President's Message
- - --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the 17th Annual Report for
Liberty Municipal Securities Fund, Inc. You will find
its new design and new charts make the Report easier
to read and more informative.
This Report covers the 12-month period ended March 31,
1994. It includes an interview with the Fund's
portfolio manager, Jonathan C. Conley, Vice President
of Federated Advisers; a complete listing of the
Fund's holdings; and its financial statements.
To bring you competitive monthly income, which is free
from federal regular income tax, the Fund invests in a
portfolio of long-term, high-quality securities issued by
more than 70 municipalities across the country.
Because all bond prices fall when interest rates rise,
the Fund's share price declined over the past 12 months
as interest rates rose during the last quarter of its
fiscal year. However, over the entire 12 months, the
Class A Shares of the Fund produced tax-free income of
$0.66 per share, capital gains of $0.02 per share, and a
total return of 2.10% based on net asset value.
In this interest rate environment, the Fund's manager is
employing a cautious approach to provide you with income
while protecting your principal. I urge you to review the
charts at the beginning of this Report which show the
Fund's record of success over time.
Reflecting the Fund's increased appeal to tax-sensitive
investors, assets increased from $706 million to $737
million during the reporting period. We appreciate your
continued confidence in the Fund. A mutual fund may be
the most convenient way to participate in the complex but
rewarding municipal market. Remember, by reinvesting your
dividends to purchase additional shares of the Fund, you
can automatically position your account to pursue higher
income.
As always, we invite your comments or questions.
Sincerely,
J. Christopher Donahue
President
May 16, 1994
Investment Review
- - --------------------------------------------------------------------------------
Q. WHAT HAS OCCURRED IN THE LONG-TERM FIXED-INCOME
MARKETS DURING THE SIX-MONTH PERIOD ENDED
MARCH 31, 1994?
A. Interest rates in the long-term fixed-income
markets exhibited considerable volatility. On
September 30, 1993, the yield for the current
30-year U.S. Treasury bond (6.25% due 8/15/2023) stood
at 6.03%. From there, the yield fell to 5.79%--the low
point for this business cycle and for a 17-year span--on
October 15, 1993, then rose sharply to 7.09% as of
March 31, 1994.
Jonathan C. Conley As for the long-term municipal market, the Bond Buyer
Vice President Revenue Index,* representing 30-year A-rated municipal
Federated Advisers issues, registered 5.53% on September 30, 1993. It then
declined to 5.41%--the lowest reading ever for the
Index--on October 15, 1993, and climbed dramatically to
6.39% by March 31, 1994.
Q. HOW VOLATILE HAVE LONG-TERM BOND PRICES BEEN WITH
THESE FLUCTUATIONS IN INTEREST RATES?
A. From September 30, 1993, to October 15, 1993, the
price of the bellwether U.S. Treasury bond
appreciated 3.3%. From that point, the price
descended 15.8% through March 31, 1994. Long-term
municipal bonds, however, were not as volatile. The
Municipal Bond Index* of prices grew by 1.5% between
September 30, 1993 and October 15, 1993; it then
declined by 14.1% as of March 31, 1994.
* This index is unmanaged.
- - --------------------------------------------------------------------------------
Q. HOW HAVE INVESTORS IN LIBERTY MUNICIPAL
SECURITIES FUND, INC. FARED DURING THIS PERIOD?
A. For the six months ending March 31, 1994,
investors in the Fund (Class A Shares)
experienced a total return based on net
asset value of -3.54%. This result was composed
of a 2.66% income and reinvestment return (net of
expenses) and of 6.20% depreciation in the net asset
value (NAV) per share. These figures are not annualized.
During the past six months, investors received $0.329 per
share in regular dividends, and $0.0195 in capital gains
distributions, while the NAV fell from $11.96 on
September 30, 1993 to $11.20 on March 31, 1994.
For the same period, investors in the Fund (Class C
Shares) experienced a total return based on net asset
value of -4.00%. This result was composed of a 2.20%
income and reinvestment return (net of expenses) and of
6.20% depreciation in the NAV per share. These figures
are not annualized. During the past six months, an
investor received $0.273 per share in regular dividends,
and $0.0195 in capital gains distributions, while the NAV
fell from $11.96 on September 30, 1993 to $11.20 on March
31, 1994.
Q. AS THE PORTFOLIO MANAGER OF THE FUND, JONATHAN,
HOW DO YOU CONTROL THE VOLATILITY OF THE NET
ASSET VALUE PER SHARE?
A. I favor, in a variety of interest rate
environments, securities that have coupons
greater than the Bond Buyer Revenue Index.*
For equal credit quality and maturity, the bond with
the higher coupon rate will be less price sensitive
with respect to market interest rate changes. The Fund,
accordingly, has typically swapped into higher-coupon
issues in each municipal market sector during times of
rising rates so as to secure coupon-price protection
and to book attractive income streams for distribution
to shareholders.
* This index is unmanaged.
- - --------------------------------------------------------------------------------
Q. IN WHAT AREAS OF THE MUNICIPAL MARKET HAS THE
FUND INVESTED OVER THE PAST SIX MONTHS?
A. Between September 30, 1993 and March 31, 1994,
the Fund purchased $85,775,000 face amount of
medium-to-upper grade municipal issues, while
$72,620,000 face amount of higher-quality holdings was
sold. Sectors represented in the Fund's investment
activity included: hospital issues, pollution control
obligations of investor-owned utilities, industrial
development bonds of non-financial corporations,
college and university tuition revenue issues, single-
family housing mortgage revenue issues, and resource
recovery project finance obligations.
Recent acquisitions included obligations of:
- Leesburg Regional Medical Centre, FL
- Maryland HEFA (Howard County General Hospital)
- Massachusetts HEFA (Holyoke Hospital)
- Ohio Air Quality Development Authority (Ohio Edison)
The average yield on issues purchased during the past six
months by the Fund was 6.56%.*
Q. WHAT IS THE COMPOSITION OF THE
INVESTMENTS OF THE FUND BY CREDIT
QUALITY?
A. The credit quality of the portfolio
of investments of the Fund, as of
March 31, 1994, is shown below:
<TABLE>
<CAPTION>
% of Total
Rating Investments
- - ------- -------------
<S> <C>
AAA 38.6%
AA 31.9%
A 10.1%
BBB 13.0%
Non-Rated 6.4%
---------
100.0%
</TABLE>
* Of course past performance is not indicative of future results.
Liberty Municipal Securities Fund, Inc.
(Class A Shares)
- - --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN LIBERTY
MUNICIPAL SECURITIES FUND, INC. (CLASS A
SHARES) FOR THE TEN YEAR PERIOD ENDED
MARCH 31, 1994
This graph shows the hypothetical investment of $10,000 in the Liberty Municipal
Securities Fund, Inc. (Class A Shares) from March 31, 1984, to March 31, 1994,
compared to the Lehman Brothers Revenue Bond Index ("LBRB").
"Graphic representation A1 omitted. See Appendix."
AVERAGE ANNUAL TOTAL RETURN FOR THE FISCAL YEAR ENDED MARCH 31, 1994
<TABLE>
<S> <C>
1 Year....................................................(2.52)%
5 Year......................................................7.34%
10 Year.....................................................9.01%
Start of Performance (10/4/76)..............................6.43%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
* Represents a hypothetical investment of $10,000 in Class A Shares of the Fund
after deducting the maximum sales charge of 4.50% ($10,000 investment minus
$450 sales charge = $9,550). The Fund's performance of Class A Shares assumes
the reinvestment of all dividends and distributions. The LBRB has been
adjusted to reflect reinvestment of dividends on securities in the index.
Liberty Municipal Securities Fund, Inc.
(Select Shares)
- - --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN LIBERTY MUNICIPAL SECURITIES FUND, INC.
(SELECT SHARES) FOR THE PERIOD ENDED MARCH 31, 1994
This graph shows the hypothetical investment of $10,000 in the Liberty Municipal
Securities Fund, Inc. (Select Shares) (the "Fund") from January 15, 1994 (date
of initial public offering) to March 31, 1994, compared to the
Lehman Brothers Revenue Bond Index ("LBRB").
"Graphic representation A2 omitted. See Appendix."
<TABLE>
<S> <C>
Start of Performance (1/15/94) Total Cumulative Return.....(4.76)%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
* The Fund's performance assumes the reinvestment of all dividends and
distributions. The LBRB has been adjusted to reflect reinvestment of dividends
on securities in the index.
Liberty Municipal Securities Fund, Inc.
(Class C Shares)
- - --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN LIBERTY MUNICIPAL SECURITIES FUND, INC.
(CLASS C SHARES) FOR THE PERIOD ENDED MARCH 31, 1994
This graph shows the hypothetical investment of $10,000 in the Liberty Municipal
Securities Fund, Inc. (Class C Shares) from April 20, 1993 (date of initial
public offering) to March 31, 1994, compared to the Lehman Brothers Revenue Bond
Index ("LBRB").
"Graphic representation A3 omitted. See Appendix."
<TABLE>
<S> <C>
Start of Performance (4/20/93) Total Cumulative Return....(.81)%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
* Represents a hypothetical investment of $10,000 in Class C Shares of the Fund.
The ending value of the Class C Shares of the Fund reflects a contingent
deferred sales charge of 1.00% on any redemption less than 1 year from the
purchase date. The performance of Class C Shares assumes the reinvestment of
all dividends and distributions. The LBRB is adjusted to reflect reinvestment
of dividends on securities in the index.
