT GO Veterans Housing Assistance, 7.00%, 12/1/2025 AA 3,132,000 ----------------------------------------------------------------------- 12,505,000 Travis County, Texas Housing Finance Corp., SFM Revenue Bonds, 7.10% (GNMA COL), 10/1/2027 AAA 13,220,536 ----------------------------------------------------------------------- 3,000,000 Tyler, TX Health Facilities Development Corp., Revenue Bonds, 6.75% (East Texas Medical Center)/(Original Issue Yield: 7.00%), 11/1/2025 NR 2,869,950 ----------------------------------------------------------------------- -------------- Total 85,151,509 ----------------------------------------------------------------------- --------------
Liberty Municipal Securities Fund, Inc. - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- --------- -------------- LONG-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------------------- UTAH--4.5% ----------------------------------------------------------------------- $ 9,500,000 Intermountain Power Agency, UT, Power Supply Revenue Refunding Bonds (Series D), 8.625% (Original Issue Yield: 8.693%), 7/1/2021 AA $ 10,384,925 ----------------------------------------------------------------------- 2,000,000 Intermountain Power Agency, UT, Special Obligation Bonds, 1st Crossover Series, 7.875% (Original Issue Yield: 8.091%), 7/1/2014 AA 2,101,760 ----------------------------------------------------------------------- 1,000,000 Intermountain Power Agency, UT, Special Obligation Bonds, 2nd Crossover Series, 7.50% (Original Issue Yield: 7.605%), 7/1/2016 AA 1,040,280 ----------------------------------------------------------------------- 13,500,000 Salt Lake City, UT Hospital Authority, Hospital Revenue Refunding Bonds (Series A), 8.125% (IHC Hospitals Inc., UT)/(United States Treasury COL)/(Original Issue Yield: 8.17%), 5/15/2015 AAA 16,425,450 ----------------------------------------------------------------------- 2,500,000 Salt Lake City, UT Hospital Authority, Hospital Revenue Refunding Bonds (Series B), 8.125% (IHC Hospitals Inc., UT)/(Original Issue Yield: 8.17%), 5/15/2015 AA 2,773,775 ----------------------------------------------------------------------- -------------- Total 32,726,190 ----------------------------------------------------------------------- -------------- WASHINGTON--0.6% ----------------------------------------------------------------------- 5,000,000 Pilchuck Development Public Corp., WA, Special Facilities Airport Revenue Bonds (Series 1993), Tramco, Inc. Project, 6.00% (Goodrich (B.F.) Co.), 8/1/2023 Baa1 4,548,800 ----------------------------------------------------------------------- -------------- WEST VIRGINIA--2.9% ----------------------------------------------------------------------- 3,800,000 Marion County, WV County Commission, Solid Waste Disposal Facility Revenue Bonds, 8.25% (American Power Paper Recycling), 12/1/2011 NR 3,501,396 ----------------------------------------------------------------------- 20,000,000 Marion County, WV County Commission, Solid Waste Facility Revenue Bonds (Series 1993), 7.75% (American Power Paper Recycling), 12/1/2011 NR 17,595,000 ----------------------------------------------------------------------- -------------- Total 21,096,396 ----------------------------------------------------------------------- --------------
Liberty Municipal Securities Fund, Inc. - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- --------- -------------- LONG-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------------------- WYOMING--1.2% ----------------------------------------------------------------------- $ 8,460,000 Sweetwater County, WY IDA, Solid Waste Disposal Revenue Bonds (Series A), 7.00% (FMC Corp.), 6/1/2024 BBB $ 8,715,153 ----------------------------------------------------------------------- -------------- TOTAL LONG-TERM MUNICIPALS (IDENTIFIED COST $683,803,113) 717,169,155 ----------------------------------------------------------------------- -------------- TOTAL MUNICIPAL SECURITIES (IDENTIFIED COST $689,703,113)(A) $ 723,069,155 ----------------------------------------------------------------------- --------------
