CBA CBA
CBA CBA
CBA Money Fund
Semi-Annual Report
August 31, 1994
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance, which will fluctuate. The Fund
seeks to maintain a consistent $1.00 net asset value per share,
although this cannot be assured. An investment in the Fund is
neither insured nor guaranteed by the US Government.
CBA Money Fund
Box 9011
Princeton, NJ 08543-9011
CBA Money Fund
Dear Shareholder:
For the six-month period ended August 31, 1994, CBA Money Fund paid
shareholders a net annualized dividend of 3.37%*. The Fund's 7-day
yield as of August 31, 1994 was 3.90% (including gains and losses)
and 3.89% (excluding gains and losses).
<PAGE>
The Environment
Concerns of increasing inflationary pressures continued to prompt
volatility in the US stock and bond markets during the March--August
period. In addition, the weakness of the US dollar in foreign
exchange markets prolonged stock and bond market declines during
July. While the immediate concerns regarding the US dollar had
diminished by late July, the possibility of continued tightening by
the Federal Reserve Board resurfaced after Chairman Alan Greenspan
gave his most recent Congressional testimony. However, a lower-than-
expected rate of growth reported for the US economy during the
second calendar quarter allayed inflationary concerns to some
degree, despite the fifth increase in short-term interest rates so
far this year made by the central bank in mid-August.
While the economic recovery is continuing, data suggest that it is
losing some momentum. Consumer spending is increasing, but at a
relatively slow pace, and existing home sales may have peaked. In
the industrial sector, capital goods spending is still on the rise,
but the gain for the second quarter was revised downward to 6.5%. On
balance, the growth in US industry is progressing at a steady,
modest rate.
Despite evidence of a moderating trend in the US economy, Chairman
Greenspan indicated in his July Humphrey-Hawkins testimony that the
central bank would prefer to err on the side of too much monetary
tightening rather than too little. In the weeks ahead, investors
will continue to assess economic data and inflationary trends in
order to gauge whether further increases in short-term interest
rates are imminent. Continued indications of moderate and
sustainable levels of economic growth would be positive for the US
capital markets.
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
Portfolio Matters
Since our last report to shareholders, the Federal Reserve Board has
embarked on a series of tightening moves, raising the Federal Funds
rate to 4.75%. During the six-month period ended August 31, 1994,
CBA Money Fund's average portfolio maturity ranged from a high of 57
days to a low of 37 days, reflecting our generally cautious approach
to the market.
In March, we continued the Fund's defensive strategy which was
instituted in early February, reducing its average life from 47 days
to 40 days by month-end. Responding to higher fourth quarter gross
domestic product revisions, the central bank raised the Federal
Funds rate on March 22, 1994 to 3.50% from 3.25%. In such a bearish
environment, the Fund's activity was restricted to purchases of
overnight repurchase agreements at or close to the Federal Funds
rate and 30-day commercial paper at 3.625%.
<PAGE>
The market continued to weaken in April in response to an additional
25 basis point (0.25%) Federal Reserve Board tightening on April 18,
1994. This move was followed by major domestic banks raising their
prime lending rates to 6.75% from 6.25%. While the fundamentals were
generally weak, the technical condition of the market was good. Our
primary strategy was to continue investing in overnight repurchase
agreements and short-term commercial paper, but we expanded our
activities to include modest amounts of 90-day commercial paper at
4.00%. Additionally, we increased our holdings of Treasury bill-
based variable rate products.
The market started May under pressure in response to a strong
employment report. On May 17, 1994, the Federal Reserve Board
announced a 50 basis point increase in the Federal Funds rate to
4.25% and the discount rate to 3.50%. Following the same pattern as
in April, major domestic banks raised their prime lending rates to
7.25% from 6.75%. The market's positive response to these interest
rate hikes was partially the result of covering short positions and
the widespread view that the Federal Reserve Board had achieved
"neutrality" and would withhold any further restrictive moves in the
near future. Believing that the central bank could hold policy
steady for a time, we purchased three-month commercial paper where
quality spreads were most attractive. By the end of May, the Fund's
average life stood at 54 days.
