-----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, KCRaqGPSTYxsBzjaQ29WJbIiDkXNT6lmwXdLRi8PyPq6sSO/9iTl4sbgfa0O/8Cd scRWsq2JOxOulrTYGy8I2Q== 0000201801-94-000012.txt : 19941129 0000201801-94-000012.hdr.sgml : 19941129 ACCESSION NUMBER: 0000201801-94-000012 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941128 SROS: NONE 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: 94562170 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 FEDERATED LIBERTY MUNICIPAL SECURITIES FUND, INC. 18TH SEMI-ANNUAL REPORT September 30, 1994 Established 1976 President's Message Dear Fellow Shareholder: I am pleased to present the 18th Semi-Annual Report to Shareholders for the Liberty Municipal Securities Fund, Inc. (the ``Fund''). We begin this report with our customary update from the Fund's portfolio manager, Jonathan C. Conley, Vice President, Federated Advisers. Jonathan will discuss market activity for the past six months, and then outline the Fund's performance and his management strategies relative to the long-term municipal bond market activity. The Federal Reserve Board raised interest rates again during the time period covered by this report. This resulted in a decline in each class of the Fund's share price of $10.91. I urge you to pay special attention to long-term performance charts that directly follow Jonathan's interview. These charts illustrate the growth of a hypothetical Fund investment in Class A Shares from 1976 to September 30, 1994. They span a period of 18 years, rather than just six months, and are a more reassuring reflection of the Fund's historical performance. As always, Liberty Municipal Securities Fund, Inc. strives to bring you competitive monthly income that is free from federal regular income tax.* The Fund invests in municipal securities issued by more than 80 municipalities across the country. The Fund's Class A Shares net assets totaled $683 million, Class C Shares net assets stood at $23 million, and Class B Shares net assets stood at $4 million at the end of the period. This money is invested in over 100 municipal issues diversified by types of issues and issuers. We are confident that the Fund's broad diversification reduces risk and adds to our ability to pursue tax-free income in the Fund. We appreciate your continued interest in the Fund, and we welcome your comments or questions. Very sincerely yours, J. Christopher Donahue President November 15, 1994 * Income may be subject to the federal alternative minimum tax and state and local taxes. Investment Review Jonathan C. Conley, Vice President Federated Advisers Q. What has occurred in the long-term, fixed-income markets during the six-month period ended September 30, 1994? A. Interest rates in the long-term, fixed-income markets exhibited considerable volatility during the past six months. On March 31, 1994, the yield for the current thirty-year U.S. Treasury bond (6.25% due 8/15/2023) stood at 7.09%. From there, the yield rose to 7.95% by September 27, 1994 before dropping to 7.92% on September 30, 1994. As for the long-term municipal market, the Bond Buyer Revenue Index,* representing thirty-year A-rated municipal issues, registered 6.39% on March 31, 1994. It then descended to 6.20% as of June 9, 1994 and rose thereafter to 6.70% by September 30, 1994. Rising interest rates effect all bonds_municipal, corporate and U.S. government bonds. Q. How volatile have long-term bond prices been with these fluctuations in interest rates? A. From March 31, 1994 to September 30, 1994, the price of the bellwether U.S. Treasury bond depreciated 9.5%. Long-term municipal bonds were not nearly as volatile. The Municipal Bond Index* of prices declined by 2.7% between March 31, 1994 and September 30, 1994. Q. How has an investor in the Fund fared during this period? A. For the six months ended September 30, 1994, an investor in Class A Shares experienced a total return of 1.44%** based on net asset value. This result was composed of a 2.96% income and reinvestment return and of 1.52% depreciation in the net asset value per share. These figures are not annualized. During the past six months, an investor received $0.33 per share in dividends, while the share price fell from $11.20 on March 31, 1994 to $10.91 on September 30, 1994. A capital gain distribution of $0.12 per share, however, was paid on June 30, 1994. * This index is unmanaged. **Performance quoted represents past performance. Investment return and principal value will fluctuate, so an investor's shares, when redeemed, may be worth more or less than their original cost. For the period from July 25, 1994 (date of initial public offering) to September 30, 1994, investors in Class B Shares experienced a total return of -0.41%** based on net asset value. Total return, taking into account the maximum contingent deferred sales charge of 5.50%, was - -5.86%.** This result was composed of a 0.95% income and reinvestment return and of 1.36% depreciation in the net asset value per share. These figures are not annualized. During the period, investors received $0.11 per share in regular dividends, while the share price fell from $11.06 on July 25, 1994 to $10.91 on September 30, 1994. For the same period, investors in Class C Shares experienced a total return of 1.00%** based on net asset value. Total return, taking into account the maximum contingent deferred sales charge of 1.00%, was -0.02%.** This result was composed of a 2.52% income and reinvestment return and of 1.52% depreciation in the net asset value per share. These figures are not annualized. During the past six months, investors received $0.28 per share in regular dividends, while the share price fell from $11.20 on March 31, 1994 to $10.91 on September 30, 1994. A capital gains distribution of $0.12 per share, however, was paid on June 30, 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, issues which have coupons or yields greater than the Bond Buyer Revenue Index.* For equal credit quality and maturity, the bond with the higher coupon rate or market yield will be less price sensitive with respect to market rate changes. The Fund, therefore, would swap into higher coupon (or yield) issues in each municipal market sector during rising rates to secure coupon-price protection and to pursue attractive income streams for distribution to shareholders. * This index is unmanaged. ** Performance quoted represents past performance. Investment return and principal value will fluctuate, so an investor's shares, when redeemed, may be worth more or less than their original cost. Q. In what areas of the municipal market has the Fund invested over the past six months? A. Between March 31, 1994 and September 30, 1994, the Fund purchased $195,655,000 face amount of medium-to-upper grade municipal issues. These transactions were financed by the sale of higher-grade issues. Sectors represented: 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. The average yield on issues bought during the past six months by the Fund was 7.60%. Q. What is the composition of the investments of the Fund by credit quality? The credit quality of the portfolio of investments* of the Fund is shown below: 9/30/94 3/31/94 ------- ------- AAA 29.9% 36.3% AA 23.8% 33.9% A 12.4% 9.7% BBB 17.6% 14.1% NR 16.3% 6.0% ------ ------ Total 100.0% 100.0% * Please refer to the Appendix to the Statement of Additional Information for an explanation of credit ratings. Q. Could you explain the rationale for the downgrading of the portfolio holdings? A. Medium and lower-grade issues tend to outperform higher grade issues during periods of economic recovery. As state and local governments receive greater tax revenue_from sales, income, business use, and property_and as corporations, on the whole, increase profitability and cashflow generation, the potential for credit rating upgrades increases. This augurs well for medium/lower-grade issues as a class of debt instruments. The Fund over the past six months has been investing in what it considers upgrade candidates. Because of their higher-than-general-market coupons (yields) at issue, medium/lower-grade bonds have shorter durations than their higher grade brethren. Furthermore, medium/lower-grade issues tend to be core holdings; municipal bond portfolio managers typically accommodate shareholder purchases in and redemptions from a fund through transactions involving higher-grade issues. Consequently, assuming stable credit quality, secondary market pricing for medium/lower-grade bonds is less volatile than that for higher grade issues. A portfolio which holds a diversified mix of the former types of issues should display the attributes of those issues. 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 $54,317. 