CBA CBA
CBA CBA
CBA Money Fund
Semi-Annual Report
August 31, 1995
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.
<PAGE>
CBA Money Fund
Box 9011
Princeton, NJ 08543-9011
CBA Money Fund
Dear Shareholder:
For the six-month period ended August 31, 1995, CBA Money Fund paid
shareholders a net annualized dividend of 5.45%*. The Fund's 7-day
yield as of August 31, 1995 was 5.24% (including gains and losses)
and 5.23% (excluding gains and losses).
The Environment
During the six months ended August 31, 1995, US economic indicators
continued to suggest that economic growth is moderate and that the
rate of inflation remains low. Gross domestic product (GDP) growth
for the three months ended June 30 were revised to show that the
economy expanded at a 1.1% pace, rather than the 0.5% rate that was
originally reported. However, although the employment report for
August exceeded consensus expectations, most of the new jobs created
were in the service sector, reflecting the ongoing sluggishness in
manufacturing. In addition, total hours worked and hourly wages
declined in August. Other lackluster economic indicators included
disappointing durable goods orders in July and continued poor retail
sales results.
Throughout most of the six-month period, the US dollar was
persistently weak in foreign exchange markets. However, as the
period drew to a close, the US dollar has strengthened relative to
the yen and the Deutschemark. Improving interest rate differentials
favoring the US currency, combined with coordinated central bank
intervention and more positive investor sentiment, have helped to
bolster the dollar in foreign exchange markets. Other factors that
appear to be improving the US dollar's outlook in the near term are
a pick-up in capital flows to the United States and the prospect of
increased capital outflows from Japan. However, it remains to be
seen if the US dollar's strengthening trend can continue without
significant improvements in the US budget and trade deficits.
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
<PAGE>
In the weeks ahead, investor interest will continue to focus on US
economic activity. Clear signs of a moderate, noninflationary
expansion could further benefit the US stock and bond markets. In
addition, should the current Federal budget deficit reduction
efforts now underway in Washington prove successful, the
implications would likely be positive for the US financial markets.
Portfolio Matters
Since our last report to shareholders, short-term yields have
declined as a moderating economy and tame inflation allowed the
Federal Reserve Board to ease monetary policy. During the six-month
period ended August 31, 1995, CBA Money Fund's average portfolio
maturity ranged from a low of 44 days to a high of 86 days.
While February started out with a 50 basis point (0.50%) interest
rate hike and ended with the failure of Barings Securities, the
month was also strongly influenced by investors' relatively
underinvested positions. As a result, we continued the Fund's
strategy of modestly increasing the portfolio's average life in
response to a relatively steep yield curve and technicals that were
expected to keep the market strong. Our principal area of
concentration was one-year Treasury bills at a discount spread of 85
basis points to the Federal Funds rate.
March and April continued to provide evidence of a slowing economy.
During this period the US dollar continued under pressure, falling
to new post-war lows against the yen. However, central bank support
only served to exacerbate the already strong technicals. In this
environment of yield curve flattening, we used a barbelled
investment strategy. Utilizing investments in one-year instruments
and 30-day securities, we extended the Fund's average life to almost
70 days by the end of April. In addition to the yield curve's
flattening, quality spreads narrowed substantially, providing
numerous swap opportunities into Treasury and agency securities for
minimal yield concessions.
The economic weakness and rallying fixed-income market of April
continued into May. The consensus opinion saw monetary policy on
hold for the foreseeable future, and the continued demand for supply
forced further flattening. This culminated with the two-year
Treasury note breaking through 6% and the bill curve inverting. Our
investment strategy was to reduce the Fund's emphasis on overnight
cash in favor of one-month bank investments and six-month agency
discount notes.
<PAGE>
June's economic news showed clear evidence of a slowing economy, and
in turn, the short end of the interest rate curve rallied. The
Fund's average life extension to the mid to high 70-day range was
primarily accomplished with purchases in the six-month and two-year
areas. Quality spreads in the very short end had widened
substantially, providing an opportunity to sell August Treasury
issues in favor of August commercial paper for a pick up of 50 basis
points.
