N-30D 1 FEDERATED INVESTORS Liberty Municipal Securities Fund, Inc. 18th Annual Report March 31, 1995 Established 1976 MUNICIPAL President's Message Dear Fellow Shareholder: Liberty Municipal Securities Fund, Inc. was established in 1976, and I am pleased to present the 18th Annual Report for the fund. This report covers the 12-month period from April 1, 1994 to March 31, 1995. It contains an interview with the fund's portfolio manager, Jonathan C. Conley, Vice President of Federated Advisers. Following the interview is a series of investment record performance charts, a complete listing of the fund's portfolio of tax-free municipal securities, and its Financial Statements. Although the increases in interest rates by the Federal Reserve Board (the ``Fed'') made 1994 a difficult year for municipal funds, we are happy to note that interest rates did decline in January and February of 1995. In addition, many indicators point to a slow-down in the economy, and the Fed met recently and decided against another rate hike. These are all very positive signs for municipal investors. Over the past six months, there were many stories in the news about municipalities and their investment techniques. Happily, we are able to report that Liberty Municipal Securities Fund, Inc. did not own issues of the municipalities in California, Florida, Texas and Oklahoma that caused such a stir in the press. Founded nearly 20 years ago, Liberty Municipal Securities Fund, Inc. continues to seek relief for you and other tax-sensitive Americans, in the form of monthly income that's exempt from federal regular income taxes.* To do so, the fund invests in a diversified portfolio of municipal securities issued by more than 70 municipalities across the country. The fund's total net assets as of this report are $749.3 million. The fund's net asset value (share price) stands at $10.92, up slightly from our last report, and distributions paid to shareholders totaled $0.90 per share.** Thank you for selecting Liberty Municipal Securities Fund, Inc. If you have any questions concerning the fund's portfolio or your account, please do not hesitate to write. Very sincerely yours, J. Christopher Donahue President May 15, 1995 *Income may be subject to the federal alternative minimum tax and state and local taxes. **These figures are for Class A Shares; refer to the portfolio manager Investment Review that immediately follows this letter for Class B Shares and Class C Shares figures. Investment Review ------------------------------------------------------------------------------ Jonathan, can you tell us what has occurred in the long-term fixed-income markets during the 12-month period ending March 31, 1995? Interest rates in these markets exhibited considerable volatility during the past 12 months. On April 1, 1994, the yield for the ``current'' 30-year U.S. Treasury bond (6.25% due August 15, 2023) stood at 7.09%. From there, the yield rose to 8.23% by November 7, 1994, before dropping to 7.50% as of March 31, 1995. As for the long-term municipal market, the Bond Buyer 40 Index* (representing on a daily basis ``A'' to ``AAA'' long-term municipal yields) registered 6.36% on April 1, 1994. It then climbed to 7.37% by November 22, 1994, and fell thereafter to 6.37% by March 31, 1995. How have these interest rate changes translated to bond price movements? From April 1, 1994 to November 7, 1994, the price of the bellwether U.S. Treasury bond declined from $89.69 to $78.25. By March 31, 1995, the price recovered substantially, climbing to $85.38. From April 1, 1994 to November 22, 1994, the Municipal Bond Index* plummeted from $91.56 to $80.13, then climbed to $91.19 by March 31, 1995. Why was the municipal bond market more volatile than its Treasury counterpart? First, many issues in the municipal secondary market had been quoted at prices representing discounts to face value in excess of IRS provisions allowing for capital gains treatment. Excess discounts were, and continue to be, treated as ordinary income, taxable at ordinary income rates. Such issues trade at lower prices to allow the incremental investor to achieve a market after-tax yield. *This index is unmanaged. What have investors in Liberty Municipal Securities Fund, Inc. experienced during this period? For the 12 months ending March 31, 1995, investors in the fund (Class A Shares) experienced a total return based on Net Asset Value (``NAV'') of 5.90%, or of 1.11% based on offering price.* Investors in Class A Shares received $0.67 per share in tax-exempt dividend interest and $0.23 in capital gains distributions, while the NAV fell-in part due to such distributions-from $11.20 on April 1, 1994 to $10.92 on March 31, 1995. Investors in Class B Shares experienced a total return of 3.49% based on NAV, or of (2.17%) based on offering price for the period from July 26, 1994 (date of initial public offering) to March 31, 1995.* These investors received $0.40 per share in tax-exempt dividend interest and $0.11 in capital gains distributions; the NAV for Class B Shares stands at $10.92 as of this report. Investors in Class C Shares experienced a total return of 4.96% based on NAV, or of 3.91% based on the offering price.* These investors received $0.58 per share in tax-exempt dividend interest and $0.23 in capital gains distributions, while the NAV fell from $11.20 to $10.92. How do you control the volatility of the NAV per share? I favor, in a variety of interest rate environments, issues which have coupons or yields greater than the Bond Buyer 40 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 to secure coupon-price protection and to seek attractive income for distribution to shareholders. On April 1, 1994, the average coupon rate of the holdings in the fund was 7.33%; on March 31, 1995, the average coupon rate of fund holdings stood at 7.43%. These coupon rates helped to keep the portfolio duration of the fund rather low, averaging 5.75 years versus 13.10 years for the Bond Buyer 40 Index over the past twelve months. *Past performance does not guarantee future results. Investment return and principal value will fluctuate, so when shares are redeemed they may be worth more or less than their original cost. What is the composition of the fund's investments by credit quality? The credit quality of the fund's portfolio of investments is as follows:
March 31, 1995 March 31, 1994 AAA 20.7% 38.6% AA 24.2% 31.9% A 11.7% 10.1% BBB 27.4% 13.0% NR 16.0% 6.4% ------ ------ 100.0% 100.0%
Could you explain the rationale for downgrading the portfolio holdings? 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 upgrading increases. This bodes well for medium/lower-grade issues as a class of debt instruments. As a result, the fund has been investing over the past year in what it considers upgrade candidates. Because of their ``higher-than-general-market'' coupons (yields) at issue, many medium/lower-grade bonds have shorter durations than their higher grade counterparts. 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. So, 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: If you had made an initial investment of $19,000 in the Class A Shares of Liberty Municipal Securities Fund, Inc. on 10/4/76, reinvested your dividends and capital gains, and didn't redeem any shares, your account would be worth $59,854 on 3/31/95. You would have earned a 6.40%* average annual total return for the 19-year investment life span. One key to investing wisely is to reinvest all tax-free distributions in fund shares. This increases the number of shares on which you can earn future tax-free dividends, and you gain the benefit of compounding tax-free. As of 3/31/95, the Class A Shares' average annual one-year, five-year and ten-year total returns were 1.11%, 6.68%, and 8.86%, respectively. Class B Shares' total return since inception on 7/26/94 was -2.17%. Class C Shares'average annual one-year and since inception on 4/21/93 total returns were 3.91% and 2.61%, respectively. [Graphic Representation A1 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 4.50% sales load 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 19 years (reinvesting all dividends and capital gains) grew to $41,683. With this approach, the key is consistency. If you had started investing $1,000 annually in the Class A Shares of Liberty Municipal Securities Fund, Inc. on 10/4/76, reinvested your dividends and capital gains and didn't redeem any shares, you would have invested only $19,000 but your account would have reached a total value of $41,683* by 3/31/95. You would have earned an average annual total return of 7.70%. 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 A2 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.- 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 March 31, 1985, the Bartletts invested $25,000 in the Class A Shares of Liberty Municipal Securities Fund, Inc. As this chart shows, in 10 years, their original $25,000 investment has grown to $58,435-that's $27,920 in tax-free income.