President's Message
- - --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the 17th Annual Report for
Liberty High Income Bond Fund, Inc. (the "Fund"). This
Report features a design that is easier to read.
We have also included more charts that show how
investments in the Fund have grown over time. I
trust that you will find this format both informative
and appealing.
This Report covers the one-year period ended March 31,
1994. It begins with an interview with the Fund's
portfolio manager, Mark E. Durbiano, Vice President,
Federated Advisers, detailing the high-yield market and
recent portfolio activity. Also included are a series of
performance charts, a complete listing of the Fund's
holdings, and its financial statements.
Reflecting the first quarter 1994 rise in interest rates,
the Fund's net asset value decreased over the period. On
the first day of the period, the share price based on net
asset value was $11.19 compared to $10.99 on March 31,
1994. However, over the entire 12 months, the Class A
Shares of the Fund produced income of $1.06 per share,
and a total return of 7.82%, based on net asset value. I
urge you to review the series of charts at the beginning
of this Report, which show the Fund's record of success
over time.
As Mark explains, the Fund is managed with a prudent
approach to the high-yield bond market. Its
well-researched portfolio is focused on securities rated
single B, which are issued by companies selected for
their ability to improve their creditworthiness. The
portfolio does not hold the lowest quality issues that,
while offering high returns, also involve an extremely
high level of risk.
At the end of the report period, the Fund was highly
diversified among more than 100 issues representing more
than 30 different industries. Many of its holding are
names you know well, like USAIR, DR. PEPPER, BELL &
HOWELL, OWENS-ILLINOIS, REVLON, and AMERICAN STANDARD.
Reflecting increased investor confidence, the Fund's
total assets continued to grow over the period--from $417
million at the period's beginning to $464 million at its
end.
We appreciate your continued confidence in Liberty High
Income Bond Fund, Inc. I encourage you to add to your
investment in the Fund. By reinvesting your dividends,
you can increase your share balance on which future
dividends will be paid.
Very sincerely yours,
Richard B. Fisher
President
May 16, 1994
Investment Review
- - --------------------------------------------------------------------------------
Q. HOW HAVE HIGH-YIELD BONDS TREATED INVESTORS OVER
THE PAST 12 MONTHS?
A. The high-yield market generated strong relative
performance over the 12 months ended March 31,
1994. For example, the Lehman Brothers Single
B Index* (which most closely corresponds with the Fund's
investment style) provided a total return of 8.21% over
the period, while the Lehman Brothers Treasury Index*
provided a total return of 2.67% over the same time
period. The high-yield market benefited from a
continuing expansion of economic activity that
Mark E. Durbiano accelerated in the fourth quarter of 1993 and the first
Vice President quarter of 1994. This strong economic growth caused the
Federated Advisers spread between hihg-yield bonds and U.S. Treasuries to
narrow from 5.02% on March 31, 1993 to 4.42% on
March 31, 1994.
Q. THE FIRST QUARTER OF 1994 WAS DIFFICULT FOR MOST
FINANCIAL ASSETS INCLUDING HIGH-YIELD BONDS,
WHAT HAPPENED?
A. Rising interest rates were the main culprit.
Yields on 30-year U.S. Treasury securities
bottomed at 5.79% on October 15, 1993, and rose
to 7.10%, as of March 31, 1994, constituting a 131 basis
point increase. Most of the increase occurred in the
first quarter of 1994, as the realization that the
economy was expanding faster than expectations fueled
inflationary fears. The fear of inflation also caused
the Federal Reserve Board to tighten monetary policy
in February. High-yield bonds were able to offset some
of the rise in rates, given the improved credit outlook
for high-yield issuers. However, the dramatic rise in
rates in the first quarter caused the Lehman Brothers
Single B Index* to decline 1.94%.
* These indices are unmanaged.
- - --------------------------------------------------------------------------------
Q. HOW DID LIBERTY HIGH INCOME BOND FUND, INC.
PERFORM DURING THE PAST YEAR?
A. The performance of Liberty High Income Bond Fund,
Inc. has been comparable to the Lehman Brothers
Single B Index. The Fund benefited from its
large positions in cyclical industries such as steel,
chemicals, and forest products. The Fund was negatively
impacted by its overweight in zero-coupon, high-yield
securities. These securities typically underperform in
periods of rising rates because of their longer
durations. From December 31, 1993 to March 31, 1994,
the Class A Shares' price, based on net asset value,
declined from $11.44 to $10.99, and dividends per share
totaled $0.255.
Q. HOW IS LIBERTY HIGH INCOME BOND FUND, INC.
POSITIONED GOING OUT INTO 1994?
A. We believe that the economy will continue to
grow, and we, therefore, maintain large
positions in several cyclical industries. For
example, the Fund has overweighted in the steel
industry with investments in INLAND STEEL, WEIRTON
STEEL, GENEVA STEEL, and ENVIROSOURCE. We also have an
overweight position in the chemical industry with
issuers such as UNIROYAL CHEMICAL, G-I HOLDINGS, and
ARCADIAN PARTNERS, a nitrogen-based fertilizer company.
We also have significant exposure to the linerboard
segment of the forest products industry through
investments in CONTAINER CORPORATION OF AMERICA and STONE
CONTAINER. We believe these industries and companies
should outperform the general high-yield market if the
economy continues to surprise on the upside.
- - --------------------------------------------------------------------------------
Q. MANY HIGH-YIELD FUNDS HAVE ALTERED THEIR
PORTFOLIOS BY INVESTING IN DEFAULTED SECURITIES
AND EMERGING MARKET BONDS. HAS LIBERTY HIGH
INCOME BOND FUND, INC. EMBRACED THESE STRATEGIES?
A. Definitely not. Liberty High Income Bond Fund,
Inc. is targeted toward the single-B sector of the
high-yield corporate market. We believe that our
expertise lies in the analysis of corporate issuers where
we can identify companies that will improve their
creditworthiness over time. While the lowest quality
high-yield bonds, such as issuers in default and emerging
markets, have provided attractive returns over the past
12 months, these investments entail a much higher risk
profile than Liberty High Income Bond Fund, Inc. is
prepared to accept.
Q. WHAT IS YOUR OUTLOOK FOR THE FUND?
A. We expect the economy to continue to
surprise on the upside and that will
continue to cause concerns about
inflation. However, reported statistics on
inflation show no problem yet, though
interest rates have increased substantially
to compensate investors for rising
inflation. These contradicting factors may
continue to increase volatility in the
markets, while not altering the overall
level of interest rates dramatically. In
this environment, high-yield bonds should
continue to deliver strong relative
performance as the improved debt servicing
ability of high-yield issuers, brought
about by an improving economy, leads to a
continued narrowing of the spreads between
high-yield bonds and Treasuries. Overall
returns will be affected by the general
movement in interest rates.
Liberty High Income Bond Fund, Inc.
(Class A Shares)
- - --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN LIBERTY HIGH INCOME BOND FUND, INC.
(CLASS A SHARES)
The graph below illustrates the hypothetical investment of $10,000 in the
Liberty High Income Bond Fund, Inc. (Class A Shares) (the "Fund") from March 31,
1984 to March 31, 1994 compared to the Lehman Brothers Single B Rated Index
("LBSBRI") and the Lipper High Current Yield Funds Average ("LHCYFA").+
Graphic representation "A1" omitted.
See Appendix.
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 1994
<TABLE>
<S> <C>
1 Year Total Return.....................................2.94%
5 Year Total Return....................................11.90%
10 Year Total Return...................................12.00%
Start of Performance (11/30/77) (cumulative)..........421.53%
Start of Performance (11/30/77) (cumulative)...........10.64%
</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. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
* Represents a hypothetical investment of $10,000 in the Fund after
deducting the maximum sales charge of 4.50% ($10,000 investment minus
$450 sales charge = $9,550). The Fund's performance assumes the
reinvestment of all dividends and distributions. The LBSBRI and the
LHCYFA have been adjusted to reflect reinvestment of dividends on
securities in the indices.
+ The LHCYFA is a compilation of a specified category of mutual fund total
returns reported to Lipper Analytical Services, Inc. Each fund is reported net
of sales loads, expenses or other fees that the SEC requires to be reflected
in a fund's performance.
Liberty High Income Bond Fund, Inc.
(Class C Shares)
- - --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN LIBERTY HIGH INCOME BOND FUND, INC.
(CLASS C SHARES)
The graph below illustrates the hypothetical investment of $10,000 in the
Liberty High Income Bond Fund, Inc. (Class C Shares) (the "Fund") from April 30,
1993 to March 31, 1994 compared to the Lehman Brothers Single B Rated Index
("LBSBRI") and the Lipper High Current Yield Funds Average ("LHCYFA").+
Graphic representation "A2" omitted.
See Appendix
<TABLE>
<S> <C>
Start of Performance (4/30/93), cumulative total return.....5.17%
</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. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
* Represents a hypothetical investment of $10,000 in the Fund. The ending
value of the Fund reflects a contingent deferred sales charge of 1.00% on
any redemption less than one year from the purchase date. The Fund's
performance assumes the reinvestment of all dividends and distributions.