Two Ways You May Seek to Invest for Success in
Liberty Municipal Securities Fund, Inc.
- - --------------------------------------------------------------------------------
INITIAL INVESTMENT:
AN $18,000 INVESTMENT (REINVESTING ALL DIVIDENDS AND CAPITAL GAINS) GREW TO
$53,550.
If you had invested $18,000 in the Class A Shares of Liberty Municipal
Securities Fund, Inc. on 10/4/76, reinvested your dividends and capital gains,
and didn't redeem any shares, your account would be worth $53,550 on 3/31/94.
You would have earned a 6.43%* average annual total return for the 18-year
investment life span.
One key to investing wisely is to reinvest all tax-free distributions in Fund
shares. This increases the number of shares on which you can earn future
tax-free dividends, and you gain the benefit of compounding tax-free.
As of 3/31/94, the Class A Shares' average annual one-year, five-year and
ten-year total returns were -2.52%, 7.34%, and 9.01%, respectively. Class C
Shares' total return since inception on 4/20/93 was -0.81%. Select Shares'
total return since inception on 1/15/94 was -4.76%.
"Graphic representation A4 omitted. See Appendix."
* Total return represents the change in the value of an investment in Class A
Shares after reinvesting all income and capital gains, and takes into account
the 4.5% sales charge applicable to an initial investment in Class A Shares.
Data quoted represent past performance and do not guarantee future results.
Investment return and principal value will fluctuate so an investor's shares,
when redeemed, may be worth more or less than their original cost.
Liberty Municipal Securities Fund, Inc.
- - --------------------------------------------------------------------------------
One Step at a Time:
$1,000 INVESTED EACH YEAR FOR 18 YEARS (REINVESTING ALL DIVIDENDS AND CAPITAL
GAINS) GREW TO $38,422.
With this approach, the key is consistency.
If you had started investing $1,000 annually in the Class A Shares of Liberty
Municipal Securities Fund, Inc. on 10/4/76, reinvested your dividends and
capital gains and didn't redeem any shares, you would have invested only
$18,000, but your account would have reached a total value of $38,422* by
3/31/94. You would have earned an average annual total return of 7.88%.
A practical investment plan helps you pursue a high level of income through
tax-free municipal bonds. Through systematic investing, you buy shares on a
regular basis and reinvest all tax-free earnings. An investment plan works for
you when you invest only $1,000 annually. You can take it one step at a time.
Put time, money and compounding to work!
"Graphic representation A5 omitted. See Appendix."
* No method of investing can guarantee a profit or protect against loss in down
markets. However, by investing regularly over time and buying shares at
various prices, investors can purchase more shares at lower prices, and all
accumulated shares have the ability to pay income to the investor. Because
such a plan involves continuous investment, regardless of changing price
levels, the investor should consider whether or not to continue purchases
through periods of low price levels.
Liberty Municipal Securities Fund, Inc._
A History of Tax Free Investing--Nine 10-Year Periods
- - --------------------------------------------------------------------------------
$10,000 INVESTED WITH DISTRIBUTIONS
REINVESTED IN SHARES
HOW A $10,000 INVESTMENT GREW DURING EACH
10-YEAR PERIOD SINCE FUND INCEPTION.
This chart shows what your account would be worth had you invested $10,000 at
the beginning of these consecutive decades.
OVER EVERY 10-YEAR PERIOD SINCE THE FUND'S INCEPTION, A $10,000 INVESTMENT IN
ITS CLASS A SHARES (WITH ALL DIVIDENDS AND CAPITAL GAINS REINVESTED) GREW IN
VALUE. There was never a decade in which an investor would have lost money.
A HISTORY OF INVESTMENT GROWTH
<TABLE>
<CAPTION>
Dividends and
April 1- Initial Number Capital Gains Total Ending Value
March 31 of Shares Reinvested Shares of Shares
<S> <C> <C> <C> <C>
1976-1986* 764 $ 8,477 1,571 $16,506
1977-1987 739 9,176 1,588 17,152
1878-1988 728 8,705 1,596 16,005
1979-1989 790 9,944 1,760 18,055
1980-1990 1087 14,025 2,426 25,405
1981-1991 1135 14,561 2,507 26,605
1982-1992 1328 16,462 2,827 31,044
1983-1993 1021 12,694 2,114 24,563
1984-1994 1049 11,936 2,115 23,689
</Table
*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.
SOME OF THE FUND'S MAJOR SHAREHOLDER GROUPS
</TABLE>
<TABLE>
<S> <C>
Individuals and Joint Tenants $440,093,756
Trusts 89,379,430
Corporations 2,905,718
Estates 1,235,849
Clubs/Fraternal Organizations 1,137,003
Custodians (under Uniform Gift to Minors Act) 975,457
</Table
Liberty Municipal Securities Fund, Inc._
Portfolio Update
- - --------------------------------------------------------------------------------
"Graphic representation A6 omitted. See Appendix."
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,
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
$59,221--that's $27,750 in tax-free income.* This represents a 9.01% 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.
"Graphic representation A7 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.
Portfolio of Investments
- - --------------------------------------------------------------------------------
March 31, 1994
</TABLE>
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P*
AMOUNT (NOTE 6) VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--98.0%
- - ------------------------------------------------------------------------------------
ARIZONA--3.4%
---------------------------------------------------------------------
$ 12,000,000 Salt River Project, AZ, 7.875% Revenue Bonds (Pre-
refunded), 1/1/98 (@ 102) Aaa $ 13,513,920
---------------------------------------------------------------------
10,500,000 Salt River Project, AZ, 8.25% Revenue Bonds (Original
Issue Yield: 8.40%) (Prerefunded), 1/1/98 (@ 102) Aaa 11,805,045
--------------------------------------------------------------------- --------------
Total 25,318,965
--------------------------------------------------------------------- --------------
CALIFORNIA--4.1%
---------------------------------------------------------------------
25,000,000 Los Angeles, CA, Department of Water & Power, 7.10% Electric Plant
Revenue Bonds, 1/15/2031 AA 27,885,500
---------------------------------------------------------------------
2,000,000 Southern California Public Power Authority, 7.875%
Revenue Bonds (Prerefunded), 7/1/96 (@ 103) AAA 2,215,040
--------------------------------------------------------------------- --------------
Total 30,100,540
--------------------------------------------------------------------- --------------
COLORADO--1.4%
---------------------------------------------------------------------
7,810,000 Colorado Springs, CO, Utilities System 8.00% Revenue Bonds
(Prerefunded), 11/15/97 (@ 100) Aaa 8,602,090
---------------------------------------------------------------------
1,500,000 Colorado Springs, CO, Utilities System, 9.50% Revenue Bonds,
11/15/2015 Aa 1,613,730
--------------------------------------------------------------------- --------------
Total 10,215,820
--------------------------------------------------------------------- --------------
CONNECTICUT--0.7%
---------------------------------------------------------------------
5,000,000 Connecticut State Health and Education Facility
Authority, 6.80% Revenue Bonds (University of
Hartford)/(Original Issue Yield: 6.84%), 7/1/2022 Baa 4,943,800
--------------------------------------------------------------------- --------------
</TABLE>
Liberty Municipal Securities Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P*
AMOUNT (NOTE 6) VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- - ------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA--3.9%
---------------------------------------------------------------------
$ 22,250,000 District of Columbia, 7.15% Revenue Bonds
(Original Issue Yield: 7.19%)/(Series 1990B)/
(Georgetown University), 4/1/2021 Aa $ 23,702,258
---------------------------------------------------------------------
4,765,000 District of Columbia, 8.25% Revenue Bonds
(Georgetown University), 4/1/2018 Aa 5,293,772
--------------------------------------------------------------------- --------------
Total 28,996,030
--------------------------------------------------------------------- --------------
FLORIDA--10.6%
---------------------------------------------------------------------
7,500,000 City of Tampa, FL, 8.125% Utilities Tax & Special Revenue Bonds
(AMBAC Insured)/(Prerefunded), 10/1/97 (@ 102) Aaa 8,507,550
---------------------------------------------------------------------
5,000,000 Florida Board of Education, 6.70% OID Capital Outlay Bonds (Original
Issue Yield: 6.72%)/(Series 1991B),
6/1/2022 AA 5,199,900
---------------------------------------------------------------------
8,160,000 Florida Board of Education, 7.25% Capital Outlay Bonds (Prerefunded),
6/1/2000 (@ 102) Aa 9,173,962
---------------------------------------------------------------------
7,840,000 Florida Board of Education, 7.25% Capital Outlay Bonds (Prerefunded),
6/1/2000 (@ 102) Aaa 8,548,736
---------------------------------------------------------------------
4,335,000 Florida Board of Education, 9.125% Capital Outlay Bonds, 6/1/2014 Aa 5,794,724
---------------------------------------------------------------------
665,000 Florida Board of Education, 9.125% Capital Outlay Bonds, 6/1/2014 Aa 905,145
