-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, OM3EbKaDW54/Xc81GM1PifYQoJ32vd5ULv7HAEfY7GDbCpRrf+psrTabGluc30Pe DHFqQH8inTRDszrsgQYgHg== 0000201801-94-000004.txt : 19940603 0000201801-94-000004.hdr.sgml : 19940603 ACCESSION NUMBER: 0000201801-94-000004 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940524 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY MUNICIPAL SECURITIES FUND INC CENTRAL INDEX KEY: 0000201801 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94530063 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 FORM DOCUMENT President's Message - - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the 17th Annual Report for Liberty Municipal Securities Fund, Inc. You will find its new design and new charts make the Report easier to read and more informative. This Report covers the 12-month period ended March 31, 1994. It includes an interview with the Fund's portfolio manager, Jonathan C. Conley, Vice President of Federated Advisers; a complete listing of the Fund's holdings; and its financial statements. To bring you competitive monthly income, which is free from federal regular income tax, the Fund invests in a portfolio of long-term, high-quality securities issued by more than 70 municipalities across the country. Because all bond prices fall when interest rates rise, the Fund's share price declined over the past 12 months as interest rates rose during the last quarter of its fiscal year. However, over the entire 12 months, the Class A Shares of the Fund produced tax-free income of $0.66 per share, capital gains of $0.02 per share, and a total return of 2.10% based on net asset value. In this interest rate environment, the Fund's manager is employing a cautious approach to provide you with income while protecting your principal. I urge you to review the charts at the beginning of this Report which show the Fund's record of success over time. Reflecting the Fund's increased appeal to tax-sensitive investors, assets increased from $706 million to $737 million during the reporting period. We appreciate your continued confidence in the Fund. A mutual fund may be the most convenient way to participate in the complex but rewarding municipal market. Remember, by reinvesting your dividends to purchase additional shares of the Fund, you can automatically position your account to pursue higher income. As always, we invite your comments or questions. Sincerely, J. Christopher Donahue President May 16, 1994 Investment Review - - -------------------------------------------------------------------------------- Q. WHAT HAS OCCURRED IN THE LONG-TERM FIXED-INCOME MARKETS DURING THE SIX-MONTH PERIOD ENDED MARCH 31, 1994? A. Interest rates in the long-term fixed-income markets exhibited considerable volatility. On September 30, 1993, the yield for the current 30-year U.S. Treasury bond (6.25% due 8/15/2023) stood at 6.03%. From there, the yield fell to 5.79%--the low point for this business cycle and for a 17-year span--on October 15, 1993, then rose sharply to 7.09% as of March 31, 1994. Jonathan C. Conley As for the long-term municipal market, the Bond Buyer Vice President Revenue Index,* representing 30-year A-rated municipal Federated Advisers issues, registered 5.53% on September 30, 1993. It then declined to 5.41%--the lowest reading ever for the Index--on October 15, 1993, and climbed dramatically to 6.39% by March 31, 1994. Q. HOW VOLATILE HAVE LONG-TERM BOND PRICES BEEN WITH THESE FLUCTUATIONS IN INTEREST RATES? A. From September 30, 1993, to October 15, 1993, the price of the bellwether U.S. Treasury bond appreciated 3.3%. From that point, the price descended 15.8% through March 31, 1994. Long-term municipal bonds, however, were not as volatile. The Municipal Bond Index* of prices grew by 1.5% between September 30, 1993 and October 15, 1993; it then declined by 14.1% as of March 31, 1994. * This index is unmanaged. - - -------------------------------------------------------------------------------- Q. HOW HAVE INVESTORS IN LIBERTY MUNICIPAL SECURITIES FUND, INC. FARED DURING THIS PERIOD? A. For the six months ending March 31, 1994, investors in the Fund (Class A Shares) experienced a total return based on net asset value of -3.54%. This result was composed of a 2.66% income and reinvestment return (net of expenses) and of 6.20% depreciation in the net asset value (NAV) per share. These figures are not annualized. During the past six months, investors received $0.329 per share in regular dividends, and $0.0195 in capital gains distributions, while the NAV fell from $11.96 on September 30, 1993 to $11.20 on March 31, 1994. For the same period, investors in the Fund (Class C Shares) experienced a total return based on net asset value of -4.00%. This result was composed of a 2.20% income and reinvestment return (net of expenses) and of 6.20% depreciation in the NAV per share. These figures are not annualized. During the past six months, an investor received $0.273 per share in regular dividends, and $0.0195 in capital gains distributions, while the NAV fell from $11.96 on September 30, 1993 to $11.20 on March 31, 1994. Q. AS THE PORTFOLIO MANAGER OF THE FUND, JONATHAN, HOW DO YOU CONTROL THE VOLATILITY OF THE NET ASSET VALUE PER SHARE? A. I favor, in a variety of interest rate environments, securities that have coupons greater than the Bond Buyer Revenue Index.* For equal credit quality and maturity, the bond with the higher coupon rate will be less price sensitive with respect to market interest rate changes. The Fund, accordingly, has typically swapped into higher-coupon issues in each municipal market sector during times of rising rates so as to secure coupon-price protection and to book attractive income streams for distribution to shareholders. * This index is unmanaged. - - -------------------------------------------------------------------------------- Q. IN WHAT AREAS OF THE MUNICIPAL MARKET HAS THE FUND INVESTED OVER THE PAST SIX MONTHS? A. Between September 30, 1993 and March 31, 1994, the Fund purchased $85,775,000 face amount of medium-to-upper grade municipal issues, while $72,620,000 face amount of higher-quality holdings was sold. Sectors represented in the Fund's investment activity included: hospital issues, pollution control 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 finance obligations. Recent acquisitions included obligations of: - Leesburg Regional Medical Centre, FL - Maryland HEFA (Howard County General Hospital) - Massachusetts HEFA (Holyoke Hospital) - Ohio Air Quality Development Authority (Ohio Edison) The average yield on issues purchased during the past six months by the Fund was 6.56%.* Q. WHAT IS THE COMPOSITION OF THE INVESTMENTS OF THE FUND BY CREDIT QUALITY? A. The credit quality of the portfolio of investments of the Fund, as of March 31, 1994, is shown below:
% of Total Rating Investments - - ------- ------------- AAA 38.6% AA 31.9% A 10.1% BBB 13.0% Non-Rated 6.4% --------- 100.0%
* Of course past performance is not indicative of future results. Liberty Municipal Securities Fund, Inc. (Class A Shares) - - -------------------------------------------------------------------------------- GROWTH OF $10,000 INVESTED IN LIBERTY MUNICIPAL SECURITIES FUND, INC. (CLASS A SHARES) FOR THE TEN YEAR PERIOD ENDED MARCH 31, 1994 This graph shows the hypothetical investment of $10,000 in the Liberty Municipal Securities Fund, Inc. (Class A Shares) from March 31, 1984, to March 31, 1994, compared to the Lehman Brothers Revenue Bond Index ("LBRB"). "Graphic representation A1 omitted. See Appendix." AVERAGE ANNUAL TOTAL RETURN FOR THE FISCAL YEAR ENDED MARCH 31, 1994 1 Year....................................................(2.52)% 5 Year......................................................7.34% 10 Year.....................................................9.01% Start of Performance (10/4/76)..............................6.43%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. * Represents a hypothetical investment of $10,000 in Class A Shares of the Fund after deducting the maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge = $9,550). The Fund's performance of Class A Shares assumes the reinvestment of all dividends and distributions. The LBRB has been adjusted to reflect reinvestment of dividends on securities in the index. Liberty Municipal Securities Fund, Inc. (Select Shares) - - -------------------------------------------------------------------------------- GROWTH OF $10,000 INVESTED IN LIBERTY MUNICIPAL SECURITIES FUND, INC. (SELECT SHARES) FOR THE PERIOD ENDED MARCH 31, 1994 This graph shows the hypothetical investment of $10,000 in the Liberty Municipal Securities Fund, Inc. (Select Shares) (the "Fund") from January 15, 1994 (date of initial public offering) to March 31, 1994, compared to the Lehman Brothers Revenue Bond Index ("LBRB"). "Graphic representation A2 omitted. See Appendix." Start of Performance (1/15/94) Total Cumulative Return.....(4.76)%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. * The Fund's performance assumes the reinvestment of all dividends and distributions. The LBRB has been adjusted to reflect reinvestment of dividends on securities in the index. Liberty Municipal Securities Fund, Inc. (Class C Shares) - - -------------------------------------------------------------------------------- GROWTH OF $10,000 INVESTED IN LIBERTY MUNICIPAL SECURITIES FUND, INC. (CLASS C SHARES) FOR THE PERIOD ENDED MARCH 31, 1994 This graph shows the hypothetical investment of $10,000 in the Liberty Municipal Securities Fund, Inc. (Class C Shares) from April 20, 1993 (date of initial public offering) to March 31, 1994, compared to the Lehman Brothers Revenue Bond Index ("LBRB"). "Graphic representation A3 omitted. See Appendix." Start of Performance (4/20/93) Total Cumulative Return....(.81)%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. * Represents a hypothetical investment of $10,000 in Class C Shares of the Fund. The ending value of the Class C Shares of the Fund reflects a contingent deferred sales charge of 1.00% on any redemption less than 1 year from the purchase date. The performance of Class C Shares assumes the reinvestment of all dividends and distributions. The LBRB is adjusted to reflect reinvestment of dividends on securities in the index. Two Ways You May Seek to Invest for Success in Liberty Municipal Securities Fund, Inc. - - -------------------------------------------------------------------------------- INITIAL INVESTMENT: AN $18,000 INVESTMENT (REINVESTING ALL DIVIDENDS AND CAPITAL GAINS) GREW TO $53,550. If you had invested $18,000 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 $53,550 on 3/31/94. You would have earned a 6.43%* average annual total return for the 18-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 3/31/94, the Class A Shares' average annual one-year, five-year and ten-year total returns were -2.52%, 7.34%, and 9.01%, respectively. Class C Shares' total return since inception on 4/20/93 was -0.81%. Select Shares' total return since inception on 1/15/94 was -4.76%. "Graphic representation A4 omitted. See Appendix." * 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 4.5% sales charge applicable to an initial investment in Class A Shares. Data quoted represent past performance and do 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 18 YEARS (REINVESTING ALL DIVIDENDS AND CAPITAL GAINS) GREW TO $38,422. 