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 $54,317 on 9/30/94. You would have earned a 6.33% 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 9/30/94, the Class A Shares' average annual one-year, five-year and ten-year total returns were -6.52%, 6.45%, and 9.38%, respectively. Class B Shares' total return since inception on 7/26/94 was -5.86%. Class C Shares' one-year and since inception on 4/21/93 total returns were -4.00% and 0.81%. 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 load applicable to an 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 $38,973. 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 $38,973* by 9/30/94. You would have earned an average annual total return of 7.65%. 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! 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. _ Hypothetical Investors Profile: Investing for Tax-Free Income Larry and Barbara Bartlett are a fictional couple who, like all other tax-sensitive shareholders, want to keep more of what they earn. Larry owns a successful architectural firm and Barbara is a marketing executive. Their combined income puts them in the 39.6% federal tax bracket. On September 30, 1984, the Bartletts invested $25,000 in the Class A Shares of Liberty Municipal Securities Fund, Inc. As this chart shows, in 10 years, their original $25,000 investment has grown to $61,297, that's $29,954 in tax-free income.* This represents a 9.38% average annual total return+. As far as the Bartletts are concerned, this Fund has made all the difference. * Income may be subject to the federal alternative minimum income tax and state and local taxes. See Appendix + This hypothetical scenario is provided for illustrative purposes only and does not represent the results obtained by any particular shareholder. Past performance does not guarantee future results. [LOGO] FEDERATED SECURITIES CORP. Distributor A subsidiary of FEDERATED INVESTORS PITTSBURGH, PA 15222-3779 530900109 530900208 530900406 8110104 (11/94) Liberty Municipal Securities Fund, Inc. Portfolio of Investments - -------------------------------------------------------------------------------- September 30, 1994 (unaudited)
CREDIT RATING: PRINCIPAL MOODY'S, AMOUNT OR S&P* VALUE SECURITIES--1.38% ------------------------------------------------------------------ ALABAMA--0.04% --------------------------------------------------------------------- $ 300,000 Birmingham, AL, Medical Clinic Board Daily VRDNs (University of Alabama Health Services Foundation)/(Morgan Guaranty Trust Co. LOC) A-1+ $ 300,000 --------------------------------------------------------------------- -------------- KENTUCKY--0.01% --------------------------------------------------------------------- 100,000 Kentucky Pollution Abatement & Water Resource Finance Authority Daily VRDNs (Toyota Motor Company Guaranty)/(Subject to AMT) A-1+ 100,000 --------------------------------------------------------------------- -------------- PENNSYLVANIA--1.19% --------------------------------------------------------------------- 8,400,000 Geisinger Authority, PA, Health System Daily VRDNs (Series 1992B) A-1+ 8,400,000 --------------------------------------------------------------------- -------------- TEXAS--0.11% --------------------------------------------------------------------- 800,000 Harris County, TX, IDC Daily VRDNs (Yokohoma Tire Corp.)/(Industrial Bank of Japan Ltd. LOC)/(Subject to AMT) A-1 800,000 --------------------------------------------------------------------- -------------- VIRGINIA--0.03% --------------------------------------------------------------------- 200,000 Virginia Peninsula Port Authority Daily VRDNs (Kinyo Virginia, Inc.)/(Industrial Bank of Japan Ltd. LOC)/ (Subject to AMT) A-1 200,000 --------------------------------------------------------------------- -------------- TOTAL SHORT-TERM MUNICIPAL SECURITIES (AT AMORTIZED COST) 9,800,000 --------------------------------------------------------------------- -------------- LONG-TERM MUNICIPAL SECURITIES--96.67% - ------------------------------------------------------------------------------------ ARIZONA--3.50% --------------------------------------------------------------------- 12,000,000 Salt River Project, AZ, 7.875% Revenue Bonds, (Prerefunded), 1/1/98 (@ 102) Aaa 13,249,680 --------------------------------------------------------------------- $ 10,500,000 Salt River Project, AZ, 8.25% Revenue Bonds (Original Issue Yield: 8.40%), (Prerefunded), 1/1/98 (@ 102) Aaa $ 11,552,835 --------------------------------------------------------------------- -------------- Total 24,802,515 --------------------------------------------------------------------- -------------- CALIFORNIA--0.31% --------------------------------------------------------------------- 2,000,000 Southern California Public Power Authority, 7.875% Revenue Bonds, (Prerefunded), 7/1/96 (@ 102) AAA 2,174,260 --------------------------------------------------------------------- -------------- COLORADO--1.41% --------------------------------------------------------------------- 7,810,000 Colorado Springs, CO, Utilities System, 8.00% Revenue Bonds, 11/15/2020 Aa 8,416,837 --------------------------------------------------------------------- 1,500,000 Colorado Springs, CO, Utilities System, 9.50% Revenue Bonds, 11/15/2015 Aa 1,578,525 --------------------------------------------------------------------- -------------- Total 9,995,362 --------------------------------------------------------------------- -------------- CONNECTICUT--0.69% --------------------------------------------------------------------- 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 4,901,500 --------------------------------------------------------------------- -------------- DISTRICT OF COLUMBIA--5.44% --------------------------------------------------------------------- 22,250,000 District of Columbia, 6.90% Revenue Bonds (Series 1990B)/ (Georgetown University)/(Original Issue Yield: 7.19%), 4/1/2021 Aa 23,246,355 --------------------------------------------------------------------- 2,000,000 District of Columbia, 7.00% Hospital Revenue Refunding Bonds (Medlantic HealthCare Group)/(Original Issue Yield: 7.282%), 8/15/2015 BBB 1,959,000 --------------------------------------------------------------------- 8,275,000 District of Columbia, 7.125% Hospital Revenue Refunding Bonds (Medlantic-Washington Hospital Center)/(Original Issue Yield: 7.30%), 8/15/2019 BBB 8,202,594 --------------------------------------------------------------------- 4,765,000 District of Columbia, 8.25% Revenue Bonds (Georgetown University), 4/1/2018 Aa 5,265,754 --------------------------------------------------------------------- -------------- Total 38,673,703 --------------------------------------------------------------------- -------------- $ 7,500,000 City of Tampa, FL, 8.12% Utilities Tax & Special Revenue Bonds (AMBAC Insured), 10/1/2015 Aaa $ 8,330,850 --------------------------------------------------------------------- 5,000,000 Florida Board of Education, 9.125% Capital Outlay Bonds, 6/1/2014 Aa 6,622,007 --------------------------------------------------------------------- 14,735,000 Jacksonville, FL, Electric Authority, 7.70% Revenue Bonds, (Prerefunded), 10/1/96 (@ 101.5) Aaa 15,804,172 --------------------------------------------------------------------- 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+ 888,289 --------------------------------------------------------------------- 15,000,000 Orlando and Orange County, FL, Expressway Authority, 7.50% Junior Lien Revenue Bonds, 7/1/2016 A 16,015,650 --------------------------------------------------------------------- 2,000,000 Orlando Utilities Commission, FL, 10.50% Revenue Bonds (Prerefunded), 10/1/94 (@ 103) Aaa 2,060,360 --------------------------------------------------------------------- 3,000,000 State of Florida, 10.00% GO Bonds, 7/1/2014 Aa 4,250,610 --------------------------------------------------------------------- -------------- Total 53,971,938 --------------------------------------------------------------------- -------------- GEORGIA--3.38% --------------------------------------------------------------------- 5,000,000 Metropolitan Atlanta Rapid Transit Authority, 8.00% Sales Tax Revenue Bonds (FGIC Insured), 7/1/2018 Aaa 5,597,250 --------------------------------------------------------------------- 5,000,000 Municipal Electric Authority of Georgia, 8.125% Power Supply Revenue Bonds, 1/1/2017 AA- 5,541,900 --------------------------------------------------------------------- 2,500,000 Municipal Electric Authority of Georgia, 8.375% Power Supply Revenue Bonds, 1/1/2016 AA- 2,802,700 --------------------------------------------------------------------- 5,000,000 Municipal Electric Authority of Georgia, 8.375% Power Supply Revenue Bonds, 1/1/2020 AA- 5,473,400 --------------------------------------------------------------------- 4,200,000 Municipal Electric Authority of Georgia, 8.375% Power Supply Revenue Bonds, 1/1/2020 AA- 4,597,656 --------------------------------------------------------------------- -------------- Total 24,012,906 --------------------------------------------------------------------- -------------- $ 5,000,000 Illinois Development Finance Authority, 6.10% Revenue Bonds (Series 1993C)/(Catholic Charities Housing Development Corp.)