The market's modestly constructive mood was further encouraged by
economic fundamentals suggesting a slowing economy and moderating
inflation. As a result, the Fund continued a strategy of cautious
optimism by maintaining an average life in the mid 50-day range. Six-
month Treasury bills and three-month commercial paper were
purchased, both representing relative value for a stable Federal
Funds target. Turbulence returned to the market during the latter
part of June, as a result of a rapidly deteriorating US dollar and
the implied inflationary ramifications. Concerned that the Federal
Reserve Board could tighten monetary policy once again, we reduced
the Fund's exposure to interest rate volatility by selling our six-
month Treasury bills. By the end of June, we reduced the Fund's
average maturity to 46 days by limiting new purchases to maturities
of 30 days or less and increasing repurchase agreement holdings to
10% of net assets.
Early July's higher interest rates stemmed from an unexpectedly
large increase in non-farm payrolls on July 7, 1994. Utilizing one-
month commercial paper and repurchase agreements, we continued to
reduce the Fund's average life, which stood at 37 days by mid-month.
While Chairman Greenspan's Humphrey-Hawkins testimony was
inconclusive and the US dollar began a modest recovery, investors
grew impatient and short-term interest rates rose slightly. In
returning the Fund's average life to 43 days by month-end, we made
modest purchases of 90-day commercial paper and 120-day commercial
paper at attractive levels.
<PAGE>
In early August, the market's focus was on the unemployment data.
The market weakened in response to another substantial increase in
non-farm payrolls and an increase in average hourly earnings. The
Fund's average life was maintained in the mid 40-day range as we
continued to assess the central bank's next move with a strong bias
to remaining defensive.
The Federal Reserve Board responded to the perceived inflation
threat by raising the Federal Funds rate and discount rate by 50
basis points on August 16, 1994. The policy committee's accompanying
statement that the tightening would be sufficient for a time to
sustain non-inflationary growth brought a strong bid back to the
market. Armed with the prospects of near-term market stability, we
extended the Fund's average life to the mid 50-day range by
purchasing six-month commercial paper and one-year Treasury bills.
At August month-end, the Fund's average life stood at 54 days.
Looking forward, we are keeping a wary eye on rising commodity
prices, capacity restraints and a weak US dollar as potential
reasons for further interest rate hikes.
The portfolio's composition at the end of the August period and as
of our last report is detailed below:
8/31/94 2/28/94
Bank Notes 2.0% 3.1%
Bankers' Acceptances--Yankee* 0.5 1.2
Certificates of Deposit--Yankee* 1.9 3.1
Commercial Paper 61.0 46.7
Master Notes 4.7 9.9
Repurchase Agreements 4.6 9.6
US Government & Agency
Obligations--Discount Notes 2.7 4.2
US Government & Agency
Obligations--Non-Discount Notes 25.5 24.1
Liabilities in Excess of
Other Assets (2.9) (1.9)
------ ------
100.0% 100.0%
====== ======
[FN]
*US branches of foreign banks.
<PAGE>
In Conclusion
We appreciate your continued support of CBA Money Fund, and we look
forward to assisting you with your financial needs and objectives in
the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Carlo J. Giannini)
Carlo J. Giannini
Vice President and Portfolio Manager
September 28, 1994
CBA Money Fund
Schedule of Investments as of August 31, 1994 (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Bank Notes--2.0%
Nations Bank Texas $ 5,000 3.625% 11/30/94 $ 4,980
PNC Bank, 15,000 3.40 10/14/94 14,955
Kentucky
Trust Co. Bank, Atlanta 5,000 3.375 9/30/94 4,991
Total Bank Notes
(Cost--$24,998) 24,926
Bankers' Acceptances--Yankee--0.5%
Dai-Ichi Kangyo Bank, 6,400 4.76 9/22/94 6,381
Ltd., NY
Total Bankers' Acceptances--Yankee
(Cost--$6,381) 6,381
Certificates of Deposit--Yankee--1.9%
Dai-Ichi Kangyo Bank, 25,000 4.66 10/03/94 25,000
Ltd., NY
<PAGE>
Total Certificates of Deposit--Yankee
(Cost--$25,000) 25,000
Commercial Paper--61.0%
ANZ (Delaware), Inc. 20,000 4.46 9/07/94 19,982
APRECO, Inc. 25,000 4.52 9/19/94 24,940
Bank One Diversified 25,000 4.45 9/13/94 24,958
Services
Bankers Trust NY Corp. 25,000 4.50 9/01/94 24,997
Bowater PLC 5,000 4.45 9/15/94 4,990
8,458 4.75 9/16/94 8,440
10,000 4.75 9/19/94 9,975
British Columbia, 8,300 4.45 9/15/94 8,283
Province of
C.S. First Boston Inc. 20,000 4.75 9/21/94 19,945
20,000 4.75 10/03/94 19,913
CSW Credit Inc. 25,000 4.72 9/27/94 24,912
CXC Incorporated 8,500 4.53 9/26/94 8,472
Caisse Des Depots et 21,000 4.75 9/23/94 20,936
Consignations
Central & SouthWest 10,000 4.75 9/16/94 9,979
Corp. 10,000 4.75 9/22/94 9,971
Cheltenham & Glouster 8,000 4.45 9/19/94 7,980
Building Society 22,000 4.60 10/18/94 21,858
Ciesco L.P. 10,530 4.45 9/08/94 10,519
Corporate Receivables 9,400 4.75 11/07/94 9,312
Corp.