July brought the widely anticipated Federal Reserve Board easing of
25 basis points at the Federal Open Market Committee meeting. While
this slight accommodation ultimately proved to be a disappointment
to investors, the Fund operated comfortably in the 80-day area. The
shape of the yield curve continued to support a barbelled investment
strategy. Later in the month, quality spreads had widened
sufficiently to allow the Fund to sell US Government agency discount
notes and purchase commercial paper.
In early August the market modestly retreated in an attempt to
successfully distribute the refunding supply and prepare for the two-
year and five-year supply soon to be auctioned. As yields rose, we
purchased additional six-month money market securities to bring the
Fund's average life to 85 days.
Looking forward, we expect to maintain a constructive approach
toward the market, in spite of recent stronger economic news. We
believe as long as inflationary pressures remain subdued, the market
will continue to offer reasonable value.
The portfolio's composition at the end of the August period and as
of our last report is detailed below:
<PAGE>
8/31/95 2/28/95
Bank Notes -- 0.7%
Bankers' Acceptances--Yankee* -- 0.4
Certificates of Deposit--European 1.8% 1.8
Certificates of Deposit--Yankee* 9.5 3.6
Commercial Paper 44.9 46.8
Corporate Notes 2.6 0.1
Master Notes 2.3 2.8
Repurchase Agreements 3.6 4.5
US Government & Agency
Obligations 36.5 39.0
Other Assets Less Liabilities -- 0.3
Liabilities in Excess of Other Assets (1.2) --
------ ------
100.0% 100.0%
====== ======
[FN]
*US branches of foreign banks.
In Conclusion
We appreciate your continued support of CBA Money Fund, and we look
forward to assisting you with your financial needs in the months and
years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Carlo J. Giannini)
Carlo J. Giannini
Vice President and Portfolio Manager
October 5, 1995
<PAGE>
CBA Money Fund
Schedule of Investments as of August 31, 1995 (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Certificates of Deposit--European--1.8%
Abbey National $20,000 5.77 % 10/12/95 $ 20,000
Treasury Services PLC 10,000 6.76 4/02/96 10,043
Total Certificates of Deposit--European
(Cost--$30,018) 30,043
Certificates of Deposit--Yankee--9.5%
Bayerische 20,000 6.20 9/03/96 20,002
Hypotheken-
und-Wechsel Bank
Bayerische Landesbank 22,000 6.20 8/28/96 22,002
Girozentrale
Rabobank Nederland, NY 10,000 5.76 1/31/96 9,995
8,500 6.69 3/08/96 8,529
Sanwa Bank 25,000 5.875 9/08/95 25,000
Sumitomo Bank, NY 25,000 5.81 9/06/95 25,000
25,000 5.86 9/26/95 25,001
25,000 5.95 10/02/95 25,000
Total Certificates of Deposit--Yankee
(Cost--$160,504) 160,529
Commercial Paper--44.9%
ABN-AMRO North 30,000 5.65 12/27/95 29,440
America Finance, Inc.
ANZ (Delaware), Inc. 25,000 5.71 10/02/95 24,872
Abbey National Treasury 20,000 5.67 11/07/95 19,784
Services, Inc.
Beta Finance Inc. 9,000 5.83 9/22/95 8,968
CXC Incorporated 25,000 5.70 10/06/95 24,856
<PAGE>
Cadbury Schweppes 25,000 5.71 11/16/95 24,694
Money Management
Canadian Wheat Board 25,000 5.68 12/04/95 24,624
Corporate Receivables 22,900 5.73 11/21/95 22,601
Corp.
DuPont (E.I.) de Nemours 15,000 6.05 10/10/95 14,904
& Company
Eiger Capital Corp. 5,000 5.77 9/18/95 4,986
Ford Motor Credit Co. 15,000 6.11 10/04/95 14,918
General Electric 25,000 6.19 10/02/95 24,872
Capital Corp.
Halifax Building Society 25,000 5.68 12/04/95 24,624
International Lease 14,400 6.10 10/11/95 14,306
Finance Corp.