* This represents an 8.86% average annual total return. As far as the Bartletts are concerned, this fund has made all the difference. *Income may be subject to the federal alternative minimum tax and state and local taxes. [Graphic Representation A3 omitted. 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. Liberty Municipal Securities Fund, Inc.- A History of Tax Free Investing-Ten 10-Year Periods ------------------------------------------------------------------------------ $10,000 Invested With Distributions Reinvested 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. [Graphic Representation A4 omitted. See Appendix.] * This 10-year period is October 4, 1976 through March 31, 1986. Liberty Municipal Securities Fund, Inc.- Serving a Wide Range of Investors ------------------------------------------------------------------------------ Liberty Municipal Securities Fund, Inc. appeals to a broad range of tax-sensitive investors seeking tax-free current income. The fund invests primarily in a diversified portfolio of quality municipal bonds. Fund shares are not guaranteed, and the value of your investment may fluctuate in value. Mutual funds involve risk, including possible loss of principal. [Graphic Representation A5 omitted. See Appendix.] Liberty Municipal Securities Fund, Inc._ Portfolio Update ------------------------------------------------------------------------------- [Graphic Representation A6 omitted. See Appendix.] Liberty Municipal Securities Fund, Inc. (Class A Shares) ------------------------------------------------------------------------------- Growth of $10,000 Invested in Liberty Municipal Securities Fund, Inc. (Class A Shares) The graph below illustrates the hypothetical investment of $10,000 in the Liberty Municipal Securities Fund, Inc. (Class A Shares) from March 31, 1985 to March 31, 1995, compared to the Lehman Brothers Revenue Bond Index (LBRBI)++ [Graphic Representation A7 omitted. See Appendix.] 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. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. * Represents a hypothetical investment of $10,000 in the fund after deducting the maximum sales load of 4.50%($10,000 investment minus $450 sales charge = $9,550). The fund's performance assumes the reinvestment of all dividends and distributions. The LBRBI has been adjusted to reflect reinvestment of dividends on securities in the index. **Total return quoted reflects all applicable sales loads and contingent deferred sales charges. +The LBRBI is not adjusted to reflect sales loads, expenses, or other fees that the SEC requires to be reflected in the fund's performance. This index is unmanaged. Liberty Municial Securities Fund, Inc. (Class B Shares and Class C Shares) ------------------------------------------------------------------------------- Growth of $10,000 Invested in Liberty Municipal Securities Fund, Inc. The graphs below illustrate the hypothetical investment of $10,000 in the Liberty Municipal Securities Fund, Inc. from the start of performance to March 31, 1995, compared to the Lehman Brothers Revenue Bond Index (LBRBI).++ [Graphic Representation A8 omitted. See Appendix.] [Graphic Representation A9 omitted. See Appendix.] Liberty Municipal Securities Fund, Inc. (Class B Shares and Class C Shares) ------------------------------------------------------------------------------ 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 the fund. The ending value of the fund reflects a 5.50% contingent deferred sales charge on any redemption made within one full year from the purchase date. The fund's performance assumes the reinvestment of all dividends and distributions. The LBRBI has been adjusted to reflect reinvestment of dividends on securities in the index. **Represents a hypothetical investment of $10,000 in the fund. The ending value of the fund reflects a 1.00% contingent deferred sales charge on any redemption made within one full year from the purchase date. The fund's performance assumes the reinvestment of all dividends and distributions. The LBRBI has been adjusted to reflect reinvestment of dividends on securities in the index. +Total return quoted reflects all applicable sales loads and contingent deferred sales charges. ++The LBRBI is not adjusted to reflect sales loads, expenses, or other fees that the SEC requires to be reflected in the fund's performance. This index is unmanaged. Liberty Municipal Securities Fund, Inc. Portfolio of Investments -------------------------------------------------------------------------------- March 31, 1995
CREDIT RATING: PRINCIPAL MOODY'S AMOUNT OR S&P* VALUE ------------- --------------------------------------------------------------------- ---------- -------------- SHORT-TERM MUNICIPAL SECURITIES--4.3% ------------------------------------------------------------------------------------ ALABAMA--0.2% --------------------------------------------------------------------- $ 1,500,000 Birmingham, AL, Medical Clinic Board Daily VRDNs (University of Alabama Health System)/(Morgan Guaranty Trust Co. LOC) A-1+ $ 1,500,000 --------------------------------------------------------------------- -------------- ILLINOIS--3.9% --------------------------------------------------------------------- 29,000,000 Illinois Development Finance Authority Weekly VRDNs (Series 1994)/(Chicago Symphony Orchestra)/(Northern Trust Co. and Sanwa Bank Ltd. LOCs) A-1+ 29,000,000 --------------------------------------------------------------------- -------------- PUERTO RICO--0.1% --------------------------------------------------------------------- 1,250,000 Government Development Bank of Puerto Rico Weekly VRDNs (Credit Suisse and Sumitomo Bank Ltd. LOCs) A-1 1,250,000 --------------------------------------------------------------------- -------------- TEXAS--0.1% --------------------------------------------------------------------- 800,000 Harris County, TX, HFDC Daily VRDNs (Series 1994)/ (Methodist Hospital Guaranty) A-1+ 800,000 --------------------------------------------------------------------- -------------- TOTAL SHORT-TERM MUNICIPAL SECURITIES (AT AMORTIZED COST) 32,550,000 --------------------------------------------------------------------- -------------- LONG-TERM MUNICIPAL SECURITIES--93.6% ------------------------------------------------------------------------------------ ARIZONA--3.3% --------------------------------------------------------------------- 12,000,000 Salt River Project, AZ, Agriculture Improvement & Power District Electric Systems, 7.875% Revenue Bonds (Series A)/(Prerefunded), 1/1/98 (@ 102%) Aaa 13,162,320 --------------------------------------------------------------------- 10,500,000 Salt River Project, AZ, Agriculture Improvement & Power District Electric Systems, 8.25% OID Revenue Bonds (Series E)/(Original Issue Yield: 8.40%)/(Prerefunded), 1/1/98 (@ 102%) Aaa 11,438,490 --------------------------------------------------------------------- -------------- Total 24,600,810 --------------------------------------------------------------------- -------------- CALIFORNIA--0.3% --------------------------------------------------------------------- $ 2,000,000 Southern California Public Power Authority, 7.875% Revenue Bonds (Southern Transmission Project)/ (Prerefunded), 7/1/96 (@ 103%) AAA $ 2,142,020 --------------------------------------------------------------------- -------------- COLORADO--1.3% --------------------------------------------------------------------- 7,810,000 Colorado Springs, CO, Utilities System, 8.00% Revenue Bonds (Series A)/(Prerefunded), 11/15/97 (@ 100%) Aaa 8,333,895 --------------------------------------------------------------------- 1,500,000 Colorado Springs, CO, Utilities System, 9.50% Revenue Bonds (Series A), 11/15/2015 Aa 1,548,660 --------------------------------------------------------------------- -------------- Total 9,882,555 --------------------------------------------------------------------- -------------- DISTRICT OF COLUMBIA--5.7% --------------------------------------------------------------------- 22,250,000 District of Columbia, 7.15% OID Revenue Bonds (Series 1990B)/(Georgetown University)/(Original Issue Yield: 7.19%), 4/1/2021 Aa 23,474,863 --------------------------------------------------------------------- 2,000,000 District of Columbia, 7.00% Hospital Revenue Refunding Bonds (Medlantic HealthCare Group)/(Original Issue Yield: 7.282%), 8/15/2015 BBB 1,886,240 --------------------------------------------------------------------- 12,775,000 District of Columbia, 7.125% Hospital Revenue Refunding Bonds (Medlantic-Washington Hospital Center)/(Original Issue Yield: 7.30%), 8/15/2019 BBB 12,449,621 --------------------------------------------------------------------- 4,765,000 District of Columbia, 8.25% Revenue Bonds (Georgetown University), 4/1/2018 Aa 5,220,486 --------------------------------------------------------------------- -------------- Total 43,031,210 --------------------------------------------------------------------- -------------- FLORIDA--6.3% --------------------------------------------------------------------- 3,000,000 Broward County, FL, 10.00% GO Bonds, 7/1/2014 Aa 4,421,700 --------------------------------------------------------------------- 4,335,000 