/(Archdiocese of Chicago Guaranty), 1/1/2020 NR $ 4,427,250 --------------------------------------------------------------------- 2,860,000 Illinois Health Facilities Authority, 6.125% Refunding Revenue Bonds (Lutheran Social Services)/(Original Issue Yield: 6.27%), 8/15/2010 NR 2,731,043 --------------------------------------------------------------------- 10,250,000 Illinois Health Facilities Authority, 7.00% Revenue Bonds (Trinity Medical Center)/(Original Issue Yield: 7.24%), 7/1/2012 Baa 10,105,270 --------------------------------------------------------------------- 14,500,000 Illinois HFA, 9.25% Revenue Refunding Bonds (Series 1994A)/(Edgewater Hospital & Medical Center), 7/1/2024 NR 14,298,015 --------------------------------------------------------------------- 4,565,000 Illinois State, 7.625% Sales Tax Revenue Bonds (Build Illinois Program), 6/15/2015 AAA 4,878,068 --------------------------------------------------------------------- 6,250,000 Illinois State, 7.625% Sales Tax Revenue Bonds (Build Illinois Program), 6/15/2018 AAA 6,915,875 --------------------------------------------------------------------- -------------- Total 43,355,521 --------------------------------------------------------------------- -------------- INDIANA--2.16% --------------------------------------------------------------------- 6,200,000 Indiana State Health Facilities Hospital Authority, 6.625% Revenue Bonds (Floyd Memorial Hospital Project)/ (Original Issue Yield: 6.90%), 2/15/2022 A 5,975,312 --------------------------------------------------------------------- 10,000,000 Kokomo, IN, 6.35% Hospital Revenue Bonds (Original Issue Yield: 6.40%), 8/15/2013 Baa 9,403,300 --------------------------------------------------------------------- -------------- Total 15,378,612 --------------------------------------------------------------------- -------------- LOUISIANA--2.37% --------------------------------------------------------------------- 2,550,000 Louisiana State, Parish of St. Charles, 7.00% Revenue Bonds (Louisiana Power & Light Co.)/(Original Issue Yield: 7.04%)/(Subject to AMT), 12/1/2022 BBB+ 2,515,703 --------------------------------------------------------------------- 5,000,000 Louisiana State, Parish of St. James, 6.20% Revenue Bonds (Series 1993A)/(Louisiana Power & Light Co.)/(Original Issue Yield: 6.25%)/(Subject to AMT), 5/1/2023 BBB+ 4,429,900 --------------------------------------------------------------------- $ 10,000,000 Louisiana State, Parish of St. James, 7.70% Revenue Bonds (Freeport McMoran)/(Original Issue Yield: 7.75%)/(Subject to AMT), 10/1/2022 NR $ 9,920,400 --------------------------------------------------------------------- -------------- Total 16,866,003 --------------------------------------------------------------------- -------------- MARYLAND--2.02% --------------------------------------------------------------------- 12,230,000 Maryland State Department of Housing & Community Development, 6.75% SFH Bonds (Subject to AMT), 4/1/2026 Aa 11,995,429 --------------------------------------------------------------------- 3,000,000 Maryland State HEFA, 5.50% Revenue Bonds (Series 1993)/(Howard General Hospital Issue)/(Original Issue Yield: 5.80%), 7/1/2025 BBB 2,374,800 --------------------------------------------------------------------- -------------- Total 14,370,229 --------------------------------------------------------------------- -------------- MASSACHUSETTS--5.31% --------------------------------------------------------------------- 4,700,000 Massachusetts State HEFA, 6.50% Revenue Bonds (Series B)/(Holyoke Hospital)/(Original Issue Yield: 6.75%), 7/1/2015 Baa1 4,357,135 --------------------------------------------------------------------- 33,800,000 Massachusetts State IFA, 9.00% Solid Waste Disposal Revenue Bonds (Series 1994A)/(Sr. Lien-Massachusetts Recycling Association)/(Subject to AMT), 8/1/2016 NR 33,392,372 --------------------------------------------------------------------- -------------- Total 37,749,507 --------------------------------------------------------------------- -------------- MICHIGAN--0.45% --------------------------------------------------------------------- 450,000 Michigan State Hospital Finance Authority, 6.75% Revenue Bonds (Series 1991)/(Henry Ford Continuing Care Corp.), 7/1/2011 AA 456,458 --------------------------------------------------------------------- 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 517,255 --------------------------------------------------------------------- $ 2,000,000 Royal Oak, MI Hospital Finance Authority, 7.38% Revenue Bonds (William Beaumont Hospital), 1/1/2020 AA $ 2,204,040 --------------------------------------------------------------------- -------------- Total 3,177,753 --------------------------------------------------------------------- -------------- MINNESOTA--2.13% --------------------------------------------------------------------- 11,900,000 Saint Paul, MN, Housing & Redevelopment Authority, 6.625% Refunding Revenue Bonds (Series A)/(Healtheast Project)/(Original Issue Yield: 6.50%), 11/1/2017 BBB- 10,934,553 --------------------------------------------------------------------- 4,000,000 Southern Minnesota Municipal Power Agency, 6.75% Revenue Bonds, (Prerefunded), 1/1/96 (@ 102) A+ 4,185,240 --------------------------------------------------------------------- -------------- Total 15,119,793 --------------------------------------------------------------------- -------------- NEW JERSEY--1.04% --------------------------------------------------------------------- 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 7,398,080 --------------------------------------------------------------------- -------------- NEW MEXICO--0.74% --------------------------------------------------------------------- 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 5,229,150 --------------------------------------------------------------------- -------------- NEW YORK--6.30% --------------------------------------------------------------------- 3,000,000 Municipal Assistance Corp. of New York, 7.625% Bonds, 7/1/2008 Aa 3,296,190 --------------------------------------------------------------------- 13,000,000 New York State Power Authority, 8.00% Revenue Bonds, 1/1/2017 Aa 14,298,830 --------------------------------------------------------------------- 2,000,000 New York State, Mortgage Agency, 6.65% Revenue Bonds (Series 30B)/(Subject to AMT), 10/1/2025 Aa 1,963,940 --------------------------------------------------------------------- 7,000,000 Triborough Bridge and Tunnel Authority, NY, 7.625% Revenue Bonds, (Prerefunded), 1/1/96 (@ 102) Aaa 7,411,180 --------------------------------------------------------------------- 9,000,000 Triborough Bridge and Tunnel Authority, NY, 7.70% Revenue Bonds, (Prerefunded), 1/1/99 (@ 101.5) Aaa 10,032,660 --------------------------------------------------------------------- $ 2,750,000 Triborough Bridge and Tunnel Authority, NY, 7.875% Revenue Bonds, (Prerefunded), 1/1/98 (@ 101.5) Aaa $ 3,036,220 --------------------------------------------------------------------- 4,300,000 Triborough Bridge and Tunnel Authority, NY, 8.125% Revenue Bonds, 1/1/2012 Aa 4,738,729 --------------------------------------------------------------------- -------------- Total 44,777,749 --------------------------------------------------------------------- -------------- NORTH CAROLINA--4.59% --------------------------------------------------------------------- 7,800,000 Martin County, NC, Industrial Facilities & Pollution Control Finance Authority, 6.80% Solid Waste Disposal Revenue Bonds (Subject to AMT), 5/1/2024 A 7,842,744 --------------------------------------------------------------------- 4,000,000 North Carolina Eastern Municipal Power Agency, 5.75% Revenue Bonds (Series A)/(Original Issue Yield: 6.734%), 1/1/2019 A- 3,499,600 --------------------------------------------------------------------- 13,500,000 North Carolina Municipal Power Agency Number One, 7.875% Revenue Bonds, (Prerefunded), 1/1/98 (@ 102) AAA 14,893,065 --------------------------------------------------------------------- 