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 $18,000, but your account would have reached a total value of $38,422* by 3/31/94. You would have earned an average annual total return of 7.88%. 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 representation A5 omitted. See Appendix." * 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._ A History of Tax Free Investing--Nine 10-Year Periods - - -------------------------------------------------------------------------------- $10,000 INVESTED WITH DISTRIBUTIONS REINVESTED IN SHARES HOW A $10,000 INVESTMENT GREW DURING EACH 10-YEAR PERIOD SINCE FUND INCEPTION. This chart shows what your account would be worth had you invested $10,000 at the beginning of these consecutive decades. OVER EVERY 10-YEAR PERIOD SINCE THE FUND'S INCEPTION, A $10,000 INVESTMENT IN ITS CLASS A SHARES (WITH ALL DIVIDENDS AND CAPITAL GAINS REINVESTED) GREW IN VALUE. There was never a decade in which an investor would have lost money. A HISTORY OF INVESTMENT GROWTH
Dividends and April 1- Initial Number Capital Gains Total Ending Value March 31 of Shares Reinvested Shares of Shares 1976-1986* 764 $ 8,477 1,571 $16,506 1977-1987 739 9,176 1,588 17,152 1878-1988 728 8,705 1,596 16,005 1979-1989 790 9,944 1,760 18,055 1980-1990 1087 14,025 2,426 25,405 1981-1991 1135 14,561 2,507 26,605 1982-1992 1328 16,462 2,827 31,044 1983-1993 1021 12,694 2,114 24,563 1984-1994 1049 11,936 2,115 23,689
Individuals and Joint Tenants $440,093,756 Trusts 89,379,430 Corporations 2,905,718 Estates 1,235,849 Clubs/Fraternal Organizations 1,137,003 Custodians (under Uniform Gift to Minors Act) 975,457
CREDIT RATING: MOODY'S, PRINCIPAL OR S&P* AMOUNT (NOTE 6) VALUE LONG-TERM MUNICIPAL SECURITIES--98.0% - - ------------------------------------------------------------------------------------ ARIZONA--3.4% --------------------------------------------------------------------- $ 12,000,000 Salt River Project, AZ, 7.875% Revenue Bonds (Pre- refunded), 1/1/98 (@ 102) Aaa $ 13,513,920 --------------------------------------------------------------------- 10,500,000 Salt River Project, AZ, 8.25% Revenue Bonds (Original Issue Yield: 8.40%) (Prerefunded), 1/1/98 (@ 102) Aaa 11,805,045 --------------------------------------------------------------------- -------------- Total 25,318,965 --------------------------------------------------------------------- -------------- CALIFORNIA--4.1% --------------------------------------------------------------------- 25,000,000 Los Angeles, CA, Department of Water & Power, 7.10% Electric Plant Revenue Bonds, 1/15/2031 AA 27,885,500 --------------------------------------------------------------------- 2,000,000 Southern California Public Power Authority, 7.875% Revenue Bonds (Prerefunded), 7/1/96 (@ 103) AAA 2,215,040 --------------------------------------------------------------------- -------------- Total 30,100,540 --------------------------------------------------------------------- -------------- COLORADO--1.4% --------------------------------------------------------------------- 7,810,000 Colorado Springs, CO, Utilities System 8.00% Revenue Bonds (Prerefunded), 11/15/97 (@ 100) Aaa 8,602,090 --------------------------------------------------------------------- 1,500,000 Colorado Springs, CO, Utilities System, 9.50% Revenue Bonds, 11/15/2015 Aa 1,613,730 --------------------------------------------------------------------- -------------- Total 10,215,820 --------------------------------------------------------------------- -------------- CONNECTICUT--0.7% --------------------------------------------------------------------- 5,000,000 Connecticut State Health and Education Facility Authority, 6.80% Revenue Bonds (University of Hartford)/(Original Issue Yield: 6.84%), 7/1/2022 Baa 4,943,800 --------------------------------------------------------------------- --------------
Liberty Municipal Securities Fund, Inc. - - --------------------------------------------------------------------------------
CREDIT RATING: MOODY'S, PRINCIPAL OR S&P* AMOUNT (NOTE 6) VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - - ------------------------------------------------------------------------------------ DISTRICT OF COLUMBIA--3.9% --------------------------------------------------------------------- $ 22,250,000 District of Columbia, 7.15% Revenue Bonds (Original Issue Yield: 7.19%)/(Series 1990B)/ (Georgetown University), 4/1/2021 Aa $ 23,702,258 --------------------------------------------------------------------- 4,765,000 District of Columbia, 8.25% Revenue Bonds (Georgetown University), 4/1/2018 Aa 5,293,772 --------------------------------------------------------------------- -------------- Total 28,996,030 --------------------------------------------------------------------- -------------- FLORIDA--10.6% --------------------------------------------------------------------- 7,500,000 City of Tampa, FL, 8.125% Utilities Tax & Special Revenue Bonds (AMBAC Insured)/(Prerefunded), 10/1/97 (@ 102) Aaa 8,507,550 --------------------------------------------------------------------- 5,000,000 Florida Board of Education, 6.70% OID Capital Outlay Bonds (Original Issue Yield: 6.72%)/(Series 1991B), 6/1/2022 AA 5,199,900 --------------------------------------------------------------------- 8,160,000 Florida Board of Education, 7.25% Capital Outlay Bonds (Prerefunded), 6/1/2000 (@ 102) Aa 9,173,962 --------------------------------------------------------------------- 7,840,000 Florida Board of Education, 7.25% Capital Outlay Bonds (Prerefunded), 6/1/2000 (@ 102) Aaa 8,548,736 --------------------------------------------------------------------- 4,335,000 Florida Board of Education, 9.125% Capital Outlay Bonds, 6/1/2014 Aa 5,794,724 --------------------------------------------------------------------- 665,000 Florida Board of Education, 9.125% Capital Outlay Bonds, 6/1/2014 Aa 905,145 --------------------------------------------------------------------- 14,735,000 Jacksonville, FL, Electric Authority, 7.70% Revenue Bonds (Prerefunded), 10/1/96 (@ 101.5) Aaa 16,142,340 --------------------------------------------------------------------- 1,050,000 Leesburg, FL, 5.625% Hospital Revenue Bonds (Series 1993B)/(Leesburg Regional Medical Center)/(Original Issue Yield 5.75%), 7/1/2013 BBB+ 900,113 --------------------------------------------------------------------- 15,000,000 Orlando and Orange County, FL, Expressway Authority, 7.50% Junior Lien Revenue Bonds (Prerefunded), 7/1/96 (@ 102) Aaa 16,296,750 ---------------------------------------------------------------------
Liberty Municipal Securities Fund, Inc. - - --------------------------------------------------------------------------------
CREDIT RATING: MOODY'S, PRINCIPAL OR S&P* AMOUNT (NOTE 6) VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - - ------------------------------------------------------------------------------------ FLORIDA--CONTINUED --------------------------------------------------------------------- $ 2,000,000 Orlando Utilities Commission, FL,10.50% Revenue Bonds (Prerefunded), 10/1/94 (@ 103) Aaa $ 2,123,060 --------------------------------------------------------------------- 3,000,000 State of Florida, 10.00% GO Bonds, 7/1/2014 Aa 4,308,600 --------------------------------------------------------------------- -------------- Total 77,900,880 --------------------------------------------------------------------- -------------- GEORGIA--5.3% --------------------------------------------------------------------- 3,000,000 Fulco, GA, Hospital Authority, 6.375% Anticipation Certificates Refunding Revenue Bonds (Georgia Baptist Healthcare)/(Original Issue Yield: 6.55%), 9/1/2022 A 2,898,750 --------------------------------------------------------------------- 3,000,000 Fulco, GA, Hospital Authority, 6.375% Anticipation Certificates Refunding Revenue Bonds (Series A)/(Georgia Baptist Healthcare)/(Original Issue Yield: 6.55%), 9/1/2022 A 2,883,960 --------------------------------------------------------------------- 5,000,000 Metropolitan Atlanta Rapid Transit Authority, 8.00% Sales Tax Revenue Bonds (FGIC Insured)/(Prerefunded), 7/1/98 (@ 102) Aaa 5,702,150 --------------------------------------------------------------------- 8,750,000 Municipal Electric Authority of Georgia, 6.50% Power Supply Revenue Bonds, 1/1/2025 AA- 8,791,300 --------------------------------------------------------------------- 5,000,000 Municipal Electric Authority of Georgia, 8.125% Power Supply Revenue Bonds, 1/1/2017 AA- 5,556,200 --------------------------------------------------------------------- 2,500,000 Municipal Electric Authority of Georgia, 8.375% Power Supply Revenue Bonds, 1/1/2016 AA- 2,808,200 --------------------------------------------------------------------- 5,000,000 Municipal Electric Authority of Georgia, 8.375% Power Supply Revenue Bonds, 1/1/2020 AA- 5,522,050 --------------------------------------------------------------------- 4,200,000 Municipal Electric Authority of Georgia, 8.375% Power Supply Revenue Bonds, 1/1/2020 AA- 4,638,522 --------------------------------------------------------------------- -------------- Total 38,801,132 --------------------------------------------------------------------- --------------
Liberty Municipal Securities Fund, Inc. - - --------------------------------------------------------------------------------