(a) The cost of investments for federal tax purposes amounts to $689,703,113. The net unrealized appreciation of investments on a federal tax basis amounts to $33,366,042, which is comprised of $40,374,530 appreciation and $7,008,488 depreciation at September 30, 1995. * Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. Current credit ratings are unaudited. Note: The categories of investments are shown as a percentage of net assets ($734,362,206) at September 30, 1995. The following acronyms are used throughout this portfolio: AMBAC-- --American Municipal Bond Assurance Corporation COL----Collateralized CP--Commercial Paper FHA--Federal Housing Administration FSA--Financial Security Assurance GNMA-- Government National Mortgage Association GO--General Obligation GTD--Guarantee HEFA-- Health and Education Facilities Authority IDA--Industrial Development Authority IFA--Industrial Finance Authority INS--Insurance MBIA--Municipal Bond Investors Assurance PCA--Pollution Control Authority PCR--Pollution Control Revenue PFA--Public Facility Authority PRF--Prerefunded SFM--Single Family Mortgage UT--Unlimited Tax (See Notes which are an integral part of the Financial Statements) Liberty Municipal Securities Fund, Inc. Statement of Assets and Liabilities - -------------------------------------------------------------------------------- September 30, 1995 (unaudited) ASSETS: - --------------------------------------------------------------------------------------------------- Total investments in securities, at value (identified and tax cost $689,703,113) $ 723,069,155 - --------------------------------------------------------------------------------------------------- Income receivable 16,062,702 - --------------------------------------------------------------------------------------------------- Receivable for shares sold 506,991 - --------------------------------------------------------------------------------------------------- ------------- Total assets 739,638,848 - --------------------------------------------------------------------------------------------------- LIABILITIES: - --------------------------------------------------------------------------------------------------- Payable for shares redeemed $ 103,896 - -------------------------------------------------------------------------------------- Income distribution payable 3,740,278 - -------------------------------------------------------------------------------------- Payable to Bank 1,346,676 - -------------------------------------------------------------------------------------- Accrued expenses 85,792 - -------------------------------------------------------------------------------------- ----------- Total liabilities 5,276,642 - --------------------------------------------------------------------------------------------------- ------------- NET ASSETS for 66,781,575 shares outstanding $ 734,362,206 - --------------------------------------------------------------------------------------------------- ------------- NET ASSETS CONSIST OF: - --------------------------------------------------------------------------------------------------- Paid in capital $ 701,664,055 - --------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments 33,366,042 - --------------------------------------------------------------------------------------------------- Accumulated net realized loss on investments (667,891) - --------------------------------------------------------------------------------------------------- ------------- Total Net Assets $ 734,362,206 - --------------------------------------------------------------------------------------------------- ------------- NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: - --------------------------------------------------------------------------------------------------- CLASS A SHARES: - --------------------------------------------------------------------------------------------------- Net Asset Value Per Share ($676,381,808 / 61,508,915 shares outstanding) $11.00 - --------------------------------------------------------------------------------------------------- ------------- Offering Price Per Share (100/95.50 of $11.00)* $11.52 - --------------------------------------------------------------------------------------------------- ------------- Redemption Proceeds Per Share (100.00/100 of $11.00)** $11.00 - --------------------------------------------------------------------------------------------------- ------------- CLASS C SHARES: - --------------------------------------------------------------------------------------------------- Net Asset Value Per Share ($23,198,339 / 2,109,667 shares outstanding) $11.00 - --------------------------------------------------------------------------------------------------- ------------- Offering Price Per Share (100/100.00 of $11.00)* $11.00 - --------------------------------------------------------------------------------------------------- ------------- Redemption Proceeds Per Share (99.00/100 of $11.00)** $10.89 - --------------------------------------------------------------------------------------------------- ------------- CLASS B SHARES: - --------------------------------------------------------------------------------------------------- Net Asset Value Per Share ($34,782,059 / 3,162,993 shares outstanding) $11.00 - --------------------------------------------------------------------------------------------------- ------------- Offering Price Per Share (100/100.00 of $11.00)* $11.00 - --------------------------------------------------------------------------------------------------- ------------- Redemption Proceeds Per Share (94.50/100 of $11.00)** $10.40 - --------------------------------------------------------------------------------------------------- -------------