6,000,000 North Carolina Municipal Power Agency Number One, 8.50% Revenue Bonds, (Prerefunded), 1/1/96 (@ 102) AAA 6,398,160 --------------------------------------------------------------------- -------------- Total 32,633,569 --------------------------------------------------------------------- -------------- OHIO--2.16% --------------------------------------------------------------------- 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%), 11/15/2020 Aaa 339,375 --------------------------------------------------------------------- 1,200,000 Cuyahoga County, OH, 8.00% Revenue Bonds (Cleveland Clinic Foundation)/(Original Issue Yield: 8.045%), 12/1/2015 Aa 1,306,668 --------------------------------------------------------------------- 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 1,081,650 --------------------------------------------------------------------- 14,000,000 Ohio State Air Quality Development Authority, 5.95% PCR Bonds (Ohio Edison Co.), 5/15/2029 BBB- 11,980,780 --------------------------------------------------------------------- $ 600,000 Ohio State Water Development Authority, 7.00% Revenue Bonds (Original Issue Yield: 7.65%), 12/1/2014 A $ 640,548 --------------------------------------------------------------------- -------------- 4,585,000 Jackson County, OK, Memorial Hospital Authority, 7.30% Revenue Bonds (Jackson County Memorial Hospital)/ (Original Issue Yield: 7.40%), 8/1/2015 BBB- 4,461,159 --------------------------------------------------------------------- 7,500,000 Tulsa, OK, Municipal Airport, 7.60% Revenue Bonds (American Airlines Corp.)/(Original Issue Yield: 7.932%)/ (Subject to AMT), 12/1/2030 Baa2 7,407,675 --------------------------------------------------------------------- -------------- Total 11,868,834 --------------------------------------------------------------------- -------------- PENNSYLVANIA--5.32% --------------------------------------------------------------------- 750,000 Geisinger, PA, Health System, 7.625% Revenue Bonds (Original Issue Yield: 7.695%), (Prerefunded), 7/1/99 (@ 102) AA 841,432 --------------------------------------------------------------------- 1,300,000 Latrobe, PA, 6.75% IDA Revenue Bonds (Series 1994)/(St. Vincent College Project)/(Original Issue Yield: 7.00%), 5/1/2024 Baa1 1,256,372 --------------------------------------------------------------------- 3,000,000 Montgomery County, PA, Higher Education and Health Facilities Authority, 7.375% Hospital Revenue Bonds (Bryn Mawr Hospital), 12/1/2019 A 3,352,650 --------------------------------------------------------------------- 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 5,723,500 --------------------------------------------------------------------- 1,565,000 Northhampton County, PA, 6.95% IDA (Series 1985)/ (Citizens Utility Company), 8/1/2015 AAA 1,610,729 --------------------------------------------------------------------- 12,000,000 Pennsylvania HFA, 6.875% SFM Revenue Bonds (Series 1994-39B)/(Subject to AMT), 10/1/2024 AA 11,992,320 --------------------------------------------------------------------- 1,000,000 Pennsylvania Higher Educational Facilities Authority, 6.625%, Revenue Bonds (Trustees of the University of Pennsylvania)/(Original Issue Yield: 6.75%), 1/1/2017 Aa 996,980 --------------------------------------------------------------------- $ 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 $ 4,153,760 --------------------------------------------------------------------- 1,000,000 Pennsylvania Higher Educational Facilities Authority, 7.75% Revenue Bonds (Thomas Jefferson University & Jefferson Park Hospital), 11/1/2015 Aa 1,146,700 --------------------------------------------------------------------- 5,000,000 Sayre, PA, Health Care Facilities Authority, 7.10% Revenue Bonds (Guthrie Healthcare System)/(AMBAC Insured), 3/1/2017 Aaa 5,251,250 --------------------------------------------------------------------- 1,300,000 Washington County, PA, 7.45% Municipal Facilities Lease Revenue Bonds (Shadyside Hospital)/(AMBAC Insured), (Prerefunded), 6/15/2000 (@ 103) Aaa 1,471,821 --------------------------------------------------------------------- -------------- Total 37,797,514 --------------------------------------------------------------------- -------------- SOUTH CAROLINA--2.93% --------------------------------------------------------------------- 2,255,000 Richland County, SC, Solid Waste Disposal Facility, 6.75% Revenue Bonds (Series A)/(Union Camp Corp.)/(Original Issue Yield: 6.80%)/(Subject to AMT), 5/1/2022 A1 2,254,797 --------------------------------------------------------------------- 3,685,000 South Carolina Public Service Authority, 7.875% Revenue Bonds, (Prerefunded), 1/1/96 (@ 102) AAA 3,900,867 --------------------------------------------------------------------- 2,430,000 South Carolina, 7.875% Electric Revenue System, (Prerefunded), 1/1/96 (@ 102) AAA 2,572,349 --------------------------------------------------------------------- 11,495,000 South Carolina, 7.875% Electric Revenue System, 7/1/2021 A1 12,083,199 --------------------------------------------------------------------- -------------- Total 20,811,212 --------------------------------------------------------------------- -------------- TENNESSEE--2.67% --------------------------------------------------------------------- 5,000,000 Springfield, TN, HEFA, 8.25% Revenue Bonds (Jesse Holman Jones Hospital)/(Original Issue Yield: 8.50%), 4/1/2012 NR 4,819,450 --------------------------------------------------------------------- $ 15,000,000 Springfield, TN, HEFA, 8.50% Revenue Bonds (Jesse Holman Jones Hospital)/(Original Issue Yield: 8.875%), 4/1/2024 NR $ 14,130,600 --------------------------------------------------------------------- -------------- Total 18,950,050 --------------------------------------------------------------------- -------------- TEXAS--10.23% --------------------------------------------------------------------- 4,000,000 Brazos River Authority, TX, 7.875% PCR Bonds (Texas Utilities Electric Company)/(Subject to AMT), 3/1/2021 Baa2 4,291,840 --------------------------------------------------------------------- 14,500,000 Brazos River Authority, TX, 8.10% PCR Bonds (Houston Light & Power Company)/(BIG Insured), 5/1/2019 Aaa 16,099,785 --------------------------------------------------------------------- 1,600,000 Comal County, TX, IDA, 7.50% Revenue Bonds (Johnson Controls), 6/30/2002 A2 1,650,576 --------------------------------------------------------------------- 12,750,000 Dallas-Fort Worth, TX, International Airport Facilities Improvement Corp., 7.25% Revenue Bonds (American Airlines, Inc.)/(Original Issue Yield: 7.428%)/(Subject to AMT), 11/1/2030 Baa2 12,081,900 --------------------------------------------------------------------- 1,000,000 Richardson, TX, 6.75% Hospital Authority Revenue Refunding & Improvement Bonds (Richardson Medical Center)/(Original Issue Yield: 6.82%), 12/1/2023 Baa 910,440 --------------------------------------------------------------------- 16,500,000 Sabine River Authority, TX, 8.20% PCR Bonds (Southwestern Electric Power), 7/1/2014 Aa3 17,604,180 --------------------------------------------------------------------- 1,650,000 Sabine River Authority, TX, 5.85% PCR Refunding Bonds (Texas Utilities Electric Co.)/(Original Issue Yield: 5.875%), 5/1/2022 AAA 1,421,211 --------------------------------------------------------------------- 2,000,000 Texas City, TX, IDC, 7.37% Marine Terminal Revenue Bonds (Arco Pipeline Co.), 10/1/2020 A1 2,250,980 --------------------------------------------------------------------- 970,000 Texas HFA, 9.375% SFM Revenue Bonds, 9/1/2015 Aa 998,751 --------------------------------------------------------------------- 12,505,000 Travis County, TX, Housing Finance Corporation, 7.10% SFM, Revenue Bonds (GNMA & FNMA Collateralized)/ (Subject to AMT), 10/1/2027 AAA 12,646,432 --------------------------------------------------------------------- $ 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 $ 2,720,190 --------------------------------------------------------------------- -------------- Total 72,676,285 --------------------------------------------------------------------- -------------- UTAH--7.73% --------------------------------------------------------------------- 14,540,000 Intermountain Power Agency, UT, 7.00% Power Supply Revenue Bonds, 7/1/2021 AA 15,139,339 --------------------------------------------------------------------- 1,000,000 Intermountain Power Agency, UT, 7.50% Power Supply Revenue Bonds, Callable 7/1/96 (@ 102) AA 1,055,520 --------------------------------------------------------------------- 2,000,000 Intermountain Power Agency, UT, 7.875% Special Obligations Crossover Refunding Revenue Bonds, Callable 7/1/96 (@ 102) AA 2,124,140 --------------------------------------------------------------------- 9,500,000 Intermountain Power Agency, UT, 8.625% Power Supply Revenue Bonds, 7/1/2021 AA 10,472,705 --------------------------------------------------------------------- 7,500,000 Salt Lake City, UT, 7.60% Hospital Revenue Bonds (Intermountain Health Care), (Prerefunded), 2/15/99 (@ 102) Aaa 8,354,024 --------------------------------------------------------------------- 13,500,000 Salt Lake City, UT, 8.125% Hospital Revenue Bonds (Intermountain Health Care), (Escrowed to Maturity) 5/15/2015 Aa 14,976,225 --------------------------------------------------------------------- 2,500,000 Salt Lake City, UT, 8.125% Hospital Revenue Bonds (Intermountain Health Care), 5/15/2015 Aa 2,763,400 --------------------------------------------------------------------- -------------- Total 54,885,353 --------------------------------------------------------------------- -------------- VIRGINIA--1.67% --------------------------------------------------------------------- 8,000,000 Isle of Wight, VA, 6.55% IDA Solid Waste Disposal Bonds (Union Camp Corp.)