CREDIT RATING: MOODY'S, PRINCIPAL OR S&P* AMOUNT (NOTE 6) VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - - ------------------------------------------------------------------------------------ ILLINOIS--4.6% --------------------------------------------------------------------- $ 5,000,000 Illinois Development Finance Authority, 6.10% Revenue Bonds (Series 1993C)/(Catholic Charities Housing Development Corp.)/(Archdiocese of Chicago Guaranty)/ (Original Issue Yield: 6.10%), 1/1/2020 NR $ 4,572,850 --------------------------------------------------------------------- 2,860,000 Illinois Health Facilities Authority, 6.125% Refunding Revenue Bonds (Lutheran Social Services)/(Original Issue Yield: 6.27%), 8/15/2010 NR 2,699,297 --------------------------------------------------------------------- 4,000,000 Illinois State, 6.50% Sales Tax Revenue Bonds (Build Illinois Program), 6/15/2013 AAA 4,094,000 --------------------------------------------------------------------- 9,630,000 Illinois State, 7.00% Sales Tax Revenue Bonds (Build Illinois Program)/(Prerefunded), 6/15/2000 (@ 102) AAA 10,660,506 --------------------------------------------------------------------- 4,565,000 Illinois State, 7.625% Sales Tax Revenue Bonds (Series B)/ (Build Illinois Program)/(Prerefunded), 6/15/96 (@ 102) AAA 4,972,928 --------------------------------------------------------------------- 6,250,000 Illinois State, 7.625% Sales Tax Revenue Bonds (Series H)/ (Build Illinois Program)/(Prerefunded), 6/15/98 (@ 102) AAA 7,034,750 --------------------------------------------------------------------- -------------- Total 34,034,331 --------------------------------------------------------------------- -------------- INDIANA--1.3% --------------------------------------------------------------------- 10,000,000 Kokomo, IN, 6.35% Hospital Revenue Bonds (Original Issue Yield: 6.40%), 8/15/2013 Baa 9,350,100 --------------------------------------------------------------------- -------------- LOUISIANA--2.1% --------------------------------------------------------------------- 1,000,000 Parish of St. Charles, LA, 7.00%, Revenue Bonds (Louisiana Power & Light Co.)/(Original Issue Yield: 7.04%), 12/1/2022 (Subject to AMT) BBB+ 1,011,690 --------------------------------------------------------------------- 5,000,000 Parish of St. Charles, LA, 6.20% Revenue Bonds (Series 1993A)/(Louisiana Power & Light Co.)/(Original Issue Yield: 6.25%), 5/1/2023 (Subject to AMT) BBB+ 4,552,200 ---------------------------------------------------------------------
Liberty Municipal Securities Fund, Inc. - - --------------------------------------------------------------------------------
CREDIT RATING: MOODY'S, PRINCIPAL OR S&P* AMOUNT (NOTE 6) VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - - ------------------------------------------------------------------------------------ LOUISIANA--CONTINUED --------------------------------------------------------------------- $ 10,000,000 Parish of St. James, LA, 7.70% Revenue Bonds (Freeport McMoran)/(Original Issue Yield: 7.75%) 10/1/2022 (Subject to AMT) NR $ 10,136,800 --------------------------------------------------------------------- -------------- Total 15,700,690 --------------------------------------------------------------------- -------------- MAINE--1.4% --------------------------------------------------------------------- 11,000,000 Bucksport, ME, 6.25% Solid Waste Disposal Revenue Bonds (Champion International Corp.), 5/1/2010 BBB+ 10,543,720 --------------------------------------------------------------------- -------------- MARYLAND--0.3% --------------------------------------------------------------------- 3,000,000 Maryland HEFA, 5.50% Revenue Bonds (Series 1993)/ (Howard General Hospital Issue)/(Original Issue Yield: 5.80%), 7/1/2025 BBB 2,471,520 --------------------------------------------------------------------- -------------- MASSACHUSETTS--0.6% --------------------------------------------------------------------- 4,700,000 Massachusetts HEFA, 6.50% Revenue Bonds (Series B)/ (Holyoke Hospital)/(Original Issue Yield: 6.75%), 7/1/2015 Baa1 4,462,979 --------------------------------------------------------------------- -------------- MICHIGAN--0.4% --------------------------------------------------------------------- 450,000 Michigan State Hospital Finance Authority, 6.75% Revenue Bonds (Series 1991)/(Henry Ford Continuing Care Corp.), 7/1/2011 AA 465,565 --------------------------------------------------------------------- 500,000 Michigan State Hospital Finance Authority, 7.00% Revenue Bonds (Series 1991)/(Daughters of Charity National Health System Providence Hospital)/(Original Issue Yield: 7.04%), 11/1/2021 Aa 533,005 --------------------------------------------------------------------- 2,000,000 Royal Oak Michigan Hospital Finance Authority, 7.375% Revenue Bonds (William Beaumont Hospital), 1/1/2020 AA 2,241,160 --------------------------------------------------------------------- -------------- Total 3,239,730 --------------------------------------------------------------------- --------------
Liberty Municipal Securities Fund, Inc. - - --------------------------------------------------------------------------------
CREDIT RATING: MOODY'S, PRINCIPAL OR S&P* AMOUNT (NOTE 6) VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - - ------------------------------------------------------------------------------------ MINNESOTA--2.7% --------------------------------------------------------------------- $ 4,750,000 Minnesota HFA, 6.15% SFM Revenue Bonds (Series B2), 1/1/2026 (Subject to AMT) Aa $ 4,484,712 --------------------------------------------------------------------- 11,900,000 Saint Paul, MN, Housing & Redevelopment Authority, 6.625% Refunding Revenue Bonds (Series A)/(Health East)/(Original Issue Yield: 6.50%), 11/1/2017 BBB- 11,253,830 --------------------------------------------------------------------- 4,000,000 Southern Minnesota Municipal Power Agency, 6.75% Revenue Bonds (Prerefunded), 1/1/96 (@ 102) Aaa 4,246,480 --------------------------------------------------------------------- -------------- Total 19,985,022 --------------------------------------------------------------------- -------------- NEW JERSEY--1.0% --------------------------------------------------------------------- 8,000,000 New Jersey State Educational Facilities Authority, 6.625% Revenue Bonds (Series 1993C)/(Fairleigh Dickinson University Issue)/(Original Issue Yield: 6.703%), 7/1/2023 NR 7,220,320 --------------------------------------------------------------------- -------------- NEW MEXICO--0.7% --------------------------------------------------------------------- 5,000,000 City of Farmington, NM, 7.20% Pollution Control Revenue Bonds (Southern California Edison)/(Four Corners)/ (Series 1991A)/(Original Issue Yield: 7.30%), 4/1/2021 AA 5,333,800 --------------------------------------------------------------------- -------------- NEW YORK--9.1% --------------------------------------------------------------------- 3,000,000 Municipal Assistance Corp. of New York, 7.625% Bonds, 7/1/2008 Aa 3,377,430 --------------------------------------------------------------------- 24,100,000 New York State Power Authority, 5.97% General Purpose Revenue Bonds (Original Issue Yield: 6.03%), 1/1/2002 AA- 19,490,875 --------------------------------------------------------------------- 2,085,000 New York State, Energy Research and Development Authority, 6.375% Facilities Revenue Bonds (Series 1992B)/(Consolidated Edison Company of New York)/ (Original Issue Yield: 6.521%), 12/1/2027 (Subject to AMT) Aa2 2,071,885 --------------------------------------------------------------------- 2,000,000 New York State, NY, Mortgage Agency, 6.65% Revenue Bonds (Series 30B), 10/1/2025 (Subject to AMT) Aa 2,007,540 ---------------------------------------------------------------------
Liberty Municipal Securities Fund, Inc. - - --------------------------------------------------------------------------------
CREDIT RATING: MOODY'S, PRINCIPAL OR S&P* AMOUNT (NOTE 6) VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - - ------------------------------------------------------------------------------------ NEW YORK--CONTINUED --------------------------------------------------------------------- $ 13,000,000 Power Authority of the State of New York, 8.00% Revenue Bonds, 1/1/2017 Aa $ 14,356,420 --------------------------------------------------------------------- 7,000,000 Triborough Bridge and Tunnel Authority, NY, 7.625% Revenue Bonds (Prerefunded), 1/1/96 (@ 102) Aaa 7,533,610 --------------------------------------------------------------------- 9,000,000 Triborough Bridge and Tunnel Authority, NY, 7.70% Revenue Bonds (Prerefunded), 1/1/99 (@ 101.5) Aaa 10,172,880 --------------------------------------------------------------------- 2,750,000 Triborough Bridge and Tunnel Authority, NY, 7.875% Revenue Bonds (Prerefunded), 1/1/98 (@ 101.5) Aaa 3,088,910 --------------------------------------------------------------------- 4,300,000 Triborough Bridge and Tunnel Authority, NY, 8.125% Revenue Bonds, 1/1/2012 Aa 4,792,350 --------------------------------------------------------------------- -------------- Total 66,891,900 --------------------------------------------------------------------- -------------- NORTH CAROLINA--3.0% --------------------------------------------------------------------- 13,500,000 North Carolina Municipal Power Agency Pound1, 7.875% Revenue Bonds (Prerefunded), 1/1/98 (@ 102) Aaa 15,203,160 --------------------------------------------------------------------- 6,000,000 North Carolina Municipal Power Agency Pound1, 8.50% Revenue Bonds (Prerefunded), 1/1/96 (@ 102) Aaa 6,553,620 --------------------------------------------------------------------- -------------- Total 21,756,780 --------------------------------------------------------------------- -------------- OHIO--4.0% --------------------------------------------------------------------- 300,000 Akron, OH, Bath & Copley Joint Townships, 7.45% Health Care Revenue Bonds (Series 1990)/(Children's Hospital and Medical Centre of Akron)/(AMBAC Insured)/ (Original Issue Yield: 7.70%)/(Prerefunded), 11/15/2000 (@ 102) Aaa 342,744 --------------------------------------------------------------------- 1,200,000 Cuyahoga County, OH, 8.00% Revenue Bonds (Cleveland Clinic Foundation)/(Original Issue Yield: 8.045%), 12/1/2015 Aa 1,305,912 ---------------------------------------------------------------------
Liberty Municipal Securities Fund, Inc. - - --------------------------------------------------------------------------------