---------------------------------------------------------------------
14,735,000 Jacksonville, FL, Electric Authority, 7.70% Revenue Bonds
(Prerefunded), 10/1/96 (@ 101.5) Aaa 16,142,340
---------------------------------------------------------------------
1,050,000 Leesburg, FL, 5.625% Hospital Revenue Bonds (Series 1993B)/(Leesburg
Regional Medical Center)/(Original Issue Yield 5.75%), 7/1/2013 BBB+ 900,113
---------------------------------------------------------------------
15,000,000 Orlando and Orange County, FL, Expressway Authority, 7.50% Junior
Lien Revenue Bonds (Prerefunded), 7/1/96
(@ 102) Aaa 16,296,750
---------------------------------------------------------------------
</TABLE>
Liberty Municipal Securities Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P*
AMOUNT (NOTE 6) VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- - ------------------------------------------------------------------------------------
FLORIDA--CONTINUED
---------------------------------------------------------------------
$ 2,000,000 Orlando Utilities Commission, FL,10.50% Revenue Bonds (Prerefunded),
10/1/94 (@ 103) Aaa $ 2,123,060
---------------------------------------------------------------------
3,000,000 State of Florida, 10.00% GO Bonds, 7/1/2014 Aa 4,308,600
--------------------------------------------------------------------- --------------
Total 77,900,880
--------------------------------------------------------------------- --------------
GEORGIA--5.3%
---------------------------------------------------------------------
3,000,000 Fulco, GA, Hospital Authority, 6.375% Anticipation
Certificates Refunding Revenue Bonds (Georgia Baptist
Healthcare)/(Original Issue Yield: 6.55%), 9/1/2022 A 2,898,750
---------------------------------------------------------------------
3,000,000 Fulco, GA, Hospital Authority, 6.375% Anticipation
Certificates Refunding Revenue Bonds (Series A)/(Georgia Baptist
Healthcare)/(Original Issue Yield: 6.55%), 9/1/2022 A 2,883,960
---------------------------------------------------------------------
5,000,000 Metropolitan Atlanta Rapid Transit Authority, 8.00% Sales Tax Revenue
Bonds (FGIC Insured)/(Prerefunded), 7/1/98 (@ 102) Aaa 5,702,150
---------------------------------------------------------------------
8,750,000 Municipal Electric Authority of Georgia, 6.50% Power Supply Revenue
Bonds, 1/1/2025 AA- 8,791,300
---------------------------------------------------------------------
5,000,000 Municipal Electric Authority of Georgia, 8.125% Power Supply Revenue
Bonds, 1/1/2017 AA- 5,556,200
---------------------------------------------------------------------
2,500,000 Municipal Electric Authority of Georgia, 8.375% Power Supply Revenue
Bonds, 1/1/2016 AA- 2,808,200
---------------------------------------------------------------------
5,000,000 Municipal Electric Authority of Georgia, 8.375% Power Supply Revenue
Bonds, 1/1/2020 AA- 5,522,050
---------------------------------------------------------------------
4,200,000 Municipal Electric Authority of Georgia, 8.375% Power Supply Revenue
Bonds, 1/1/2020 AA- 4,638,522
--------------------------------------------------------------------- --------------
Total 38,801,132
--------------------------------------------------------------------- --------------
</TABLE>
Liberty Municipal Securities Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P*
AMOUNT (NOTE 6) VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- - ------------------------------------------------------------------------------------
ILLINOIS--4.6%
---------------------------------------------------------------------
$ 5,000,000 Illinois Development Finance Authority, 6.10% Revenue Bonds (Series
1993C)/(Catholic Charities Housing
Development Corp.)/(Archdiocese of Chicago Guaranty)/
(Original Issue Yield: 6.10%), 1/1/2020 NR $ 4,572,850
---------------------------------------------------------------------
2,860,000 Illinois Health Facilities Authority, 6.125% Refunding
Revenue Bonds (Lutheran Social Services)/(Original
Issue Yield: 6.27%), 8/15/2010 NR 2,699,297
---------------------------------------------------------------------
4,000,000 Illinois State, 6.50% Sales Tax Revenue Bonds (Build
Illinois Program), 6/15/2013 AAA 4,094,000
---------------------------------------------------------------------
9,630,000 Illinois State, 7.00% Sales Tax Revenue Bonds (Build
Illinois Program)/(Prerefunded), 6/15/2000 (@ 102) AAA 10,660,506
---------------------------------------------------------------------
4,565,000 Illinois State, 7.625% Sales Tax Revenue Bonds (Series B)/ (Build
Illinois Program)/(Prerefunded), 6/15/96 (@ 102) AAA 4,972,928
---------------------------------------------------------------------
6,250,000 Illinois State, 7.625% Sales Tax Revenue Bonds (Series H)/ (Build
Illinois Program)/(Prerefunded), 6/15/98 (@ 102) AAA 7,034,750
--------------------------------------------------------------------- --------------
Total 34,034,331
--------------------------------------------------------------------- --------------
INDIANA--1.3%
---------------------------------------------------------------------
10,000,000 Kokomo, IN, 6.35% Hospital Revenue Bonds (Original
Issue Yield: 6.40%), 8/15/2013 Baa 9,350,100
--------------------------------------------------------------------- --------------
LOUISIANA--2.1%
---------------------------------------------------------------------
1,000,000 Parish of St. Charles, LA, 7.00%, Revenue Bonds (Louisiana Power &
Light Co.)/(Original Issue Yield: 7.04%),
12/1/2022 (Subject to AMT) BBB+ 1,011,690
---------------------------------------------------------------------
5,000,000 Parish of St. Charles, LA, 6.20% Revenue Bonds (Series
1993A)/(Louisiana Power & Light Co.)/(Original Issue Yield: 6.25%),
5/1/2023 (Subject to AMT) BBB+ 4,552,200
---------------------------------------------------------------------
</TABLE>
Liberty Municipal Securities Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P*
AMOUNT (NOTE 6) VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- - ------------------------------------------------------------------------------------
LOUISIANA--CONTINUED
---------------------------------------------------------------------
$ 10,000,000 Parish of St. James, LA, 7.70% Revenue Bonds (Freeport
McMoran)/(Original Issue Yield: 7.75%) 10/1/2022 (Subject to AMT) NR $ 10,136,800
--------------------------------------------------------------------- --------------
Total 15,700,690
--------------------------------------------------------------------- --------------
MAINE--1.4%
---------------------------------------------------------------------
11,000,000 Bucksport, ME, 6.25% Solid Waste Disposal Revenue Bonds (Champion
International Corp.), 5/1/2010 BBB+ 10,543,720
--------------------------------------------------------------------- --------------
MARYLAND--0.3%
---------------------------------------------------------------------
3,000,000 Maryland HEFA, 5.50% Revenue Bonds (Series 1993)/ (Howard General
Hospital Issue)/(Original Issue Yield: 5.80%), 7/1/2025 BBB 2,471,520
--------------------------------------------------------------------- --------------
MASSACHUSETTS--0.6%
---------------------------------------------------------------------
4,700,000 Massachusetts HEFA, 6.50% Revenue Bonds (Series B)/ (Holyoke
Hospital)/(Original Issue Yield: 6.75%),
7/1/2015 Baa1 4,462,979
--------------------------------------------------------------------- --------------
MICHIGAN--0.4%
---------------------------------------------------------------------
450,000 Michigan State Hospital Finance Authority, 6.75%
Revenue Bonds (Series 1991)/(Henry Ford Continuing Care Corp.),
7/1/2011 AA 465,565
---------------------------------------------------------------------
500,000 Michigan State Hospital Finance Authority, 7.00%
Revenue Bonds (Series 1991)/(Daughters of Charity
National Health System Providence Hospital)/(Original
Issue Yield: 7.04%), 11/1/2021 Aa 533,005
---------------------------------------------------------------------
2,000,000 Royal Oak Michigan Hospital Finance Authority, 7.375% Revenue Bonds
(William Beaumont Hospital), 1/1/2020 AA 2,241,160
--------------------------------------------------------------------- --------------
Total 3,239,730
--------------------------------------------------------------------- --------------
</TABLE>
Liberty Municipal Securities Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P*
AMOUNT (NOTE 6) VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- - ------------------------------------------------------------------------------------
MINNESOTA--2.7%
---------------------------------------------------------------------
$ 4,750,000 Minnesota HFA, 6.15% SFM Revenue Bonds (Series B2),
1/1/2026 (Subject to AMT) Aa $ 4,484,712
---------------------------------------------------------------------
11,900,000 Saint Paul, MN, Housing & Redevelopment Authority, 6.625% Refunding
Revenue Bonds (Series A)/(Health East)/(Original Issue Yield: 6.50%),
11/1/2017 BBB- 11,253,830
---------------------------------------------------------------------
4,000,000 Southern Minnesota Municipal Power Agency, 6.75%
Revenue Bonds (Prerefunded), 1/1/96 (@ 102) Aaa 4,246,480
--------------------------------------------------------------------- --------------
Total 19,985,022
--------------------------------------------------------------------- --------------
NEW JERSEY--1.0%
---------------------------------------------------------------------