*See "How to Purchase Shares" in the Prospectus. **See "How to Redeem Shares" in the Prospectus. (See Notes which are an integral part of the Financial Statements) Liberty Municipal Securities Fund, Inc. Statement of Operations - -------------------------------------------------------------------------------- Six Months Ended September 30, 1995 (unaudited) INVESTMENT INCOME: - --------------------------------------------------------------------------------------------------- Interest $ 26,275,588 - --------------------------------------------------------------------------------------------------- EXPENSES: - ------------------------------------------------------------------------------------- Investment advisory fee $ 2,313,591 - ------------------------------------------------------------------------------------- Administrative personnel and services fee 281,424 - ------------------------------------------------------------------------------------- Custodian fees 53,842 - ------------------------------------------------------------------------------------- Transfer and dividend disbursing agent fees and expenses 297,848 - ------------------------------------------------------------------------------------- Directors'/Trustees' fees 7,503 - ------------------------------------------------------------------------------------- Auditing fees 9,456 - ------------------------------------------------------------------------------------- Legal fees 17,982 - ------------------------------------------------------------------------------------- Portfolio accounting fees 71,324 - ------------------------------------------------------------------------------------- Distribution services fee--Class C Shares 84,370 - ------------------------------------------------------------------------------------- Distribution services fee--Class B Shares 97,200 - ------------------------------------------------------------------------------------- Shareholder services fee--Class A Shares 868,882 - ------------------------------------------------------------------------------------- Shareholder services fee--Class C Shares 28,123 - ------------------------------------------------------------------------------------- Shareholder services fee--Class B Shares 32,400 - ------------------------------------------------------------------------------------- Share registration costs 39,736 - ------------------------------------------------------------------------------------- Printing and postage 80,468 - ------------------------------------------------------------------------------------- Insurance premiums 8,418 - ------------------------------------------------------------------------------------- Taxes 92,448 - ------------------------------------------------------------------------------------- Miscellaneous 3,075 - ------------------------------------------------------------------------------------- ------------ Total expenses 4,388,090 - ------------------------------------------------------------------------------------- Waivers-- - ------------------------------------------------------------------------ Waiver of shareholder services fee--Class A Shares $ (451,819) - ------------------------------------------------------------------------ Waiver of shareholder services fee--Class C Shares (5,625) - ------------------------------------------------------------------------ ----------- Total waivers (457,444) - ------------------------------------------------------------------------------------- ------------ Net expenses 3,930,646 - --------------------------------------------------------------------------------------------------- ------------- Net investment income 22,344,942 - --------------------------------------------------------------------------------------------------- ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: - --------------------------------------------------------------------------------------------------- Net realized loss on investments (254,837) - --------------------------------------------------------------------------------------------------- Net change in unrealized appreciation of investments 6,412,146 - --------------------------------------------------------------------------------------------------- ------------- Net realized and unrealized gain on investments 6,157,309 - --------------------------------------------------------------------------------------------------- ------------- Change in net assets resulting from operations $ 28,502,251 - --------------------------------------------------------------------------------------------------- -------------