Florida Board of Education, 9.125% Capital Outlay Bonds, 6/1/2014 Aa 6,020,361 --------------------------------------------------------------------- 665,000 Florida Board of Education, 9.125% Capital Outlay Bonds, 6/1/2014 Aa 924,510 --------------------------------------------------------------------- $ 10,500,000 Jacksonville, FL, Electric Authority, 7.70% Revenue Bonds (Prerefunded), 10/1/96 (@ 101.5%) Aaa $ 11,142,075 --------------------------------------------------------------------- 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+ 935,046 --------------------------------------------------------------------- 15,000,000 Orlando and Orange County, FL, Expressway Authority, 7.50% Junior Lien Revenue Bonds, 7/1/2016 A 15,840,150 --------------------------------------------------------------------- 7,500,000 Tampa, FL, 8.12% Utilities Tax & Special Revenue Bonds (AMBAC Insured), 10/1/2015 Aaa 8,246,850 --------------------------------------------------------------------- -------------- Total 47,530,692 --------------------------------------------------------------------- -------------- GEORGIA--3.1% --------------------------------------------------------------------- 5,000,000 Georgia State Municipal Electric Authority, 8.125% Power Supply Revenue Bonds (Series O), 1/1/2017 AA- 5,447,050 --------------------------------------------------------------------- 5,000,000 Georgia State Municipal Electric Authority, 8.375% Power Supply Revenue Bonds (Series A), 1/1/2020 AA- 5,380,100 --------------------------------------------------------------------- 4,200,000 Georgia State Municipal Electric Authority, 8.375% Power Supply Revenue Bonds (Series M), 1/1/2020 AA- 4,494,336 --------------------------------------------------------------------- 2,500,000 Georgia State Municipal Electric Authority, 8.375% Power Supply Revenue Bonds (Series Q), 1/1/2016 AA- 2,750,825 --------------------------------------------------------------------- 5,000,000 Metropolitan Atlanta Rapid Transit Authority, 8.00% Sales Tax Revenue Bonds (Series J)/(FGIC Insured)/ (Prerefunded), 7/1/98 (@ 102%) Aaa 5,558,100 --------------------------------------------------------------------- -------------- Total 23,630,411 --------------------------------------------------------------------- -------------- ILLINOIS--5.9% --------------------------------------------------------------------- 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 4,357,750 --------------------------------------------------------------------- $ 14,500,000 Illinois Health Facilities Authority, 9.25% Revenue Refunding Bonds (Series 1994A)/(Edgewater Hospital & Medical Center), 7/1/2024 NR $ 14,935,580 --------------------------------------------------------------------- 2,860,000 Illinois Health Facilities Authority, 6.125% Refunding Revenue Bonds (Lutheran Social Services)/(Original Issue Yield: 6.27%), 8/15/2010 NR 2,502,042 --------------------------------------------------------------------- 10,250,000 Illinois Health Facilities Authority, 7.00% Revenue Bonds (Trinity Medical Center)/(Original Issue Yield: 7.24%), 7/1/2012 Baa 10,352,500 --------------------------------------------------------------------- 4,565,000 Illinois State, 7.625% Sales Tax Revenue Bonds (Series B)/ (Build Illinois Program), 6/15/2015 AAA 4,822,192 --------------------------------------------------------------------- 6,250,000 Illinois State, 7.625% Sales Tax Revenue Bonds (Series H)/ (Build Illinois Program), 6/15/2018 AAA 6,867,625 --------------------------------------------------------------------- -------------- Total 43,837,689 --------------------------------------------------------------------- -------------- INDIANA--6.6% --------------------------------------------------------------------- 6,200,000 Indiana State Health Facilities Authority, 6.625% Revenue Bonds (Floyd Memorial Hospital Project)/(Original Issue Yield: 6.90%), 2/15/2022 A 6,199,318 --------------------------------------------------------------------- 33,000,000 Indianapolis, IN, Airport Authority, 7.10% Special Facility Revenue Bonds (Series 1994)/(Federal Express Corp.)/ (Original Issue Yield: 7.178%)/(Subject to AMT), 1/15/2017 BBB 34,108,140 --------------------------------------------------------------------- 10,000,000 Kokomo, IN, 6.35% Hospital Revenue Bonds (Original Issue Yield: 6.40%), 8/15/2013 Baa 9,332,700 --------------------------------------------------------------------- -------------- Total 49,640,158 --------------------------------------------------------------------- -------------- LOUISIANA--3.3% --------------------------------------------------------------------- 6,000,000 Louisiana State, Parish of De Soto, 7.70% Environmental Improvement Revenue Bonds (Series 1994A)/(International Paper Company)/(Subject to AMT), 11/1/2018 A- 6,563,100 --------------------------------------------------------------------- $ 3,550,000 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+ $ 3,586,707 --------------------------------------------------------------------- 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+ 4,510,950 --------------------------------------------------------------------- 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 10,080,200 --------------------------------------------------------------------- -------------- Total 24,740,957 --------------------------------------------------------------------- -------------- MARYLAND--2.0% --------------------------------------------------------------------- 12,230,000 Maryland State Department of Housing & Community Development, 6.75% SFH Mortgage Revenue Bonds (Subject to AMT), 4/1/2026 Aa 12,419,565 --------------------------------------------------------------------- 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 2,371,590 --------------------------------------------------------------------- -------------- Total 14,791,155 --------------------------------------------------------------------- -------------- MASSACHUSETTS--5.3% --------------------------------------------------------------------- 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 35,249,682 --------------------------------------------------------------------- 4,700,000 Massachusetts State HEFA, 6.50% Revenue Bonds (Series B)/(Holyoke Hospital)/(Original Issue Yield: 6.75%), 7/1/2015 Baa1 4,360,848 --------------------------------------------------------------------- -------------- Total 39,610,530 --------------------------------------------------------------------- -------------- MICHIGAN--0.1% --------------------------------------------------------------------- $ 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 $ 523,905 --------------------------------------------------------------------- -------------- MINNESOTA--1.5% --------------------------------------------------------------------- 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- 11,331,656 --------------------------------------------------------------------- -------------- 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 7,410,320 --------------------------------------------------------------------- -------------- 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 5,334,300 --------------------------------------------------------------------- -------------- NEW YORK--5.9% --------------------------------------------------------------------- 3,000,000 Municipal Assistance Corp. of New York, 7.625% Bonds (Series 67), 7/1/2008 Aa 3,314,820 --------------------------------------------------------------------- 13,000,000 New York State Power Authority, 8.00% Revenue Bonds, 1/1/2017 Aa 14,166,620 --------------------------------------------------------------------- 2,000,000 New York State Mortgage Agency, 6.65% Revenue Bonds (Series 30B)/(Subject to AMT), 10/1/2025 Aa 2,008,480 --------------------------------------------------------------------- 2,750,000 Triborough Bridge and Tunnel Authority, NY, 7.875% Revenue Bonds (Series N)/(Prerefunded), 1/1/98 (@ 102%) Aaa 3,002,780 --------------------------------------------------------------------- 7,000,000 Triborough Bridge and Tunnel Authority, NY, 7.625% Revenue Bonds (Series I)/(Prerefunded), 1/1/96 (@ 102%) Aaa 7,303,800 --------------------------------------------------------------------- $ 9,000,000 Triborough Bridge and Tunnel Authority, NY, 7.70% Revenue Bonds (Series O)/(Prerefunded), 1/1/99 (@ 101.5%) Aaa $ 9,988,110 --------------------------------------------------------------------- 4,300,000 Triborough Bridge and Tunnel Authority, NY, 8.125% Revenue Bonds (Series L), 1/1/2012 Aa 4,730,430 --------------------------------------------------------------------- -------------- Total 44,515,040 --------------------------------------------------------------------- -------------- NORTH CAROLINA--3.3% --------------------------------------------------------------------- 4,000,000 North Carolina Eastern Municipal Power Agency, 5.75% Revenue Bonds (Series A)/(Original Issue Yield: 6.734%), 1/1/2019 A- 3,577,000 --------------------------------------------------------------------- 13,500,000 North Carolina Municipal Power