8,000,000 New Jersey State Educational Facilities Authority, 6.625% Revenue
Bonds (Series 1993C)/(Fairleigh Dickinson University Issue)/(Original
Issue Yield: 6.703%), 7/1/2023 NR 7,220,320
--------------------------------------------------------------------- --------------
NEW MEXICO--0.7%
---------------------------------------------------------------------
5,000,000 City of Farmington, NM, 7.20% Pollution Control Revenue Bonds
(Southern California Edison)/(Four Corners)/
(Series 1991A)/(Original Issue Yield: 7.30%), 4/1/2021 AA 5,333,800
--------------------------------------------------------------------- --------------
NEW YORK--9.1%
---------------------------------------------------------------------
3,000,000 Municipal Assistance Corp. of New York, 7.625% Bonds,
7/1/2008 Aa 3,377,430
---------------------------------------------------------------------
24,100,000 New York State Power Authority, 5.97% General
Purpose Revenue Bonds (Original Issue Yield:
6.03%), 1/1/2002 AA- 19,490,875
---------------------------------------------------------------------
2,085,000 New York State, Energy Research and Development Authority, 6.375%
Facilities Revenue Bonds (Series
1992B)/(Consolidated Edison Company of New York)/
(Original Issue Yield: 6.521%), 12/1/2027 (Subject to AMT) Aa2 2,071,885
---------------------------------------------------------------------
2,000,000 New York State, NY, Mortgage Agency, 6.65% Revenue Bonds (Series
30B), 10/1/2025 (Subject to AMT) Aa 2,007,540
---------------------------------------------------------------------
</TABLE>
Liberty Municipal Securities Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P*
AMOUNT (NOTE 6) VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- - ------------------------------------------------------------------------------------
NEW YORK--CONTINUED
---------------------------------------------------------------------
$ 13,000,000 Power Authority of the State of New York, 8.00%
Revenue Bonds, 1/1/2017 Aa $ 14,356,420
---------------------------------------------------------------------
7,000,000 Triborough Bridge and Tunnel Authority, NY, 7.625% Revenue Bonds
(Prerefunded), 1/1/96 (@ 102) Aaa 7,533,610
---------------------------------------------------------------------
9,000,000 Triborough Bridge and Tunnel Authority, NY, 7.70%
Revenue Bonds (Prerefunded), 1/1/99 (@ 101.5) Aaa 10,172,880
---------------------------------------------------------------------
2,750,000 Triborough Bridge and Tunnel Authority, NY, 7.875%
Revenue Bonds (Prerefunded), 1/1/98 (@ 101.5) Aaa 3,088,910
---------------------------------------------------------------------
4,300,000 Triborough Bridge and Tunnel Authority, NY, 8.125%
Revenue Bonds, 1/1/2012 Aa 4,792,350
--------------------------------------------------------------------- --------------
Total 66,891,900
--------------------------------------------------------------------- --------------
NORTH CAROLINA--3.0%
---------------------------------------------------------------------
13,500,000 North Carolina Municipal Power Agency Pound1, 7.875%
Revenue Bonds (Prerefunded), 1/1/98 (@ 102) Aaa 15,203,160
---------------------------------------------------------------------
6,000,000 North Carolina Municipal Power Agency Pound1, 8.50%
Revenue Bonds (Prerefunded), 1/1/96 (@ 102) Aaa 6,553,620
--------------------------------------------------------------------- --------------
Total 21,756,780
--------------------------------------------------------------------- --------------
OHIO--4.0%
---------------------------------------------------------------------
300,000 Akron, OH, Bath & Copley Joint Townships, 7.45% Health Care Revenue
Bonds (Series 1990)/(Children's Hospital and Medical Centre of
Akron)/(AMBAC Insured)/
(Original Issue Yield: 7.70%)/(Prerefunded), 11/15/2000
(@ 102) Aaa 342,744
---------------------------------------------------------------------
1,200,000 Cuyahoga County, OH, 8.00% Revenue Bonds
(Cleveland Clinic Foundation)/(Original Issue
Yield: 8.045%), 12/1/2015 Aa 1,305,912
---------------------------------------------------------------------
</TABLE>
Liberty Municipal Securities Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P*
AMOUNT (NOTE 6) VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- - ------------------------------------------------------------------------------------
OHIO--CONTINUED
---------------------------------------------------------------------
$ 1,000,000 Franklin County, OH, 7.25% Revenue Refunding and
Improvement Bonds (Riverside United Methodist
Hospital)/(MBIA Insured)/(Original Issue Yield:
7.29%), 5/15/2020 Aaa $ 1,097,060
---------------------------------------------------------------------
12,250,000 Franklin County, OH, 7.60% Hospital Facility Refunding and
Improvement Revenue Bonds (Riverside United
Methodist Hospital)/(Prerefunded), 5/15/2000 (102) Aaa 13,991,582
---------------------------------------------------------------------
14,000,000 Ohio State Air Quality Development Authority, 5.95% PCR Bonds (Ohio
Edison Co.), 5/15/2029 BBB- 12,350,240
---------------------------------------------------------------------
600,000 Ohio State Water Development Authority, 7.00%
Revenue Bonds (Original Issue Yield: 7.65%),
12/1/2014 A 650,202
--------------------------------------------------------------------- --------------
Total 29,737,740
--------------------------------------------------------------------- --------------
OKLAHOMA--1.0%
---------------------------------------------------------------------
7,500,000 Tulsa, OK, Municipal Airport 7.60% Revenue Bonds (American Airlines
Corp.)/(Original Issue Yield: 7.932%),
12/1/2030 (Subject to AMT) Baa2 7,635,975
--------------------------------------------------------------------- --------------
PENNSYLVANIA--6.8%
---------------------------------------------------------------------
750,000 Geisinger, PA, Health System, 7.625% Revenue Bonds (Original Issue
Yield: 7.695%)/(Prerefunded), 7/1/99
(@ 102) AA 852,158
---------------------------------------------------------------------
3,000,000 Montgomery County, PA, Higher Education and Health Facilities
Authority, 7.375% Hospital Revenue Bonds (Bryn Mawr
Hospital)/(Original Issue Yield: 7.50%), 12/1/2019 A 3,392,880
---------------------------------------------------------------------
5,000,000 Montgomery County, PA, Higher Education and Health Facilities
Authority, 9.375% Revenue Bonds (Bryn Mawr Hospital)/(Prerefunded),
12/1/97 (@ 102) AAA 5,875,650
---------------------------------------------------------------------
l,565,000 Northampton County, PA, 6.95% IDA (Series 1985)/
(Citizens Utility Company), 8/1/2015 AAA 1,664,017
---------------------------------------------------------------------
</TABLE>
Liberty Municipal Securities Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P*
AMOUNT (NOTE 6) VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- - ------------------------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
---------------------------------------------------------------------
$ 1,000,000 Pennsylvania Higher Education Facilities Authority, 6.625%, Revenue
Bonds (Trustees of the University of Pennsylvania/(Original Issue
Yield: 6.75%), 1/1/2017 Aa $ 1,007,710
---------------------------------------------------------------------
4,000,000 Pennsylvania Higher Educational Facilities Authority, 7.25% Revenue
Bonds (Series 1991A)/(Allegheny General Hospital)/(Original Issue
Yield: 7.40%), 9/1/2017 Aa 4,312,120
---------------------------------------------------------------------
1,000,000 Pennsylvania Higher Education Facilities Authority, 7.75% Revenue
Bonds (Thomas Jefferson University &
Jefferson Park Hospital), 11/1/2015 Aa 1,157,250
---------------------------------------------------------------------
12,000,000 Pennsylvania Turnpike Commission, 7.20% Revenue Bonds (Series
1986J)/(FGIC Insured), 12/1/2017 AAA 13,637,760
---------------------------------------------------------------------
10,055,000 Pennsylvania Turnpike Commission, 7.50% Revenue Bonds (Original Issue
Yield: 7.625%)/(Prerefunded),
12/1/99 (@ 102) AAA 11,443,897
---------------------------------------------------------------------
5,000,000 Sayre, PA, Health Care Facilities Authority, 7.10% OID
Revenue Bonds (Guthrie Healthcare System)/(AMBAC
Insured)/(Original Issue Yield: 7.175%), 3/1/2017 Aaa 5,442,000
---------------------------------------------------------------------
1,300,000 Washington County, PA, 7.45% Municipal Facilities Lease Revenue Bonds
(Shadyside Hospital)/(AMBAC Insured)/ (Prerefunded), 6/15/2000 (@
102) Aaa 1,486,147
--------------------------------------------------------------------- --------------
Total 50,271,589
--------------------------------------------------------------------- --------------
SOUTH CAROLINA--4.1%
---------------------------------------------------------------------
2,255,000 Richland County, SC, Solid Waste Disposal Facility, 6.75% OID Revenue
Bonds (Series A)/(Union Camp Corp.)/ (Original Issue Yield: 6.80%),
5/1/2022 (Subject to AMT) A1 2,336,518
---------------------------------------------------------------------
8,000,000 South Carolina Public Service Authority, 7.10%
OID Electric Revenue Bonds (Series B)/(Santee Cooper)/ (Original
Issue Yield: 7.29%), 7/1/2021 A+ 8,991,840
---------------------------------------------------------------------
</TABLE>
Liberty Municipal Securities Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P*