/(Original Issue Yield: 6.627%)/ (Subject to AMT), 4/1/2024 A1 7,697,600 --------------------------------------------------------------------- 2,000,000 West Point, VA, 6.25% IDA Solid Waste Revenue Bonds (Series B)/(Chesapeake Corp. Project)/(Original Issue Yield: 6.33%), 3/1/2019 BBB- 1,838,580 --------------------------------------------------------------------- $ 2,500,000 West Point, VA, 6.375% IDA Solid Waste Revenue Bonds (Series A)/(Chesapeake Corp. Project)/(Original Issue Yield: 6.435%)/(Subject to AMT), 3/1/2019 BBB- $ 2,307,250 --------------------------------------------------------------------- -------------- Total 11,843,430 --------------------------------------------------------------------- -------------- 6,900,000 Pilchuck Public Development Corp., WA, 6.00% Revenue Bonds (Special Facilities Airport)/(Tramco, Inc.)/(BF Goodrich Guaranty)/(Subject to AMT), 8/1/2023 BBB 5,854,788 --------------------------------------------------------------------- -------------- WEST VIRGINIA--4.89% --------------------------------------------------------------------- 11,990,000 Harrison County, WV, 6.25% Solid Waste Disposal Revenue Bonds (The Potomac Edison Co.)/(Subject to AMT), 5/11/2023 A+ 11,262,806 --------------------------------------------------------------------- 20,000,000 Marion County, WV, 7.75% Solid Waste Disposal Revenue Bonds (Series 1993)/(America Power Paper Recycling)/ (Subject to AMT), 12/1/2011 NR 19,743,800 --------------------------------------------------------------------- 3,800,000 Marion County, WV, 8.25% Solid Waste Disposal Revenue Bonds, 12/1/2011 NR 3,756,414 --------------------------------------------------------------------- -------------- Total 34,763,020 --------------------------------------------------------------------- -------------- WYOMING--1.04% --------------------------------------------------------------------- 7,460,000 Sweetwater County, WY, 7.00% Solid Waste Disposal Revenue Bonds (Series 1994A)/(FMC Corp. Project)/ (Subject to AMT), 6/1/2024 BBB 7,367,123 --------------------------------------------------------------------- -------------- TOTAL LONG-TERM MUNICIPAL SECURITIES (IDENTIFIED COST $668,498,990) $ 686,754,780 --------------------------------------------------------------------- -------------- TOTAL MUNICIPAL SECURITIES (IDENTIFIED COST $678,298,990) $ 696,554,780+ --------------------------------------------------------------------- --------------
* Please refer to the Appendix to the Statement of Additional Information for an explanation of the credit ratings. + The cost of investments for federal tax purposes amounts to $678,298,990. The net unrealized appreciation of investments on a federal tax basis amounts to $18,255,790, which is comprised of $30,763,588 appreciation and $12,507,798 depreciation at September 30, 1994. Note: The categories of investments are shown as a percentage of net assets ($710,438,075) at September 30, 1994. Liberty Municipal Securities Fund, Inc. - -------------------------------------------------------------------------------- The following abbreviations are used in this portfolio: AMBAC -- American Municipal Bond Assurance Corporation AMT -- Alternative Minimum Tax BIG -- Bond Investors Guaranty FGIC -- Financial Guaranty Insurance Company FNMA -- Federal National Mortgage Association GNMA -- Government National Mortgage Association GO -- General Obligation HEFA -- Health and Education Facilities Authority HFA -- Housing Finance Authority/Agency HFDC -- Health Facility Development Corporation I DA -- Industrial Development Authority I DC -- Industrial Development Corporation I FA -- Industrial Finance Authority/Agency LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance PCR -- Pollution Control Revenue SFH -- Single Family Housing SFM -- Single Family Mortgage VRDNs -- Variable Rate Demand Note(s) (See Notes which are an integral part of the Financial Statements) Liberty Municipal Securities Fund, Inc. Statement of Assets and Liabilities - -------------------------------------------------------------------------------- September 30, 1994 (unaudited) ASSETS: - --------------------------------------------------------------------------------------------------- Investments in securities, at value (identified and tax cost: $678,298,990) $696,554,780 - --------------------------------------------------------------------------------------------------- Cash 247,340 - --------------------------------------------------------------------------------------------------- Interest receivable 15,391,977 - --------------------------------------------------------------------------------------------------- Receivable for capital stock sold 1,120,185 - --------------------------------------------------------------------------------------------------- ----------- Total assets 713,314,282 - --------------------------------------------------------------------------------------------------- LIABILITIES: - --------------------------------------------------------------------------------------------------- Payable for capital stock redeemed $1,504,922 - ---------------------------------------------------------------------------------------- Dividends payable 1,363,641 - ---------------------------------------------------------------------------------------- Accrued expenses 7,644 - ---------------------------------------------------------------------------------------- --------- Total liabilities 2,876,207 - --------------------------------------------------------------------------------------------------- ----------- NET ASSETS for 65,132,679 shares of capital stock outstanding $710,438,075 - --------------------------------------------------------------------------------------------------- ----------- NET ASSETS CONSIST OF: - --------------------------------------------------------------------------------------------------- Paid-in capital $683,899,315 - --------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investments 18,255,790 - --------------------------------------------------------------------------------------------------- Accumulated net realized gain (loss) on investments 8,282,970 - --------------------------------------------------------------------------------------------------- ----------- Total Net Assets $710,438,075 - --------------------------------------------------------------------------------------------------- ----------- NET ASSET VALUE: - --------------------------------------------------------------------------------------------------- Class A Shares (net assets of $683,063,939 / 62,622,910 shares of capital stock outstanding) $10.91 - --------------------------------------------------------------------------------------------------- ----------- Class B Shares (net assets of $4,088,302 / 374,607 shares of capital stock outstanding) $10.91 - --------------------------------------------------------------------------------------------------- ----------- Class C Shares (net assets of $23,285,834 / 2,135,162 shares of capital stock outstanding) $10.91 - --------------------------------------------------------------------------------------------------- ----------- COMPUTATION OF OFFERING PRICE: - --------------------------------------------------------------------------------------------------- Class A Shares (100/95.5 of $10.91)* $11.42 - --------------------------------------------------------------------------------------------------- ----------- Class B Shares $10.91 - --------------------------------------------------------------------------------------------------- ----------- Class C Shares $10.91 - --------------------------------------------------------------------------------------------------- ----------- COMPUTATION OF PROCEEDS ON REDEMPTION: - --------------------------------------------------------------------------------------------------- Class A Shares $10.91 - --------------------------------------------------------------------------------------------------- ----------- Class B Shares (94.5/100 of $10.91)** $10.31 - --------------------------------------------------------------------------------------------------- ----------- Class C Shares (99/100 of $10.91)** $10.80 - --------------------------------------------------------------------------------------------------- -----------