Agency Pound1, 7.875% Revenue Bonds (Catawba Electric), 1/1/2019 A 14,807,610 --------------------------------------------------------------------- 6,000,000 North Carolina Municipal Power Agency Pound1, 8.50% Revenue Bonds (Series B)/(Catawba Electric), 1/1/2017 A 6,306,480 --------------------------------------------------------------------- -------------- Total 24,691,090 --------------------------------------------------------------------- -------------- OHIO--2.0% --------------------------------------------------------------------- 1,200,000 Cuyahoga County, OH, 8.00% Revenue Bonds (Cleveland Clinic Foundation)/(Original Issue Yield: 8.045%), 12/1/2015 Aa 1,291,692 --------------------------------------------------------------------- 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 1,085,710 --------------------------------------------------------------------- 14,000,000 Ohio State Air Quality Development Authority, 5.95% Revenue Bonds (Ohio Edison Co.), 5/15/2029 BBB- 12,245,100 --------------------------------------------------------------------- -------------- Total 14,622,502 --------------------------------------------------------------------- -------------- OKLAHOMA--1.6% --------------------------------------------------------------------- $ 4,585,000 Jackson County, OK, Memorial Hospital Authority, 7.30% Revenue Bonds (Original Issue Yield: 7.40%), 8/1/2015 BBB- $ 4,379,271 --------------------------------------------------------------------- 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 Baa 7,737,600 --------------------------------------------------------------------- -------------- Total 12,116,871 --------------------------------------------------------------------- -------------- PENNSYLVANIA--9.5% --------------------------------------------------------------------- 750,000 Geisinger, PA Health System, 7.625% Revenue Bonds (Original Issue Yield: 7.695%), 7/1/2009 AA 840,450 --------------------------------------------------------------------- 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 1,323,231 --------------------------------------------------------------------- 5,000,000 Montgomery County, PA, Higher Education & Health Facilities Authority, 9.375% Revenue Bonds (Bryn Mawr Hospital)/(Prerefunded), 12/1/97 (@102) AAA 5,651,000 --------------------------------------------------------------------- 6,250,000 Pennsylvania EDA, 7.60% Exempt Facilities Revenue Bonds (Series 1995)/(MacMillan Bloedel Clarion L.P.)/ (Original Issue Yield: 7.65%)/(Subject to AMT), 12/1/2020 BBB- 6,576,813 --------------------------------------------------------------------- 20,500,000 Pennsylvania EDA, 7.60% Wastewater Treatment Revenue Bonds (Series 1994A)/(Sun Company)/(Original Issue Yield: 7.653%)/(Subject to AMT), 12/1/2024 BBB- 21,695,150 --------------------------------------------------------------------- 12,865,000 Pennsylvania HEFA, 7.375% Revenue Bonds (Medical College of Pennsylvania)/(Original Issue Yield: 7.45%), 3/1/2021 Baa1 12,943,991 --------------------------------------------------------------------- 12,000,000 Pennsylvania HFA, 6.875% SFM Revenue Bonds (Series 1994-39-B)/(Subject to AMT), 10/1/2024 AA 12,349,680 --------------------------------------------------------------------- 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 4,231,600 --------------------------------------------------------------------- $ 5,000,000 Sayre, PA, Health Care Facilities Authority, 7.10% Revenue Bonds (Guthrie Healthcare System)/(AMBAC Insured), 3/1/2017 Aaa $ 5,326,050 --------------------------------------------------------------------- -------------- Total 70,937,965 --------------------------------------------------------------------- -------------- SOUTH CAROLINA--2.5% --------------------------------------------------------------------- 3,685,000 South Carolina Public Service Authority, 7.875% Revenue Bonds (Prerefunded), 1/1/96 (@ 102%) Aaa 3,854,436 --------------------------------------------------------------------- 13,925,000 South Carolina, 7.875% Electric Revenue System (Prerefunded), 1/1/96 (@ 102%) Aaa 14,551,707 --------------------------------------------------------------------- -------------- Total 18,406,143 --------------------------------------------------------------------- -------------- TENNESSEE--2.7% --------------------------------------------------------------------- 5,000,000 Springfield, TN, HEFA, 8.25% Revenue Bonds (Jesse Holman Jones Hospital)/(Original Issue Yield: 8.50%), 4/1/2012 NR 5,116,100 --------------------------------------------------------------------- 15,000,000 Springfield, TN, HEFA, 8.50% Revenue Bonds (Jesse Holman Jones Hospital)/(Original Issue Yield: 8.875%), 4/1/2024 NR 15,093,600 --------------------------------------------------------------------- -------------- Total 20,209,700 --------------------------------------------------------------------- -------------- TEXAS--10.0% --------------------------------------------------------------------- 4,000,000 Brazos River Authority, TX, 7.875% PCR Bonds (Texas Utilities Electric Company)/(Subject to AMT), 3/1/2021 Baa2 4,288,400 --------------------------------------------------------------------- 14,500,000 Brazos River Authority, TX, 8.10% PCR Bonds (Houston Light & Power Co.)/ (BIG Insured), 5/1/2019 Aaa 16,039,755 --------------------------------------------------------------------- 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 12,897,773 --------------------------------------------------------------------- $ 3,700,000 Red River Authority, TX, PCR, 6.875% Revenue Bonds (Hoechst Celanese Corp.)/(Original Issue Yield: 6.939%)/ (Subject to AMT), 4/1/2017 AA- $ 3,813,738 --------------------------------------------------------------------- 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 940,990 --------------------------------------------------------------------- 16,500,000 Sabine River Authority, TX, 8.20% PCR Bonds (Southwestern Electric Power), 7/1/2014 Aa3 17,337,045 --------------------------------------------------------------------- 495,000 Texas HFA, 9.375% SFM Revenue Bonds (Series B), 9/1/2015 Aa 514,389 --------------------------------------------------------------------- 3,000,000 Texas Veterans Housing Assistance Program, 7.00% GO Bonds (Series DD)/(Subject to AMT), 12/1/2025 AA 3,108,540 --------------------------------------------------------------------- 12,505,000 Travis County, TX, Housing Finance Corporation, 7.10% SFM Revenue Bonds (GNMA & FNMA Mortgage Backed Securities)/(Subject to AMT), 10/1/2027 AAA 13,166,139 --------------------------------------------------------------------- 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 2,798,940 --------------------------------------------------------------------- -------------- Total 74,905,709 --------------------------------------------------------------------- -------------- UTAH--4.3% --------------------------------------------------------------------- 1,000,000 Intermountain Power Agency, UT, 7.50% Power Supply Revenue Bonds, Callable 7/1/96 (@102) AA 1,041,290 --------------------------------------------------------------------- 2,000,000 Intermountain Power Agency, UT, 7.875% Special Obligations Crossover Refunding Revenue Bonds, Callable 7/1/96 (@102) AA 2,098,700 --------------------------------------------------------------------- 9,500,000 Intermountain Power Agency, UT, 8.625% Power Supply Revenue Bonds, 7/1/2021 AA 10,322,890 --------------------------------------------------------------------- 13,500,000 Salt Lake City, UT, 8.125% Hospital Revenue Bonds (Series A)/(Intermountain Health Care), 5/15/2015 Aa 16,078,365 --------------------------------------------------------------------- $ 2,500,000 Salt Lake City, UT, 8.125% Hospital Revenue Bonds (Series B)/(Intermountain Health Care), 5/15/2015 (Escrowed to Maturity) Aa $ 2,755,925 --------------------------------------------------------------------- -------------- Total 32,297,170 --------------------------------------------------------------------- -------------- VIRGINIA--0.6% --------------------------------------------------------------------- 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- 1,930,200 --------------------------------------------------------------------- 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- 2,397,875 --------------------------------------------------------------------- -------------- Total 4,328,075 --------------------------------------------------------------------- -------------- WASHINGTON--0.8% --------------------------------------------------------------------- 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 5,993,202 --------------------------------------------------------------------- -------------- WEST VIRGINIA--3.0% --------------------------------------------------------------------- 20,000,000 Marion County, WV, 7.75% Solid Waste Disposal Revenue Bonds (Series 1993)/(American Power Paper Recycling)/ (Subject to AMT), 12/1/2011 NR 18,756,600 --------------------------------------------------------------------- 3,800,000 Marion County, WV, 8.25% Solid Waste Disposal Revenue Bonds (American Power Paper Recycling)/(Subject to AMT), 12/1/2011 NR 3,735,286 --------------------------------------------------------------------- -------------- Total 22,491,886 --------------------------------------------------------------------- -------------- WYOMING--1.0% --------------------------------------------------------------------- $ 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 $ 7,545,342 --------------------------------------------------------------------- -------------- TOTAL LONG-TERM MUNICIPAL SECURITIES (IDENTIFIED COST $674,145,167) 701,099,063 --------------------------------------------------------------------- -------------- TOTAL MUNICIPAL SECURITIES (IDENTIFIED COST $706,695,167) $ 733,649,063(A) --------------------------------------------------------------------- --------------