CREDIT RATING: MOODY'S, PRINCIPAL OR S&P* AMOUNT (NOTE 6) VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - - ------------------------------------------------------------------------------------ OHIO--CONTINUED --------------------------------------------------------------------- $ 1,000,000 Franklin County, OH, 7.25% Revenue Refunding and Improvement Bonds (Riverside United Methodist Hospital)/(MBIA Insured)/(Original Issue Yield: 7.29%), 5/15/2020 Aaa $ 1,097,060 --------------------------------------------------------------------- 12,250,000 Franklin County, OH, 7.60% Hospital Facility Refunding and Improvement Revenue Bonds (Riverside United Methodist Hospital)/(Prerefunded), 5/15/2000 (102) Aaa 13,991,582 --------------------------------------------------------------------- 14,000,000 Ohio State Air Quality Development Authority, 5.95% PCR Bonds (Ohio Edison Co.), 5/15/2029 BBB- 12,350,240 --------------------------------------------------------------------- 600,000 Ohio State Water Development Authority, 7.00% Revenue Bonds (Original Issue Yield: 7.65%), 12/1/2014 A 650,202 --------------------------------------------------------------------- -------------- Total 29,737,740 --------------------------------------------------------------------- -------------- OKLAHOMA--1.0% --------------------------------------------------------------------- 7,500,000 Tulsa, OK, Municipal Airport 7.60% Revenue Bonds (American Airlines Corp.)/(Original Issue Yield: 7.932%), 12/1/2030 (Subject to AMT) Baa2 7,635,975 --------------------------------------------------------------------- -------------- PENNSYLVANIA--6.8% --------------------------------------------------------------------- 750,000 Geisinger, PA, Health System, 7.625% Revenue Bonds (Original Issue Yield: 7.695%)/(Prerefunded), 7/1/99 (@ 102) AA 852,158 --------------------------------------------------------------------- 3,000,000 Montgomery County, PA, Higher Education and Health Facilities Authority, 7.375% Hospital Revenue Bonds (Bryn Mawr Hospital)/(Original Issue Yield: 7.50%), 12/1/2019 A 3,392,880 --------------------------------------------------------------------- 5,000,000 Montgomery County, PA, Higher Education and Health Facilities Authority, 9.375% Revenue Bonds (Bryn Mawr Hospital)/(Prerefunded), 12/1/97 (@ 102) AAA 5,875,650 --------------------------------------------------------------------- l,565,000 Northampton County, PA, 6.95% IDA (Series 1985)/ (Citizens Utility Company), 8/1/2015 AAA 1,664,017 ---------------------------------------------------------------------
Liberty Municipal Securities Fund, Inc. - - --------------------------------------------------------------------------------
CREDIT RATING: MOODY'S, PRINCIPAL OR S&P* AMOUNT (NOTE 6) VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - - ------------------------------------------------------------------------------------ PENNSYLVANIA--CONTINUED --------------------------------------------------------------------- $ 1,000,000 Pennsylvania Higher Education Facilities Authority, 6.625%, Revenue Bonds (Trustees of the University of Pennsylvania/(Original Issue Yield: 6.75%), 1/1/2017 Aa $ 1,007,710 --------------------------------------------------------------------- 4,000,000 Pennsylvania Higher Educational Facilities Authority, 7.25% Revenue Bonds (Series 1991A)/(Allegheny General Hospital)/(Original Issue Yield: 7.40%), 9/1/2017 Aa 4,312,120 --------------------------------------------------------------------- 1,000,000 Pennsylvania Higher Education Facilities Authority, 7.75% Revenue Bonds (Thomas Jefferson University & Jefferson Park Hospital), 11/1/2015 Aa 1,157,250 --------------------------------------------------------------------- 12,000,000 Pennsylvania Turnpike Commission, 7.20% Revenue Bonds (Series 1986J)/(FGIC Insured), 12/1/2017 AAA 13,637,760 --------------------------------------------------------------------- 10,055,000 Pennsylvania Turnpike Commission, 7.50% Revenue Bonds (Original Issue Yield: 7.625%)/(Prerefunded), 12/1/99 (@ 102) AAA 11,443,897 --------------------------------------------------------------------- 5,000,000 Sayre, PA, Health Care Facilities Authority, 7.10% OID Revenue Bonds (Guthrie Healthcare System)/(AMBAC Insured)/(Original Issue Yield: 7.175%), 3/1/2017 Aaa 5,442,000 --------------------------------------------------------------------- 1,300,000 Washington County, PA, 7.45% Municipal Facilities Lease Revenue Bonds (Shadyside Hospital)/(AMBAC Insured)/ (Prerefunded), 6/15/2000 (@ 102) Aaa 1,486,147 --------------------------------------------------------------------- -------------- Total 50,271,589 --------------------------------------------------------------------- -------------- SOUTH CAROLINA--4.1% --------------------------------------------------------------------- 2,255,000 Richland County, SC, Solid Waste Disposal Facility, 6.75% OID Revenue Bonds (Series A)/(Union Camp Corp.)/ (Original Issue Yield: 6.80%), 5/1/2022 (Subject to AMT) A1 2,336,518 --------------------------------------------------------------------- 8,000,000 South Carolina Public Service Authority, 7.10% OID Electric Revenue Bonds (Series B)/(Santee Cooper)/ (Original Issue Yield: 7.29%), 7/1/2021 A+ 8,991,840 ---------------------------------------------------------------------
Liberty Municipal Securities Fund, Inc. - - --------------------------------------------------------------------------------
CREDIT RATING: MOODY'S, PRINCIPAL OR S&P* AMOUNT (NOTE 6) VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - - ------------------------------------------------------------------------------------ SOUTH CAROLINA--CONTINUED --------------------------------------------------------------------- $ 3,685,000 South Carolina Public Service Authority, 7.875% Revenue Bonds (Prerefunded), 1/1/96 (@ 102) Aaa $ 3,983,927 --------------------------------------------------------------------- 2,430,000 South Carolina Public Service Authority, 7.875% Revenue Bonds (Prerefunded), 1/1/96 (@ 102) Aaa 2,627,122 --------------------------------------------------------------------- 11,495,000 South Carolina, Public Service Authority, 7.875% Revenue Bonds, 7/1/2021 A1 12,261,717 --------------------------------------------------------------------- -------------- Total 30,201,124 --------------------------------------------------------------------- -------------- TEXAS--10.0% --------------------------------------------------------------------- 4,000,000 Brazos River Authority, TX, 7.875% PCR Bonds (Texas Utilities Electric Company), 3/1/2021 (Subject to AMT) Baa2 4,334,400 --------------------------------------------------------------------- 14,500,000 Brazos River Authority, TX, 8.10% PCR Bonds (Houston Light & Power Company)/(BIG Insured), 5/1/2019 Aaa 16,274,655 --------------------------------------------------------------------- 1,800,000 Comal County, TX, IDA, 7.50% Revenue Bonds (Johnson Controls), 6/30/2002 A2 1,892,556 --------------------------------------------------------------------- 12,750,000 Dallas-Fort Worth, TX, International Airport Facilities Improvement Corp., 7.25% Revenue Bonds (Delta Airlines)/(Series 1992)/(Original Issue Yield: 7.428%), 11/1/2030 (Subject to AMT) BB 12,603,630 --------------------------------------------------------------------- 1,000,000 Richardson, TX, Hospital Authority, 6.75% Revenue Refunding & Improvement Bonds (Richardson Medical Center)/(Original Issue Yield: 6.82%), 12/1/2023 Baa 942,890 --------------------------------------------------------------------- 1,650,000 Sabine River Authority TX, 5.85%, PCR Refunding Bonds (Texas Utilities Electric Co.)/(Original Issue Yield: 5.875%)/ (Capital Authority Insured), 5/1/2022 AAA 1,469,969 --------------------------------------------------------------------- 16,500,000 Sabine River Authority TX, 8.20%, PCR Bonds (Southwestern Electric Power), 7/1/2014 Aa3 17,753,340 --------------------------------------------------------------------- 6,960,000 San Antonio, TX, Electric & Gas System, 6.50% Revenue Bonds (Original Issue Yield: 7.276%), 2/1/2012 Aa 7,065,653 ---------------------------------------------------------------------
Liberty Municipal Securities Fund, Inc. - - --------------------------------------------------------------------------------
CREDIT RATING: MOODY'S, PRINCIPAL OR S&P* AMOUNT (NOTE 6) VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - - ------------------------------------------------------------------------------------ TEXAS--CONTINUED --------------------------------------------------------------------- $ 4,655,000 San Antonio, TX, Electric & Gas System, 6.50% Revenue Bonds (Original Issue Yield: 7.276%), 2/1/2012 Aa $ 4,725,663 --------------------------------------------------------------------- 2,000,000 Texas City, TX, IDC, 7.375% Marine Terminal Revenue Bonds (Arco Pipeline Co.), 10/1/2020 A1 2,238,980 --------------------------------------------------------------------- 1,320,000 Texas HFA, 9.375% SFM Revenue Bonds, 9/1/2015 Aa 1,337,134 --------------------------------------------------------------------- 3,000,000 Tyler, TX, HFDC, 6.75% Revenue Bonds (Series A)/(East Texas Medical Center)/(Original Issue Yield: 7.00%), 11/1/2025 Baa 2,808,180 --------------------------------------------------------------------- -------------- Total 73,447,050 --------------------------------------------------------------------- -------------- UTAH--7.6% --------------------------------------------------------------------- 14,540,000 Intermountain Power Agency, UT, 7.00% Power Supply Revenue Bonds, (Original Issue Yield: 7.242%), 7/1/2021 AA 15,622,503 --------------------------------------------------------------------- 1,000,000 Intermountain Power Agency, UT, 7.50% Power Supply Revenue Bonds, (Original Issue Yield: 7.605%), 7/1/2016 AA 1,076,580 --------------------------------------------------------------------- 2,000,000 Intermountain Power Agency, UT, 7.875% Power Supply Revenue Bonds, (Original Issue Yield: 8.091%), 7/1/2014 AA 2,160,940 --------------------------------------------------------------------- 9,500,000 Intermountain Power Agency, UT, 8.625% Power Supply Revenue Bonds, (Original Issue Yield: 8.693%), 7/1/2021 AA 10,551,460 --------------------------------------------------------------------- 7,500,000 Salt Lake City, UT, 7.60% Hospital Revenue Bonds (Intermountain Health Care), (Prerefunded), 2/15/99 (@ 102) Aaa 8,490,300 --------------------------------------------------------------------- 13,500,000 Salt Lake City, UT, 8.125% Hospital Revenue Bonds (Intermountain Health Care)/(Escrowed to Maturity), 5/15/2015 Aaa 15,052,500 ---------------------------------------------------------------------
Liberty Municipal Securities Fund, Inc. - - --------------------------------------------------------------------------------