The LBSBRI and the LHCYFA have been adjusted to reflect reinvestment of
dividends on securities in the indices.
+ The LHCYFA is a compilation of a specified category of mutual fund total
returns reported to Lipper Analytical Services, Inc. Each fund is reported net
of sales loads, expenses or other fees that the SEC requires to be reflected
in a fund's performance.
Liberty High Income Bond Fund, Inc.
(Select Shares)
- - --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN LIBERTY HIGH INCOME BOND FUND, INC.
(SELECT SHARES)
The graph below illustrates the hypothetical investment of $10,000 in the
Liberty High Income Bond Fund, Inc. (Select Shares) (the "Fund") from January
15, 1994 to March 31, 1994 compared to the Lehman Brothers Single B Rated Index
("LBSBRI") and the Lipper High Current Yield Funds Average ("LHCYFA").+
Graphic representation "A3" omitted.
See Appendix.
<TABLE>
<S> <C>
Start of Performance (1/15/94), cumulative total return....(3.40)%
</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. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
* The Fund's performance assumes the reinvestment of all dividends and
distributions. The LBSBRI and the LHCYFA have been adjusted to reflect
reinvestment of dividends on securities in the indices.
+ The LHCYFA is a compilation of a specified category of mutual fund total
returns reported to Lipper Analytical Services, Inc. Each fund is reported net
of sales loads, expenses or other fees that the SEC requires to be reflected
in a fund's performance.
Two Ways You May Seek to Invest for Success In
Liberty High Income Bond Fund, Inc.
- - --------------------------------------------------------------------------------
Initial Investment:
A $17,000 INVESTMENT (REINVESTING ALL DIVIDENDS AND CAPITAL GAINS) GREW TO
$88,654.
If you had invested $17,000 in the Class A Shares of Liberty High Income Bond
Fund, Inc. on 11/30/77, reinvested dividends and capital gains, and didn't
redeem any shares, your account would have been worth $88,654 on 3/31/94. You
would have earned a 10.58%* average annual total return for the 17-year
investment life span.
One key to investing wisely is to reinvest all distributions in Fund shares.
This increases the number of shares on which you can earn future dividends, and
you gain the benefit of compounding.
As of 3/31/94, the Class A Shares' average annual one-year, five-year and
ten-year total returns were 2.94%, 11.90%, and 12.00%, respectively. Class C
Shares' total return since inception on 4/30/93 was 5.17%. Select Shares'
total return since inception on 1/15/94 was -3.40%.
Graphic representation "A4" omitted.
See Appendix.
* Total return represents the change in the value of an investment 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 High Income Bond Fund, Inc.
- - --------------------------------------------------------------------------------
One Step at a Time:
$1,000 INVESTED EACH YEAR FOR 17 YEARS (REINVESTING ALL DIVIDENDS AND CAPITAL
GAINS) GREW TO $50,475.
With this approach, the key is consistency.
If you had started investing $1,000 annually in the Class A Shares of Liberty
High Income Bond Fund, Inc. on 11/30/77, reinvested your dividends and capital
gains and didn't redeem any shares, you would have invested only $17,000, but
your account would have reached a total value of $50,475 by 3/31/94. You would
have earned an average annual total return of 11.94%*.
A practical investment plan helps you pursue a high level of income through
corporate bonds. Through systematic investing, you buy shares on a regular basis
and reinvest all earning. An investment plan works for you when you invest only
$1,000 annually. You can take it one step at a time. Put time 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 High Income Bond Fund, Inc.--
A History of Solid Earnings--Eight 10-Year Periods
- - --------------------------------------------------------------------------------
$10,000 INVESTED WITH DISTRIBUTIONS REINVESTED
HOW A $10,000 INVESTMENT GREW DURING EACH 10-YEAR PERIOD SINCE FUND INCEPTION.
This chart shows what your account would be worth had you invested $10,000 at
the beginning of these consecutive decades.
OVER EVERY 10-YEAR PERIOD SINCE THE FUND'S INCEPTION, A $10,000 INVESTMENT IN
ITS CLASS A SHARES (WITH ALL DIVIDENDS AND CAPITAL GAINS REINVESTED) GREW IN
VALUE. There was never a decade in which an investor would have lost money.
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>
1977-1987* 637 $17,187 2,008 $25,163
1878-1988 652 18,597 2,312 25,899
1979-1989 693 19,998 2,512 27,609
1980-1990 850 20,612 3,153 28,216
1981-1991 836 20,541 3,173 27,890
1982-1992 943 27,488 3,491 37,667
1983-1993 771 22,248 2,759 30,875
1984-1994 816 22,078 2,825 31,050
</TABLE>
*This initial investment period is November 30, 1977 (inception date of
Class A Shares) through March 31, 1987.
Liberty High Income Bond Fund, Inc.--
Serving a Wide Range of Investors
- - --------------------------------------------------------------------------------
LIBERTY HIGH INCOME BOND FUND, INC. APPEALS TO A BROAD RANGE OF INVESTORS
SEEKING CURRENT INCOME.
The Fund invests primarily in a diversified portfolio of high-yield corporate
bonds covering more than 100 companies across 35 industries. Fund shares are not
guaranteed, and the value of your investment may fluctuate. Mutual funds involve
risk, including possible loss of principal.
SOME OF THE FUND'S MAJOR SHAREHOLDER GROUPS
<TABLE>
<S> <C>
Individuals and Joint Tenants $212,585,323
IRAs 58,484,443
Trusts 29,089,406
Clubs/Fraternal Organizations 9,884,900
Corporations 8,448,377
Custodians (under Uniform Gift to Minors Act) 5,497,011
Pension Plans 5,236,440
Keogh/Profit-Sharing 2,950,327
Estates 1,130,377
Churches/Religious Organizations 935,734
</TABLE>
Liberty High Income Bond Fund, Inc.--
Portfolio Update
- - --------------------------------------------------------------------------------
The chart shows some of the Fund's best-performing holdings over the six-month
period ended March 31, 1994, in terms of how much they increased in total
return.
10 BEST PERFORMERS
<TABLE>
<CAPTION>
Holdings Total Return
<S> <C>
Specialty Foods 2.1%
Stone Container 1.7%
Collins & Aikman 1.6%
Ivex Holdings 1.2%
Bell & Howell 1.1%
Coldwell Banker 0.9%
Fairchild Industries 0.8%
Cablevision Systems 0.6%
Eagle Industries 0.6%
Kaiser Aluminum 0.2%
</TABLE>
Liberty High Income Bond Fund, Inc.--
Hypothetical Investor Profile: Investing for High Monthly Income
- - --------------------------------------------------------------------------------
Chuck Colby is a fictional investor who, like many other shareholders, is
looking for high monthly income opportunities.
Chuck is an attorney on his way up the corporate ladder. On March 31, 1984, he
invested $5,000 in the Class A Shares of Liberty High Income Bond Fund, Inc.
As this chart shows, over 10 years, his original $5,000 investment has grown to
$15,527. This represents a 11.99% average annual total return. For Chuck, that
means extra money toward the construction of his first home.
Graphic representation "A6" 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 High Income Bond Fund, Inc.