(a) The cost of investments for federal tax purposes amounts to $707,103,777. The net unrealized appreciation of investments on a federal tax basis amounts to $26,545,286 which is comprised of $35,390,601 appreciation and $8,845,315 depreciation at March 31, 1995. * Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. Current credit ratings are unaudited. Note: The categories of investments are shown as a percentage of net assets ($749,301,968) at March 31, 1995. The following abbreviation(s) are used throughout 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 FNMA--Federal National Mortgage Association GNMA-- Government National Mortgage Association GO--General Obligation HEFA-- Health and Education Facilities Authority HFA--Housing Finance Authority HFDC-- Health Facility Development Corporation IDA--Industrial Development Authority IFA--Industrial Finance Authority LOCs--Letter(s) of Credit LOC--Letter of Credit MBIA--Municipal Bond Investors Assurance OID--Original Issue Discount PCR--Pollution Control Revenue SFH--Single Family Housing SFM--Single Family Mortgage UT--Unlimited Tax VA--Virginia/Veterans Administration VRDNs--Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements.) Liberty Municipal Securities Fund, Inc. Statement of Assets and Liabilities -------------------------------------------------------------------------------- March 31, 1995 ASSETS: --------------------------------------------------------------------------------------------------- Investments in securities, at value (identified cost, $706,695,167 and tax cost, $707,103,777) $ 733,649,063 --------------------------------------------------------------------------------------------------- Cash 173,521 --------------------------------------------------------------------------------------------------- Income receivable 15,710,864 --------------------------------------------------------------------------------------------------- Receivable for shares sold 1,587,162 --------------------------------------------------------------------------------------------------- Other assets 149,119 --------------------------------------------------------------------------------------------------- ------------- Total assets 751,269,729 --------------------------------------------------------------------------------------------------- LIABILITIES: --------------------------------------------------------------------------------------------------- Income distribution payable $ 1,389,544 -------------------------------------------------------------------------------------- Payable for shares redeemed 454,264 -------------------------------------------------------------------------------------- Accrued expenses 123,953 -------------------------------------------------------------------------------------- ----------- Total liabilities 1,967,761 --------------------------------------------------------------------------------------------------- ------------- NET ASSETS for 68,621,999 shares outstanding $ 749,301,968 --------------------------------------------------------------------------------------------------- ------------- NET ASSETS CONSIST OF: --------------------------------------------------------------------------------------------------- Paid in capital $ 721,791,660 --------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investments 26,953,896 --------------------------------------------------------------------------------------------------- Accumulated net realized gain on investments 556,412 --------------------------------------------------------------------------------------------------- ------------- Total Net Assets $ 749,301,968 --------------------------------------------------------------------------------------------------- ------------- CLASS A SHARES: --------------------------------------------------------------------------------------------------- Net Asset Value Per Share ($708,711,921 / 64,904,435 shares outstanding) $10.92 --------------------------------------------------------------------------------------------------- ------------- Offering Price Per Share (100/95.5 of $10.92)* $11.43 --------------------------------------------------------------------------------------------------- ------------- Redemption Proceeds Per Share** $10.92 --------------------------------------------------------------------------------------------------- ------------- CLASS C SHARES: --------------------------------------------------------------------------------------------------- Net Asset Value Per Share ($22,388,592 / 2,050,571 shares outstanding) $10.92 --------------------------------------------------------------------------------------------------- ------------- Offering Price Per Share* $10.92 --------------------------------------------------------------------------------------------------- ------------- Redemption Proceeds Per Share (99/100 of $10.92)** $10.81 --------------------------------------------------------------------------------------------------- ------------- CLASS B SHARES: --------------------------------------------------------------------------------------------------- Net Asset Value Per Share ($18,201,455 / 1,666,993 shares outstanding) $10.92 --------------------------------------------------------------------------------------------------- ------------- Offering Price Per Share* $10.92 --------------------------------------------------------------------------------------------------- ------------- Redemption Proceeds Per Share (94.5/100 of $10.92)** $10.32 --------------------------------------------------------------------------------------------------- -------------
*See "How To Purchase Shares" in the prospectus. **See "How To Redeem Shares" in the prospectus. (See Notes which are an integral part of the Financial Statements) Liberty Municipal Securities Fund, Inc. Statement of Operations -------------------------------------------------------------------------------- Year Ended March 31, 1995 INVESTMENT INCOME: -------------------------------------------------------------------------------------------------- Interest $ 51,529,349 -------------------------------------------------------------------------------------------------- EXPENSES: -------------------------------------------------------------------------------------------------- Investment advisory fee $ 4,498,635 ----------------------------------------------------------------------------------- Administrative personnel and services fee 550,028 ----------------------------------------------------------------------------------- Custodian fees 181,873 ----------------------------------------------------------------------------------- Transfer agent and dividend disbursing agent fees and expenses 363,028 ----------------------------------------------------------------------------------- Director's/Trustee's fees 11,977 ----------------------------------------------------------------------------------- Auditing fees 18,967 ----------------------------------------------------------------------------------- Legal fees 17,978 ----------------------------------------------------------------------------------- Portfolio accounting fees 70,744 ----------------------------------------------------------------------------------- Distribution services fee--Select Shares 1,448 ----------------------------------------------------------------------------------- Distribution services fee--Class C Shares 166,386 ----------------------------------------------------------------------------------- Distribution services fee--Class B Shares 38,166 ----------------------------------------------------------------------------------- Shareholder services fee--Class A Shares 659,513 ----------------------------------------------------------------------------------- Shareholder services fee--Select Shares 483 ----------------------------------------------------------------------------------- Shareholder services fee--Class C Shares 55,984 ----------------------------------------------------------------------------------- Shareholder services fee--Class B Shares 12,722 ----------------------------------------------------------------------------------- Share registration costs 49,674 ----------------------------------------------------------------------------------- Printing