(See Notes which are an integral part of the Financial Statements) Liberty Municipal Securities Fund, Inc. Statement of Changes in Net Assets - --------------------------------------------------------------------------------
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED SEPTEMBER 30, 1995 MARCH 31, 1995 ------------------ -------------- INCREASE (DECREASE) IN NET ASSETS: - --------------------------------------------------------------------- OPERATIONS-- - --------------------------------------------------------------------- Net investment income $ 22,344,942 $ 44,628,279 - --------------------------------------------------------------------- Net realized gain (loss) on investments ($254,837 net loss and $8,228,240 net gain, respectively, as computed for federal tax purposes) (254,837) 7,819,630 - --------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) 6,412,146 (10,931,022) - --------------------------------------------------------------------- ----------------------- ------------------ Change in net assets resulting from operations 28,502,251 41,516,887 - --------------------------------------------------------------------- ----------------------- ------------------ DISTRIBUTIONS TO SHAREHOLDERS-- - --------------------------------------------------------------------- Distributions from net investment income - --------------------------------------------------------------------- Class A Shares (21,055,078) (43,126,423) - --------------------------------------------------------------------- Select Shares 0 (9,592) - --------------------------------------------------------------------- Class C Shares (590,633) (1,190,042) - --------------------------------------------------------------------- Class B Shares (699,231) (302,222) - --------------------------------------------------------------------- Distributions from net realized gains - --------------------------------------------------------------------- Class A Shares (894,438) (14,957,324) - --------------------------------------------------------------------- Select Shares 0 (6,166) - --------------------------------------------------------------------- Class C Shares (30,361) (461,364) - --------------------------------------------------------------------- Class B Shares (44,667) (100,862) - --------------------------------------------------------------------- ----------------------- ------------------ Change in net assets resulting from distributions to shareholders (23,314,408) (60,153,995) - --------------------------------------------------------------------- ----------------------- ------------------ SHARE TRANSACTIONS-- - --------------------------------------------------------------------- Proceeds from sale of shares 150,677,605 299,314,879 - --------------------------------------------------------------------- Net asset value of shares issued to shareholders in payment of distributions declared 12,001,025 38,127,189 - --------------------------------------------------------------------- Cost of shares redeemed (182,806,235) (306,549,262) - --------------------------------------------------------------------- ----------------------- ------------------ Change in net assets resulting from share transactions (20,127,605) 30,892,806 - --------------------------------------------------------------------- ----------------------- ------------------ Change in net assets (14,939,762) 12,255,698 - --------------------------------------------------------------------- NET ASSETS: - --------------------------------------------------------------------- Beginning of period 749,301,968 737,046,270 - --------------------------------------------------------------------- ----------------------- ------------------ End of period $ 734,362,206 $ 749,301,968 - --------------------------------------------------------------------- ----------------------- ------------------