Portfolio of Investments
- - --------------------------------------------------------------------------------
March 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- - ------------- ---------------------------------------------------------------------------------- --------------
CORPORATE BONDS--93.3%
- - -------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.5%
----------------------------------------------------------------------------------
$ 2,500,000 Tracor, Sr. Sub. Note, 10.875%, 8/15/2001 $ 2,475,000
---------------------------------------------------------------------------------- --------------
AIR TRANSPORTATION--1.0%
----------------------------------------------------------------------------------
5,000,000 USAir, Inc., Pass Thru Cert., Series 1993-A, 10.375%, 3/1/2013 4,700,000
---------------------------------------------------------------------------------- --------------
AUTOMOTIVE--1.4%
----------------------------------------------------------------------------------
2,500,000 Lear Seating Corp., Sr. Sub. Note, 11.25%, 7/15/2000 2,675,000
----------------------------------------------------------------------------------
3,500,000 Motor Wheel Corp., Sr. Note, 11.50%, 3/1/2000 3,692,500
---------------------------------------------------------------------------------- --------------
Total 6,367,500
---------------------------------------------------------------------------------- --------------
BEVERAGE & TOBACCO--2.9%
----------------------------------------------------------------------------------
7,000,000 Dr. Pepper Bottling Holdings Co., Sr. Disc. Note, 0/11.625%, 2/15/2003 4,760,000
----------------------------------------------------------------------------------
6,152,000 Dr. Pepper/7-Up Cos., Sr. Sub. Note, 0/11.50%, 11/1/2002 4,783,180
----------------------------------------------------------------------------------
4,000,000 Heileman Acquisition Co., Sr. Sub. Note, 9.625%, 1/31/2004 3,820,000
---------------------------------------------------------------------------------- --------------
Total 13,363,180
---------------------------------------------------------------------------------- --------------
BROADCAST RADIO & TV--4.4%
----------------------------------------------------------------------------------
6,000,000 Ackerly Communications, Inc., Sr. Secd. Note, 10.75%, 10/1/2003 6,120,000
----------------------------------------------------------------------------------
5,000,000 Allbritton Communication Co., Sr. Sub. Note, 11.50%, 8/15/2004 5,275,000
----------------------------------------------------------------------------------
7,250,000 SCI Television, Inc., Sr. Secd. Note, 11.00%, 6/30/2005 7,268,125
----------------------------------------------------------------------------------
1,500,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 12/15/2003 1,515,000
---------------------------------------------------------------------------------- --------------
Total 20,178,125
---------------------------------------------------------------------------------- --------------
BUSINESS EQUIPMENT & SERVICES--2.3%
----------------------------------------------------------------------------------
4,750,000 Anacomp, Inc., Sr. Sub. Note, 15.00%, 11/1/2000 5,367,500
----------------------------------------------------------------------------------
3,000,000 Bell & Howell Co., Sr. Sub. Note, 10.75%, 10/1/2002 3,090,000
----------------------------------------------------------------------------------
3,500,000 Bell & Howell Holdings Co., Sr. Disc. Deb., 0/11.50%, 3/1/2005 1,925,000
---------------------------------------------------------------------------------- --------------
Total 10,382,500
---------------------------------------------------------------------------------- --------------
CABLE TV--4.9%
----------------------------------------------------------------------------------
3,000,000 Cablevision Industries Corp., Sr. Note, 9.25%, 4/1/2008 2,790,000
----------------------------------------------------------------------------------
3,000,000 Cablevision Systems Co., Sr. Sub. Deb., 9.875%, 2/15/2013 3,045,000
----------------------------------------------------------------------------------
</TABLE>
Liberty High Income Bond Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- - ------------- ---------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- - -------------------------------------------------------------------------------------------------
CABLE TV--CONTINUED
----------------------------------------------------------------------------------
$ 4,500,000 Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013 $ 4,365,000
----------------------------------------------------------------------------------
6,250,000 International Cabletel, Inc., Sr. Defd. Note, 0/10.875%, 10/15/2003 3,781,250
----------------------------------------------------------------------------------
4,500,000 Marcus Cable Co., L.P., Sr. Deb., 11.875%, 10/1/2005 4,477,500
----------------------------------------------------------------------------------
6,000,000 Rogers Cablesystems Ltd., Sr. Secd. Note, 9.65%, 1/15/2014 4,076,028
---------------------------------------------------------------------------------- --------------
Total 22,534,778
---------------------------------------------------------------------------------- --------------
CHEMICALS & PLASTICS--7.9%
----------------------------------------------------------------------------------
7,500,000 Arcadian Partners L.P., Sr. Note, Series B, 10.75%, 5/1/2005 7,500,000
----------------------------------------------------------------------------------
6,000,000 Foamex Capital Corp., Sr. Sub. Deb., 11.875%, 10/1/2004 6,450,000
----------------------------------------------------------------------------------
13,000,000 G-I Holdings, Inc., Sr. Disc. Note, 0/11.375% 10/1/98* 7,995,000
----------------------------------------------------------------------------------
7,500,000 Harris Chemical, Sr. Secd. Disc. Note, 0/10.25%, 7/15/2001 6,187,500
----------------------------------------------------------------------------------
4,000,000 UCC Investors Holdings, Inc., Sr. Sub. Note, 11.00%, 5/1/2003 4,120,000
----------------------------------------------------------------------------------
7,000,000 UCC Investors Holdings, Inc., Sub. Disc. Note, 0/12.00%, 5/1/2005 4,532,500
---------------------------------------------------------------------------------- --------------
Total 36,785,000
---------------------------------------------------------------------------------- --------------
CLOTHING & TEXTILES--1.9%
----------------------------------------------------------------------------------
1,500,000 Fieldcrest Cannon, Inc., Sr. Sub. Deb., 11.25%, 6/15/2004 1,590,000
----------------------------------------------------------------------------------
7,500,000 WestPoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 7,087,500
---------------------------------------------------------------------------------- --------------
Total 8,677,500
---------------------------------------------------------------------------------- --------------
CONGLOMERATES--4.3%
----------------------------------------------------------------------------------
7,350,000 Collins & Aikman Group, Sr. Sub. Deb., 11.875%, 6/1/2001 7,423,500
----------------------------------------------------------------------------------
3,500,000 Fairchild Industries, Sr. Secd. Note, 12.25%, 2/1/99 3,587,500
----------------------------------------------------------------------------------
4,500,000 Sherritt Gordon Ltd., Sr. Note, 9.75%, 4/1/2003 4,387,500
----------------------------------------------------------------------------------
5,000,000 (a)Walter Industries, Inc., Sub. Note, 17.00%, 1/1/96 4,525,000
---------------------------------------------------------------------------------- --------------
Total 19,923,500
---------------------------------------------------------------------------------- --------------
</TABLE>
Liberty High Income Bond Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- - ------------- ---------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- - -------------------------------------------------------------------------------------------------
CONTAINERS & GLASS PRODUCTS--7.5%
----------------------------------------------------------------------------------
$ 4,000,000 Ivex Holdings Corp., Sr. Disc. Deb., Series A, 0/13.25%, 3/15/2005 $ 1,920,000
----------------------------------------------------------------------------------
3,500,000 Ivex Packaging Corp., Sr. Sub. Note, 12.50%, 12/15/2002 3,745,000
----------------------------------------------------------------------------------
1,680,000 (a)Kane Industries, Inc., Sr. Sub. Disc. Note, 0/8.00%, 2/1/98* 50,400
----------------------------------------------------------------------------------
3,500,000 Owens Illinois, Inc., Sr. Sub. Note, 10.50%, 6/15/2002 3,605,000
----------------------------------------------------------------------------------
4,500,000 Owens Illinois, Inc., Sr. Sub. Note, 9.95%, 10/15/2004 4,545,000
----------------------------------------------------------------------------------
3,500,000 Plastic Containers, Inc., Sr. Secd. Note, 10.75%, 4/1/2001 3,587,500
----------------------------------------------------------------------------------
3,500,000 Sea Containers Ltd., Sr. Note, 9.50%, 7/1/2003 3,377,500
----------------------------------------------------------------------------------
1,750,000 Sea Containers Ltd., Sr. Sub. Note, 12.50%, 12/1/2004 1,986,250
----------------------------------------------------------------------------------
2,000,000 Silgan Corp., Sr. Sub. Note, 11.75%, 6/15/2002 2,070,000
----------------------------------------------------------------------------------
7,000,000 Silgan Holdings, Inc., Sr. Disc. Deb., 0/13.25%, 12/15/2002 5,145,000
----------------------------------------------------------------------------------
4,250,000 U.S. Can Co., Sr. Sub. Note, 13.50%, 1/15/2002 4,749,375
---------------------------------------------------------------------------------- --------------
Total 34,781,025
---------------------------------------------------------------------------------- --------------
COSMETICS & TOILETRIES--2.0%
----------------------------------------------------------------------------------
20,000,000 Revlon Worldwide Corp., Sr. Secd. Note, Series B, 0/12.00%,
3/15/98 9,150,000
---------------------------------------------------------------------------------- --------------
ECOLOGICAL SERVICES & EQUIPMENT--1.8%
----------------------------------------------------------------------------------
4,375,000 Allied Waste Industries, Inc., Sr. Sub. Note, 10.75%, 2/1/2004 4,353,125
----------------------------------------------------------------------------------
4,000,000 ICF Kaiser International, Sr. Sub. Note, 12.00%, 12/31/2003 4,060,000
---------------------------------------------------------------------------------- --------------
Total 8,413,125
---------------------------------------------------------------------------------- --------------
ELECTRONICS--0.8%
----------------------------------------------------------------------------------