and postage 84,244 ----------------------------------------------------------------------------------- Insurance premiums 16,755 ----------------------------------------------------------------------------------- Taxes 97,638 ----------------------------------------------------------------------------------- Miscellaneous 4,827 ----------------------------------------------------------------------------------- ------------- Total expenses 6,901,070 -------------------------------------------------------------------------------------------------- -------------- Net investment income 44,628,279 -------------------------------------------------------------------------------------------------- -------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: -------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments 7,819,630 -------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) of investments (10,931,022) -------------------------------------------------------------------------------------------------- -------------- Net realized and unrealized gain (loss) on investments (3,111,392) -------------------------------------------------------------------------------------------------- -------------- Change in net assets resulting from operations $ 41,516,887 -------------------------------------------------------------------------------------------------- --------------
(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 $ 44,628,279 $ 43,122,210 ------------------------------------------------------------------------------- Net realized gain (loss) on investments ($8,228,240 and $11,496,140 net gain, respectively, as computed for federal income tax purposes) 7,819,630 11,496,140 ------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) of investments (10,931,022) (38,359,833) ------------------------------------------------------------------------------- --------------- --------------- Change in assets resulting from operations 41,516,887 16,258,517 ------------------------------------------------------------------------------- --------------- --------------- DISTRIBUTIONS TO SHAREHOLDERS-- ------------------------------------------------------------------------------- Distributions from net investment income: ------------------------------------------------------------------------------- Class A Shares (43,126,423) (42,577,953) ------------------------------------------------------------------------------- Select Shares (9,592) (2,853) ------------------------------------------------------------------------------- Class C Shares (1,190,042) (541,404) ------------------------------------------------------------------------------- Class B Shares (302,222) 0 ------------------------------------------------------------------------------- Distributions from net realized gains: ------------------------------------------------------------------------------- Class A Shares (14,957,324) (1,289,936) ------------------------------------------------------------------------------- Select Shares (6,166) 0 ------------------------------------------------------------------------------- Class C Shares (461,364) (30,507) ------------------------------------------------------------------------------- Class B Shares (100,862) 0 ------------------------------------------------------------------------------- --------------- --------------- Change in net assets resulting from distributions to shareholders (60,153,995) (44,442,653) ------------------------------------------------------------------------------- --------------- --------------- SHARE TRANSACTIONS-- ------------------------------------------------------------------------------- Proceeds from sale of Shares 299,314,879 294,116,244 ------------------------------------------------------------------------------- Net asset value of Shares issued to shareholders in payment of distributions declared 38,127,189 28,065,973 ------------------------------------------------------------------------------- Cost of Shares redeemed (306,549,262) (263,078,057) ------------------------------------------------------------------------------- --------------- --------------- Change in net assets resulting from share transactions 30,892,806 59,104,160 ------------------------------------------------------------------------------- --------------- --------------- Change in net assets 12,255,698 30,920,024 ------------------------------------------------------------------------------- NET ASSETS: ------------------------------------------------------------------------------- Beginning of period 737,046,270 706,126,246 ------------------------------------------------------------------------------- --------------- --------------- End of period $ 749,301,968 $ 737,046,270 ------------------------------------------------------------------------------- --------------- ---------------
(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 0.67 0.66 0.66 0.67 0.71 0.72 0.72 0.73 0.75 --------------------------- Net realized and unrealized gain (loss) on investments (0.05) (0.40) 0.64 0.37 0.14 0.21 0.23 (0.77) 0.29 --------------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Total from investment operations 0.62 0.26 1.30 1.04 0.85 0.93 0.95 (0.04) 1.04 --------------------------- LESS DISTRIBUTIONS --------------------------- Distributions from net investment income (0.67) (0.66) (0.66) (0.67) (0.71) (0.72) (0.72) (0.73) (0.75) --------------------------- Distributions from net realized gain on invest- ment transactions (0.23) (0.02) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 --------------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Total distributions (0.90) (0.68) (0.66) (0.67) (0.71) (0.72) (0.72) (0.73) (0.75) --------------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 10.92 $ 11.20 $ 11.62 $ 10.98 $ 10.61 $ 10.47 $ 10.26 $ 10.03 $ 10.80 --------------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- TOTAL RETURN (a) 5.90% 2.10% 12.13% 10.05% 8.42% 9.20% 9.76% (0.17%) 10.28% --------------------------- RATIOS TO AVERAGE NET ASSETS --------------------------- Expenses 0.92% 0.84% 0.80% 0.84% 0.89% 0.90% 0.95% 0.95% 0.95% --------------------------- Net investment income 6.17% 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) $708,712 $714,384 $706,126 $590,118 $511,611 $474,797 $440,445 $388,916 $424,655 --------------------------- Portfolio turnover 41% 27% 13% 8% 45% 25% 58% 55% 13% --------------------------- 1986 NET ASSET VALUE, BEGINNING OF PERIOD $ 8.91 --------------------------- INCOME FROM INVESTMENT OPERATIONS --------------------------- Net investment income 0.80 --------------------------- Net realized and unrealized gain (loss) on investments 1.60 --------------------------- --------- Total from investment operations 2.40 --------------------------- LESS DISTRIBUTIONS --------------------------- Distributions from net investment income (0.80) --------------------------- Distributions from net realized gain on invest- ment transactions 0.00 --------------------------- --------- Total distributions (0.80) --------------------------- --------- NET ASSET VALUE, END OF PERIOD $ 10.51 --------------------------- --------- TOTAL RETURN (a) 28.25% --------------------------- RATIOS TO AVERAGE NET ASSETS --------------------------- Expenses 0.93% --------------------------- Net investment income 8.39% --------------------------- Expense waiver/ reimbursement (b) 0.23% --------------------------- SUPPLEMENTAL DATA --------------------------- Net assets, end of period (000 omitted) $248,710 --------------------------- Portfolio turnover 2% ---------------------------
(a) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (b) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) Liberty Municipal Securities Fund, Inc. Financial Highlights--Class B Shares -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
PERIOD ENDED MARCH 31, 1995(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 11.06 ------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS ------------------------------------------------------------------------------------------- Net investment income 0.40 ------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.03) ------------------------------------------------------------------------------------------- ------- Total from investment operations 0.37 ------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS ------------------------------------------------------------------------------------------- Distributions from net investment income (0.40) ------------------------------------------------------------------------------------------- Distributions from net realized gain on investment transactions (0.11) ------------------------------------------------------------------------------------------- ------- Total distributions (0.51) ------------------------------------------------------------------------------------------- ------- NET ASSET VALUE, END OF PERIOD $ 10.92 ------------------------------------------------------------------------------------------- ------- TOTAL RETURN (B) 3.49% ------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS ------------------------------------------------------------------------------------------- Expenses 1.84%(c) ------------------------------------------------------------------------------------------- Net investment income 5.94%(c) ------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA ------------------------------------------------------------------------------------------- Net assets, end of period (000 omitted) $18,201 ------------------------------------------------------------------------------------------- Portfolio turnover 41% -------------------------------------------------------------------------------------------