AMOUNT (NOTE 6) VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- - ------------------------------------------------------------------------------------
SOUTH CAROLINA--CONTINUED
---------------------------------------------------------------------
$ 3,685,000 South Carolina Public Service Authority, 7.875%
Revenue Bonds (Prerefunded), 1/1/96 (@ 102) Aaa $ 3,983,927
---------------------------------------------------------------------
2,430,000 South Carolina Public Service Authority, 7.875% Revenue Bonds
(Prerefunded), 1/1/96 (@ 102) Aaa 2,627,122
---------------------------------------------------------------------
11,495,000 South Carolina, Public Service Authority, 7.875% Revenue Bonds,
7/1/2021 A1 12,261,717
--------------------------------------------------------------------- --------------
Total 30,201,124
--------------------------------------------------------------------- --------------
TEXAS--10.0%
---------------------------------------------------------------------
4,000,000 Brazos River Authority, TX, 7.875% PCR Bonds (Texas
Utilities Electric Company), 3/1/2021 (Subject to AMT) Baa2 4,334,400
---------------------------------------------------------------------
14,500,000 Brazos River Authority, TX, 8.10% PCR Bonds (Houston Light & Power
Company)/(BIG Insured), 5/1/2019 Aaa 16,274,655
---------------------------------------------------------------------
1,800,000 Comal County, TX, IDA, 7.50% Revenue Bonds (Johnson Controls),
6/30/2002 A2 1,892,556
---------------------------------------------------------------------
12,750,000 Dallas-Fort Worth, TX, International Airport Facilities Improvement
Corp., 7.25% Revenue Bonds (Delta
Airlines)/(Series 1992)/(Original Issue Yield: 7.428%),
11/1/2030 (Subject to AMT) BB 12,603,630
---------------------------------------------------------------------
1,000,000 Richardson, TX, Hospital Authority, 6.75% Revenue Refunding &
Improvement Bonds (Richardson Medical Center)/(Original Issue Yield:
6.82%), 12/1/2023 Baa 942,890
---------------------------------------------------------------------
1,650,000 Sabine River Authority TX, 5.85%, PCR Refunding Bonds (Texas
Utilities Electric Co.)/(Original Issue Yield: 5.875%)/ (Capital
Authority Insured), 5/1/2022 AAA 1,469,969
---------------------------------------------------------------------
16,500,000 Sabine River Authority TX, 8.20%, PCR Bonds
(Southwestern Electric Power), 7/1/2014 Aa3 17,753,340
---------------------------------------------------------------------
6,960,000 San Antonio, TX, Electric & Gas System, 6.50% Revenue
Bonds (Original Issue Yield: 7.276%), 2/1/2012 Aa 7,065,653
---------------------------------------------------------------------
</TABLE>
Liberty Municipal Securities Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P*
AMOUNT (NOTE 6) VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- - ------------------------------------------------------------------------------------
TEXAS--CONTINUED
---------------------------------------------------------------------
$ 4,655,000 San Antonio, TX, Electric & Gas System, 6.50% Revenue Bonds (Original
Issue Yield: 7.276%),
2/1/2012 Aa $ 4,725,663
---------------------------------------------------------------------
2,000,000 Texas City, TX, IDC, 7.375% Marine Terminal Revenue Bonds (Arco
Pipeline Co.), 10/1/2020 A1 2,238,980
---------------------------------------------------------------------
1,320,000 Texas HFA, 9.375% SFM Revenue Bonds, 9/1/2015 Aa 1,337,134
---------------------------------------------------------------------
3,000,000 Tyler, TX, HFDC, 6.75% Revenue Bonds (Series A)/(East Texas Medical
Center)/(Original Issue Yield: 7.00%),
11/1/2025 Baa 2,808,180
--------------------------------------------------------------------- --------------
Total 73,447,050
--------------------------------------------------------------------- --------------
UTAH--7.6%
---------------------------------------------------------------------
14,540,000 Intermountain Power Agency, UT, 7.00% Power
Supply Revenue Bonds, (Original Issue Yield: 7.242%),
7/1/2021 AA 15,622,503
---------------------------------------------------------------------
1,000,000 Intermountain Power Agency, UT, 7.50% Power
Supply Revenue Bonds, (Original Issue Yield: 7.605%),
7/1/2016 AA 1,076,580
---------------------------------------------------------------------
2,000,000 Intermountain Power Agency, UT, 7.875% Power
Supply Revenue Bonds, (Original Issue Yield: 8.091%),
7/1/2014 AA 2,160,940
---------------------------------------------------------------------
9,500,000 Intermountain Power Agency, UT, 8.625% Power
Supply Revenue Bonds, (Original Issue Yield: 8.693%),
7/1/2021 AA 10,551,460
---------------------------------------------------------------------
7,500,000 Salt Lake City, UT, 7.60% Hospital Revenue Bonds
(Intermountain Health Care), (Prerefunded), 2/15/99
(@ 102) Aaa 8,490,300
---------------------------------------------------------------------
13,500,000 Salt Lake City, UT, 8.125% Hospital Revenue Bonds
(Intermountain Health Care)/(Escrowed to Maturity),
5/15/2015 Aaa 15,052,500
---------------------------------------------------------------------
</TABLE>
Liberty Municipal Securities Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P*
AMOUNT (NOTE 6) VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- - ------------------------------------------------------------------------------------
UTAH--CONTINUED
---------------------------------------------------------------------
$ 2,500,000 Salt Lake City, UT, 8.125% Hospital Revenue Bonds
(Intermountain Health Care)/(Original Issue Yield: 8.17%), 5/15/2015 Aa $ 2,835,375
--------------------------------------------------------------------- --------------
Total 55,789,658
--------------------------------------------------------------------- --------------
VIRGINIA--0.6%
---------------------------------------------------------------------
2,000,000 West Point, VA, IDA 6.25% Solid Waste Revenue Bonds (Series
B)/(Chesapeake Corp. Project)/(Original Issue Yield: 6.33%), 3/1/2019
(Subject to AMT) BBB- 1,917,460
---------------------------------------------------------------------
2,500,000 West Point, VA, IDA 6.375% Solid Waste Revenue Bonds (Series
A)/(Chesapeake Corp. Project)/(Original Issue Yield: 6.435%),
3/1/2019 (Subject to AMT) BBB- 2,399,525
--------------------------------------------------------------------- --------------
Total 4,316,985
--------------------------------------------------------------------- --------------
WASHINGTON--0.8%
---------------------------------------------------------------------
6,900,000 Pilchuck Public Development Corp., WA, 6.00% Revenue Bonds (Special
Facilities Airport)/(Tramco, Inc.)/(BF Goodrich Guaranty), 8/1/2023
(Subject to AMT) BBB 6,031,014
--------------------------------------------------------------------- --------------
WEST VIRGINIA--6.5%
---------------------------------------------------------------------
13,990,000 Harrison County, WV, 6.25% Solid Waste Disposal
Revenue Bonds (The Potomac Edison Co.), 5/1/2023 (Subject to AMT) A+ 13,499,231
---------------------------------------------------------------------
20,000,000 Marion County, WV, 7.75% Solid Waste Disposal Revenue Bonds (Series
1993)/(America Power Paper Recycling),
12/1/2011 (Subject to AMT) NR 19,320,200
---------------------------------------------------------------------
</TABLE>
Liberty Municipal Securities Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P*
AMOUNT (NOTE 6) VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- - ------------------------------------------------------------------------------------
WEST VIRGINIA--CONTINUED
---------------------------------------------------------------------
$ 13,770,000 West Virginia State Parkway EDA, 7.125% Revenue Bonds (FGIC
Insured)/(Prerefunded), 7/1/99 (@ 102) AAA $ 15,303,978
--------------------------------------------------------------------- --------------
Total 48,123,409
--------------------------------------------------------------------- --------------
TOTAL LONG-TERM MUNICIPAL SECURITIES
(IDENTIFIED COST $684,937,685) $ 722,822,603++
--------------------------------------------------------------------- --------------
</TABLE>
* Please refer to the Appendix of the Statement of Additional Information
for an explanation of the credit ratings.
+ Private placement issue.
++ The cost of investments for federal tax purposes amounts to $684,937,685. The
net unrealized appreciation of investments on a federal tax basis amounts to
$37,884,918, which is comprised of $51,531,462 appreciation and $13,646,544
depreciation at March 31, 1994.
Note: The categories of investments are shown as a percentage of net assets
($737,046,270) at March 31, 1994.
The following abbreviations are used in this portfolio:
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
BIG -- Bond Investors Guaranty
EDA -- Economic Development Authority
FGIC -- Financial Guaranty Insurance Company
GO -- General Obligation
HEFA -- Health and Education Facilities Authority
HFA -- Housing Finance Authority/Agency
HFDC -- Housing Facility Development Corporation
I DA -- Industrial Development Authority
I DC -- Industrial Development Corporation
MBIA -- Municipal Bond Investors Assurance
OID -- Original Issue Discount
PCR -- Pollution Control Revenue
SFM -- Single Family Mortgage
(See Notes which are an integral part of the Financial Statements)
Liberty Municipal Securities Fund, Inc.