3,500,000 Harman International Industries, Sr. Sub. Note, 12.00%, 8/1/2002 3,832,500
---------------------------------------------------------------------------------- --------------
FARMING & AGRICULTURE--0.7%
----------------------------------------------------------------------------------
3,000,000 Spreckels Industries, Inc., Sr. Secd. Note, 11.50%, 9/1/2000 3,060,000
---------------------------------------------------------------------------------- --------------
FINANCIAL INTERMEDIARIES--0.9%
----------------------------------------------------------------------------------
4,000,000 Coldwell Banker Corp., Sr. Sub. Note, 10.25%, 6/30/2003 4,120,000
---------------------------------------------------------------------------------- --------------
</TABLE>
Liberty High Income Bond Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- - ------------- ---------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- - -------------------------------------------------------------------------------------------------
FOOD & DRUG RETAILERS--3.5%
----------------------------------------------------------------------------------
$ 9,000,000 Grand Union Co., Sr. Note, 12.25%, 7/15/2002 $ 8,977,500
----------------------------------------------------------------------------------
5,000,000 Pathmark Stores, Inc., Sr. Sub. Note, 9.625%, 5/1/2003 4,737,500
----------------------------------------------------------------------------------
2,500,000 Penn Traffic Co., Sr. Sub. Note, 9.625%, 4/15/2005 2,437,500
---------------------------------------------------------------------------------- --------------
Total 16,152,500
---------------------------------------------------------------------------------- --------------
FOOD PRODUCTS--4.0%
----------------------------------------------------------------------------------
5,000,000 Doskocil Cos., Inc., Sr. Sub. Note, 9.75%, 7/15/2000 4,850,000
----------------------------------------------------------------------------------
4,000,000 PMI Acquisition Corp., Sr. Sub. Note, 10.25%, 9/1/2003 4,060,000
----------------------------------------------------------------------------------
19,000,000 Specialty Foods Acquisition Corp., Sr. Secd. Disc. Deb., 0/13.00%,
8/15/2005 9,737,500
---------------------------------------------------------------------------------- --------------
Total 18,647,500
---------------------------------------------------------------------------------- --------------
FOOD SERVICES--3.2%
----------------------------------------------------------------------------------
3,500,000 Americold Corp., FMB Series B, 11.50%, 3/1/2005 3,412,500
----------------------------------------------------------------------------------
4,500,000 Flagstar Corp., Sr. Note, 10.75%, 9/15/2001 4,455,000
----------------------------------------------------------------------------------
6,000,000 Flagstar Corp., Sr. Note, 10.875%, 12/1/2002 5,932,500
----------------------------------------------------------------------------------
1,000,000 Flagstar Corp., Sr. Sub. Deb., 11.25%, 11/1/2004 975,000
---------------------------------------------------------------------------------- --------------
Total 14,775,000
---------------------------------------------------------------------------------- --------------
FOREST PRODUCTS--5.1%
----------------------------------------------------------------------------------
3,500,000 Container Corp. of America, Sr. Note, 9.75%, 4/1/2003 3,421,250
----------------------------------------------------------------------------------
5,000,000 Domtar, Inc., Note, 12.00%, 4/15/2001 5,375,000
----------------------------------------------------------------------------------
1,500,000 Repap Wisconsin, Inc., 1st Priority Sr. Secd. Note, 9.25%, 2/1/2002 1,425,000
----------------------------------------------------------------------------------
1,500,000 Repap Wisconsin, Inc., 2nd Priority Sr. Secd. Note, 9.875%, 5/1/2006 1,440,000
----------------------------------------------------------------------------------
4,000,000 Riverwood International Corp., Sr. Sub. Note, 11.25%, 6/15/2002 4,280,000
----------------------------------------------------------------------------------
1,500,000 Stone Container Corp., Sr. Note, 11.875%, 12/1/98 1,537,500
----------------------------------------------------------------------------------
1,000,000 Stone Container Corp., Sr. Note, 12.625%, 7/15/98 1,046,250
----------------------------------------------------------------------------------
1,250,000 Stone Container Corp., Sr. Note, 9.875%, 2/1/2001 1,150,000
----------------------------------------------------------------------------------
</TABLE>
Liberty High Income Bond Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- - ------------- ---------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- - -------------------------------------------------------------------------------------------------
FOREST PRODUCTS--CONTINUED
----------------------------------------------------------------------------------
$ 4,000,000 Stone Savannah River Pulp & Paper Corp., Sr. Sub. Note, 14.125%, 12/15/2000 $ 4,020,000
---------------------------------------------------------------------------------- --------------
Total 23,695,000
---------------------------------------------------------------------------------- --------------
HEALTHCARE--5.0%
----------------------------------------------------------------------------------
5,790,000 Alco Health Distribution Corp., Sr. PIK Deb., 11.25%, 7/15/2005 5,963,700
----------------------------------------------------------------------------------
2,500,000 American Medical International, Inc., Jr. Sub. Disc. Deb., 0/15.00%, 11/26/2005 4,262,500
----------------------------------------------------------------------------------
1,750,000 American Medical International, Inc., Sr. Sub. Note, 13.50%, 8/15/2001 1,977,500
----------------------------------------------------------------------------------
4,750,000 Healthsouth Rehabilitation Corp., Sr. Sub. Note, 9.50%, 4/1/2001 4,666,875
----------------------------------------------------------------------------------
6,000,000 Hillhaven Corp., Sr. Sub. Note, 10.125%, 9/1/2001 6,120,000
---------------------------------------------------------------------------------- --------------
Total 22,990,575
---------------------------------------------------------------------------------- --------------
HOME PRODUCTS & FURNISHINGS--4.1%
----------------------------------------------------------------------------------
3,000,000 American Standard, Inc., Sr. Deb., 11.375%, 5/15/2004 3,180,000
----------------------------------------------------------------------------------
13,000,000 American Standard, Inc., Sr. Sub. Disc. Deb., 0/10.50%, 6/1/2005 8,060,000
----------------------------------------------------------------------------------
3,500,000 Nortek, Inc., Sr. Sub. Note, 9.875%, 3/1/2004 3,246,250
----------------------------------------------------------------------------------
4,500,000 Triangle Pacific Corp., Sr. Note, 10.50%, 8/1/2003 4,477,500
---------------------------------------------------------------------------------- --------------
Total 18,963,750
---------------------------------------------------------------------------------- --------------
INDUSTRIAL PRODUCTS & EQUIPMENT--3.9%
----------------------------------------------------------------------------------
4,000,000 Eagle Industries, Inc., Sr. Defd. Cpn. Note, 0/10.50%, 7/15/2003 2,520,000
----------------------------------------------------------------------------------
4,000,000 Essex Group, Inc., Sr. Note, 10.00%, 5/1/2003 3,780,000
----------------------------------------------------------------------------------
2,000,000 Fairfield Manufacturing Co., Inc., Sr. Sub. Note, 11.375%, 7/1/2001 2,020,000
----------------------------------------------------------------------------------
3,000,000 Interlake Corp., Sr. Sub. Deb., 12.125%, 3/1/2002 2,970,000
----------------------------------------------------------------------------------
2,625,000 Pace Industries, Inc., Sr. Note, 10.625%, 12/1/2002 2,664,375
----------------------------------------------------------------------------------
4,000,000 Wolverine Tube, Sr. Sub. Note, 10.125%, 9/1/2002 4,250,000
---------------------------------------------------------------------------------- --------------
Total 18,204,375
---------------------------------------------------------------------------------- --------------
LEISURE & ENTERTAINMENT--1.8%
----------------------------------------------------------------------------------
4,250,000 Act III Theatres, Inc., Sr. Sub. Note, 11.875%, 2/1/2003 4,590,000
----------------------------------------------------------------------------------
</TABLE>
Liberty High Income Bond Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- - ------------- ---------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- - -------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT--CONTINUED
----------------------------------------------------------------------------------
$ 3,500,000 Affinity Group, Inc., Sr. Sub. Note, 11.50%, 10/15/2003 $ 3,587,500
---------------------------------------------------------------------------------- --------------
Total 8,177,500
---------------------------------------------------------------------------------- --------------
NON-FERROUS METALS & MINERALS--0.2%
----------------------------------------------------------------------------------
1,000,000 Kaiser Aluminum, Sr. Sub. Note, 12.75%, 2/1/2003 1,035,000
---------------------------------------------------------------------------------- --------------
OIL & GAS--4.8%
----------------------------------------------------------------------------------
6,750,000 California Energy Co., Inc., Sr. Disc. Note, 0/10.25%, 1/15/2004 4,978,125
----------------------------------------------------------------------------------
2,875,000 Energy Ventures, Sr. Note, 10.25%, 3/15/2004* 2,821,094
----------------------------------------------------------------------------------
3,500,000 Falcon Drilling Co., Inc., Sr. Note, 9.75%, 1/15/2001* 3,412,500
----------------------------------------------------------------------------------
3,000,000 Giant Industries, Sr. Sub. Note, 9.75%, 11/15/2003 2,880,000
----------------------------------------------------------------------------------
3,250,000 H.S. Resources, Inc., Sr. Sub. Note, 9.875%, 12/1/2003 3,201,250
----------------------------------------------------------------------------------
1,500,000 Triton Energy Corp., Sr. Sub. Disc. Note, 0/9.75%, 12/15/2000 1,087,500
----------------------------------------------------------------------------------
5,500,000 Triton Energy Corp., Sr. Sub. Disc. Note, 0/12.50%, 11/1/97 3,843,125
---------------------------------------------------------------------------------- --------------
Total 22,223,594
---------------------------------------------------------------------------------- --------------
PRINTING & PUBLISHING--0.6%
----------------------------------------------------------------------------------
3,000,000 Webcraft Technologies, Inc., Sr. Sub. Note, 9.375%, 2/15/2002 2,842,500
---------------------------------------------------------------------------------- --------------