(a) Reflects operations for the period from July 26, 1994 (date of initial public offering) to March 31, 1995. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) 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 EACH PERIOD)
YEAR ENDED MARCH 31, 1995 1994(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 11.20 $ 11.70 ------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS ------------------------------------------------------------------------------------------- Net investment income 0.58 0.52 ------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (0.05) (0.48) ------------------------------------------------------------------------------------------- --------- ----------- Total from investment operations 0.53 0.04 ------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS ------------------------------------------------------------------------------------------- Distributions from net investment income (0.58) (0.52) ------------------------------------------------------------------------------------------- Distributions from net realized gain on investment transactions (0.23) (0.02) ------------------------------------------------------------------------------------------- --------- ----------- Total distributions (0.81) (0.54) ------------------------------------------------------------------------------------------- --------- ----------- NET ASSET VALUE, END OF PERIOD $ 10.92 $ 11.20 ------------------------------------------------------------------------------------------- --------- ----------- TOTAL RETURN (b) 4.96% 0.17% ------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS ------------------------------------------------------------------------------------------- Expenses 1.81% 1.80%(c) ------------------------------------------------------------------------------------------- Net investment income 5.28% 4.70%(c) ------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA ------------------------------------------------------------------------------------------- Net assets, end of period (000 omitted) $22,389 $22,066 ------------------------------------------------------------------------------------------- Portfolio turnover 41% 27% -------------------------------------------------------------------------------------------
(a) Reflects operations for the period from April 20, 1993 (date of initial public offering) to March 31, 1994. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) 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 EACH PERIOD)
YEAR ENDED MARCH 31, 1995(A) 1994(B) NET ASSET VALUE, BEGINNING OF PERIOD $ 11.20 $ 11.88 ----------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS ----------------------------------------------------------------------------------------- Net investment income 0.19 0.12 ----------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 0.02 (0.68) ----------------------------------------------------------------------------------------- ----------- ----------- Total from investment operations 0.21 (0.56) ----------------------------------------------------------------------------------------- LESS DISTRIBUTIONS ----------------------------------------------------------------------------------------- Distributions from net investment income (0.19) (0.12) ----------------------------------------------------------------------------------------- Distributions from net realized gain on investment transactions (0.12) -- ----------------------------------------------------------------------------------------- ----------- ----------- Total distributions (0.31) (0.12) ----------------------------------------------------------------------------------------- ----------- ----------- NET ASSET VALUE, END OF PERIOD $ 11.10 $ 11.20 ----------------------------------------------------------------------------------------- ----------- ----------- TOTAL RETURN (c) 1.86% (4.76%) ----------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS ----------------------------------------------------------------------------------------- Expenses 1.82%(d) 1.80%(d) ----------------------------------------------------------------------------------------- Net investment income 5.01%(d) 5.08%(d) ----------------------------------------------------------------------------------------- SUPPLEMENTAL DATA ----------------------------------------------------------------------------------------- Net assets, end of period (000 omitted) $ -- $ 596 ----------------------------------------------------------------------------------------- Portfolio turnover 41% 27% -----------------------------------------------------------------------------------------
(a) Reflects operations for the period from April 1, 1994 to July 29, 1994 (date Select Shares ceased operations). (b) Reflects operations for the period from January 15, 1994 (date of initial public offering) to March 31, 1994. (c) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (d) 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, 1995 1. ORGANIZATION Liberty Municipal Securities Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a diversified, open-end, management investment company. Effective July 29, 1994, the Select Shares ceased operations and were reclassified as Class C Shares. Also, effective July 26, 1994, the Fund added Class B Shares. Consequently, the Fund currently offers three classes of shares ("Class A Shares," "Class B Shares," and "Class C Shares"). 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS--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 the pricing service 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 at the time of purchase may be valued at amortized cost, which approximates fair market value. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. OTHER--Investment transactions are accounted for on the trade date. 3. CAPITAL STOCK At March 31, 1995, par value ($0.01) shares authorized were as follows:
NUMBER OF PAR VALUE CLASS NAME SHARES AUTHORIZED Class A Shares 375,000,000 Class C Shares 375,000,000 Class B Shares 250,000,000 -------------------------- Total shares authorized 1,000,000,000 --------------------------
Transactions in shares were as follows:
YEAR ENDED MARCH 31, 1995 1994 CLASS A SHARES SHARES AMOUNT SHARES AMOUNT Shares sold 25,045,927 $ 272,914,437 22,832,885 $ 268,781,200 ------------------------------------------------- Shares issued to shareholders in payment of dividends declared 3,400,590 37,033,517 2,365,264 27,795,028 ------------------------------------------------- Shares redeemed (27,342,942) (297,338,150) (22,182,727) (261,363,852) ------------------------------------------------- ------------- --------------- ------------- --------------- Net change resulting from Class A Shares transactions 1,103,575 $ 12,609,804 3,015,422 $ 35,212,376 ------------------------------------------------- ------------- --------------- ------------- ---------------
YEAR ENDED MARCH 31, 1995** 1994* SELECT SHARES SHARES AMOUNT SHARES AMOUNT 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 (6,696) (107,780) (730) (8,285) ------------------------------------------------- Shares reclassified to Class C Shares (49,365) (548,045) -- -- ------------------------------------------------- ------------- --------------- ------------- --------------- Net change resulting from Select Shares transactions (53,223) ($ 624,181) 53,223 $ 624,181 ------------------------------------------------- ------------- --------------- ------------- ---------------
*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 1, 1994 to July 29, 1994 (date Select Shares ceased operations).
YEAR ENDED MARCH 31, 1995 1994*** CLASS C SHARES SHARES AMOUNT SHARES AMOUNT Shares sold 704,834 $ 7,726,015 2,092,015 $ 24,704,800 ---------------------------------------------------- Shares reclassified from Select Shares 49,365 548,045 -- -- ---------------------------------------------------- Shares issued to shareholders in payment of dividends declared 78,551 854,825 22,904 268,723 ---------------------------------------------------- Shares redeemed (752,853) (8,175,228) (144,245) (1,705,920) ---------------------------------------------------- --------- ------------- ---------- -------------- Net change resulting from Class C Shares transactions 79,897 $ 953,657 1,970,674 $ 23,267,603 ---------------------------------------------------- --------- ------------- ---------- --------------