Statement of Assets and Liabilities
- - --------------------------------------------------------------------------------
March 31, 1994
<TABLE>
<S> <C> <C>
ASSETS:
- - ---------------------------------------------------------------------------------------------------
Investments in securities, at value (Note 2A)
(identified and tax cost, $684,937,685) $722,822,603
- - ---------------------------------------------------------------------------------------------------
Cash 199,172
- - ---------------------------------------------------------------------------------------------------
Interest receivable 15,155,555
- - ---------------------------------------------------------------------------------------------------
Receivable for investments sold 10,136,215
- - ---------------------------------------------------------------------------------------------------
Receivable for capital stock sold 766,808
- - --------------------------------------------------------------------------------------------------- -----------
Total assets 749,080,353
- - ---------------------------------------------------------------------------------------------------
LIABILITIES:
- - ---------------------------------------------------------------------------------------------------
Payable for investments purchased $9,083,287
- - ----------------------------------------------------------------------------------------
Payable for capital stock redeemed 1,355,738
- - ----------------------------------------------------------------------------------------
Dividends payable 1,323,427
- - ----------------------------------------------------------------------------------------
Payable for shareholder servicing fee (Note 4) 92,855
- - ----------------------------------------------------------------------------------------
Payable for transfer and dividend disbursing agent fees (Note 4) 86,686
- - ----------------------------------------------------------------------------------------
Payable for distribution service fees (Note 4) 14,101
- - ----------------------------------------------------------------------------------------
Accrued expenses 77,989
- - ---------------------------------------------------------------------------------------- ---------
Total liabilities 12,034,083
- - --------------------------------------------------------------------------------------------------- -----------
NET ASSETS for 65,824,757 shares of capital stock outstanding $737,046,270
- - --------------------------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- - ---------------------------------------------------------------------------------------------------
Paid-in capital $690,898,853
- - ---------------------------------------------------------------------------------------------------
Unrealized appreciation of investments 37,884,918
- - ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 8,262,499
- - --------------------------------------------------------------------------------------------------- -----------
Total $737,046,270
- - --------------------------------------------------------------------------------------------------- -----------
NET ASSET VALUE PER SHARE:
- - ---------------------------------------------------------------------------------------------------
Class A Shares ($714,384,425 / 63,800,860 shares of capital stock outstanding) $11.20
- - --------------------------------------------------------------------------------------------------- -----------
Select Shares ($595,847 / 53,223 shares of capital stock outstanding) $11.20
- - --------------------------------------------------------------------------------------------------- -----------
Class C Shares ($22,065,998 / 1,970,674 shares of capital stock outstanding) $11.20
- - --------------------------------------------------------------------------------------------------- -----------
COMPUTATION OF OFFERING PRICE:
- - ---------------------------------------------------------------------------------------------------
Class A Shares (100/95.5 of $11.20)* $11.73
- - --------------------------------------------------------------------------------------------------- -----------
Select Shares $11.20
- - --------------------------------------------------------------------------------------------------- -----------
Class C Shares $11.20
- - --------------------------------------------------------------------------------------------------- -----------
COMPUTATION OF PROCEEDS ON REDEMPTION:
- - ---------------------------------------------------------------------------------------------------
Class A Shares (99.5/100 of $11.20)** $11.14
- - --------------------------------------------------------------------------------------------------- -----------
Select Shares $11.20
- - --------------------------------------------------------------------------------------------------- -----------
Class C Shares (99/100 of $11.20)*** $11.09
- - --------------------------------------------------------------------------------------------------- -----------
</TABLE>
* On sales of $100,000 or more, the offering price is reduced as stated under
"What Shares Cost" in the prospectus.
**Under certain conditions, a contingent deferred sales charge of .50 of 1% was
imposed. See "Contingent Deferred Sales Charge" in the Class A prospectus.
***Under certain conditions, a contingent deferred sales charge of 1% is
imposed. See "Contingent Deferred Sales Charge" in the Class C Shares
prospectus.
(See Notes which are an integral part of the Financial Statements)
Liberty Municipal Securities Fund, Inc.
Statement of Operations
- - --------------------------------------------------------------------------------
Year Ended March 31, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- - --------------------------------------------------------------------------------------------------
Interest income (Note 2B) $ 49,743,813
- - --------------------------------------------------------------------------------------------------
EXPENSES:
- - --------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 4,570,573
- - ------------------------------------------------------------------------------------
Directors' fees 19,715
- - ------------------------------------------------------------------------------------
Administrative personnel and services (Note 4) 541,113
- - ------------------------------------------------------------------------------------
Custodian and recordkeeping fees and expenses 216,029
- - ------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 464,443
- - ------------------------------------------------------------------------------------
Auditing fees 22,906
- - ------------------------------------------------------------------------------------
Legal fees 26,092
- - ------------------------------------------------------------------------------------
Printing and postage 125,664
- - ------------------------------------------------------------------------------------
Fund share registration costs 105,065
- - ------------------------------------------------------------------------------------
Taxes 98,897
- - ------------------------------------------------------------------------------------
Insurance premiums 18,448
- - ------------------------------------------------------------------------------------
Shareholder servicing fee--Class A (Note 4) 291,702
- - ------------------------------------------------------------------------------------
Shareholder servicing fee--Select Shares (Note 4) 140
- - ------------------------------------------------------------------------------------
Shareholder servicing fee--Class C Shares (Note 4) 28,808
- - ------------------------------------------------------------------------------------
Distribution services fee--Select Shares (Note 4) 421
- - ------------------------------------------------------------------------------------
Distribution services fee--Class C Shares (Note 4) 86,423
- - ------------------------------------------------------------------------------------
Miscellaneous 5,164
- - ------------------------------------------------------------------------------------ ------------
Total expenses 6,621,603
- - -------------------------------------------------------------------------------------------------- --------------
Net investment income 43,122,210
- - -------------------------------------------------------------------------------------------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- - --------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (identified cost basis) 11,496,140
- - --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments (38,359,833)
- - -------------------------------------------------------------------------------------------------- --------------
Net realized and unrealized gain (loss) on investments (26,863,693)
- - -------------------------------------------------------------------------------------------------- --------------
Change in net assets resulting from operations $ 16,258,517
- - -------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Liberty Municipal Securities Fund, Inc.
Statement of Changes in Net Assets
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1994 1993
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- - ----------------------------------------------------------------------------------
OPERATIONS--
- - ----------------------------------------------------------------------------------
Net investment income $ 43,122,210 $ 39,036,650
- - ----------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions
($11,496,140 net gain and $99,035 net loss, respectively,
as computed for federal tax purposes) 11,496,140 (99,035)
- - ----------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) of investments (38,359,833) 38,590,326
- - ---------------------------------------------------------------------------------- -------------- --------------
Change in net assets from operations 16,258,517 77,527,941
- - ---------------------------------------------------------------------------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2B)--
- - ----------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
- - ----------------------------------------------------------------------------------
Class A Shares (42,577,953) (39,036,650)
- - ----------------------------------------------------------------------------------
Select Shares* (2,853) --
- - ----------------------------------------------------------------------------------
Class C Shares** (541,404) --
- - ----------------------------------------------------------------------------------
Distributions to shareholders from net realized gain
on investment transactions:
- - ----------------------------------------------------------------------------------
Class A Shares (1,289,936) --
- - ----------------------------------------------------------------------------------
Class C Shares** (30,507) --
- - ---------------------------------------------------------------------------------- -------------- --------------
Change in net assets from distributions to shareholders (44,442,653) (39,036,650)
- - ---------------------------------------------------------------------------------- -------------- --------------
CAPITAL STOCK TRANSACTIONS (NOTE 3)--
- - ----------------------------------------------------------------------------------
Net proceeds from sale of shares 294,116,244 283,861,175
- - ----------------------------------------------------------------------------------
Net asset value of shares issued to shareholders electing to
receive payment of dividends in capital stock 28,065,973 25,553,978
- - ----------------------------------------------------------------------------------
Cost of shares redeemed (263,078,057) (231,898,215)
- - ---------------------------------------------------------------------------------- -------------- --------------
Change in net assets from capital stock transactions 59,104,160 77,516,938
- - ---------------------------------------------------------------------------------- -------------- --------------
Change in net assets 30,920,024 116,008,229
- - ----------------------------------------------------------------------------------
NET ASSETS:
- - ----------------------------------------------------------------------------------
Beginning of period 706,126,246 590,118,017
- - ---------------------------------------------------------------------------------- -------------- --------------
End of period $ 737,046,270 $ 706,126,246
- - ---------------------------------------------------------------------------------- -------------- --------------
</TABLE>
*Reflects operations for the period from January 15, 1994 (date of initial
public offering) to March 31, 1994.
**Reflects operations for the period from April 20, 1993 (date of initial public
offering) to March 31, 1994.
(See Notes which are an integral part of the Financial Statements)
Liberty Municipal Securities Fund, Inc.