RAIL INDUSTRY--0.2%
----------------------------------------------------------------------------------
1,000,000 Southern Pacific Rail Corp., Sr. Note, 9.375%, 8/15/2005 997,500
---------------------------------------------------------------------------------- --------------
RETAILERS--1.0%
----------------------------------------------------------------------------------
4,500,000 Brylane Capital Corp., Sr. Sub. Note, 10.00%, 9/1/2003 4,477,500
---------------------------------------------------------------------------------- --------------
SERVICES--1.0%
----------------------------------------------------------------------------------
4,250,000 Solon Automated Services, Inc., Sr. Note, 12.75%, 7/15/2001 4,632,500
---------------------------------------------------------------------------------- --------------
STEEL--6.7%
----------------------------------------------------------------------------------
3,000,000 AK Steel Corp., Sr. Note, 10.75%, 4/1/2004 3,007,500
----------------------------------------------------------------------------------
3,500,000 Armco, Inc., Sr. Note, 9.375%, 11/1/2000 3,237,500
----------------------------------------------------------------------------------
4,500,000 Carbide/Graphite Group, Sr. Note, 11.50%, 9/1/2003 4,612,500
----------------------------------------------------------------------------------
4,000,000 Envirosource, Inc., Sr. Note, 9.75%, 6/15/2003 3,780,000
----------------------------------------------------------------------------------
</TABLE>
Liberty High Income Bond Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
<C> <S> <C>
- - ------------- ---------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- - -------------------------------------------------------------------------------------------------
STEEL--CONTINUED
----------------------------------------------------------------------------------
$ 4,000,000 Geneva Steel, Sr. Note, 11.125%, 3/15/2001 $ 4,080,000
----------------------------------------------------------------------------------
2,250,000 Inland Steel Co., Unsecd. Note, 12.75%, 12/15/2002 2,542,500
----------------------------------------------------------------------------------
3,750,000 Northwestern Steel & Wire Co., Sr. Note, 9.50%, 6/15/2001 3,562,500
----------------------------------------------------------------------------------
2,500,000 WCI Steel, Inc., Sr. Secd. Note, 10.50%, 3/1/2002* 2,612,500
----------------------------------------------------------------------------------
3,500,000 Weirton Steel Corp., Sr. Note, 11.50%, 3/1/98 3,605,000
---------------------------------------------------------------------------------- --------------
Total 31,040,000
---------------------------------------------------------------------------------- --------------
SURFACE TRANSPORTATION--1.1%
----------------------------------------------------------------------------------
424 Greyhound Lines, Inc., Sr. Note, 10.00%, 7/31/2001 419
----------------------------------------------------------------------------------
5,000,000 Trism, Inc., Sr. Sub. Note, 10.75%, 12/15/2000 5,075,000
---------------------------------------------------------------------------------- --------------
Total 5,075,419
---------------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS & CELLULAR--2.3%
----------------------------------------------------------------------------------
6,250,000 NEXTEL Communications, Inc., Sr. Disc. Note, 0/9.75%, 8/15/2004 3,140,625
----------------------------------------------------------------------------------
7,250,000 PanAmSat, L.P., Sr. Sub. Disc. Note, 0/11.375%, 8/1/2003 4,585,625
----------------------------------------------------------------------------------
3,250,000 USA Mobile Communications, Sr. Note, 9.50%, 2/1/2004 2,973,750
---------------------------------------------------------------------------------- --------------
Total 10,700,000
---------------------------------------------------------------------------------- --------------
TOTAL CORPORATE BONDS (IDENTIFIED COST, $439,974,650) 433,373,946
---------------------------------------------------------------------------------- --------------
COMMON STOCKS--1.3%
- - -------------------------------------------------------------------------------------------------
AUTOMOTIVE--0.4%
----------------------------------------------------------------------------------
3,500 (a)Lear Holdings Corp. 1,662,500
---------------------------------------------------------------------------------- --------------
BUILDING & DEVELOPMENT--0.0%
----------------------------------------------------------------------------------
4,696 (a)Atlantic Gulf Communities Corp. 46,960
----------------------------------------------------------------------------------
3,571 (a)Atlantic Gulf Communities Corp., Warrants 2,343
---------------------------------------------------------------------------------- --------------
Total 49,303
---------------------------------------------------------------------------------- --------------
CHEMICALS & PLASTICS--0.0%
----------------------------------------------------------------------------------
14,862 (a)UCC Investors Holdings, Inc.* 200,637
---------------------------------------------------------------------------------- --------------
</TABLE>
Liberty High Income Bond Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- - ------------- ---------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- - -------------------------------------------------------------------------------------------------
CONGLOMERATES--0.2%
----------------------------------------------------------------------------------
25,710 (a)Hillsborough Holding Corp.* $ 1,285
----------------------------------------------------------------------------------
353 (a)MAFCO, Warrants* 0
----------------------------------------------------------------------------------
771,314 (a)Triton Group Ltd. 1,108,764
---------------------------------------------------------------------------------- --------------
Total 1,110,049
---------------------------------------------------------------------------------- --------------
CONTAINERS & GLASS PRODUCTS--0.0%
----------------------------------------------------------------------------------
71,200 (a)Kane Industries Inc., Warrants* 712
---------------------------------------------------------------------------------- --------------
ECOLOGICAL SERVICES & EQUIPMENT--0.0%
----------------------------------------------------------------------------------
19,200 (a)ICF Kaiser International, Warrants 19,200
---------------------------------------------------------------------------------- --------------
ELECTRONICS--0.0%
----------------------------------------------------------------------------------
39,960 (a)La Barge, Inc* 69,930
---------------------------------------------------------------------------------- --------------
FARMING & AGRICULTURE--0.5%
----------------------------------------------------------------------------------
204,545 Spreckels Industries, Inc., Class A 2,147,523
---------------------------------------------------------------------------------- --------------
FOOD PRODUCTS--0.1%
----------------------------------------------------------------------------------
315,000 (a)Specialty Foods Acquisition Corp.* 629,685
---------------------------------------------------------------------------------- --------------
HOTELS, MOTELS, INNS & CASINOS--0.0%
----------------------------------------------------------------------------------
359,450 (a)Vagabond Inns, Inc. 0
---------------------------------------------------------------------------------- --------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.1%
----------------------------------------------------------------------------------
6,589 (a)Haynes International, Inc.* 982
----------------------------------------------------------------------------------
18,680 (a)Reliance Electric Co.* 315,225
---------------------------------------------------------------------------------- --------------
Total 316,207
---------------------------------------------------------------------------------- --------------
PRINTING & PUBLISHING--0.0%
----------------------------------------------------------------------------------
1,875 (a)Advanstar Holdings, Trust Shares Beneficial Interest 0
----------------------------------------------------------------------------------
583 (a)Advanstar, Warrants 583
----------------------------------------------------------------------------------
46 (a)Sullivan Holdings, Inc.* 12
---------------------------------------------------------------------------------- --------------
Total 595
---------------------------------------------------------------------------------- --------------
TOTAL COMMON STOCKS (IDENTIFIED COST, $22,862,789) 6,206,341
---------------------------------------------------------------------------------- --------------
</TABLE>
Liberty High Income Bond Fund, Inc.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- - ------------- ---------------------------------------------------------------------------------- --------------
PREFERRED STOCKS--1.4%
- - -------------------------------------------------------------------------------------------------
PRINTING & PUBLISHING--1.4%
----------------------------------------------------------------------------------
63,538 K-III Communications Corp., PIK Pfd., Series B, 11.625%
(IDENTIFIED COST, $6,486,203) $ 6,290,207
---------------------------------------------------------------------------------- --------------
REPURCHASE AGREEMENT--0.6%***
- - -------------------------------------------------------------------------------------------------
$ 2,970,000 J.P. Morgan Securities, Inc., 3.59%, dated 3/31/94, due 4/4/94
(at amortized cost) 2,970,000
---------------------------------------------------------------------------------- --------------
TOTAL LNVESTMENTS (IDENTIFIED COST, $472,293,642)** $ 448,840,494
---------------------------------------------------------------------------------- --------------
</TABLE>
(a) Non-income producing.
*Indicates a private placement security which is restricted as to public
resale. At the date of acquisition, these securities were valued at cost,
and at March 31, 1994, they were valued by an independent pricing source.
The total value of private placement securities owned at March 31, 1994,
was $18,109,962 or 3.9% of total net assets.
**Includes Advanstar trust certificates and Vagabond Inns, Inc. Common Stock
which have been assigned a zero value and zero identified cost.
***The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account.
+The cost for federal tax purposes amounts to $473,844,571. The net unrealized
depreciation of investments on a federal tax basis amounts to $25,004,077,
which is comprised of $8,716,620 appreciation and $33,720,697 depreciation
at March 31, 1994.
++There are no registration rights applicable to these securities.
Note: The categories of investments are shown as a percentage of net assets
($464,347,381) at March 31, 1994.
The following abbreviation is used in this portfolio:
PIK--Payment in Kind
See Notes to Portfolio of Investments.