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Commercial Paper (concluded)
Ford Motor Credit $25,000 4.40 % 9/02/94 $ 24,994
Company 25,000 4.80 11/16/94 24,735
<PAGE>
Hanson Finance (UK) PLC 9,250 4.75 11/03/94 9,169
Hertz Funding Corp. 8,500 4.50 9/01/94 8,499
International Lease 10,000 4.63 10/25/94 9,926
Finance Corp. 25,000 5.10 2/16/95 24,401
25,000 5.07 2/22/95 24,380
Internationale 12,500 4.75 9/14/94 12,477
Nederlanden (US)
Funding Corp.
McKenna Triangle 21,000 5.10 2/21/95 20,482
National Corp.
National Australia 17,500 5.00 1/26/95 17,137
Funding (Delaware) Inc.
NationsBank Corp. 20,000 4.68 10/18/94 19,871
New Center Asset Trust 25,000 4.75 9/19/94 24,937
25,000 5.05 1/23/95 24,491
Nomura Holding 20,000 4.55 9/21/94 19,947
America, Inc.
PHH Corp. 15,000 4.75 9/16/94 14,968
Premium Funding, Inc., 2,000 4.65 10/11/94 1,989
Series A
SBC Finance 30,000 4.52 9/12/94 29,955
(Delaware) Inc.
Sheffield Receivables
Corp. 12,225 4.75 9/22/94 12,190
Svenska Handelsbanken, 25,000 4.68 10/28/94 24,805
Inc. 25,000 4.65 10/31/94 24,795
Transamerica Finance 13,000 4.50 9/27/94 12,956
Corp.
UBS Finance 60,000 4.85 9/01/94 59,992
(Delaware) Inc.
WCP Funding Inc. 25,000 4.75 9/16/94 24,947
<PAGE>
Western Australia 15,000 4.60 10/19/94 14,901
Treasury Corp.