Financial Highlights--Class A Shares
- - --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31,
1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 11.62 $ 10.98 $ 10.61 $ 10.47 $ 10.26 $ 10.03 $ 10.80 $ 10.51 $ 8.91
- - ------------------------
INCOME FROM INVESTMENT
OPERATIONS
- - ------------------------
Net investment income 0.66 0.66 0.67 0.71 0.72 0.72 0.73 0.75 0.80
- - ------------------------
Net realized and
unrealized gain/(loss)
on investments (0.40) 0.64 0.37 0.14 0.21 0.23 (0.77) 0.29 1.60
- - ------------------------ --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from investment
operations 0.26 1.30 1.04 0.85 0.93 0.95 (0.04) 1.04 2.40
- - ------------------------
LESS DISTRIBUTIONS
- - ------------------------
Dividends to
shareholders from net
investment income (0.66) (0.66) (0.67) (0.71) (0.72) (0.72) (0.73) (0.75) (0.80)
- - ------------------------
Distributions to
shareholders from net
realized gain
on investment
transactions (0.02) -- -- -- -- -- -- -- --
- - ------------------------ --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total Distributions (0.68) (0.66) (0.67) (0.71) (0.72) (0.72) (0.73) (0.75) (0.80)
- - ------------------------ --------- --------- --------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $ 11.20 $ 11.62 $ 10.98 $ 10.61 $ 10.47 $ 10.26 $ 10.03 $ 10.80 $ 10.51
- - ------------------------ --------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN** 2.10% 12.13% 10.05% 8.42% 9.20% 9.76% (0.17%) 10.28% 28.25%
- - ------------------------
RATIOS TO AVERAGE NET
ASSETS
- - ------------------------
Expenses 0.84% 0.80% 0.84% 0.89% 0.90% 0.95% 0.95% 0.95% 0.93%
- - ------------------------
Net investment income 5.59% 5.81% 6.17% 6.77% 6.80% 7.07% 7.28% 7.07% 8.39%
- - ------------------------
Expense waiver/
reimbursement(a) -- -- -- -- -- -- -- -- 0.23%
- - ------------------------
SUPPLEMENTAL DATA
- - ------------------------
Net assets, end of
period (000 omitted) $714,384 $706,126 $590,118 $511,611 $474,797 $440,445 $388,916 $424,655 $248,710
- - ------------------------
Portfolio turnover rate 27% 13% 8% 45% 25% 58% 55% 13% 2%
- - ------------------------
<CAPTION>
SEPT. 30,
1985* 1984
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 8.51 $ 9.20
- - ------------------------
INCOME FROM INVESTMENT
OPERATIONS
- - ------------------------
Net investment income 0.40 0.80
- - ------------------------
Net realized and
unrealized gain/(loss)
on investments 0.40 (0.69)
- - ------------------------ --------- -----------
Total from investment
operations 0.80 0.11
- - ------------------------
LESS DISTRIBUTIONS
- - ------------------------
Dividends to
shareholders from net
investment income (0.40) (0.80)
- - ------------------------
Distributions to
shareholders from net
realized gain
on investment
transactions -- --
- - ------------------------ --------- -----------
Total Distributions (0.40) (0.80)
- - ------------------------ --------- -----------
NET ASSET VALUE, END OF
PERIOD $ 8.91 $ 8.51
- - ------------------------ --------- -----------
TOTAL RETURN** 9.49% 1.23%
- - ------------------------
RATIOS TO AVERAGE NET
ASSETS
- - ------------------------
Expenses 1.04%(b) 1.14%
- - ------------------------
Net investment income 9.09%(b) 9.00%
- - ------------------------
Expense waiver/
reimbursement(a) 0.30%(b) 0.28%
- - ------------------------
SUPPLEMENTAL DATA
- - ------------------------
Net assets, end of
period (000 omitted) $105,664 $47,652
- - ------------------------
Portfolio turnover rate 1% 28%
- - ------------------------
</TABLE>
* For the six months ended March 31, 1985. The Fund changed its fiscal
year-end from September 30 to March 31, effective March 1, 1985.
** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
Liberty Municipal Securities Fund, Inc.
Financial Highlights--Select Shares
- - --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.88
- - -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- - -----------------------------------------------------------------------------------------------
Net investment income 0.12
- - -----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.68)
- - ----------------------------------------------------------------------------------------------- -------------------
Total from investment operations (0.56)
- - -----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- - -----------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.12)
- - ----------------------------------------------------------------------------------------------- -------------------
NET ASSET VALUE, END OF PERIOD $ 11.20
- - ----------------------------------------------------------------------------------------------- -------------------
TOTAL RETURN** (4.76)%
- - -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- - -----------------------------------------------------------------------------------------------
Expenses 1.80%(a)
- - -----------------------------------------------------------------------------------------------
Net investment income 5.08%(a)
- - -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- - -----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 596
- - -----------------------------------------------------------------------------------------------
Portfolio turnover rate 27%
- - -----------------------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from January 15, 1994 (date of initial
public offering) to March 31, 1994.
** Based on net asset value which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
Liberty Municipal Securities Fund, Inc.
Financial Highlights--Class C Shares
- - --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
<S> <C>
MARCH 31, 1994*
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.70
- - -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- - -----------------------------------------------------------------------------------------------
Net investment income 0.52
- - -----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.48)
- - ----------------------------------------------------------------------------------------------- -----------------
Total from investment operations 0.04
- - -----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- - -----------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.52)
- - -----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gain
on investment transactions (0.02)
- - ----------------------------------------------------------------------------------------------- -----------------
TOTAL DISTRIBUTIONS (0.54)
- - ----------------------------------------------------------------------------------------------- -----------------
NET ASSET VALUE, END OF PERIOD $ 11.20
- - ----------------------------------------------------------------------------------------------- -----------------
TOTAL RETURN** 0.17%
- - -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- - -----------------------------------------------------------------------------------------------
Expenses 1.80%(a)
- - -----------------------------------------------------------------------------------------------
Net investment income 4.70%(a)
- - -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- - -----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 22,066
- - -----------------------------------------------------------------------------------------------
Portfolio turnover rate 27%
- - -----------------------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from April 20, 1993 (date of initial
public offering) to March 31, 1994.
** Based on net asset value which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
Liberty Municipal Securities Fund, Inc.
Notes to Financial Statements
- - --------------------------------------------------------------------------------
March 31, 1994
(1) ORGANIZATION
The Fund is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end, management investment company.
The Fund provides three classes of shares ("Class A Shares," "Select Shares" and
"Class C Shares"). Class A Shares, Select Shares and Class C Shares are
identical in all respects except that Select Shares and Class C Shares are sold
pursuant to a distribution plan ("Plan") adopted in accordance with Investment
Company Act Rule 12b-1. Class A Shares and Class C Shares are also subject to
certain sales and contingent deferred sales charges.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of a significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--Municipal bonds are valued by an independent pricing
service taking into consideration yield, liquidity, risk, credit, quality,
coupon, maturity, type of issue, and any other factors or market data it
deems relevant in determing valuations for normal institutional size
trading units of debt securities. The independent pricing service does not
rely exclusively on quoted prices. Short-term securities with remaining
maturities of sixty days or less may be stated at amortized cost, which
approximates value.
B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and
estimated expenses are accrued daily. Bond premium and discount are
amortized as required by the Internal Revenue Code. Distributions to
shareholders are recorded on the ex-dividend date.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Internal Revenue Code ("Code") applicable to regulated investment companies
and to distribute to shareholders each year substantially all of its
tax-exempt income. Accordingly, no provisions for federal tax are
necessary.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities and maintains security positions such that sufficient liquid
assets will be available to make payment for the securities purchased.
Securities purchased on a when-issued or delayed delivery basis are marked
to market daily and begin earning interest on the settlement date.
E. RECLASSIFICATIONS--During the current period, the Fund adopted Statement of
Position 93-2 Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of Capital Distributions
by Investment Companies. Accordingly, permanent book and tax basis
Liberty Municipal Securities Fund, Inc.
- - --------------------------------------------------------------------------------
differences relating to accumulated net realized gain/loss on investments
have been reclassified to paid-in-capital. As of April 1, 1993, the
cumulative effect of such differences, totaling $5,104,381 was reclassified
from accumulated net realized gain/loss on investments to paid-in capital.
Net investment income, net realized gains, and net assets were not affected
by this change.
F. OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At March 31, 1994, there were 1,000,000,000 shares of $0.01 per share par value
capital stock authorized. Of these shares, 375,000,000 have been designated as
Class A Shares, 250,000,000 have been designated as Select Shares and
375,000,000 have been designated as Class C Shares of the Fund. Transactions in
capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1994 1993
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 22,832,885 $ 268,781,200 25,135,755 $ 283,861,175
- - -------------------------------------------------
Shares issued to shareholders in
payment of dividends declared 2,365,264 27,795,028 2,250,018 25,553,978
- - -------------------------------------------------
Shares redeemed (22,182,727) (261,363,852) (20,359,473) (231,898,215)
- - ------------------------------------------------- ------------- --------------- ------------- ---------------
Net change in net assets resulting from capital
stock transactions 3,015,422 $ 35,212,376 7,026,300 $ 77,516,938
- - ------------------------------------------------- ------------- --------------- ------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
MARCH 31,
1994*
SELECT SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 53,757 $ 630,244
- - ----------------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 196 2,222
- - ----------------------------------------------------------------------------------------
Shares redeemed (730) (8,285)
- - ---------------------------------------------------------------------------------------- ----------- ----------
Net change in net assets resulting from capital stock transactions 53,223 $ 624,181
- - ---------------------------------------------------------------------------------------- ----------- ----------
</TABLE>
* Reflects operations for the period from January 15, 1994 (date of initial
public offering) to March 31, 1994.
Liberty Municipal Securities Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED MARCH 31,
1994**
CLASS C SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 2,092,015 $ 24,704,800
- - -----------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 22,904 268,723
- - -----------------------------------------------------------------------------------
Shares redeemed (144,245) (1,705,920)
- - ----------------------------------------------------------------------------------- ---------- -------------
Net change in net assets resulting from capital stock transactions 1,970,674 $ 23,267,603
- - ----------------------------------------------------------------------------------- ---------- -------------
</TABLE>
** Reflects operations for the period from April 20, 1993 (date of initial
public offering) to March 31, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Advisers, the Fund's investment adviser
("Adviser"), receives for its services an annual investment advisory fee equal
to (a) .30 of 1% of the Fund's average daily net assets, and (b) 4.5% of the
gross income of the Fund, excluding capital gains or losses. Adviser may
voluntarily choose to waive a portion of its fee. Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
ADMINISTRATION FEE--Federated Administrative Services ("FAS") provides the Trust
administrative personnel and services. Prior to March 1, 1994, these services
were provided at approximate cost. Effective March 1, 1994, the fee is based on
the level of average aggregate net assets of all funds advised by subsidiaries
of Federated Investors for the period. The administrative fee received during
any fiscal year shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
DISTRIBUTION AND SERVICE PLAN--The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940. The
Fund will compensate Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance activities intended to
result in the sale of the Fund's Select Shares and Class C Shares. The Plan
provides that the Fund may incur distribution expenses up to 0.75 of 1% of the
average daily net assets of the Select Shares and Class C Shares, annually, to
compensate FSC.