(See Notes which are an integral part of the Financial Statements)
Liberty High Income Bond Fund, Inc.
Notes to Portfolio of Investments
- - --------------------------------------------------------------------------------
WALTER INDUSTRIES (ALSO KNOWN AS GEORGIA MARBLE CO.;
FORMERLY KNOWN AS JIM WALTER CORP.)
Walter Industries filed for Chapter 11 bankruptcy protection in December 1989.
The company was forced to seek protection because of pending asbestos litigation
as well as an inability to reset the coupon on certain debt instruments as
stipulated in its indentures. The bankruptcy court terminated the company's
exclusivity effective August 2, 1993, which should accelerate a conclusion to
the company's bankruptcy proceedings.
Fund's management is currently unable to predict the ultimate resolution or
timing of the bankruptcy proceedings.
KANE INDUSTRIES, INC.
On March 18, 1994, Kane Industries, Inc., along with two of its affiliates Kane,
Inc. and Alford Industries, Inc., filed for protection under Chapter 11 with the
U.S. Bankruptcy Court in Wilmington, Delaware. At this time, the outcome of the
court proceeding is difficult to predict.
Liberty High Income Bond Fund, Inc.
Statement of Assets and Liabilities
- - --------------------------------------------------------------------------------
March 31, 1994
<TABLE>
<S> <C> <C>
ASSETS:
- - ---------------------------------------------------------------------------------------------------
Investments in securities, at value (Note 2A and 2B)
(identified cost, $472,293,642, tax cost, $473,844,571) $448,840,494
- - ---------------------------------------------------------------------------------------------------
Cash 2,877
- - ---------------------------------------------------------------------------------------------------
Receivable for investments sold 10,094,892
- - ---------------------------------------------------------------------------------------------------
Interest receivable 9,356,138
- - ---------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 1,043,525
- - --------------------------------------------------------------------------------------------------- -----------
Total assets 469,337,926
- - ---------------------------------------------------------------------------------------------------
LIABILITIES:
- - ---------------------------------------------------------------------------------------------------
Payable for investments purchased $3,000,000
- - ---------------------------------------------------------------------------------------
Payable for Fund shares redeemed 1,716,895
- - ---------------------------------------------------------------------------------------
Accrued expenses and other liabilities 273,650
- - --------------------------------------------------------------------------------------- ----------
Total liabilities 4,990,545
- - --------------------------------------------------------------------------------------------------- -----------
NET ASSETS for 42,247,302 shares of capital stock outstanding $464,347,381
- - --------------------------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF: (NOTE 2H)
- - ---------------------------------------------------------------------------------------------------
Paid-in capital $514,150,193
- - ---------------------------------------------------------------------------------------------------
Unrealized depreciation of investments (23,453,148)
- - ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (28,781,882)
- - ---------------------------------------------------------------------------------------------------
Undistributed net investment income 2,432,218
- - --------------------------------------------------------------------------------------------------- -----------
Total Net Assets $464,347,381
- - --------------------------------------------------------------------------------------------------- -----------
NET ASSET VALUE PER SHARE:
- - ---------------------------------------------------------------------------------------------------
Class A Shares (net assets of $439,148,683 / 39,954,225 shares outstanding) $10.99
- - --------------------------------------------------------------------------------------------------- -----------
Class C Shares (net assets of $24,360,501 / 2,216,827 shares outstanding) $10.99
- - --------------------------------------------------------------------------------------------------- -----------
Select Shares (net assets of $838,197 / 76,250 shares outstanding) $10.99
- - --------------------------------------------------------------------------------------------------- -----------
OFFERING PRICE PER SHARE:
- - ---------------------------------------------------------------------------------------------------
Class A Shares (100/95.5 of $10.99)* $11.51
- - --------------------------------------------------------------------------------------------------- -----------
Class C Shares $10.99
- - --------------------------------------------------------------------------------------------------- -----------
Select Shares $10.99
- - --------------------------------------------------------------------------------------------------- -----------
REDEMPTION PROCEEDS PER SHARE:
- - ---------------------------------------------------------------------------------------------------
Class A Shares (99.5/100 of $10.99)** $10.94
- - --------------------------------------------------------------------------------------------------- -----------
Class C Shares (99/100 of $10.99)** $10.88
- - --------------------------------------------------------------------------------------------------- -----------
Select Shares $10.99
- - --------------------------------------------------------------------------------------------------- -----------
</TABLE>
*See "What Shares Cost" in the prospectus.
**See "Redeeming Shares" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
Liberty High Income Bond Fund, Inc.
Statement of Operations
- - --------------------------------------------------------------------------------
Year Ended March 31, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- - ----------------------------------------------------------------------------------------------------
Interest income $46,935,398
- - ----------------------------------------------------------------------------------------------------
Dividend income 925,668
- - ---------------------------------------------------------------------------------------------------- -----------
Total income (Note 2C) 47,861,066
- - ----------------------------------------------------------------------------------------------------
EXPENSES--
- - ----------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $3,435,904
- - -----------------------------------------------------------------------------------------
Directors' fees 13,331
- - -----------------------------------------------------------------------------------------
Administrative personnel and services (Note 4) 489,385
- - -----------------------------------------------------------------------------------------
Custodian and recordkeeping fees and expenses 158,333
- - -----------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses (Note 4) 416,662
- - -----------------------------------------------------------------------------------------
Distribution services fee--Class C Shares (Note 4) 84,940
- - -----------------------------------------------------------------------------------------
Distribution services fee--Select Shares (Note 4) 920
- - -----------------------------------------------------------------------------------------
Capital stock registration costs 51,467
- - -----------------------------------------------------------------------------------------
Auditing fees 35,414
- - -----------------------------------------------------------------------------------------
Legal fees 36,202
- - -----------------------------------------------------------------------------------------
Printing and postage 113,731
- - -----------------------------------------------------------------------------------------
Taxes 54,881
- - -----------------------------------------------------------------------------------------
Insurance premiums 13,505
- - -----------------------------------------------------------------------------------------
Shareholder services fee--Class A Shares (Note 4) 762,810
- - -----------------------------------------------------------------------------------------
Shareholder services fee--Class C Shares (Note 4) 28,941
- - -----------------------------------------------------------------------------------------
Shareholder services fee--Select Shares (Note 4) 307
- - -----------------------------------------------------------------------------------------
Miscellaneous 9,325
- - ----------------------------------------------------------------------------------------- ---------
Total expenses 5,706,058
- - -----------------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 4) 219,155
- - ----------------------------------------------------------------------------------------- ---------
Net expenses 5,486,903
- - ---------------------------------------------------------------------------------------------------- -----------
Net investment income 42,374,163
- - ---------------------------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- - ----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments--(identified cost basis) 15,492,911
- - ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (24,237,819)
- - ---------------------------------------------------------------------------------------------------- -----------
Net realized and unrealized gain (loss) on investments (8,744,908)
- - ---------------------------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $33,629,255
- - ---------------------------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Liberty High Income Bond Fund, Inc.
Statement of Changes in Net Assets
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
<S> <C> <C>
1994 1993
INCREASE (DECREASE) IN NET ASSETS:
- - --------------------------------------------------------------------------------
OPERATIONS--
- - --------------------------------------------------------------------------------
Net investment income $ 42,374,163 $ 39,039,675
- - --------------------------------------------------------------------------------
Net realized gain (loss) on investments ($15,192,825 net gain and
$7,705,849 net gain, respectively, as computed for federal income
tax purposes) 15,492,911 13,795,045
- - --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) of investments (24,237,819) 1,272,181
- - -------------------------------------------------------------------------------- --------------- --------------
Change in net assets resulting from operations 33,629,255 54,106,901
- - -------------------------------------------------------------------------------- --------------- --------------
NET EQUALIZATION CREDITS (DEBITS) (NOTE 2E) 10,368 36,767
- - -------------------------------------------------------------------------------- --------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- - --------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
- - --------------------------------------------------------------------------------
Class A Shares (41,478,274) (39,652,250)
- - --------------------------------------------------------------------------------
Class C Shares (943,649) --
- - --------------------------------------------------------------------------------
Select Shares (9,149) --
- - -------------------------------------------------------------------------------- --------------- --------------
Change in net assets from distributions to shareholders (42,431,072) (39,652,250)
- - -------------------------------------------------------------------------------- --------------- --------------
CAPITAL STOCK TRANSACTIONS (NOTE 3)--
- - --------------------------------------------------------------------------------
(Exclusive of amounts allocated to net investment income)
- - --------------------------------------------------------------------------------
Proceeds from sales of shares 165,279,381 122,975,847
- - --------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 20,093,179 18,269,064
- - --------------------------------------------------------------------------------
Cost of shares redeemed (129,248,655) (89,808,313)
- - -------------------------------------------------------------------------------- --------------- --------------
Change in net assets from capital stock transactions 56,123,905 51,436,598
- - -------------------------------------------------------------------------------- --------------- --------------
Change in net assets 47,332,456 65,928,016
- - --------------------------------------------------------------------------------
NET ASSETS:
- - --------------------------------------------------------------------------------
Beginning of period 417,014,925 351,086,909
- - -------------------------------------------------------------------------------- --------------- --------------
End of period (including undistributed net investment income of $2,432,218 and
$351,335, respectively) $ 464,347,381 $ 417,014,925
- - -------------------------------------------------------------------------------- --------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Liberty High Income Bond Fund, Inc.