***Reflects operations for the period from April 20, 1993 (date of initial public offering) to March 31, 1994.
PERIOD ENDED MARCH 31, 1995**** 1994 CLASS B SHARES SHARES AMOUNT SHARES AMOUNT Shares sold 1,680,837 $ 18,106,451 0 $ 0 --------------------------------------------------- Shares issued to shareholders in payment of dividends declared 21,290 227,134 0 0 --------------------------------------------------- Shares redeemed (35,134) (380,059) 0 0 --------------------------------------------------- ---------- ------------- ---------- ------------- Net change resulting from Class B Shares transactions 1,666,993 $ 17,953,526 0 $ 0 --------------------------------------------------- ---------- ------------- ---------- ------------- Net change resulting from Fund Shares transactions 2,797,242 $ 30,892,806 5,039,319 $ 59,104,160 --------------------------------------------------- ---------- ------------- ---------- -------------
****Reflects operations for the period from July 26, 1994 (date of initial public offering) to March 31, 1995. 4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--Federated Advisers, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to a maximum of .30 of 1% of the Fund's average daily net assets, and 4.50% of the gross income of the Fund, excluding capital gains or losses. ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the Administrative Services Agreement, 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. DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. ("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. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average daily net assets of each class of shares for the period. This fee is to obtain certain personal services for shareholders and to maintain the shareholder accounts. TRANSFER AGENT FEES--Federated Services Company ("FServ") serves as transfer and dividend disbursing agent for the Fund. This fee is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of each Fund's average daily net assets for the period plus, out-of-pocket expenses. INTERFUND TRANSACTIONS--During the year ended March 31, 1995, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These transactions were made at current market value with funds pursuant to Rule 17a-7 under the Act amounting to $282,184,260 and $230,100,000, respectively. GENERAL--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 year ended March 31, 1995 were as follows: -------------------------------------------------------------------------------------------------- PURCHASES $ 291,479,559 -------------------------------------------------------------------------------------------------- -------------- SALES $ 310,044,580 -------------------------------------------------------------------------------------------------- --------------
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, 1995, the related statement of operations for the year then ended, the statements of changes in net assets for the years ended March 31, 1995 and 1994, and the financial highlights for each of the periods in the ten-year period ended March 31, 1995. 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 audit 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 disclosures in the financial statements. Our procedures included confirmation of the securities owned at March 31, 1995 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, 1995, 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 LLP Pittsburgh, Pennsylvania May 15, 1995 Directors Officers -------------------------------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley Chairman John T. Conroy, Jr. J. Christopher Donahue William J. Copeland President J. Christopher Donahue Richard B. Fisher James E. Dowd Vice President Lawrence D. Ellis, M.D. Edward C. Gonzales Edward L. Flaherty, Jr. Vice President and Treasurer Peter E. Madden John W. McGonigle Gregor F. Meyer Vice President and Secretary John E. Murray, Jr. David M. Taylor Wesley W. Posvar Assistant Treasurer Marjorie P. Smuts Charles H. Field Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including possible loss of principal. This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. [LOGO] FEDERATED SECURITIES CORP. ------------------------------------------------------------------------------- Distributor A Subsidiary of Federated Investors Federated Investors Tower Pittsburgh, PA 15222-3779 530900109 530900406 530900208 8042830 (5/95) A1. The graphic presentation here displayed consists of a boxed legend in the upper left quadrant indicating the components of the corresponding mountain chart. The color coded mountain chart is a visual representation of the narrative text above it, which shows that an initial investment of $19,000 in the Class A Shares of Liberty Municipal Securities Fund, Inc. in 1976 would have grown to $59,854. The "x" axis reflects computation periods from 1976 to 1995, 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. A2. 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 $41,683. The "x" axis reflects computation periods from 1976 to 1995, the "y" axis reflects the cost of the investment, and the right margin reflects a total investment range from $0 to $50,000. The chart further indicates the ending value attributable to principal, as well as the ending market value attributable to capital gains and reinvested dividends. A3. 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 1985 would have grown to $58,435. The "x" axis reflects computation periods from 1985 to 1995, 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. A4. The graphic presentation here displayed consists of a five-column chart outlining the ten 10-year periods of investment growth. The columns are as follows: the 10-year periods from April 1-March 31; Intial Number of Shares; Dividends and Capital Gains Reinvested; Total Shares; Ending Value of Shares. The information is as follows: 1976- 1986; 764; $8,477;1,571; $16,506; 1977-1987; 739; $9,176; 1,588, $17,152; 1978-1988; 728; $8,705; 1,596; $16,005; 1979-1989; 790; $9,944; 1,760; $18,055; 1980-1990; 1,087; $14,025; 2,426; $25,405; 1981-1991; 1,135; $14,561; 2,507; $26,605; 1982-1992; 1,328; $16,462; 2,827; $31,044; 1983-1993; 1,021; $12,694; 2,114; $24,563; 1984-1994; 1,049; $11,936; 2,115; $23,689; 1985-1995; 1,072; $11,778; 2,150; $23,482. A5. The graphic presentation here displayed consists of a two-column chart outlining the Fund's Major Shareholder Groups. The information is as follows: Individuals and Joint Tenants, $467,554,714; Trusts, $111,144,844; Corporations, $3,943,982; Clubs/Fraternal Organizations, $2,810,348; Custodians (under Uniform Gift to Minors Act), $1,997,243. A6. The bar chart is a visual representation of Liberty Municipal Securities Fund, Inc. portfolio distribution as of March 31, 1995. The information is as follows: AAA, 20.7%; AA, 24.2%; A, 11.7%; BBB, 27.4%; No Rating, 16.0%. Underneath this bar chart is another chart showing the five largest holdings of Liberty Municipal Securities Fund, Inc. It shows two categories entitled, Holdings and Percentage. The information listed is as follows: Massachusetts IFA-9.00%, due 8/1/2016-Fitchburg Recycling, 4.80%; Indianapolis-Airport Authority 7.10%, due 1/15/2017, 4.65%; Illinois DFA-Chicago Symphony, 3.95%; District of Columbia-7.15%, due 4/1/2021-Georgetown University, 3.20%; Marion County, WV-7.75%- 8.25%, due 12/1/2011-Recycling Project, 3.07%. A7. 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 Liberty Municipal Securities Fund, Inc. are represented by a solid line, whereas Lehman Brothers Revenue Bond Index is represented by a broken dotted line. The line graph is a visual representation of a comparison of change in value of a $10,000 hypothetical investment in the Class A Shares of the fund and Lehman Brothers Revenue Bond Index for the ten-year period from March 31, 1985 to March 31, 1995. 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 A Shares of the fund as compared to Lehman Brothers Revenue Bond Index; the ending values are $23,374 and $24,908, respectively. Beneath the list of 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. The corresponding total return figures are as follows: 1.11%; 6.68%; and 8.86%, respectively. The performance disclaimer and footnotes are listed directly under the graphic presentation. A8. The graphic presentation here displayed consists of a line graph. The corresponding components of the line graph are listed underneath. The Class B Shares of Liberty Municipal Securities Fund, Inc. are represented by a solid line, whereas Lehman Brothers Revenue Bond Index is represented by a broken dotted line. The line graph is a visual representation of a comparison of change in value of a $10,000 hypothetical investment in the Class B Shares of the fund and Lehman Brothers Revenue Bond Index for the period from July 26, 1994 (start of performance) to March 31, 1995. 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 B Shares of the fund as compared to Lehman Brothers Revenue Bond Index; the ending values are $9,783 and $10,444, respectively. Beneath the list of components that correspond to the line graph is the cumulative total return for the period from July 26, 1994 (start of performance) to March 31, 1995. The total return figure is (2.17%). The performance disclaimer and footnotes are listed on the page following the graphic presentation. A9. 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 Liberty Municipal Securities Fund, Inc. are represented by a solid line, whereas Lehman Brothers Revenue Bond Index is represented by a broken dotted line. The line graph is a visual representation of a comparison of change in value of a $10,000 hypothetical investment in the Class C Shares of the fund and Lehman Brothers Revenue Bond Index for the period from April 21, 1993 (start of performance) to March 31, 1995. 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 $10,513 and $10,880, respectively. Beneath the list of components that correspond to the line graph is the Average Annual Total Return for the period ended March 31, 1995, beginning with the start of performance (April 21, 1993), and the one-year period; the Average Annual Total Returns are 2.61% and 3.91%, respectively. The performance disclaimer and footnotes are listed on the pages following the graphic presentation.