Total Commercial Paper
(Cost--$777,371) 777,306
Master Notes--4.7%
Goldman Sachs Group, 40,000 4.81 9/01/94 40,000
L.P. 20,000 4.81 5/26/95 20,000
Total Master Notes
(Cost--$60,000) 60,000
CBA Money Fund
Schedule of Investments as of August 31, 1994 (concluded)
(in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
US Government & Agency Obligations--
Discount Notes--2.7%
US Treasury Bills $15,000 3.495% 2/09/95 $ 14,675
20,000 4.922 3/09/95 19,503
Total US Government & Agency Obligations--
Discount Notes (Cost--$34,266) 34,178
US Government & Agency Obligations--
Non-Discount Notes--25.5%
Federal Home Loan 5,000 4.68++ 6/21/95 5,000
Banks 11,000 4.68++ 12/28/95 11,000
10,000 4.625 8/09/95 9,907
12,000 4.71++ 6/17/96 12,000
5,000 4.71++ 6/21/96 5,000
15,000 4.78++ 2/03/97 14,993
15,000 5.28++ 2/10/97 15,000
Federal Home Loan 30,000 4.72++ 1/06/95 29,996
Mortgage Corp. 10,000 4.635 8/09/95 9,908
12,000 4.61++ 9/01/95 11,998
<PAGE>
Federal National 17,000 4.71 6/01/95 16,999
Mortgage Association++ 5,000 4.65 12/20/95 5,000
5,000 5.12 1/26/96 4,996
15,000 4.58 5/13/96 15,000
12,000 5.20 5/19/97 12,000
11,000 5.25 5/14/98 11,000
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
US Government & Agency Obligations--
Non-Discount Notes (concluded)
Student Loan Marketing $ 4,000 4.66 % 10/13/94 $ 4,000
Association++ 4,800 5.33 3/20/95 4,808
8,500 5.08 8/07/95 8,500
33,000 5.08 3/20/96 33,000
10,000 4.91 5/14/96 10,013
10,000 5.09 1/14/97 10,000
US Treasury Notes 17,000 6.00 11/15/94 17,040
48,500 3.875 2/28/95 48,212
Total US Government & Agency Obligations--
Non-Discount Notes (Cost--$325,937) 325,370
Repurchase Agreement**--4.6%
Face Amount Issue
$58,883 Citicorp Securities, Inc., purchased on
8/31/94 to yield 4.83% to 9/01/94 58,883
Total Repurchase Agreements
(Cost--$58,883) 58,883
Total Investments (Cost--$1,312,836)--102.9% 1,312,044
Liabilities in Excess of Other Assets--(2.9%) (36,799)
----------
Net Assets--100.0% $1,275,245
==========
<PAGE>
[FN]
*Bankers' Acceptances, Commercial Paper and certain US Government &
Agency Obligations are traded on a discount basis; the interest
rates shown are the discount rates paid at the time of purchase by
the Fund. Other securities bear interest at the rates shown,payable
at fixed dates or upon maturity. Interest rates on variable rate
securities are adjusted periodically based upon appropriate
indexes. The interest rates shown are those in effect at August 31,
1994.
**Repurchase Agreements are fully collateralized by US Government
Obligations.
++Floating Rate Notes.
See Notes to Financial Statements.
<TABLE>
CBA Money Fund
Statement of Assets and Liabilities as of August 31, 1994
<S> <C> <C>
Assets:
Investments, at value (identified cost--$1,312,835,958*) (Note 1a) $1,312,044,001
Cash 877
Receivables:
Securities sold $ 9,752,783
Interest receivable 3,201,159 12,953,942
--------------
Prepaid registration fees and other assets (Note 1d) 251,014
--------------
Total assets 1,325,249,834
--------------
Liabilities:
Payables:
Securities purchased 49,253,294
Investment adviser (Note 2) 464,433
Distributor (Note 2) 285,482 50,003,209
--------------
Accrued expenses and other liabilities 1,745
--------------
Total liabilities 50,004,954
--------------
Net Assets $1,275,244,880
==============
Net Assets Consist of:
Shares of beneficial interest, $.10 par value, unlimited number
of shares authorized $ 127,603,684
Paid-in capital in excess of par 1,148,433,153
Unrealized appreciation/depreciation on investments--net (791,957)
--------------
Net Assets--Equivalent to $1.00 per share based on 1,276,036,837
shares of beneficial interest outstanding $1,275,244,880
==============
<PAGE>
<FN>
*Cost for Federal income tax purposes. As of August 31, 1994, net unrealized depreciation for
Federal income tax purposes amounted to $791,957, of which $253 related to appreciated
securities and $792,210 related to depreciated securities.
See Notes to Financial Statements.