Financial Highlights--Class A Shares
- - --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MARCH 31, AUGUST 31,
<CAPTION>
1994 1993 1992 1991 1990 1989 1988 1987** 1986 1985
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 11.19 $ 10.80 $ 8.79 $ 8.96 $ 10.99 $ 11.20 $ 12.53 $ 12.53 $ 12.17 $ 11.35
- - --------------------
INCOME FROM
INVESTMENT
OPERATIONS
- - --------------------
Net investment
income 1.05 1.13 1.23 1.21 1.33 1.40 1.42 0.85 1.53 1.56
- - --------------------
Net realized and
unrealized gain
(loss) on
investments (0.19) 0.41 1.99 (0.14) (1.98) (0.20) (1.31) -- 0.37 0.81
- - -------------------- --------- --------- --------- --------- --------- --------- --------- ----------- --------- ---------
Total from
investment
operations 0.86 1.54 3.22 1.07 (0.65) 1.20 0.11 0.85 1.90 2.37
- - --------------------
LESS DISTRIBUTIONS
- - --------------------
Dividends to
shareholders from
net investment
income (1.06) (1.15) (1.21) (1.24) (1.38) (1.41) (1.44) (0.85) (1.54) (1.55)
- - -------------------- --------- --------- --------- --------- --------- --------- --------- ----------- --------- ---------
NET ASSET VALUE,
END OF PERIOD $ 10.99 $ 11.19 $ 10.80 $ 8.79 $ 8.96 $ 10.99 $ 11.20 $ 12.53 $ 12.53 $ 12.17
- - -------------------- --------- --------- --------- --------- --------- --------- --------- ----------- --------- ---------
TOTAL RETURN* 7.82% 15.39% 38.83% 14.20% (6.82)% 11.34% 1.30% 7.09% 16.51% 22.42%
- - --------------------
RATIOS TO AVERAGE
NET ASSETS
- - --------------------
Expenses 1.18% 1.08% 1.02% 1.03% 1.02% 1.00% 1.05% 1.02%(a) 1.06% 1.14%
- - --------------------
Net investment
income 9.27% 10.44% 12.40% 14.62% 13.01% 12.55% 12.37% 11.72%(a) 12.41% 13.27%
- - --------------------
Expense waiver/
reimbursement(b) 0.05% 0.08% -- -- -- -- -- -- -- --
- - --------------------
SUPPLEMENTAL DATA
- - --------------------
Net assets,
end of period
(000 omiited) $439,149 $417,015 $351,087 $252,147 $282,149 $379,876 $360,409 $390,160 $352,641 $212,932
- - --------------------
Portfolio turnover
rate 76% 49% 37% 32% 40% 43% 52% 25% 27% 26%
- - --------------------
<CAPTION>
<S> <C>
1984
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 11.97
- - --------------------
INCOME FROM
INVESTMENT
OPERATIONS
- - --------------------
Net investment
income 1.54
- - --------------------
Net realized and
unrealized gain
(loss) on
investments (0.63)
- - -------------------- ---------
Total from
investment
operations 0.91
- - --------------------
LESS DISTRIBUTIONS
- - --------------------
Dividends to
shareholders from
net investment
income (1.53)
- - -------------------- ---------
NET ASSET VALUE,
END OF PERIOD $ 11.35
- - -------------------- ---------
TOTAL RETURN* 8.12%
- - --------------------
RATIOS TO AVERAGE
NET ASSETS
- - --------------------
Expenses 1.11%
- - --------------------
Net investment
income 13.26%
- - --------------------
Expense waiver/
reimbursement(b) --
- - --------------------
SUPPLEMENTAL DATA
- - --------------------
Net assets,
end of period
(000 omiited) $156,168
- - --------------------
Portfolio turnover
rate 21%
- - --------------------
</TABLE>
* Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
** Reflects operations for the seven month period ended March 31, 1987.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
Liberty High Income Bond Fund, Inc.
Financial Highlights--Class C Shares
- - --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31,
<S> <C>
1994**
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.18
- - --------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- - --------------------------------------------------------------------------------------------------
Net investment income 0.92
- - --------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.23)
- - -------------------------------------------------------------------------------------------------- --------------
Total from investment operations 0.69
- - --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- - --------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.88)
- - -------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, END OF PERIOD $ 10.99
- - -------------------------------------------------------------------------------------------------- --------------
TOTAL RETURN* 6.23%
- - --------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- - --------------------------------------------------------------------------------------------------
Expenses 1.99%(a)
- - --------------------------------------------------------------------------------------------------
Net investment income 8.54%(a)
- - --------------------------------------------------------------------------------------------------
Expense waiver/reimbursement(b) 0.05%(a)
- - --------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- - --------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 24,360
- - --------------------------------------------------------------------------------------------------
Portfolio turnover rate 76 %
- - --------------------------------------------------------------------------------------------------
</TABLE>
* Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
** Reflects operations for the period from April 30, 1993 (date of initial
public offering) to March 31, 1994.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
Liberty High Income Bond Fund, Inc.
Financial Highlights--Select Shares
- - --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31,
<S> <C>
1994**
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.53
- - --------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- - --------------------------------------------------------------------------------------------------
Net investment income 0.19
- - --------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.58)
- - -------------------------------------------------------------------------------------------------- ---------------
Total from investment operations (0.39)
- - --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- - --------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.15)
- - -------------------------------------------------------------------------------------------------- ---------------
NET ASSET VALUE, END OF PERIOD $ 10.99
- - -------------------------------------------------------------------------------------------------- ---------------
TOTAL RETURN* (3.40)%
- - --------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- - --------------------------------------------------------------------------------------------------
Expenses 2.01%(a)
- - --------------------------------------------------------------------------------------------------
Net investment income 8.18%(a)
- - --------------------------------------------------------------------------------------------------
Expense waiver/reimbursement(b) 0.05%(a)
- - --------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- - --------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $838
- - --------------------------------------------------------------------------------------------------
Portfolio turnover rate 76 %
- - --------------------------------------------------------------------------------------------------
</TABLE>
* Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
** Reflects operations for the period from January 15, 1994 (date of initial
public offering) to March 31, 1994.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
Liberty High Income Bond 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.
Effective April 30, 1993, and January 15, 1994, (the effective dates for the
Class C Shares and Select Shares, respectively, of Liberty High Income Bond
Fund, Inc.) Liberty High Income Bond Fund, Inc. provides three classes of Shares
("Class A Shares", "Class C Shares", and "Select Shares"). Class A Shares, Class
C Shares, and Select Shares are subject to certain of the same expenses;
however, Class A Shares are subject to certain sales and contingent deferred
sales charges; Class C Shares and Select Shares are sold pursuant to a
distribution plan ("Plan") adopted in accordance with Investment Company Act
Rule 12b-1. Class C Shares are also subject to certain contingent deferred sales
charges.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles (GAAP).
A. INVESTMENT VALUATIONS--Listed equity securities, corporate bonds and other
fixed income securities are valued at the last sales price reported on
national securities exchanges. Unlisted securities and bonds are generally
valued at the price provided by an independent pricing service. Short-term
securities with remaining maturities of sixty days, or less may be stated
at amortized cost, which approximates value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian's bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines established
by the Directors. Risks may arise from the potential inability of
counterparties to honor the terms of the repurchase agreement. Accordingly,
the Fund could receive less than the repurchase price on the sale of
collateral securities.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount if applicable, are amortized
as required by the
Liberty High Income Bond Fund, Inc.
- - --------------------------------------------------------------------------------
Internal Revenue Code ("Code"). Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income.
Accordingly, no provision for federal tax is necessary. At March 31, 1994,
the Fund, for federal tax purposes, had a capital loss carryforward of
$28,752,593 which will reduce the Fund's taxable income arising from future
net realized gain on investments, if any, to the extent permitted by the
Code, and thus will reduce the amount of the distributions to shareholders
which would otherwise be necessary to relieve the Fund of any liability for
federal tax. Pursuant to the Code, such capital loss carryforward will
expire in 1999 ($4,687,976) and 2000 ($24,064,617).
E. EQUALIZATION--The Fund follows the accounting practice known as
equalization by which a portion of the proceeds from sales and costs of
redemptions of capital stock, equivalent on a per share basis to the amount
of undistributed net investment income on the date of the transaction, is
credited or charged to undistributed net investment income. As a result,
undistributed net investment income per share is unaffected by sales or
redemptions of capital stock.
F. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
G. INVESTMENT RISKS--Although the Fund has a diversified portfolio, the Fund
has 19% of its portfolio invested in lower rated and comparable quality
unrated high yield securities. Investments in higher yield securities are
accompanied by a greater degree of credit risk and the risk tends to be
more sensitive to economic conditions than higher rated securities. The
risk of loss due to default by the issuer may be significantly greater for
the holders of high yielding securities, because such securities are
generally unsecured and are often subordinated to other creditors of the
issuer. The Fund held defaulted securities with a value aggregating
$3,256,287, representing 0.70% of the Fund's net assets at March 31, 1994.
H. 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
differences relating to shareholder distributions have been reclassified to
paid-in-capital. As of March 31, 1994, the cumulative effect of such
differences, totaling $3,157,116 and $2,127,424 was reclassified from
accumulated net realized loss on investments and undistributed net
investment income, respectively, to paid-in-capital. Net investment income,
net realized gains, and net assets were not affected by this change.
Liberty High Income Bond Fund, Inc.
- - --------------------------------------------------------------------------------
I. OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At March 31, 1994, the Corporation was authorized to issue 10,000,000,000 shares
of $0.01 par value stock. Of these shares, 4,000,000,000 have been designated to
Class A Shares and Class C Shares, respectively, of the Fund. 2,000,000,000
shares have been designated as Select Shares of the Fund. Transactions in
capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
<S> <C> <C> <C> <C>
1994 1993
<CAPTION>
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 11,912,803 $ 134,712,957 11,388,433 $ 122,975,847
- - --------------------------------------------------
Shares issued to shareholders in payment of
dividends declared 1,747,408 19,711,663 1,699,652 18,269,064
- - --------------------------------------------------
Shares redeemed (10,988,010) (124,250,451) (8,319,000) (89,808,313)
- - -------------------------------------------------- ------------- --------------- ------------- --------------
Net change resulting from capital stock
transactions 2,672,201 $ 30,174,169 4,769,085 $ 51,436,598
- - -------------------------------------------------- ------------- --------------- ------------- --------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31,
1994
<S> <C> <C>
CLASS C SHARES SHARES AMOUNT
Shares sold 2,611,701 $ 29,542,663
- - --------------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 33,178 376,498
- - --------------------------------------------------------------------------------------
Shares redeemed (428,052) (4,851,948)
- - -------------------------------------------------------------------------------------- ---------- -------------
Net change resulting from capital stock transactions 2,216,827 $ 25,067,213
- - -------------------------------------------------------------------------------------- ---------- -------------
<CAPTION>
YEAR ENDED
MARCH 31,
1994
SELECT SHARES SHARES AMOUNT
<S> <C> <C>
Shares sold 88,939 $ 1,023,761
- - --------------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 439 5,018
- - --------------------------------------------------------------------------------------
Shares redeemed (13,128) (146,256)
- - -------------------------------------------------------------------------------------- ---------- -------------
Net change resulting from capital stock transactions 76,250 $ 882,523
- - -------------------------------------------------------------------------------------- ---------- -------------
</TABLE>
Liberty High Income Bond Fund, Inc.
- - --------------------------------------------------------------------------------
(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 0.75 of 1% of the Fund's average daily net assets. 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.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the
Fund's 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 daily 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. Under
the terms of the Plan, the Fund will compensate Federated Securities Corp.
("FSC"), the principal distributor, from the assets of the Class C Shares and
Select Shares of the Fund, to finance activities intended to result in the sale
of Class C Shares and Select Shares. The Plan provides that the Fund may incur
distribution expenses of up to 0.75 of 1% of the average daily net assets of the
Class C Shares and Select Shares, respectively, 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 average net assets
for the Fund for the period. This fee is to obtain certain personal services for
shareholders and the maintenance of shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT--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.
Certain of the Officers and Directors of the Fund are Officers and Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short-term obligations) for the
year ended March 31, 1994 were as follows:
<TABLE>
<S> <C>
- - --------------------------------------------------------------------------------------------------
PURCHASES $ 368,568,546
- - -------------------------------------------------------------------------------------------------- --------------
SALES $ 334,574,393
- - -------------------------------------------------------------------------------------------------- --------------
</TABLE>
Report of Independent
Public Accountants
- - --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
LIBERTY HIGH INCOME BOND FUND, INC.
We have audited the accompanying statement of assets and liabilities of Liberty
High Income Bond Fund, Inc. (a Maryland corporation), including the schedule of
portfolio of investments, as of March 31, 1994, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
the periods presented. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1994, by correspondence with the custodian and broker. 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Liberty High Income Bond Fund, Inc. as of March 31, 1994, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN & CO.
Pittsburgh, Pennsylvania
May 13, 1994
Directors Officers
- - --------------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Richard B. Fisher
J. Christopher Donahue President
James E. Dowd J. Christopher Donahue
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
Recycle Paper Logo
8042507 (5/94)
APPENDIX
A 1. The graphic presentation here displayed consists of a
line graph titled "Growth of $10,000 as of March 31, 1994.
The corresponding components of the line graph are listed
underneath. The Liberty High Income Bond Fund, Inc., Class
A Shares are represented by a solid line. The Lehman
Brothers Single B Rated Index is represented by a dotted
line, and the Lipper High Current Yield Funds Average is
represented by a broken line. The line graph is a visual
representation of a comparison of change in value of a
hypothetical $10,000 investment in the Class A Shares of the
Fund and the Lehman Brothers Single B Rated Index and the
Lipper High Current Yield Funds Average. The "x" axis
reflects computation periods from the ten year period from
March 31, 1984 to March 31, 1994. The "y" axis reflects the
cost of the investment, ranging from $9,000 to $34,000. The
right margin reflects the ending value of the hypothetical
investment in the Fund as compared to the Lehman Brothers
Single B Rated Index and the Lipper High Current Yield Funds
Average. The ending values are $31,051, $32,333, and
$29,021, respectively.
A 2. The graphic presentation here displayed consists of a
line graph titled "Growth of $10,000 as of March 31, 1994.
The corresponding components of the line graph are listed
underneath. The Liberty High Income Bond Fund, Inc., Class
C Shares are represented by a solid line. The Lehman
Brothers Single B Rated Index is represented by a dotted
line, and the Lipper High Current Yield Funds Average is
represented by a broken line. The line graph is a visual
representation of a comparison of change in value of a
hypothetical $10,000 investment in the Class C Shares of the
Fund and the Lehman Brothers Single B Rated Index and the
Lipper High Current Yield Funds Average. The "x" axis
reflects computation periods of April 30, 1993 and March 31,
1994. The "y" axis reflects the cost of the investment,
ranging from $9,000 to $11,500. The right margin reflects the
ending value of the hypothetical investment in the Fund as
compared to the Lehman Brothers Single B Rated Index and the
Lipper High Current Yield Funds Average. The ending values
are $10,517, $10,745, and $10,986, respectively.
A 3. The graphic presentation here displayed consists of a
line graph titled "Growth of $10,000 as of March 31, 1994.
The corresponding components of the line graph are listed
underneath. The Liberty High Income Bond Fund, Inc., Select
Shares are represented by a solid line. The Lehman Brothers
Single B Rated Index is represented by a dotted line, and the
Lipper High Current Yield Funds Average is represented by a
broken line. The line graph is a visual representation of a
comparison of change in value of a hypothetical $10,000
investment in the Select Shares of the Fund and the Lehman
Brothers Single B Rated Index and the Lipper High Current
Yield Funds Average. The "x" axis reflects computation
periods of January 15, 1994 and March 31, 1994. The "y" axis
reflects the cost of the investment, ranging from $9,500 to
$10,250. The right margin reflects the ending value of the
hypothetical investment in the Fund as compared to the Lehman
Brothers Single B Rated Index and the Lipper High Current
Yield Funds Average. The ending values are $9,660, $9,595,
and $9,663, respectively.
A 4 . The graphic representation here displayed consists of
a boxed legend in the upper left quadrant of the graphic
presentation 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 $17,000 in Liberty High Income
Bond Fund, Inc. in 1977 would have grown to $88,654 in 1994.
The "x" axis reflects computation periods from 1977 to 1994,
and the "y" axis reflects a total investment range from $0 to
$100,000. 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.
A 5. The graphic representation here displayed consists of a
boxed legend in the upper left quadrant of the graphic
presentation 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 yearly investments of $1,000 in Liberty High Income Bond
Fund, Inc. in 1977, and on each anniversary date, would have
grown to $50,475 in 1994. The "x" axis reflects computation
periods from 1977 to 1994, and the "y" axis 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.
A 6. The graphic representation here displayed consists of a
boxed legend in the upper left quadrant of the graphic
presentation 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
hypothetical growth over time in Liberty High Income Bond
Fund, Inc. beginning with a $5,000 investment in the Fund in
1984, which would have grown to $15,527 in 1994. The "x" axis
reflects computation periods from 1984 to 1994, and the "y"
axis reflects a total investment range from $0 to $20,000.
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.