CREDIT RATING: MOODY'S, PRINCIPAL OR S&P* AMOUNT (NOTE 6) VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - - ------------------------------------------------------------------------------------ UTAH--CONTINUED --------------------------------------------------------------------- $ 2,500,000 Salt Lake City, UT, 8.125% Hospital Revenue Bonds (Intermountain Health Care)/(Original Issue Yield: 8.17%), 5/15/2015 Aa $ 2,835,375 --------------------------------------------------------------------- -------------- Total 55,789,658 --------------------------------------------------------------------- -------------- VIRGINIA--0.6% --------------------------------------------------------------------- 2,000,000 West Point, VA, IDA 6.25% Solid Waste Revenue Bonds (Series B)/(Chesapeake Corp. Project)/(Original Issue Yield: 6.33%), 3/1/2019 (Subject to AMT) BBB- 1,917,460 --------------------------------------------------------------------- 2,500,000 West Point, VA, IDA 6.375% Solid Waste Revenue Bonds (Series A)/(Chesapeake Corp. Project)/(Original Issue Yield: 6.435%), 3/1/2019 (Subject to AMT) BBB- 2,399,525 --------------------------------------------------------------------- -------------- Total 4,316,985 --------------------------------------------------------------------- -------------- WASHINGTON--0.8% --------------------------------------------------------------------- 6,900,000 Pilchuck Public Development Corp., WA, 6.00% Revenue Bonds (Special Facilities Airport)/(Tramco, Inc.)/(BF Goodrich Guaranty), 8/1/2023 (Subject to AMT) BBB 6,031,014 --------------------------------------------------------------------- -------------- WEST VIRGINIA--6.5% --------------------------------------------------------------------- 13,990,000 Harrison County, WV, 6.25% Solid Waste Disposal Revenue Bonds (The Potomac Edison Co.), 5/1/2023 (Subject to AMT) A+ 13,499,231 --------------------------------------------------------------------- 20,000,000 Marion County, WV, 7.75% Solid Waste Disposal Revenue Bonds (Series 1993)/(America Power Paper Recycling), 12/1/2011 (Subject to AMT) NR 19,320,200 ---------------------------------------------------------------------
Liberty Municipal Securities Fund, Inc. - - --------------------------------------------------------------------------------
CREDIT RATING: MOODY'S, PRINCIPAL OR S&P* AMOUNT (NOTE 6) VALUE LONG-TERM MUNICIPAL SECURITIES--CONTINUED - - ------------------------------------------------------------------------------------ WEST VIRGINIA--CONTINUED --------------------------------------------------------------------- $ 13,770,000 West Virginia State Parkway EDA, 7.125% Revenue Bonds (FGIC Insured)/(Prerefunded), 7/1/99 (@ 102) AAA $ 15,303,978 --------------------------------------------------------------------- -------------- Total 48,123,409 --------------------------------------------------------------------- -------------- TOTAL LONG-TERM MUNICIPAL SECURITIES (IDENTIFIED COST $684,937,685) $ 722,822,603++ --------------------------------------------------------------------- --------------
* Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. + Private placement issue. ++ The cost of investments for federal tax purposes amounts to $684,937,685. The net unrealized appreciation of investments on a federal tax basis amounts to $37,884,918, which is comprised of $51,531,462 appreciation and $13,646,544 depreciation at March 31, 1994. Note: The categories of investments are shown as a percentage of net assets ($737,046,270) at March 31, 1994. The following abbreviations are used in this portfolio: AMBAC -- American Municipal Bond Assurance Corporation AMT -- Alternative Minimum Tax BIG -- Bond Investors Guaranty EDA -- Economic Development Authority FGIC -- Financial Guaranty Insurance Company GO -- General Obligation HEFA -- Health and Education Facilities Authority HFA -- Housing Finance Authority/Agency HFDC -- Housing Facility Development Corporation I DA -- Industrial Development Authority I DC -- Industrial Development Corporation MBIA -- Municipal Bond Investors Assurance OID -- Original Issue Discount PCR -- Pollution Control Revenue SFM -- Single Family Mortgage (See Notes which are an integral part of the Financial Statements) Liberty Municipal Securities Fund, Inc. Statement of Assets and Liabilities - - -------------------------------------------------------------------------------- March 31, 1994 ASSETS: - - --------------------------------------------------------------------------------------------------- Investments in securities, at value (Note 2A) (identified and tax cost, $684,937,685) $722,822,603 - - --------------------------------------------------------------------------------------------------- Cash 199,172 - - --------------------------------------------------------------------------------------------------- Interest receivable 15,155,555 - - --------------------------------------------------------------------------------------------------- Receivable for investments sold 10,136,215 - - --------------------------------------------------------------------------------------------------- Receivable for capital stock sold 766,808 - - --------------------------------------------------------------------------------------------------- ----------- Total assets 749,080,353 - - --------------------------------------------------------------------------------------------------- LIABILITIES: - - --------------------------------------------------------------------------------------------------- Payable for investments purchased $9,083,287 - - ---------------------------------------------------------------------------------------- Payable for capital stock redeemed 1,355,738 - - ---------------------------------------------------------------------------------------- Dividends payable 1,323,427 - - ---------------------------------------------------------------------------------------- Payable for shareholder servicing fee (Note 4) 92,855 - - ---------------------------------------------------------------------------------------- Payable for transfer and dividend disbursing agent fees (Note 4) 86,686 - - ---------------------------------------------------------------------------------------- Payable for distribution service fees (Note 4) 14,101 - - ---------------------------------------------------------------------------------------- Accrued expenses 77,989 - - ---------------------------------------------------------------------------------------- --------- Total liabilities 12,034,083 - - --------------------------------------------------------------------------------------------------- ----------- NET ASSETS for 65,824,757 shares of capital stock outstanding $737,046,270 - - --------------------------------------------------------------------------------------------------- ----------- NET ASSETS CONSIST OF: - - --------------------------------------------------------------------------------------------------- Paid-in capital $690,898,853 - - --------------------------------------------------------------------------------------------------- Unrealized appreciation of investments 37,884,918 - - --------------------------------------------------------------------------------------------------- Accumulated net realized gain on investments 8,262,499 - - --------------------------------------------------------------------------------------------------- ----------- Total $737,046,270 - - --------------------------------------------------------------------------------------------------- ----------- NET ASSET VALUE PER SHARE: - - --------------------------------------------------------------------------------------------------- Class A Shares ($714,384,425 / 63,800,860 shares of capital stock outstanding) $11.20 - - --------------------------------------------------------------------------------------------------- ----------- Select Shares ($595,847 / 53,223 shares of capital stock outstanding) $11.20 - - --------------------------------------------------------------------------------------------------- ----------- Class C Shares ($22,065,998 / 1,970,674 shares of capital stock outstanding) $11.20 - - --------------------------------------------------------------------------------------------------- ----------- COMPUTATION OF OFFERING PRICE: - - --------------------------------------------------------------------------------------------------- Class A Shares (100/95.5 of $11.20)* $11.73 - - --------------------------------------------------------------------------------------------------- ----------- Select Shares $11.20 - - --------------------------------------------------------------------------------------------------- ----------- Class C Shares $11.20 - - --------------------------------------------------------------------------------------------------- ----------- COMPUTATION OF PROCEEDS ON REDEMPTION: - - --------------------------------------------------------------------------------------------------- Class A Shares (99.5/100 of $11.20)** $11.14 - - --------------------------------------------------------------------------------------------------- ----------- Select Shares $11.20 - - --------------------------------------------------------------------------------------------------- ----------- Class C Shares (99/100 of $11.20)*** $11.09 - - --------------------------------------------------------------------------------------------------- -----------
* On sales of $100,000 or more, the offering price is reduced as stated under "What Shares Cost" in the prospectus. **Under certain conditions, a contingent deferred sales charge of .50 of 1% was imposed. See "Contingent Deferred Sales Charge" in the Class A prospectus. ***Under certain conditions, a contingent deferred sales charge of 1% is imposed. See "Contingent Deferred Sales Charge" in the Class C Shares prospectus. (See Notes which are an integral part of the Financial Statements) Liberty Municipal Securities Fund, Inc. Statement of Operations - - -------------------------------------------------------------------------------- Year Ended March 31, 1994 INVESTMENT INCOME: - - -------------------------------------------------------------------------------------------------- Interest income (Note 2B) $ 49,743,813 - - -------------------------------------------------------------------------------------------------- EXPENSES: - - -------------------------------------------------------------------------------------------------- Investment advisory fee (Note 4) $ 4,570,573 - - ------------------------------------------------------------------------------------ Directors' fees 19,715 - - ------------------------------------------------------------------------------------ Administrative personnel and services (Note 4) 541,113 - - ------------------------------------------------------------------------------------ Custodian and recordkeeping fees and expenses 216,029 - - ------------------------------------------------------------------------------------ Transfer and dividend disbursing agent fees and expenses (Note 4) 464,443 - - ------------------------------------------------------------------------------------ Auditing fees 22,906 - - ------------------------------------------------------------------------------------ Legal fees 26,092 - - ------------------------------------------------------------------------------------ Printing and postage 125,664 - - ------------------------------------------------------------------------------------ Fund share registration costs 105,065 - - ------------------------------------------------------------------------------------ Taxes 98,897 - - ------------------------------------------------------------------------------------ Insurance premiums 18,448 - - ------------------------------------------------------------------------------------ Shareholder servicing fee--Class A (Note 4) 291,702 - - ------------------------------------------------------------------------------------ Shareholder servicing fee--Select Shares (Note 4) 140 - - ------------------------------------------------------------------------------------ Shareholder servicing fee--Class C Shares (Note 4) 28,808 - - ------------------------------------------------------------------------------------ Distribution services fee--Select Shares (Note 4) 421 - - ------------------------------------------------------------------------------------ Distribution services fee--Class C Shares (Note 4) 86,423 - - ------------------------------------------------------------------------------------ Miscellaneous 5,164 - - ------------------------------------------------------------------------------------ ------------ Total expenses 6,621,603 - - -------------------------------------------------------------------------------------------------- -------------- Net investment income 43,122,210 - - -------------------------------------------------------------------------------------------------- -------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: - - -------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments (identified cost basis) 11,496,140 - - -------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) of investments (38,359,833) - - -------------------------------------------------------------------------------------------------- -------------- Net realized and unrealized gain (loss) on investments (26,863,693) - - -------------------------------------------------------------------------------------------------- -------------- Change in net assets resulting from operations $ 16,258,517 - - -------------------------------------------------------------------------------------------------- --------------
(See Notes which are an integral part of the Financial Statements) Liberty Municipal Securities Fund, Inc. Statement of Changes in Net Assets - - --------------------------------------------------------------------------------
YEAR ENDED MARCH 31, 1994 1993 INCREASE (DECREASE) IN NET ASSETS: - - ---------------------------------------------------------------------------------- OPERATIONS-- - - ---------------------------------------------------------------------------------- Net investment income $ 43,122,210 $ 39,036,650 - - ---------------------------------------------------------------------------------- Net realized gain (loss) on investment transactions ($11,496,140 net gain and $99,035 net loss, respectively, as computed for federal tax purposes) 11,496,140 (99,035) - - ---------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) of investments (38,359,833) 38,590,326 - - ---------------------------------------------------------------------------------- -------------- -------------- Change in net assets from operations 16,258,517 77,527,941 - - ---------------------------------------------------------------------------------- -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2B)-- - - ---------------------------------------------------------------------------------- Dividends to shareholders from net investment income: - - ---------------------------------------------------------------------------------- Class A Shares (42,577,953) (39,036,650) - - ---------------------------------------------------------------------------------- Select Shares* (2,853) -- - - ---------------------------------------------------------------------------------- Class C Shares** (541,404) -- - - ---------------------------------------------------------------------------------- Distributions to shareholders from net realized gain on investment transactions: - - ---------------------------------------------------------------------------------- Class A Shares (1,289,936) -- - - ---------------------------------------------------------------------------------- Class C Shares** (30,507) -- - - ---------------------------------------------------------------------------------- -------------- -------------- Change in net assets from distributions to shareholders (44,442,653) (39,036,650) - - ---------------------------------------------------------------------------------- -------------- -------------- CAPITAL STOCK TRANSACTIONS (NOTE 3)-- - - ---------------------------------------------------------------------------------- Net proceeds from sale of shares 294,116,244 283,861,175 - - ---------------------------------------------------------------------------------- Net asset value of shares issued to shareholders electing to receive payment of dividends in capital stock 28,065,973 25,553,978 - - ---------------------------------------------------------------------------------- Cost of shares redeemed (263,078,057) (231,898,215) - - ---------------------------------------------------------------------------------- -------------- -------------- Change in net assets from capital stock transactions 59,104,160 77,516,938 - - ---------------------------------------------------------------------------------- -------------- -------------- Change in net assets 30,920,024 116,008,229 - - ---------------------------------------------------------------------------------- NET ASSETS: - - ---------------------------------------------------------------------------------- Beginning of period 706,126,246 590,118,017 - - ---------------------------------------------------------------------------------- -------------- -------------- End of period $ 737,046,270 $ 706,126,246 - - ---------------------------------------------------------------------------------- -------------- --------------
*Reflects operations for the period from January 15, 1994 (date of initial public offering) to March 31, 1994. **Reflects operations for the period from April 20, 1993 (date of initial public offering) to March 31, 1994. (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)
YEAR ENDED MARCH 31, 1994 1993 1992 1991 1990 1989 1988 1987 1986 NET ASSET VALUE, BEGINNING OF PERIOD $ 11.62 $ 10.98 $ 10.61 $ 10.47 $ 10.26 $ 10.03 $ 10.80 $ 10.51 $ 8.91 - - ------------------------ INCOME FROM INVESTMENT OPERATIONS - - ------------------------ Net investment income 0.66 0.66 0.67 0.71 0.72 0.72 0.73 0.75 0.80 - - ------------------------ Net realized and unrealized gain/(loss) on investments (0.40) 0.64 0.37 0.14 0.21 0.23 (0.77) 0.29 1.60 - - ------------------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- Total from investment operations 0.26 1.30 1.04 0.85 0.93 0.95 (0.04) 1.04 2.40 - - ------------------------ LESS DISTRIBUTIONS - - ------------------------ Dividends to shareholders from net investment income (0.66) (0.66) (0.67) (0.71) (0.72) (0.72) (0.73) (0.75) (0.80) - - ------------------------ Distributions to shareholders from net realized gain on investment transactions (0.02) -- -- -- -- -- -- -- -- - - ------------------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- Total Distributions (0.68) (0.66) (0.67) (0.71) (0.72) (0.72) (0.73) (0.75) (0.80) - - ------------------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 11.20 $ 11.62 $ 10.98 $ 10.61 $ 10.47 $ 10.26 $ 10.03 $ 10.80 $ 10.51 - - ------------------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- TOTAL RETURN** 2.10% 12.13% 10.05% 8.42% 9.20% 9.76% (0.17%) 10.28% 28.25% - - ------------------------ RATIOS TO AVERAGE NET ASSETS - - ------------------------ Expenses 0.84% 0.80% 0.84% 0.89% 0.90% 0.95% 0.95% 0.95% 0.93% - - ------------------------ Net investment income 5.59% 5.81% 6.17% 6.77% 6.80% 7.07% 7.28% 7.07% 8.39% - - ------------------------ Expense waiver/ reimbursement(a) -- -- -- -- -- -- -- -- 0.23% - - ------------------------ SUPPLEMENTAL DATA - - ------------------------ Net assets, end of period (000 omitted) $714,384 $706,126 $590,118 $511,611 $474,797 $440,445 $388,916 $424,655 $248,710 - - ------------------------ Portfolio turnover rate 27% 13% 8% 45% 25% 58% 55% 13% 2% - - ------------------------ SEPT. 30, 1985* 1984 NET ASSET VALUE, BEGINNING OF PERIOD $ 8.51 $ 9.20 - - ------------------------ INCOME FROM INVESTMENT OPERATIONS - - ------------------------ Net investment income 0.40 0.80 - - ------------------------ Net realized and unrealized gain/(loss) on investments 0.40 (0.69) - - ------------------------ --------- ----------- Total from investment operations 0.80 0.11 - - ------------------------ LESS DISTRIBUTIONS - - ------------------------ Dividends to shareholders from net investment income (0.40) (0.80) - - ------------------------ Distributions to shareholders from net realized gain on investment transactions -- -- - - ------------------------ --------- ----------- Total Distributions (0.40) (0.80) - - ------------------------ --------- ----------- NET ASSET VALUE, END OF PERIOD $ 8.91 $ 8.51 - - ------------------------ --------- ----------- TOTAL RETURN** 9.49% 1.23% - - ------------------------ RATIOS TO AVERAGE NET ASSETS - - ------------------------ Expenses 1.04%(b) 1.14% - - ------------------------ Net investment income 9.09%(b) 9.00% - - ------------------------ Expense waiver/ reimbursement(a) 0.30%(b) 0.28% - - ------------------------ SUPPLEMENTAL DATA - - ------------------------ Net assets, end of period (000 omitted) $105,664 $47,652 - - ------------------------ Portfolio turnover rate 1% 28% - - ------------------------
* For the six months ended March 31, 1985. The Fund changed its fiscal year-end from September 30 to March 31, effective March 1, 1985. ** Based on net asset value which does not reflect the sales load or contingent deferred sales charge, if applicable. (a) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above (Note 4). (b) Computed on an annualized basis. (See Notes which are an integral part of the Financial Statements) Liberty Municipal Securities Fund, Inc. Financial Highlights--Select Shares - - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