</TABLE>
<TABLE>
CBA Money Fund
Statement of Operations for the Six Months Ended August 31, 1994
<S> <C> <C>
Investment Income (Note 1c):
Interest and amortization of premium and discount earned $ 25,767,786
Expenses:
Investment advisory fees (Note 2) $ 2,820,379
Transfer agent fees (Note 2) 794,496
Distribution fees (Note 2) 777,111
Registration fees (Note 1d) 96,480
Printing and shareholder reports 69,431
Custodian fees 54,103
Accounting services (Note 2) 29,638
Professional fees 23,511
Trustees' fees and expenses 16,591
Other 7,258
--------------
Total expenses before reimbursement 4,688,998
Reimbursement of expenses (Note 2) (253,790)
--------------
Total expenses after reimbursement 4,435,208
--------------
Investment Income--Net 21,332,578
Realized Gain on Investments--Net (Note 1c) 3,802
Change in Unrealized Depreciation on Investments--Net (270,573)
--------------
Net Increase in Net Assets Resulting from Operations $ 21,065,807
==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the Six For the Year
CBA Money Fund Months Ended Ended
Statements of Changes in Net Assets Aug. 31, 1994 Feb. 28, 1994
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Investment income--net $ 21,332,578 $ 31,634,870
Realized gain on investments--net 3,802 468,706
Change in unrealized appreciation/depreciation on
investments--net (270,573) (935,673)
-------------- --------------
Net increase in net assets resulting from operations 21,065,807 31,167,903
-------------- --------------
Dividends & Distributions to Shareholders (Note 1e):
Investment income--net (21,332,578) (31,634,870)
Realized gain on investments--net (3,802) (468,706)
-------------- --------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (21,336,380) (32,103,576)
-------------- --------------
Beneficial Interest Transactions (Note 3):
Net proceeds from sale of shares 1,846,360,538 3,818,160,854
Net asset value of shares issued to shareholders in
reinvestment of dividends (Note 1e) 21,286,373 32,034,051
-------------- --------------
1,867,646,911 3,850,194,905
Cost of shares redeemed (1,879,587,457) (3,804,489,714)
-------------- --------------
Net increase (decrease) in net assets derived from
beneficial interest transactions (11,940,546) 45,705,191
-------------- --------------
Net Assets:
Total increase (decrease) in net assets (12,211,119) 44,769,518
Beginning of period 1,287,455,999 1,242,686,481
-------------- --------------
End of period $1,275,244,880 $1,287,455,999
============== ==============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CBA Money Fund
Financial Highlights
The following per share data and ratios have been derived For the Six For the Year For the Year For the Year
from information provided in the financial statements. Months Ended Ended Ended Ended
August 31, February 28, February 29, February 28,
Increase (Decrease) in Net Asset Value: 1994 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Investment income--net .0170 .0260 .0304 .0511 .0736
Realized and unrealized gain (loss) on
investments--net (.0002) (.0004) .0017 .0008 .0006
---------- ---------- ---------- ---------- ----------
Total from investment operations .0168 .0256 .0321 .0519 .0742
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.0170) (.0260) (.0304) (.0511) (.0736)
Realized gain on investments--net --** (.0004) (.0014) (.0008)++ (.0006)++
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.0170) (.0264) (.0318) (.0519) (.0742)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Investment Return 3.37%* 2.66% 3.24% 5.32% 7.69%
========== ========== ========== ========== ==========
Ratios to Average Net Assets:
Expenses, excluding distribution fees and net of
reimbursement .58%* .59% .59% .56% .57%
========== ========== ========== ========== ==========
Expenses, net of reimbursement .70%* .71% .71% .69% .70%
========== ========== ========== ========== ==========
Expenses .74%* .75% .75% .74% .75%
========== ========== ========== ========== ==========
Investment income--net 3.36%* 2.62% 3.19%++ 5.18%++ 7.40%++
========== ========== ========== ========== ==========
Supplemental Data:
Net assets, end of period (in thousands) $1,275,245 $1,287,456 $1,242,686 $1,211,833 $1,063,827
========== ========== ========== ========== ==========
<FN>
*Annualized.
**Amount is less than $.0001 per share.
++Includes unrealized gain (loss).
See Notes to Financial Statements.
</TABLE>
<PAGE>
CBA Money Fund
Notes to Financial Statements
1. Significant Accounting Policies:
CBA Money Fund (the "Fund") is a money fund whose shares are offered
to subscribers to the Capital Builder Account service of Merrill
Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S") and to subscribers to
the Broadcort Capital Account service of Broadcort Capital Corp.
("Broadcort"). Shares may also be purchased by individual investors
not subscribing to these services, but such investors will not
receive any of the special features offered as a part of such
services. The Fund is registered under the Investment Company Act of
1940 as a diversified, open-end management investment company. The
following is a summary of significant accounting policies followed
by the Fund.