(See Notes which are an integral part of the Financial Statements) Liberty Municipal Securities Fund, Inc. Financial Highlights--Class A Shares - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) SEPTEMBER 30, YEAR ENDED MARCH 31, 1995 1995 1994 1993 1992 1991 1990 1989 1988 NET ASSET VALUE, BEGINNING OF PERIOD $ 10.92 $ 11.20 $ 11.62 $ 10.98 $ 10.61 $ 10.47 $ 10.26 $ 10.03 $ 10.80 - ------------------------ INCOME FROM INVESTMENT OPERATIONS - ------------------------ Net investment income 0.33 0.67 0.66 0.66 0.67 0.71 0.72 0.72 0.73 - ------------------------ Net realized and unrealized gain (loss) on investments 0.10 (0.05) (0.40) 0.64 0.37 0.14 0.21 0.23 (0.77) - ------------------------ ------ --------- --------- --------- --------- --------- --------- --------- --------- Total from investment operations 0.43 0.62 0.26 1.30 1.04 0.85 0.93 0.95 (0.04) - ------------------------ ------ --------- --------- --------- --------- --------- --------- --------- --------- LESS DISTRIBUTIONS - ------------------------ Distributions from net investment income (0.33) (0.67) (0.66) (0.66) (0.67) (0.71) (0.72) (0.72) (0.73) - ------------------------ Distributions from net realized gain on investment transactions (0.02) (0.23) (0.02) 0.00 0.00 0.00 0.00 0.00 0.00 - ------------------------ ------ --------- --------- --------- --------- --------- --------- --------- --------- Total distributions (0.35) (0.90) (0.68) (0.66) (0.67) (0.71) (0.72) (0.72) (0.73) - ------------------------ ------ --------- --------- --------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 11.00 $ 10.92 $ 11.20 $ 11.62 $ 10.98 $ 10.61 $ 10.47 $ 10.26 $ 10.03 - ------------------------ ------ --------- --------- --------- --------- --------- --------- --------- --------- TOTAL RETURN (A) 3.97% 5.90% 2.10% 12.13% 10.05% 8.42% 9.20% 9.76% (0.17%) - ------------------------ RATIOS TO AVERAGE NET ASSETS - ------------------------ Expenses 1.00%* 0.92% 0.84% 0.80% 0.84% 0.89% 0.90% 0.95% 0.95% - ------------------------ Net investment income 6.07%* 6.17% 5.59% 5.81% 6.17% 6.77% 6.80% 7.07% 7.28% - ------------------------ Expense waiver/ reimbursement (b) 0.13%* -- -- -- -- -- -- -- -- - ------------------------ SUPPLEMENTAL DATA - ------------------------ Net assets, end of period (000 omitted) $676,382 $708,712 $714,384 $706,126 $590,118 $511,611 $474,797 $440,445 $388,916 - ------------------------ Portfolio turnover 3% 41% 27% 13% 8% 45% 25% 58% 55% - ------------------------ 1987 NET ASSET VALUE, BEGINNING OF PERIOD $ 10.51 - ------------------------ INCOME FROM INVESTMENT OPERATIONS - ------------------------ Net investment income 0.75 - ------------------------ Net realized and unrealized gain (loss) on investments 0.29 - ------------------------ --------- Total from investment operations 1.04 - ------------------------ --------- LESS DISTRIBUTIONS - ------------------------ Distributions from net investment income (0.75) - ------------------------ Distributions from net realized gain on investment transactions 0.00 - ------------------------ --------- Total distributions (0.75) - ------------------------ --------- NET ASSET VALUE, END OF PERIOD $ 10.80 - ------------------------ --------- TOTAL RETURN (A) 10.28% - ------------------------ RATIOS TO AVERAGE NET ASSETS - ------------------------ Expenses 0.95% - ------------------------ Net investment income 7.07% - ------------------------ Expense waiver/ reimbursement (b) -- - ------------------------ SUPPLEMENTAL DATA - ------------------------ Net assets, end of period (000 omitted) $424,655 - ------------------------ Portfolio turnover 13% - ------------------------
* Computed on an annualized basis. (a) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (b) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) Liberty Municipal Securities Fund, Inc. Financial Highlights--Class B Shares - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED PERIOD (UNAUDITED) ENDED SEPTEMBER 30, MARCH 31, 1995 1994(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 10.92 $ 11.06 - --------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - --------------------------------------------------------------------------------- Net investment income 0.29 0.40 - --------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.10 (0.03) - --------------------------------------------------------------------------------- ------- ------------- Total from investment operations 0.39 0.37 - --------------------------------------------------------------------------------- ------- ------------- LESS DISTRIBUTIONS - --------------------------------------------------------------------------------- Distributions from net investment income (0.29) (0.40) - --------------------------------------------------------------------------------- Distributions from net realized gain on investment transactions (0.02) (0.11) - --------------------------------------------------------------------------------- ------- ------------- Total distributions (0.31) (0.51) - --------------------------------------------------------------------------------- ------- ------------- NET ASSET VALUE, END OF PERIOD $ 11.00 $ 10.92 - --------------------------------------------------------------------------------- ------- ------------- TOTAL