* See "What Shares Cost" in the prospectus. ** See "Redeeming Shares" in the prospectus. (See Notes which are an integral part of the Financial Statements) Liberty Municipal Securities Fund, Inc. Statement of Operations - -------------------------------------------------------------------------------- Six months ended September 30, 1994 (unaudited) INVESTMENT INCOME: - -------------------------------------------------------------------------------------------------- Interest income $ 25,538,278 - -------------------------------------------------------------------------------------------------- EXPENSES: - -------------------------------------------------------------------------------------------------- Investment advisory fee $ 2,264,529 - ------------------------------------------------------------------------------------ Directors' fees 5,100 - ------------------------------------------------------------------------------------ Administrative personnel and services 281,429 - ------------------------------------------------------------------------------------ Custodian and portfolio accounting fees 81,713 - ------------------------------------------------------------------------------------ Transfer and dividend disbursing agent fees and expenses 201,006 - ------------------------------------------------------------------------------------ Distribution services fee--Select Shares 1,448 - ------------------------------------------------------------------------------------ Distribution services fee--Class B Shares 1,587 - ------------------------------------------------------------------------------------ Distribution services fee--Class C Shares 85,104 - ------------------------------------------------------------------------------------ Shareholder services fee--Class A Shares 343,088 - ------------------------------------------------------------------------------------ Shareholder services fee--Select Shares 483 - ------------------------------------------------------------------------------------ Shareholder services fee--Class B Shares 529 - ------------------------------------------------------------------------------------ Shareholder services fee--Class C Shares 29,302 - ------------------------------------------------------------------------------------ Fund share registration costs 47,467 - ------------------------------------------------------------------------------------ Auditing fees 8,453 - ------------------------------------------------------------------------------------ Legal fees 14,300 - ------------------------------------------------------------------------------------ Printing and postage 55,500 - ------------------------------------------------------------------------------------ Insurance premiums 9,224 - ------------------------------------------------------------------------------------ Taxes 33,201 - ------------------------------------------------------------------------------------ Miscellaneous 4,448 - ------------------------------------------------------------------------------------ ------------ Total expenses 3,467,911 - -------------------------------------------------------------------------------------------------- -------------- Net investment income 22,070,367 - -------------------------------------------------------------------------------------------------- -------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: - -------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments (identified cost basis) 8,282,567 - -------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) of investments (19,629,128) - -------------------------------------------------------------------------------------------------- -------------- Net realized and unrealized gain (loss) on investments (11,346,561) - -------------------------------------------------------------------------------------------------- -------------- Change in net assets resulting from operations $ 10,723,806 - -------------------------------------------------------------------------------------------------- --------------
(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, 1995* 1994 INCREASE (DECREASE) IN NET ASSETS: - ---------------------------------------------------------------------------------- OPERATIONS-- - ---------------------------------------------------------------------------------- Net investment income $ 22,070,367 $ 43,122,210 - ---------------------------------------------------------------------------------- Net realized gain (loss) on investment transactions ($8,282,567 and $11,496,40, respectively, as computed for federal tax purposes) 8,282,567 11,496,140 - ---------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) of investments (19,629,128) (38,359,833) - ---------------------------------------------------------------------------------- -------------- -------------- Change in net assets resulting from operations 10,723,806 16,258,517 - ---------------------------------------------------------------------------------- -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ---------------------------------------------------------------------------------- Dividends to shareholders from net investment income: - ---------------------------------------------------------------------------------- Class A Shares (21,451,690) (42,577,953) - ---------------------------------------------------------------------------------- Select Shares (9,592) (2,853) - ---------------------------------------------------------------------------------- Class C Shares (597,018) (541,404) - ---------------------------------------------------------------------------------- Class B Shares (12,068) -- - ---------------------------------------------------------------------------------- Distributions to shareholders from net realized gain on investment transactions: - ---------------------------------------------------------------------------------- Class A Shares (8,008,253) (1,289,936) - ---------------------------------------------------------------------------------- Select Shares (6,166) -- - ---------------------------------------------------------------------------------- Class C Shares (247,675) (30,507) - ---------------------------------------------------------------------------------- -------------- -------------- Change in net assets from distributions to shareholders (30,332,462) (44,442,653) - ---------------------------------------------------------------------------------- -------------- -------------- CAPITAL STOCK TRANSACTIONS-- - ---------------------------------------------------------------------------------- Proceeds from sale of shares 127,279,671 294,116,244 - ---------------------------------------------------------------------------------- Net asset value of shares issued to shareholders in payment of dividends declared 19,225,418 28,065,973 - ---------------------------------------------------------------------------------- Cost of shares redeemed (153,504,628) (263,078,057) - ---------------------------------------------------------------------------------- -------------- -------------- Change in net assets from capital stock transactions (6,999,539) 59,104,160 - ---------------------------------------------------------------------------------- -------------- -------------- Change in net assets (26,608,195) 30,920,024 - ---------------------------------------------------------------------------------- NET ASSETS: - ---------------------------------------------------------------------------------- Beginning of period 737,046,270 706,126,246 - ---------------------------------------------------------------------------------- -------------- -------------- End of period $ 710,438,075 $ 737,046,270 - ---------------------------------------------------------------------------------- -------------- --------------