Internationale 5,000 5.70 9/14/95 4,989
Nederlanden 8,000 5.70 9/21/95 7,973
(US) Funding Corp. 21,200 5.71 11/10/95 20,960
25,000 5.62 2/26/96 24,296
Kingdom of Sweden 10,000 6.05 9/29/95 9,954
25,000 5.61 12/22/95 24,553
25,000 5.66 12/22/95 24,553
10,000 5.57 1/16/96 9,782
CBA Money Fund
Schedule of Investments as of August 31, 1995 (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Commercial Paper (concluded)
McKenna Triangle $20,000 5.70 % 10/05/95 $ 19,888
National Corp.
National Fleet 10,000 5.71 9/08/95 9,987
Funding Corp. 25,000 5.76 9/13/95 24,948
7,000 5.73 10/04/95 6,962
<PAGE>
New Center Asset 25,000 6.12 9/07/95 24,972
Trust
Premium Funding, 20,183 5.75 10/02/95 20,080
Inc. (Series A)
Santander Finance 10,000 5.61 2/06/96 9,750
(Delaware) Inc.
Siemens Corporation 20,000 5.48 1/11/96 19,580
25,000 5.61 2/08/96 24,367
Southwestern Bell 15,360 5.70 10/18/95 15,241
Capital Corp.
Svenska 25,000 5.77 9/01/95 24,996
Handelsbanken, Inc. 25,000 5.70 9/20/95 24,920
25,000 5.74 11/20/95 24,678
Swedish Export 10,000 5.75 9/22/95 9,965
Credit Corp.
Transamerica Finance 30,000 5.64 11/13/95 29,647
Corp.
Vattenfall Treasury AB 10,000 5.71 11/20/95 9,871
WCP Funding, Inc. 10,000 5.88 9/21/95 9,966
Windmill Funding Corp. 19,814 5.77 9/15/95 19,766
2,000 5.77 9/25/95 1,992
Wool International 24,572 5.60 12/21/95 24,136
Total Commercial Paper
(Cost--$761,262) 761,221
Corporate Notes--2.6%
Abbey National Treasury 10,000 6.45 5/15/96 10,027
Services PLC
Banc One, 10,000 5.78++ 8/28/96 9,996
Milwaukee++
CIT Group Holdings, 1,500 5.50 11/01/95 1,499
Inc. (The)
Commercial 10,600 9.875 12/01/95 10,696
Credit Co.
<PAGE>
SMM Trust 12,000 5.895++ 6/14/96 12,000
(1995-K)
Total Corporate Notes
(Cost--$44,189 ) 44,218
Master Notes--2.3%
Goldman Sachs 40,000 5.86++ 2/14/96 40,000
Group, L.P.++
Total Master Notes
(Cost--$40,000 ) 40,000
CBA Money Fund
Schedule of Investments as of August 31, 1995 (concluded) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
US Government & Agency Obligations--
Discount Notes--8.7%
Federal Farm $ 6,075 6.14 % 2/16/96 $ 5,918
Credit Banks 10,000 6.09 2/23/96 9,730
7,475 6.03 3/01/96 7,266
Federal Home 7,500 6.15 1/25/96 7,330
Loan Banks 14,800 6.09 2/14/96 14,421
2,145 6.03 3/04/96 2,084
8,500 6.08 3/07/96 8,255
Federal Home Loan 2,621 6.09 2/08/96 2,556
Mortgage Corporation 12,000 6.07 3/22/96 11,626
Federal National 10,000 5.80 9/01/95 9,998
Mortgage Association 25,000 5.72 11/30/95 24,646
15,000 5.70 12/08/95 14,771
10,000 6.15 2/29/96 9,721
10,000 6.10 3/18/96 9,694
US Treasury Bills 10,000 6.83 1/11/96 9,803
Total US Government & Agency Obligations--
Discount Notes (Cost--$147,486) 147,819
<PAGE>
US Government & Agency Obligations--
Non-Discount Notes--27.8%
Federal Home 24,000 6.41 11/22/95 24,034
Loan Banks 11,000 6.18++ 12/28/95 11,000
4,760 7.16 2/01/96 4,786
10,000 7.13 2/09/96 10,054
10,000 6.787 2/15/96 10,038
3,155 6.88 2/21/96 3,169
12,000 6.21++ 6/17/96 12,000
5,000 6.21++ 6/21/96 5,000
10,000 5.822++ 8/05/96 9,985
7,000 6.33++ 1/31/97 7,006
15,000 6.28++ 2/03/97 14,996
15,000 6.28++ 2/10/97 15,000
6,000 6.42 6/12/97 6,000
Federal Home 12,000 6.11 9/01/95 12,000
Loan Mortgage Corp.++
CBA Money Fund
Schedule of Investments as of August 31, 1995 (concluded) (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
US Government & Agency Obligations--
Non-Discount Notes (concluded)
Federal National $ 5,000 6.15 % 12/20/95 $ 5,000
Mortgage Association++ 5,000 6.12 1/26/96 4,999
20,000 5.60 2/07/96 19,999
25,000 5.60 5/10/96 24,992
15,000 6.08 5/13/96 15,000
10,000 5.81 7/08/96 9,993
10,000 5.96 8/08/96 9,995
25,000 5.717 10/11/96 25,000
15,000 5.92 2/14/97 15,018
25,000 5.72 2/21/97 25,000
12,000 6.20 5/19/97 12,000
11,000 6.25 5/14/98 11,000
Student Loan 33,000 5.85 3/20/96 33,000
Marketing Association++ 5,000 5.72 4/16/96 5,001