PERIOD ENDED NET ASSET VALUE, BEGINNING OF PERIOD $ 11.88 - - ----------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - - ----------------------------------------------------------------------------------------------- Net investment income 0.12 - - ----------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.68) - - ----------------------------------------------------------------------------------------------- ------------------- Total from investment operations (0.56) - - ----------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS - - ----------------------------------------------------------------------------------------------- Dividends to shareholders from net investment income (0.12) - - ----------------------------------------------------------------------------------------------- ------------------- NET ASSET VALUE, END OF PERIOD $ 11.20 - - ----------------------------------------------------------------------------------------------- ------------------- TOTAL RETURN** (4.76)% - - ----------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - - ----------------------------------------------------------------------------------------------- Expenses 1.80%(a) - - ----------------------------------------------------------------------------------------------- Net investment income 5.08%(a) - - ----------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA - - ----------------------------------------------------------------------------------------------- Net assets, end of period (000 omitted) $ 596 - - ----------------------------------------------------------------------------------------------- Portfolio turnover rate 27% - - -----------------------------------------------------------------------------------------------
* Reflects operations for the period from January 15, 1994 (date of initial public offering) to March 31, 1994. ** Based on net asset value which does not reflect the sales load or contingent deferred sales charge, if applicable. (a) Computed on an annualized basis. (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 THE PERIOD)
PERIOD ENDED MARCH 31, 1994* NET ASSET VALUE, BEGINNING OF PERIOD $ 11.70 - - ----------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - - ----------------------------------------------------------------------------------------------- Net investment income 0.52 - - ----------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.48) - - ----------------------------------------------------------------------------------------------- ----------------- Total from investment operations 0.04 - - ----------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS - - ----------------------------------------------------------------------------------------------- Dividends to shareholders from net investment income (0.52) - - ----------------------------------------------------------------------------------------------- Distributions to shareholders from net realized gain on investment transactions (0.02) - - ----------------------------------------------------------------------------------------------- ----------------- TOTAL DISTRIBUTIONS (0.54) - - ----------------------------------------------------------------------------------------------- ----------------- NET ASSET VALUE, END OF PERIOD $ 11.20 - - ----------------------------------------------------------------------------------------------- ----------------- TOTAL RETURN** 0.17% - - ----------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - - ----------------------------------------------------------------------------------------------- Expenses 1.80%(a) - - ----------------------------------------------------------------------------------------------- Net investment income 4.70%(a) - - ----------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA - - ----------------------------------------------------------------------------------------------- Net assets, end of period (000 omitted) $ 22,066 - - ----------------------------------------------------------------------------------------------- Portfolio turnover rate 27% - - -----------------------------------------------------------------------------------------------
* Reflects operations for the period from April 20, 1993 (date of initial public offering) to March 31, 1994. ** Based on net asset value which does not reflect the sales load or contingent deferred sales charge, if applicable. (a) Computed on an annualized basis. (See Notes which are an integral part of the Financial Statements) Liberty Municipal Securities Fund, Inc. Notes to Financial Statements - - -------------------------------------------------------------------------------- March 31, 1994 (1) ORGANIZATION The Fund is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end, management investment company. The Fund provides three classes of shares ("Class A Shares," "Select Shares" and "Class C Shares"). Class A Shares, Select Shares and Class C Shares are identical in all respects except that Select Shares and Class C Shares are sold pursuant to a distribution plan ("Plan") adopted in accordance with Investment Company Act Rule 12b-1. Class A Shares and Class C Shares are also subject to certain sales and contingent deferred sales charges. (2) SIGNIFICANT ACCOUNTING POLICIES The following is a summary of a 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. A. INVESTMENT VALUATIONS--Municipal bonds are valued by an independent pricing service taking into consideration yield, liquidity, risk, credit, quality, coupon, maturity, type of issue, and any other factors or market data it deems relevant in determing valuations for normal institutional size trading units of debt securities. The independent pricing service does not rely exclusively on quoted prices. Short-term securities with remaining maturities of sixty days or less may be stated at amortized cost, which approximates value. B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and estimated expenses are accrued daily. Bond premium and discount are amortized as required by the Internal Revenue Code. Distributions to shareholders are recorded on the ex-dividend date. C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Internal Revenue Code ("Code") applicable to regulated investment companies and to distribute to shareholders each year substantially all of its tax-exempt income. Accordingly, no provisions for federal tax are necessary. D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities 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. E. RECLASSIFICATIONS--During the current period, the Fund adopted Statement of Position 93-2 Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. Accordingly, permanent book and tax basis Liberty Municipal Securities Fund, Inc. - - -------------------------------------------------------------------------------- differences relating to accumulated net realized gain/loss on investments have been reclassified to paid-in-capital. As of April 1, 1993, the cumulative effect of such differences, totaling $5,104,381 was reclassified from accumulated net realized gain/loss on investments to paid-in capital. Net investment income, net realized gains, and net assets were not affected by this change. F. OTHER--Investment transactions are accounted for on the trade date. (3) CAPITAL STOCK At March 31, 1994, there were 1,000,000,000 shares of $0.01 per share par value capital stock authorized. Of these shares, 375,000,000 have been designated as Class A Shares, 250,000,000 have been designated as Select Shares and 375,000,000 have been designated as Class C Shares of the Fund. Transactions in capital stock were as follows:
YEAR ENDED MARCH 31, 1994 1993 CLASS A SHARES SHARES AMOUNT SHARES AMOUNT Shares sold 22,832,885 $ 268,781,200 25,135,755 $ 283,861,175 - - ------------------------------------------------- Shares issued to shareholders in payment of dividends declared 2,365,264 27,795,028 2,250,018 25,553,978 - - ------------------------------------------------- Shares redeemed (22,182,727) (261,363,852) (20,359,473) (231,898,215) - - ------------------------------------------------- ------------- --------------- ------------- --------------- Net change in net assets resulting from capital stock transactions 3,015,422 $ 35,212,376 7,026,300 $ 77,516,938 - - ------------------------------------------------- ------------- --------------- ------------- ---------------
PERIOD ENDED MARCH 31, 1994* SELECT SHARES SHARES AMOUNT Shares sold 53,757 $ 630,244 - - ---------------------------------------------------------------------------------------- Shares issued to shareholders in payment of dividends declared 196 2,222 - - ---------------------------------------------------------------------------------------- Shares redeemed (730) (8,285) - - ---------------------------------------------------------------------------------------- ----------- ---------- Net change in net assets resulting from capital stock transactions 53,223 $ 624,181 - - ---------------------------------------------------------------------------------------- ----------- ----------
* Reflects operations for the period from January 15, 1994 (date of initial public offering) to March 31, 1994. Liberty Municipal Securities Fund, Inc. - - --------------------------------------------------------------------------------
PERIOD ENDED MARCH 31, 1994** CLASS C SHARES SHARES AMOUNT Shares sold 2,092,015 $ 24,704,800 - - ----------------------------------------------------------------------------------- Shares issued to shareholders in payment of dividends declared 22,904 268,723 - - ----------------------------------------------------------------------------------- Shares redeemed (144,245) (1,705,920) - - ----------------------------------------------------------------------------------- ---------- ------------- Net change in net assets resulting from capital stock transactions 1,970,674 $ 23,267,603 - - ----------------------------------------------------------------------------------- ---------- -------------