*Six months ended September 30, 1994 (unaudited). (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, 1995* 1994 1993 1992 1991 1990 1989 1988 1987 NET ASSET VALUE, BEGINNING OF PERIOD $ 11.20 $ 11.62 $ 10.98 $ 10.61 $ 10.47 $ 10.26 $ 10.03 $ 10.80 $ 10.51 - ------------------------ INCOME FROM INVESTMENT OPERATIONS - ------------------------ Net investment income 0.33 0.66 0.66 0.67 0.71 0.72 0.72 0.73 0.75 - ------------------------ Net realized and unrealized gain (loss) on investments (0.17) (0.40) 0.64 0.37 0.14 0.21 0.23 (0.77) 0.29 - ------------------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- Total from investment operations 0.16 0.26 1.30 1.04 0.85 0.93 0.95 (0.04) 1.04 - ------------------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- LESS DISTRIBUTIONS - ------------------------ Dividends to shareholders from net investment income (0.33) (0.66) (0.66) (0.67) (0.71) (0.72) (0.72) (0.73) (0.75) - ------------------------ Distributions to shareholders from net realized gain on investment transactions (0.12) (0.02) -- -- -- -- -- -- -- - ------------------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- Total distributions (0.45) (0.68) (0.66) (0.67) (0.71) (0.72) (0.72) (0.73) (0.75) - ------------------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 10.91 $ 11.20 $ 11.62 $ 10.98 $ 10.61 $ 10.47 $ 10.26 $ 10.03 $ 10.80 - ------------------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- TOTAL RETURN*** 1.44% 2.10% 12.13% 10.05% 8.42% 9.20% 9.76% (0.17%) 10.28% - ------------------------ RATIOS TO AVERAGE NET ASSETS - ------------------------ Expenses 0.90 (a) 0.84% 0.80% 0.84% 0.89% 0.90% 0.95% 0.95% 0.95% - ------------------------ Net investment income 5.96 (a) 5.59% 5.81% 6.17% 6.77% 6.80% 7.07% 7.28% 7.07% - ------------------------ Expense waiver/ reimbursement (b) -- -- -- -- -- -- -- -- -- - ------------------------ SUPPLEMENTAL DATA - ------------------------ Net assets, end of period (000 omitted) $683,064 $714,384 $706,126 $590,118 $511,611 $474,797 $440,445 $388,916 $424,655 - ------------------------ Portfolio turnover rate 27% 27% 13% 8% 45% 25% 58% 55% 13% - ------------------------ 1986 1985** NET ASSET VALUE, BEGINNING OF PERIOD $ 8.91 $ 8.51 - ------------------------ INCOME FROM INVESTMENT OPERATIONS - ------------------------ Net investment income 0.80 0.40 - ------------------------ Net realized and unrealized gain (loss) on investments 1.60 0.40 - ------------------------ --------- ----- Total from investment operations 2.40 0.80 - ------------------------ --------- ----- LESS DISTRIBUTIONS - ------------------------ Dividends to shareholders from net investment income (0.80) (0.40) - ------------------------ Distributions to shareholders from net realized gain on investment transactions -- -- - ------------------------ --------- ----- Total distributions (0.80) (0.40) - ------------------------ --------- ----- NET ASSET VALUE, END OF PERIOD $ 10.51 $ 8.91 - ------------------------ --------- ----- TOTAL RETURN*** 28.25% 9.49% - ------------------------ RATIOS TO AVERAGE NET ASSETS - ------------------------ Expenses 0.93% 1.04%(a) - ------------------------ Net investment income 8.93% 9.09%(a) - ------------------------ Expense waiver/ reimbursement (b) 0.23% 0.30%(a) - ------------------------ SUPPLEMENTAL DATA - ------------------------ Net assets, end of period (000 omitted) $248,710 $105,664 - ------------------------ Portfolio turnover rate 2% 1 % - ------------------------
* Six months ended September 30, 1994 (unaudited). ** For the six months ended March 31, 1985. The Fund changed its fiscal year-end from September 30 to March 31. *** 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. (b) This voluntary expense decrease is reflected in both the expense and net investment income ratios, shown above. (See Notes which are an integral part of the Financial Statements) Liberty Municipal Securities Fund, Inc. Financial Highlights--Class C Shares - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED MARCH 31, ---------------------- 1995* 1994** NET ASSET VALUE, BEGINNING OF PERIOD $ 11.20 $ 11.70 - ------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ------------------------------------------------------------------------------------------- Net investment income 0.28 0.52 - ------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.17) (0.48) - ------------------------------------------------------------------------------------------- --------- ----------- Total from investment operations 0.11 0.04 - ------------------------------------------------------------------------------------------- --------- ----------- LESS DISTRIBUTIONS - ------------------------------------------------------------------------------------------- Dividends to shareholders from net investment income (0.28) (0.52) - ------------------------------------------------------------------------------------------- Distributions to shareholders from net realized gain on investment transactions (0.12) (0.02) - ------------------------------------------------------------------------------------------- --------- ----------- Total distributions (0.40) (0.54) - ------------------------------------------------------------------------------------------- --------- ----------- NET ASSET VALUE, END OF PERIOD $ 10.91 $ 11.20 - ------------------------------------------------------------------------------------------- --------- ----------- TOTAL RETURN** 1.00% 0.17% - ------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ------------------------------------------------------------------------------------------- Expenses 1.78 (a) 1.80%(a) - ------------------------------------------------------------------------------------------- Net investment income 5.78 (a) 4.70%(a) - ------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------- Net assets, end of period (000 omitted) $23,286 $22,066 - ------------------------------------------------------------------------------------------- Portfolio turnover rate 27% 27 % - -------------------------------------------------------------------------------------------
* For the period ended September 30, 1994 (unaudited). **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. Financial Highlights--Class B Shares - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
YEAR ENDED MARCH 31, 1995* NET ASSET VALUE, BEGINNING OF PERIOD $ 11.06 - --------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - --------------------------------------------------------------------------------------------- Net investment income 0.11 - --------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.15) - --------------------------------------------------------------------------------------------- ------- Total from investment operations (0.04) - --------------------------------------------------------------------------------------------- ------- LESS DISTRIBUTIONS - --------------------------------------------------------------------------------------------- Dividends to shareholders from net investment income (0.11) - --------------------------------------------------------------------------------------------- Distributions to shareholders from net realized gain on investment transactions -- - --------------------------------------------------------------------------------------------- ------- Total distributions (0.11) - --------------------------------------------------------------------------------------------- ------- NET ASSET VALUE, END OF PERIOD $ 10.91 - --------------------------------------------------------------------------------------------- ------- TOTAL RETURN** (0.41%) - --------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - --------------------------------------------------------------------------------------------- Expenses 1.85%(a) - --------------------------------------------------------------------------------------------- Net investment income 6.50%(a) - --------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------- Net assets, end of period (000 omitted) $ 4,088 - --------------------------------------------------------------------------------------------- Portfolio turnover rate 27% - ---------------------------------------------------------------------------------------------