RETURN (B) 3.52% 3.49% - --------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - --------------------------------------------------------------------------------- Expenses 1.89%* 1.84%* - --------------------------------------------------------------------------------- Net investment income 5.41%* 5.94%* - --------------------------------------------------------------------------------- SUPPLEMENTAL DATA - --------------------------------------------------------------------------------- Net assets, end of period (000 omitted) $34,782 $18,201 - --------------------------------------------------------------------------------- Portfolio turnover 3% 41% - ---------------------------------------------------------------------------------
* Computed on an annualized basis. (a) Reflects operations for the period from July 26, 1994 (date of initial public offering) to March 31, 1995. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (See Notes which are an integral part of the Financial Statements) Liberty Municipal Securities Fund, Inc. Financial Highlights--Class C Shares - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED SEPTEMBER 30, MARCH 31, 1995 1995 1994(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 10.92 $ 11.20 $ 11.70 - -------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - -------------------------------------------------------------------- Net investment income 0.29 0.58 0.52 - -------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.10 (0.05) (0.48) - -------------------------------------------------------------------- ------- --------- ----------- Total from investment operations 0.39 0.53 0.04 - -------------------------------------------------------------------- ------- --------- ----------- LESS DISTRIBUTIONS - -------------------------------------------------------------------- Distributions from net investment income (0.29) (0.58) (0.52) - -------------------------------------------------------------------- Distributions from net realized gain on investment transactions (0.02) (0.23) (0.02) - -------------------------------------------------------------------- ------- --------- ----------- Total distributions (0.31) (0.81) (0.54) - -------------------------------------------------------------------- ------- --------- ----------- NET ASSET VALUE, END OF PERIOD $ 11.00 $ 10.92 $ 11.20 - -------------------------------------------------------------------- ------- --------- ----------- TOTAL RETURN (B) 3.52% 4.96% 0.17% - -------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - -------------------------------------------------------------------- Expenses 1.84%* 1.81% 1.80%* - -------------------------------------------------------------------- Net investment income 5.26%* 5.28% 4.70%* - -------------------------------------------------------------------- Expense waiver/reimbursement (c) 0.05%* -- -- - -------------------------------------------------------------------- SUPPLEMENTAL DATA - -------------------------------------------------------------------- Net assets, end of period (000 omitted) $23,198 $22,389 $22,066 - -------------------------------------------------------------------- Portfolio turnover 3% 41% 27% - --------------------------------------------------------------------
* Computed on an annualized basis. (a) Reflects operations for the period from April 20, 1993, (date of initial public offering) to March 31, 1994. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) Liberty Municipal Securities Fund, Inc. Notes to Financial Statements - -------------------------------------------------------------------------------- September 30, 1995 (unaudited) 1. ORGANIZATION Liberty Municipal Securities Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a diversified, open-end, management investment company. Effective July 19, 1994, the Select Shares ceased operations and were reclassified as Class C Shares. Also, effective July 26, 1994, the Fund added Class B Shares. Consequently, the Fund currently offers three classes of shares: Class A Shares, Class B Shares, and Class C Shares. 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. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS--Short-term securities with remaining maturities of sixty days or less at the time of purchase may be valued at amortized cost, which approximates fair market value. All other securities are valued at prices provided by an independent pricing service. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. OTHER--Investment transactions are accounted for on the trade date. Liberty Municipal Securities Fund, Inc. - -------------------------------------------------------------------------------- 3. CAPITAL STOCK At September 30, 1995, par value shares ($0.01 per share) authorized were as follows:
NUMBER OF PAR VALUE CLASS NAME CAPITAL STOCK AUTHORIZED Class A 375,000,000 Class C 375,000,000 Class B 250,000,000 ----------------- Total shares authorized 1,000,000,000 -----------------
Transactions in capital stock were as follows:
SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30, 1995 MARCH 31, 1995 CLASS A SHARES SHARES AMOUNT SHARES AMOUNT Shares sold 11,769,773 $ 129,567,387 25,045,927 $ 272,914,437 - ------------------------------------------------- Shares issued to shareholders in payment of distributions declared 1,044,160 11,436,853 3,400,590 37,033,517 - ------------------------------------------------- Shares redeemed (16,209,453) (178,242,725) (27,342,942) (297,338,150) - ------------------------------------------------- ------------- --------------- ------------- --------------- Net change resulting from Class A share transactions (3,395,520) $ (37,238,485) 1,103,575 $ 12,609,804 - ------------------------------------------------- ------------- --------------- ------------- --------------- SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30, 1995 MARCH 31, 1995* SELECT SHARES SHARES AMOUNT SHARES AMOUNT Shares sold -- -- 1,790 $ 19,931 - ------------------------------------------------- Shares issued to shareholders in payment of distributions declared -- -- 1,048 11,713 - ------------------------------------------------- Shares redeemed -- -- (56,061) (655,825) - ------------------------------------------------- ------------- --------------- ------------- --------------- Net change resulting from Select share transactions -- -- (53,223) $ (624,181) - ------------------------------------------------- ------------- --------------- ------------- ---------------
Liberty Municipal Securities Fund, Inc. - --------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30, 1995 MARCH 31, 1995 CLASS C SHARES SHARES AMOUNT SHARES AMOUNT Shares sold 289,897 $ 3,195,878 754,199 $ 8,274,060 - ------------------------------------------------- Shares issued to shareholders in payment of distributions declared 22,525 247,437 78,551 854,825 - ------------------------------------------------- Shares redeemed (253,326) (2,786,945) (752,853) (8,175,228) - ------------------------------------------------- ------------- --------------- ------------- --------------- Net change resulting from Class C share transactions 59,096 $ 656,370 79,897 $ 953,657 - ------------------------------------------------- ------------- --------------- ------------- --------------- SIX MONTHS ENDED PERIOD ENDED SEPTEMBER 30, 1995 MARCH 31, 1995** CLASS B SHARES SHARES AMOUNT SHARES AMOUNT Shares sold 1,628,323 $ 17,914,340 1,680,837 $ 18,106,451 - ------------------------------------------------- Shares issued to shareholders in payment of distributions declared 28,814 316,735 21,290 227,134 - ------------------------------------------------- Shares redeemed (161,137) (1,776,565) (35,134) (380,059) - ------------------------------------------------- ------------- --------------- ------------- --------------- Net change resulting from Class B share transactions 1,496,000 $ 16,454,510 1,666,993 $ 17,953,526 - ------------------------------------------------- ------------- --------------- ------------- --------------- Net change resulting from share transactions (1,840,424) $ (20,127,605) 2,797,242 $ 30,892,806 - ------------------------------------------------- ------------- --------------- ------------- ---------------
*Reflects operations for the period from April 1, 1994 to July 29, 1994 (date Select Shares ceased operations). **Reflects operations for the period from July 26, 1994 (date of initial public offering) to March 31, 1995. 4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--Federated Advisers, the Fund's investment adviser, (the "Adviser"), receives for its services an annual investment advisory fee equal to (a) a maximum of .30 of 1% of the average daily net assets of the Fund and (b) 4.5% of the gross income of the Fund, excluding capital gains or losses. ADMINISTRATIVE FEE--Federated Administrative Services, under the Administrative Services Agreement, provides the Fund with administrative personnel and services. This fee is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. Liberty Municipal Securities Fund, Inc. - -------------------------------------------------------------------------------- DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp., the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of the Fund's Class B and Class C shares. The Plan provides that the Fund may incur distribution expenses according to the following schedule annually, to compensate Federated Securities Corp.