10,000 5.68 5/14/96 10,005
20,000 5.717 9/20/96 20,000
10,000 5.86 1/14/97 10,000
<PAGE>
US Treasury Notes 20,000 5.50 4/30/96 19,972
20,000 5.875 5/31/96 20,022
30,000 6.125 7/31/96 30,103
Total US Government & Agency Obligations--
Non-Discount Notes (Cost--$471,053) 471,167
Repurchase Agreements**--3.6%
Face Amount Issue
$61,145 Lehman Government Securities,
Inc., purchased on 8/31/1995
to yield 5.85% to 9/01/1995 61,145
Total Repurchase Agreements
(Cost--$61,145) 61,145
Total Investments (Cost--$1,715,657)--101.2% 1,716,142
Liabilities in Excess of Other Assets--(1.2%) (20,392)
----------
Net Assets--100.0% $1,695,750
==========
[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, 1995.
**Repurchase Agreements are fully collateralized by US Government
Obligations.
++Variable Rate Notes.
See Notes to Financial Statements.
<PAGE>
<TABLE>
CBA Money Fund
Statement of Assets and Liabilities as of August 31, 1995
<S> <C> <C>
Assets:
Investments, at value (identified cost--$1,715,656,912*) (Note 1a) $1,716,141,635
Cash 922
Receivables:
Securities sold 19,935,667
Interest 6,279,242
Prepaid registration fees and other assets (Note 1d) 61,981
--------------
Total assets 1,742,419,447
--------------
Liabilities:
Payables:
Securities purchased $ 45,000,214
Investment adviser (Note 2) 556,054
Distributor (Note 2) 366,349
Beneficial interest redeemed 1,838 45,924,455
--------------
Accrued expenses and other liabilities 745,150
--------------
Total liabilities 46,669,605
--------------
Net Assets $1,695,749,842
==============
Net Assets Consist of:
Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized $ 169,526,512
Paid-in capital in excess of par 1,525,738,607
Unrealized appreciation on investments--net 484,723
--------------
Net Assets--Equivalent to $1.00 per share based on 1,695,265,119 shares
of beneficial interest outstanding $1,695,749,842
==============
<FN>
*Cost for Federal income tax purposes. As of August 31, 1995, net
unrealized appreciation for Federal income tax purposes amounted to
$484,723, of which $625,049 related to appreciated securities and
$140,326 related to depreciated securities.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CBA Money Fund
Statement of Operations for the Six Months Ended August 31, 1995
<S> <S> <S>
Investment Income (Note 1c):
Interest and amortization of premium and discount earned $ 47,371,960
Expenses:
Investment advisory fees (Note 2) $ 3,337,263
Transfer agent fees (Note 2) 1,620,491
Distribution fees (Note 2) 948,683
Registration fees (Note 1d) 124,407
Printing and shareholder reports 89,411
Accounting services (Note 2) 63,648
Custodian fees 47,763
Professional fees 38,356
Trustees' fees and expenses 20,842
Other 32,702
--------------
Total expenses before reimbursement 6,323,566
Reimbursement of expenses (Note 2) (308,924)
--------------
Total expenses after reimbursement 6,014,642
--------------
Investment Income--Net 41,357,318
Realized Gain on Investments--Net (Note 1c) 114,566
Change in Unrealized Appreciation on Investments--Net 424,445
--------------
Net Increase in Net Assets Resulting from Operations $ 41,896,329
==============
</TABLE>
<TABLE>
<CAPTION>
For the Six For the
CBA Money Fund Months Ended Year Ended
Statements of Changes in Net Assets August 31, 1995 February 28, 1995
Increase (Decrease) in Net Assets:
<S> <C> <C>
Operations:
Investment income--net $ 41,357,318 $ 51,426,176
Realized gain on investments--net 114,566 19,884
Change in unrealized appreciation on investments--net 424,445 581,662
-------------- --------------
Net increase in net assets resulting from operations 41,896,329 52,027,722
-------------- --------------
<PAGE>
Dividends & Distributions to Shareholders (Note 1e):
Investment income--net (41,357,318) (51,426,176)
Realized gain on investments--net (114,566) (19,884)