* Reflects operations for the period from July 25, 1994 (date of initial public offering) to September 30, 1994 (unaudited). **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 - -------------------------------------------------------------------------------- September 30, 1994 (unaudited) (1) ORGANIZATION Liberty Municipal Securities Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end, diversified, management investment company. Effective August 2, 1994, the Select Shares ceased operations and were reclassified as Class C Shares. Also, effective July 25, 1994, the Fund added Class B Shares. Consequently, the Fund currently provides three classes of shares ("Class A Shares," "Class B Shares," and "Class C Shares"). (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 determining 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 expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its 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 on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. E. OTHER--Investment transactions are accounted for on the trade date. (3) CAPITAL STOCK At September 30, 1994, there were 1,000,000,000 shares of $0.01 par value capital stock authorized. Of these shares, 375,000,000 have been designated as Class A Shares, 250,000,000 have been Liberty Municipal Securities Fund, Inc. - -------------------------------------------------------------------------------- designated as Class B 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, 1995* 1994 CLASS A SHARES SHARES DOLLARS SHARES DOLLARS Shares sold 10,536,980 $ 117,223,970 22,832,885 $ 268,781,200 - ------------------------------------------------- Shares issued to shareholders in payment of dividends declared 1,686,706 18,765,647 2,365,264 27,795,028 - ------------------------------------------------- Shares redeemed (13,401,637) (148,365,563) (22,182,727) (261,363,852) - ------------------------------------------------- ------------- --------------- ------------- --------------- Net change resulting from Class A Shares transactions (1,177,951) ($ 12,375,946) 3,015,422 $ 35,212,376 - ------------------------------------------------- ------------- --------------- ------------- --------------- YEAR ENDED MARCH 31, 1995* 1994** CLASS C SHARES SHARES DOLLARS SHARES DOLLARS Shares sold 520,250 $ 5,775,644 2,092,015 $ 24,704,800 - ------------------------------------------------- Shares issued to shareholders in payment of dividends declared 39,555 440,277 22,904 268,723 - ------------------------------------------------- Shares redeemed (395,316) (4,372,191) (144,245) (1,705,920) - ------------------------------------------------- ------------- --------------- ------------- --------------- Net change resulting from Class C Shares transactions 164,489 $ 1,843,730 1,970,674 $ 23,267,603 - ------------------------------------------------- ------------- --------------- ------------- ---------------
* Six months ended September 30, 1994. ** Reflects operations for the period from April 20, 1993 (date of initial public offering) to March 31, 1994. Liberty Municipal Securities Fund, Inc. - --------------------------------------------------------------------------------
PERIOD ENDED MARCH 31, 1995* CLASS B SHARES SHARES DOLLARS Shares sold 387,000 $ 4,260,127 - ----------------------------------------------------------- Shares issued to shareholders in payment of dividends declared 711 7,781 - ----------------------------------------------------------- Shares redeemed (13,104) (144,743) - ----------------------------------------------------------- --------- ------------- Net change resulting from Class B Shares transactions 374,607 $ 4,123,165 - ----------------------------------------------------------- --------- ------------- YEAR ENDED MARCH 31, 1995** 1994*** SELECT SHARES SHARES DOLLARS SHARES DOLLARS Shares sold 1,790 $ 19,931 53,757 $ 630,244 - ----------------------------------------------------------- Shares issued to shareholders in payment of dividends declared 1,048 11,713 196 2,222 - ----------------------------------------------------------- Shares redeemed (56,061) (622,131) (730) (8,285) - ----------------------------------------------------------- --------- ------------- ---------- ------------- Net change resulting from Select Shares transactions (53,223) $ (590,487) 53,223 $ 624,181 - ----------------------------------------------------------- --------- ------------- ---------- ------------- Net change resulting from Trust Shares transactions (692,078) $ (6,999,538) 5,039,319 $ 59,104,160 - ----------------------------------------------------------- --------- ------------- ---------- -------------
* Reflects operations for the period from July 25, 1994 (date of initial public offering) to September 30, 1994. ** For the period ended August 2, 1994. *** Reflects operations for the period from January 15, 1994 (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 (the "Adviser"), receives for its services an annual investment advisory fee equal to (a) a maximum of .30 of 1% of the average daily net assets of the Fund, and (b) 4.5% of the gross income of the Fund, excluding capital gains or losses. ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund with administrative personnel and services. The FAS fee is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. Liberty Municipal Securities Fund, Inc. - -------------------------------------------------------------------------------- DISTRIBUTION AND SHAREHOLDER SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of the Fund's Class B Shares and Class C Shares. The Plan provides that the Fund may incur distribution expenses up to .75 of 1% of the average daily net assets of the Class B 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 .25 of 1% of average net assets of each class of shares for the period. This fee is to obtain certain personal services for shareholders and to maintain shareholder accounts. TRANSFER AND DIVIDEND DISBURSING AGENT--Federated Services Company ("FServ") serves as transfer and dividend disbursing agent for the Fund. The FServ fee is based on the size, type, and number of accounts and transactions made by shareholders. INTERFUND TRANSACTIONS--During the six months ended September 30, 1994, the Fund engaged in purchase and sale transactions with other affiliated funds at current value pursuant to Rule 17a-7 under the Act amounting to $116,650,000, and $133,650,000, respectively. Certain of the Officers and Directors of the Fund are Officers and Directors or Trustees of the above companies. (5) INVESTMENT TRANSACTIONS Purchases and sales of investments, excluding short-term securities, for the six months ended September 30, 1994 were as follows: - -------------------------------------------------------------------------------------------------- PURCHASES $ 194,781,167 - -------------------------------------------------------------------------------------------------- -------------- SALES $ 219,487,409 - -------------------------------------------------------------------------------------------------- --------------
THIS PAGE INTENTIONALLY LEFT BLANK 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 David M. Taylor Assistant Treasurer Charles H. Field Assistant Secretary Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including 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. Liberty Municipal Securities Fund, Inc. Appendix A. The graphic presentation here displayed consists of a boxed legend in the lower center half indicating the components of the corresponding graphic mountain chart. The color-coded mountain chart is a visual representation of the narrative text above it, which shows a one time investment of $18,000 in the Class A Shares (reinvesting all dividends and capital gains) beginning October 4, 1976, would have grown to $54,568 by September 30, 1994. The "Y" axis reflects computation periods from October 4, 1976 through fiscal year 1994, 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 reinvested income. B. The graphic presentation here displayed consists of a boxed legend in the lower center half indicating the components of the corresponding graphic mountain chart. The color-coded mountain chart is a visual representation of the narrative text above it, which shows that $1,000 invested in Class A Shares each year for eighteen years (reinvesting all dividends and capital gains) beginning October 4, 1976, would have grown to $39,246 by 1994. The "Y" axis reflects computation periods from October 4, 1976 through fiscal year 1994, 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 reinvested income. C. The graphic presentation here displayed consists of a boxed legend in the lower center half indicating the components of the corresponding graphic mountain chart. The color-coded mountain chart is a visual representation of the narrative text above it, which shows that $25,000 invested in Class A Shares on September 30, 1984 (reinvesting all dividends and capital gains) beginning October 4, 1976, would have grown to $61,581 by 1994. The "Y" axis reflects computation periods from September 30, 1984 through fiscal year 1994, 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 reinvested income. -----END PRIVACY-ENHANCED MESSAGE-----