** Reflects operations for the period from April 20, 1993 (date of initial public offering) to March 31, 1994. (4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--Federated Advisers, the Fund's investment adviser ("Adviser"), receives for its services an annual investment advisory fee equal to (a) .30 of 1% of the Fund's average daily net assets, and (b) 4.5% of the gross income of the Fund, excluding capital gains or losses. Adviser may voluntarily choose to waive a portion of its fee. Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATION FEE--Federated Administrative Services ("FAS") provides the Trust administrative personnel and services. Prior to March 1, 1994, these services were provided at approximate cost. Effective March 1, 1994, the fee is based on the level of average aggregate net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during any fiscal year shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. DISTRIBUTION AND SERVICE PLAN--The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940. The Fund will compensate Federated Securities Corp. ("FSC"), the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of the Fund's Select Shares and Class C Shares. The Plan provides that the Fund may incur distribution expenses up to 0.75 of 1% of the average daily net assets of the Select Shares and Class C Shares, annually, to compensate FSC. Under the terms of a Shareholder Service Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25 of 1% of the level of average net assets for the Class A Shares, Select Shares and Class C Shares for the period. This fee is to obtain certain personal services for shareholders and the maintenance of shareholder accounts. TRANSFER AGENT FEES--Federated Services Company ("FServ") serves as transfer agent and dividend disbursing agent for the Fund. The fee is based on the size, type and number of accounts and transactions made by shareholders. Liberty Municipal Securities Fund, Inc. - - -------------------------------------------------------------------------------- INTERFUND TRANSACTIONS--During the fiscal year ended March 31, 1994, the Fund engaged in purchase and sale transactions with other Funds advised by the Adviser pursuant to Rule 17a-7 of the Investment Company Act of 1940 amounting to $143,900,000 and $188,219,191, respectively. These purchases and sales were conducted at an arms-length basis and transacted for cash consideration only, at independent current market prices and without brokerage commissions, fees or other renumeration. Certain of the Officers and Directors of the Fund are Officers and Directors of the above companies. (5) INVESTMENT TRANSACTIONS Purchases and sales of investments, excluding short-term obligations, for the fiscal year ended March 31, 1994 were as follows: - - -------------------------------------------------------------------------------------------------- PURCHASES $ 251,094,354 - - -------------------------------------------------------------------------------------------------- -------------- SALES $ 207,944,543 - - -------------------------------------------------------------------------------------------------- --------------
(6) CURRENT CREDIT RATINGS Current credit ratings are unaudited. Independent Auditors' Report - - -------------------------------------------------------------------------------- To the Board of Directors and Shareholders of LIBERTY MUNICIPAL SECURITIES FUND, INC.: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Liberty Municipal Securities Fund, Inc. as of March 31, 1994, the related statement of operations for the year then ended, the statements of changes in net assets for the years ended March 31, 1994 and 1993, and the financial highlights for each of the periods in the eleven-year period ended March 31, 1994. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and diclosures in the financial statements. Our procedures included confirmation of securities owned at March 31, 1994 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of Liberty Municipal Securities Fund, Inc. as of March 31, 1994, the results of its operations, the changes in its net assets, and its financial highlights for the respective stated periods in conformity with generally accepted accounting principles. DELOITTE & TOUCHE Boston, Massachusetts May 13, 1994 Directors Officers - - -------------------------------------------------------------------------------- John F. Donahue John F. Donahue John T. Conroy, Jr. Chairman William J. Copeland J. Christopher Donahue J. Christopher Donahue President James E. Dowd Richard B. Fisher Lawrence D. Ellis, M.D. Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Peter E. Madden Vice President and Treasurer Gregor F. Meyer John W. McGonigle Wesley W. Posvar Vice President and Secretary Marjorie P. Smuts John A. Staley, IV Vice President David M. Taylor Assistant Treasurer Charles H. Field Assistant Secretary Mutual funds are not obligations of or insured by any bank nor are they insured by the federal government or any of its agencies. Investment in these shares involves 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] LIBERTY HIGH INCOME BOND FUND, INC. 17TH ANNUAL REPORT March 31, 1994 Established 1977 [LOGO] FEDERATED SECURITIES CORP. -------------------------- Distributor A subsidiary of FEDERATED INVESTORS FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 8042830 (5/94) A1. The graphic presentation here displayed consists of a line graph. The corresponding components of the line graph are listed underneath. The Class A Shares of the Fund (the "Fund") are represented by a solid line, whereas Lehman Brothers Revenue Bond Index is represented by a dotted line. The line graph is a visual representation of a comparison of change in value of a hypothetical investment in the Class A Shares of the Fund and Lehman Brothers Revenue Bond Index for the ten year period from March 31, 1984 to March 31, 1994. The "y" axis reflects the cost of the investment. The "x" axis reflects computation periods from the ending value of the hypothetical investment in the Class A Shares of the Fund as compared to Lehman Brothers Revenue Bond Index; the ending values are $23,688 and $28,249, respectively.Beneath the list of the components that correspond to the line graph are the following total return data for the Class A Shares of the Fund: total return figures for the one year, five year, and ten year periods, and inception-to-date average annualized total return. The corresponding total return figures are as follows: (2.52%); 7.34%; 9.01%; and 6.43%, respectively. The performance disclaimer and footnotes are listed directly under the graphic presentation. A2. The graphic presentation here displayed consists of a line graph. The corresponding components of the line graph are listed underneath. The Select Shares of the Fund (the "Fund") are represented by a solid line, whereas Lehman Brothers Revenue Bond Index is represented by a dotted line. The line graph is a visual representation of a comparison of change in value of a hypothetical investment in the Select Shares of the Fund and Lehman Brothers Revenue Bond Index for the period from January 15, 1994 (date of initial public offering) to March 31, 1994. The "y" axis reflects the cost of the investment. The "x" axis reflects computation periods from the ending value of the hypothetical investment in the Select Shares of the Fund as compared to Lehman Brothers Revenue Bond Index; the ending values are $9,524 and $9,293, respectively. Beneath the list of components that correspond to the line graph is the total cumulative return for the period from January 15, 1994 (start of performance) to March 31, 1994. The total return figure is (4.76%). The performance disclaimer and footnotes are listed directly under the graphic presentation. A3. The graphic presentation here displayed consists of a line graph. The corresponding components of the line graph are listed underneath. The Class C Shares of the Fund (the "Fund") are represented by a solid line, whereas Lehman Brothers Revenue Bond Index is represented by a dotted line. The line graph is a visual representation of a comparison of change in value of a hypothetical investment in the Class C Shares of the Fund and Lehman Brothers Revenue Bond Index for the period from April 20, 1993 (date of initial public offering) to March 31, 1994. The "y" axis reflects the cost of the investment. The "x" axis reflects computation periods from the ending value of the hypothetical investment in Class C Shares of the Fund as compared to Lehman Brothers Revenue Bond Index; the ending values are $9,919 and $10,104, respectively. Beneath the list of components that correspond to the line graph is the total cumulative return for the period from April 20, 1993 (start of performance) to March 31, 1994. The total return figure is (.81%). The performance disclaimer and footnotes are listed directly under the graphic presentation. A4. 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 $18,000 in the Class A Shares of Liberty Municipal Securities Fund, Inc. in 1976 would have grown to $53,550. The "x" axis reflects computation periods from 1976 to 1994, the "y" axis reflects the cost of the investment, 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 reinvested dividends. A5. 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 $1,000 in the Class A Shares of Liberty Municipal Securities Fund, Inc. in 1976 would have grown to $38,422. The "x" axis reflects computation periods from 1976 to 1994, the "y" axis reflects the cost of the investment, and the right margin reflects a total investment range from $0 to $40,000. 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. A6. The bar chart is a visual representation of Liberty Municipal Securities Fund, Inc. portfolio rating distribution as of March 31, 1994. The information is as follows: AAA/Aaa, 38.6%; AA/Aa, 31.9%; A/A 10.1%; BBB/Baa, 13.0%; and No Rating, 6.4%. Underneath this bar chart is another chart showing the five largest holdings of Liberty Municipal Securities Fund, Inc. It shows three categories entitled, Holdings, Rating, Percentage. The information listed is as follows: Los Angeles, CA Department of Water & Power (Revenue), Aa/AA, 3.84%; District of Columbia- Georgetown University (Revenue), Aa/AA-, 3.23%; New York State Power Authority (Revenue), Aa/AA-, 2.73%; Orlando, FL Utilities Commission (Revenue), Aa/AA-, 2.72%; and Sabine River Authority, TX-Southwestern Electric Power Company (Revenue), Aa3/NR, 2.48%. Adjacent to these two charts is another chart showing sector distribution as of March 31, 1994. It lists two columns consisting of Holdings and Percentages. The information is as follows: Refunded, 34.6%; Poll CTL, 12.8%; Electric, 11.6%; Hospital, 7.5%; X- Refund, 7.2%; College, 5.8%; Airport, 2.8%, Inv. Fltr., 2.7%; Resource, 2.7%; Ins. Poll, 2.5%; Escrowed, 2.2%; Go- State, 2.1%; Ind. Devp., 1.1%; Sale Tax, 1.0%; Ins.-Hosp., 0.9%; Toll, 0.7%; Lifecare, 0.6%; and Water, 0.1%. A7. 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 beneath it, which shows that an initial investment of $25,000 in the Class A Shares of Liberty Municipal Securities Fund, Inc. in 1984 would have grown to $59,221. The "x" axis reflects computation periods from 1984 to 1994, the "y" axis reflects the cost of the investment, 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. -----END PRIVACY-ENHANCED MESSAGE-----