% OF AVG. DAILY NET SHARE CLASS NAME ASSETS OF CLASS Class B Shares 0.75 of 1% Class C Shares 0.75 of 1%
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average daily net assets of the Fund for the period. This fee is to obtain certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive a portion of this fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AGENT FEES--Federated Services Company serves as transfer and dividend disbursing agent for the Fund. This fee is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--Federated Services Company maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. INTERFUND TRANSACTIONS--During the period ended September 30, 1995, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser, common Directors/Trustees, and/or common Officers. These transactions were made at current market value pursuant to rule 17a-7 under the Act amounting to $126,700,000 and $158,750,000 respectively. INVESTMENT RISK--Although the Fund has a diversified portfolio, the Fund has 44.9% of its portfolio invested in lower rated and/or unrated municipal securities. Investments in lower rated and/or unrated municipal securities tend to be more sensitive to economic conditions than higher-rated municipal securities. The risk of loss due to default by the issuer may be significantly greater for the holders of lower rated and/or unrated municipal securities. GENERAL--Certain of the Officers and Directors of the Fund are Officers and Directors or Trustees of the above companies. Liberty Municipal Securities Fund, Inc. - -------------------------------------------------------------------------------- 5. INVESTMENT TRANSACTIONS Purchases and sales of investments, excluding short-term securities for the period ended September 30, 1995, were as follows: - --------------------------------------------------------------------------------------------------- PURCHASES $ 32,793,235 - --------------------------------------------------------------------------------------------------- ------------- SALES $ 22,855,314 - --------------------------------------------------------------------------------------------------- -------------
Directors Officers - -------------------------------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley Chairman John T. Conroy, Jr. J. Christopher Donahue William J. Copeland President J. Christopher Donahue Edward C. Gonzales James E. Dowd Executive Vice President Lawrence D. Ellis, M.D. John W. McGonigle Edward L. Flaherty, Jr. Executive Vice President and Secretary Peter E. Madden Richard B. Fisher Gregor F. Meyer Vice President John E. Murray, Jr. David M. Taylor Wesley W. Posvar Treasurer Marjorie P. Smuts Charles H. Field Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal. This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. [LOGO] FEDERATED FUNDS Since 1955 Where Experts Invest Federated Securities Corp. is the distributor of the fund. A Subsidiary of Federated Investors Federated Investors Tower Pittsburgh, PA 15222-3779 Cusip 530900109 Cusip 530900406 Cusip 530900208 8110104 (11/95) LMSF APPENDIX A. The graphic presentation here displayed consists of a boxed legend in the upper left quadrant indicating the components of the corresponding mountain chart. The color-coded mountain chart is a visual representation of the narrative text above it, which shows that an initial investment of $19,000 in Liberty Municipal Securities Fund, Inc. Class A Shares on October 4, 1976, would have grown to $62,230 by September 30, 1995.. The "x" axis reflects the cost of investment, the "y" axis reflects computation periods from 1976 to 1995, and the right margin reflects a total investment range from $0 to $70,000. The chart further indicates the ending market value attributable to principal, as well as the ending market value attributable to capital gains and reinvested dividends. B. The graphic presentation here displayed consists of a boxed legend in the upper left quadrant indicating the components of the corresponding mountain chart. The color-coded mountain chart is a visual representation of the narrative text above it, which shows that $1,000 invested each year for 19 years in Liberty Municipal Securities Fund, Inc. Class A Shares beginning on October 4, 1976, would have grown to $43,337 by September 30, 1995.. The "x" axis reflects the cost of investment, the "y" axis reflects computation periods from 1976 to 1995, and the right margin reflects a total investment range from $0 to $50,000. The chart further indicates the ending market value attributable to principal, as well as the ending market value attributable to capital gains and reinvested dividends. C. The graphic presentation here displayed consists of a boxed legend in the upper left quadrant indicating the components of the corresponding mountain chart. The color-coded mountain chart is a visual representation of the narrative text above it, which shows that an initial investment of $25,000 invested in Liberty Municipal Securities Fund, Inc. Class A Shares on September 30, 1985, would have grown to $56,579 by September 30, 1995.. The "x" axis reflects the cost of investment, the "y" axis reflects computation periods from 1985 to 1995, and the right margin reflects a total investment range from $0 to $60,000. The chart further indicates the ending market value attributable to principal, as well as the ending market value attributable to capital gains and -----END PRIVACY-ENHANCED MESSAGE-----