-------------- --------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (41,471,884) (51,446,060)
-------------- --------------
Beneficial Interest Transactions (Note 3):
Net proceeds from sale of shares 2,520,639,347 4,007,388,057
Net asset value of shares issued to shareholders in reinvestment
of dividends and distributions (Note 1e) 41,379,468 51,328,362
-------------- --------------
2,562,018,815 4,058,716,419
Cost of shares redeemed (2,273,008,667) (3,940,438,831)
-------------- --------------
Net increase in net assets derived from beneficial interest
transactions 289,010,148 118,277,588
-------------- --------------
Net Assets:
Total increase in net assets 289,434,593 118,859,250
Beginning of period 1,406,315,249 1,287,455,999
-------------- --------------
End of period $1,695,749,842 $1,406,315,249
============== ==============
See Notes to Financial Statements
</TABLE>
<TABLE>
CBA Money Fund
Financial Highlights
<CAPTION>
The following per share data and ratios
have been derived from information provided For the Six For the
in the financial statements. Months Ended For the Year Ended February 28, Year Ended
August 31, February 29,
Increase (Decrease) in Net Asset Value: 1995 1995 1994 1993 1992
<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 .0270 .0396 .0260 .0304 .0511
Realized and unrealized gain (loss) on
investments--net .0004 .0005 (.0004) .0017 .0008
---------- ---------- ---------- ---------- ----------
Total from investment operations .0274 .0401 .0256 .0321 .0519
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.0270) (.0396) (.0260) (.0304) (.0511)
Realized gain on investments--net (.0001) (.0000)** (.0004) (.0014) (.0008)*
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.0271) (.0396) (.0264) (.0318) (.0519)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Investment Return 5.45%++ 4.04% 2.66% 3.24% 5.32%
========== ========== ========== ========== ==========
<PAGE>
Ratios to Average Net Assets:
Expenses, net of reimbursement and
excluding distribution fees .66%++ .65% .59% .59% .56%
========== ========== ========== ========== ==========
Expenses, net of reimbursement .78%++ .77% .71% .71% .69%
========== ========== ========== ========== ==========
Expenses .82%++ .81% .75% .75% .74%
========== ========== ========== ========== ==========
Investment income and realized gain on
investments--net 5.37%++ 3.98% 2.62% 3.19% 5.18%*
========== ========== ========== ========== ==========
Supplemental Data:
Net assets, end of period (in thousands) $1,695,750 $1,406,315 $1,287,456 $1,242,686 $1,211,833
========== ========== ========== ========== ==========
<FN>
++Annualized.
*Includes unrealized gain (loss).
**Amount is less than $.0001 per share.
See Notes to Financial Statements.
</TABLE>
CBA Money Fund
Notes to Financial Statements
<PAGE>
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. These
unaudited financial statements reflect all adjustments which are, in
the opinion of management, necessary to a fair statement of the
results for the interim period presented. All such adjustments are
of a normal recurring nature. 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 gain or loss 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"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM (the "Manager") 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, 1995, the
Manager earned $3,337,263, of which $308,924 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 shareholders. 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.
<PAGE>
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, PSI, MLFDS, 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
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 221-7210*
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[FN]
* For inquiries regarding your CBA account,
call (800) 247-6400.