(a) Valuation of investments--Portfolio securities with remaining
maturities of sixty days or less are valued at amortized cost, which
approximates market value. Securities with remaining maturities of
greater than sixty days for which market quotations are readily
available will be valued at market value. When securities are valued
with sixty days or less to maturity, the difference between the
valuation existing on the sixty-first day before maturity and
maturity value is amortized on a straight-line basis to maturity.
Other securities held by the Fund will be valued at their fair value
as determined in good faith by or under the direction of the Board
of Trustees.
(b) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to
its shareholders. Therefore, no Federal income tax provision is
required.
(c) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Realized gains and losses on security
transactions are determined on the identified cost basis. Interest
income (including amortization of premium and discount) is
recognized on the accrual basis.
(d) Prepaid registration fees--Prepaid registration fees are
charged to expense as the related shares are issued.
(e) Dividends to shareholders--The Fund declares dividends daily
and reinvests daily such dividends (net of non-resident alien tax
and back-up withholding tax withheld) in additional fund shares at
net asset value. Dividends are declared from the total of net
investment income and net realized gains or losses on investments.
<PAGE>
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM" or the "Manager"). The general partner
of FAM is Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co. ("ML & Co."). The limited partners
are ML & Co. and Fund Asset Management, Inc. ("FAMI"), which is also
an indirect wholly-owned subsidiary of ML & Co.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee based upon the average daily
value of the Fund's net assets at the following annual rates: 0.50%
of the first $500 million of average daily net assets, 0.425% of
average daily net assets in excess of $500 million but not exceeding
$1 billion, and 0.375% of average daily net assets in excess of $1
billion. The most restrictive annual expense limitation requires
that the Manager reimburse the Fund in any amount necessary to
prevent such operating expenses of the Fund (excluding interest,
taxes, distribution fees, brokerage fees and commissions, and
extraordinary items) from exceeding in any fiscal year 2.5% of the
Fund's first $30 million of average daily net assets, 2.0% of the
next $70 million of average daily net assets and 1.5% of the
remaining average daily net assets. No fee payment will be made to
the Manager during the year which will cause such expenses to exceed
the pro rata expense limitation at the time of such payment. During
the six months ended August 31, 1994, the Manager earned $2,820,379,
of which $253,790 was voluntarily waived.
Notes to Financial Statements
(concluded)
The Fund has adopted a Distribution and Shareholder Servicing Plan
in compliance with Rule 12b-1 under the Investment Company Act of
1940, pursuant to which MLPF&S and Broadcort each receive a
distribution fee under the Distribution Agreement from the Fund at
the end of each month at the annual rate of 0.125% of average daily
net assets of the Fund attributable to subscribers to the respective
Capital Builder Account and Broadcort Capital Account programs. The
MLPF&S distribution fee is to compensate MLPF&S financial
consultants and other directly involved branch office personnel for
selling shares of the Fund and for providing direct personal
services to share-holders. The Broadcort distribution fee is to
compensate selected dealers for activities and services related to
the sale, promotion and marketing of shares of the Fund. The
distribution fee is not compensation for the administrative and
operational services rendered to the Fund by MLPF&S or Broadcort in
processing share orders and administering shareholder accounts.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
<PAGE>
Certain officers and/or trustees of the Fund are officers and/or
directors of FAMI, FDS, FAM, PSI, MLPF&S, and/or ML & Co.
3. Beneficial Interest Transactions:
The number of shares purchased and redeemed during the year
corresponds to the amounts included in the Statements of Changes in
Net Assets with respect to net proceeds from sale of shares and cost
of shares redeemed, respectively, since shares are recorded at $1.00
per share.
Officers and Trustees
Arthur Zeikel--President and Trustee
Ronald W. Forbes--Trustee
Cynthia A. Montgomery--Trustee
Charles C. Reilly--Trustee
Kevin A. Ryan--Trustee
Richard R. West--Trustee
Terry K. Glenn--Executive Vice President
Joseph T. Monagle, Jr.--Senior Vice President
Donald C. Burke--Vice President
Carlo J. Giannini--Vice President
Kevin J. McKenna--Vice President
Gerald M. Richard--Treasurer
Robert Harris--Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 1713
Boston, Massachusetts 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 221-7210*
[FN]
*For inquiries regarding your CBA account,
call (800) 247-6400.