Under the terms of a Shareholder Service Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to 0.25 of 1% of the level of average
net assets for the Class A Shares, Select Shares and Class C Shares for the
period. This fee is to obtain certain personal services for shareholders and the
maintenance of shareholder accounts.
TRANSFER AGENT FEES--Federated Services Company ("FServ") serves as transfer
agent and dividend disbursing agent for the Fund. The fee is based on the size,
type and number of accounts and transactions made by shareholders.
Liberty Municipal Securities Fund, Inc.
- - --------------------------------------------------------------------------------
INTERFUND TRANSACTIONS--During the fiscal year ended March 31, 1994, the Fund
engaged in purchase and sale transactions with other Funds advised by the
Adviser pursuant to Rule 17a-7 of the Investment Company Act of 1940 amounting
to $143,900,000 and $188,219,191, respectively. These purchases and sales were
conducted at an arms-length basis and transacted for cash consideration only, at
independent current market prices and without brokerage commissions, fees or
other renumeration.
Certain of the Officers and Directors of the Fund are Officers and Directors of
the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term obligations, for the
fiscal year ended March 31, 1994 were as follows:
<TABLE>
<S> <C>
- - --------------------------------------------------------------------------------------------------
PURCHASES $ 251,094,354
- - -------------------------------------------------------------------------------------------------- --------------
SALES $ 207,944,543
- - -------------------------------------------------------------------------------------------------- --------------
</TABLE>
(6) CURRENT CREDIT RATINGS
Current credit ratings are unaudited.
Independent Auditors' Report
- - --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
LIBERTY MUNICIPAL SECURITIES FUND, INC.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Liberty Municipal Securities Fund, Inc. as of
March 31, 1994, the related statement of operations for the year then ended, the
statements of changes in net assets for the years ended March 31, 1994 and 1993,
and the financial highlights for each of the periods in the eleven-year period
ended March 31, 1994. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and diclosures in the financial
statements. Our procedures included confirmation of securities owned at March
31, 1994 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Liberty Municipal
Securities Fund, Inc. as of March 31, 1994, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE
Boston, Massachusetts
May 13, 1994
Directors Officers
- - --------------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland J. Christopher Donahue
J. Christopher Donahue President
James E. Dowd Richard B. Fisher
Lawrence D. Ellis, M.D. Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Peter E. Madden Vice President and Treasurer
Gregor F. Meyer John W. McGonigle
Wesley W. Posvar Vice President and Secretary
Marjorie P. Smuts John A. Staley, IV
Vice President
David M. Taylor
Assistant Treasurer
Charles H. Field
Assistant Secretary
Mutual funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies. Investment in these shares
involves risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts
concerning its objective and policies, management fees,
expenses and other information.
[LOGO] LIBERTY
HIGH INCOME
BOND FUND, INC.
17TH ANNUAL REPORT
March 31, 1994
Established 1977
[LOGO] FEDERATED SECURITIES CORP.
--------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
8042830 (5/94)
A1. The graphic presentation here displayed consists of a
line graph. The corresponding components of the line graph
are listed underneath. The Class A Shares of the Fund (the
"Fund") are represented by a solid line, whereas Lehman
Brothers Revenue Bond Index is represented by a dotted line.
The line graph is a visual representation of a comparison of
change in value of a hypothetical investment in the Class A
Shares of the Fund and Lehman Brothers Revenue Bond Index
for the ten year period from March 31, 1984 to March 31,
1994. The "y" axis reflects the cost of the investment.
The "x" axis reflects computation periods from the ending
value of the hypothetical investment in the Class A Shares
of the Fund as compared to Lehman Brothers Revenue Bond
Index; the ending values are $23,688 and $28,249,
respectively.Beneath the list of the components that
correspond to the line graph are the following total return
data for the Class A Shares of the Fund: total return
figures for the one year, five year, and ten year periods,
and inception-to-date average annualized total return. The
corresponding total return figures are as follows: (2.52%);
7.34%; 9.01%; and 6.43%, respectively. The performance
disclaimer and footnotes are listed directly under the
graphic presentation.
A2. The graphic presentation here displayed consists of a
line graph. The corresponding components of the line graph
are listed underneath. The Select Shares of the Fund (the
"Fund") are represented by a solid line, whereas Lehman
Brothers Revenue Bond Index is represented by a dotted line.
The line graph is a visual representation of a comparison of
change in value of a hypothetical investment in the Select
Shares of the Fund and Lehman Brothers Revenue Bond Index
for the period from January 15, 1994 (date of initial public
offering) to March 31, 1994. The "y" axis reflects the cost
of the investment. The "x" axis reflects computation
periods from the ending value of the hypothetical investment
in the Select Shares of the Fund as compared to Lehman
Brothers Revenue Bond Index; the ending values are $9,524
and $9,293, respectively. Beneath the list of components
that correspond to the line graph is the total cumulative
return for the period from January 15, 1994 (start of
performance) to March 31, 1994. The total return figure is
(4.76%). The performance disclaimer and footnotes are
listed directly under the graphic presentation.
A3. The graphic presentation here displayed consists of a
line graph. The corresponding components of the line graph
are listed underneath. The Class C Shares of the Fund (the
"Fund") are represented by a solid line, whereas Lehman
Brothers Revenue Bond Index is represented by a dotted line.
The line graph is a visual representation of a comparison of
change in value of a hypothetical investment in the Class C
Shares of the Fund and Lehman Brothers Revenue Bond Index
for the period from April 20, 1993 (date of initial public
offering) to March 31, 1994. The "y" axis reflects the cost
of the investment. The "x" axis reflects computation
periods from the ending value of the hypothetical investment
in Class C Shares of the Fund as compared to Lehman Brothers
Revenue Bond Index; the ending values are $9,919 and
$10,104, respectively. Beneath the list of components that
correspond to the line graph is the total cumulative return
for the period from April 20, 1993 (start of performance) to
March 31, 1994. The total return figure is (.81%). The
performance disclaimer and footnotes are listed directly
under the graphic presentation.
A4. The graphic presentation here displayed consists of a
boxed legend in the upper left quadrant indicating the
components of the corresponding mountain chart. The color
coded mountain chart is a visual representation of the
narrative text above it, which shows that an initial
investment of $18,000 in the Class A Shares of Liberty
Municipal Securities Fund, Inc. in 1976 would have grown to
$53,550. The "x" axis reflects computation periods from
1976 to 1994, the "y" axis reflects the cost of the
investment, and the right margin reflects a total investment
range from $0 to $60,000. The chart further indicates the
ending market value attributable to principal, as well as
the ending market value attributable to capital gains and
reinvested dividends.
A5. The graphic presentation here displayed consists of a
boxed legend in the upper left quadrant indicating the
components of the corresponding mountain chart. The color
coded mountain chart is a visual representation of the
narrative text above it, which shows that an initial
investment of $1,000 in the Class A Shares of Liberty
Municipal Securities Fund, Inc. in 1976 would have grown to
$38,422. The "x" axis reflects computation periods from
1976 to 1994, the "y" axis reflects the cost of the
investment, and the right margin reflects a total investment
range from $0 to $40,000. The chart further indicates the
ending market value attributable to principal, as well as
the ending market value attributable to capital gains and
reinvested dividends.
A6. The bar chart is a visual representation of Liberty
Municipal Securities Fund, Inc. portfolio rating
distribution as of March 31, 1994. The information is as
follows: AAA/Aaa, 38.6%; AA/Aa, 31.9%; A/A 10.1%; BBB/Baa,
13.0%; and No Rating, 6.4%. Underneath this bar chart is
another chart showing the five largest holdings of Liberty
Municipal Securities Fund, Inc. It shows three categories
entitled, Holdings, Rating, Percentage. The information
listed is as follows: Los Angeles, CA Department of Water &
Power (Revenue), Aa/AA, 3.84%; District of Columbia-
Georgetown University (Revenue), Aa/AA-, 3.23%; New York
State Power Authority (Revenue), Aa/AA-, 2.73%; Orlando, FL
Utilities Commission (Revenue), Aa/AA-, 2.72%; and Sabine
River Authority, TX-Southwestern Electric Power Company
(Revenue), Aa3/NR, 2.48%. Adjacent to these two charts is
another chart showing sector distribution as of March 31,
1994. It lists two columns consisting of Holdings and
Percentages. The information is as follows: Refunded,
34.6%; Poll CTL, 12.8%; Electric, 11.6%; Hospital, 7.5%; X-
Refund, 7.2%; College, 5.8%; Airport, 2.8%, Inv. Fltr.,
2.7%; Resource, 2.7%; Ins. Poll, 2.5%; Escrowed, 2.2%; Go-
State, 2.1%; Ind. Devp., 1.1%; Sale Tax, 1.0%; Ins.-Hosp.,
0.9%; Toll, 0.7%; Lifecare, 0.6%; and Water, 0.1%.
A7. The graphic presentation here displayed consists of a
boxed legend in the upper left quadrant indicating the
components of the corresponding mountain chart. The color-
coded mountain chart is a visual representation of the
narrative text beneath it, which shows that an initial
investment of $25,000 in the Class A Shares of Liberty
Municipal Securities Fund, Inc. in 1984 would have grown to
$59,221. The "x" axis reflects computation periods from
1984 to 1994, the "y" axis reflects the cost of the
investment, and the right margin reflects a total investment
range from $0 to $70,000. The chart further indicates the
ending market value attributable to principal, as well as
the ending market value attributable to capital gains and
reinvested dividends.
