MACKENZIE SERIES TRUST, N-30D, 1996-09-03

MACKENZIE SERIES TRUST
N-30D, 1996-09-03

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<PAGE> 1

<TABLE>
<CAPTION>
MACKENZIE
<S> <C> <C> <C> <C>
June 30, 1996

MACKENZIE MARKET COMMENTARY:
NEW YORK
MUNICIPAL During the first six months of the year been supported by a stable US treasury
FUND interest rates trended higher in response to market and high absolute levels of interest
faster than expected economic growth. rates.
Additionally, energy and grain prices went For the twelve months ended June 30,
up because of colder than normal weather 1996, the total return of the Mackenzie New
- ------------------- and low inventories of these commodities. York Municipal Fund was 5.11% without
ANNUAL On the labor front, a surprising number of sales charge. This compares with the average
REPORT new jobs were created and unemployment of all New York State Municipal Debt Funds
- ------------------- declined, leading to an increase in labor tracked by Lipper Analytical Services, Inc.
This report and the costs. Historically, these factors have pre- which was 5.54% for the same period. (For
financial statements saged an increase in inflation and as market the Fund's total return with sales charge and
contained herein are participants fear a repeat of the downturn in performance commentary, please see the
submitted for the general bond prices similar to 1994, the tone of the following page.)
information of the share- fixed income markets has swung dramati- As municipalities continue to focus on
holders. This report is cally from complacency to caution. improving their balance sheets, municipal
not authorized for distrib- Our research indicates the pace of credit fundamentals are enhanced. We
ution to prospective economic growth will moderate in the believe a stable supply of municipal issuance
investors unless preced- months to come as the economy is in the and increased demand should allow the
ed or accompanied by an later stages of a longer term economic municipal bond market to perform well in
effective prospectus. recovery. This deceleration should allay fears the months ahead.
of a resurgence of inflation. Additionally,
Mackenzie Investment the Federal Reserve Board is firmly commit- MACKENZIE INVESTMENT MANAGEMENT, INC.
Management Inc. ted to price stability and we expect that they
Via Mizner Financial will act to defend this mission. Monetary
Plaza policy is currently somewhat restrictive
700 South Federal Hwy. which should act as a brake on the economy
Boca Raton, FL 33432 over the near future.
1-800-456-5111 The municipal bond market continues
to outperform US treasuries. The most
predominant reason for the strength in the
municipal market is likely explained by a
shift in asset allocation. Equity investors,
who are uncomfortable with the increased
volatility of US stock markets, have been
rotating assets into municipal bond funds.
Should equity markets continue to experi-
ence volatility, we would expect this trend to
persist. The municipal bond market has also

---------------------------------------------------------------------------------------------------

BOARD OF TRUSTEES OFFICERS TRANSFER AGENT MANAGER
John S. Anderegg, Jr. Michael G. Landry, Ivy Mackenzie Mackenzie Investment
Paul H. Broyhill President Services Corp. Management Inc.
Stanley Channick Keith J. Carlson, P.O. Box 3022 Boca Raton, FL
Frank W. DeFriece Vice President Boca Raton, FL
Roy J. Glauber C. William Ferris, 33431-0922 DISTRIBUTOR
Michael G. Landry Secretary/Treasurer 1-800-777-6472 Ivy Mackenzie
Joseph G. Rosenthal Distributors, Inc.
J. Brendan Swan CUSTODIAN AUDITORS Via Mizner Financial Plaza
Brown Brothers Coopers & Lybrand L.L.P. 700 South Federal Highway
LEGAL COUNSEL Harriman & Co. Fort Lauderdale, FL Boca Raton, FL 33432
Dechert Price Boston, MA
& Rhoads [LOGO IVY MACKENZIE]
Boston, MA

</TABLE>

<PAGE> 2

PERFORMANCE COMMENTARY
For the twelve months ended June 30, 1996, the Mackenzie New York Municipal Fund
had a total return of 5.11%. This compares with the average of all New York
State Municipal Debt Funds tracked by Lipper Analytical Services, Inc. which was
5.54% for the same period. The Fund's underperformance can be attributed to the
manager's decision to extend the average duration of the Fund as a means of
providing a higher level of tax-free income.

PERFORMANCE COMPARISON OF A $10,000
INVESTMENT SINCE INCEPTION OF THE FUND

COMPARISON CHART

All figures mentioned in the Market Commentary and in the chart and table
reflect past results and assume reinvestment of dividends and distributions from
capital gains. Future results will, of course, be different. The principal value
of the Mackenzie New York Municipal Fund will fluctuate and at redemption may be
worth more or less than the amount of the original investment.
The Lehman Bros. 5-Year Municipal Bond Index is an unmanaged index of municipal
bonds that assumes reinvestment of dividends and, unlike Fund returns, does not
reflect any fees or expenses.
Please note that Treasury Bills are short-term interest bearing instruments
which are guaranteed as to timely payment of principal and interest by the U.S.
Government.
Performance is calculated for Class A shares of the Fund unless otherwise noted.
Because Class B shares bear the expense of a higher distribution fee it is
expected that the level of performance of the Fund 's Class B shares will be
lower than that of the Fund 's Class A shares.
Total returns in some periods were higher due to reimbursement of the Fund 's
expenses. See Financial Highlights.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MACKENZIE NEW YORK MUNICIPAL FUND
FOR PERIOD ENDING 6/30/96
Class A*-with sales charge
Average Annual Class B**
Total Return Average Annual Total Return
- -------------------------------------------------------------------------------------------
w/Reimb. w/o Reimb. w/Reimb. w/o Reimb.
- -------------------------------------------------------------------------------------------
w/CDSC w/o CDSC w/CDSC w/o CDSC
----------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Yr. .12% (.09)% (.63)% 4.37% (.85)% 4.15%
- -------------------------------------------------------------------------------------------
5 Yr. 6.05% 5.88% -- -- -- --
- -------------------------------------------------------------------------------------------
Since Inception 6.49% 5.59% 3.92% 5.18% 3.73% 4.99%
- -------------------------------------------------------------------------------------------
</TABLE>

*Class A performance figures include the maximum sales charge of 4.75%.
**Class B performance figures are calculated with and without the applicable
Contingent Deferred Sales Charge (CDSC) up to a maximum of 5%.

- --------------------------------------------------------------------------------
<PAGE> 3

PORTFOLIO OF INVESTMENTS
JUNE 30, 1996

<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ------------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES -- 97.5% PRINCIPAL VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aaa AAA Bethlehem New York Central School District (GO) (NC) (AMBAC Insured), 7.10%,
11/01/06.......................................................................... $ 700,000 $ 807,625
Baa NR Canastota New York Central School District (GO) (NC), 7.10%, 06/15/07............... 215,000 241,069
Baa NR Canastota New York Central School District (GO) (NC), 7.10%, 06/15/08............... 205,000 229,600
NR BBB Guam Government (GO), 5.375%, 11/15/13.............................................. 1,000,000 890,000
NR BBB Guam Power Authority Revenue, 6.625%, 10/01/14...................................... 550,000 561,000
Baa1 BBB Metropolitan Transportation Authority Service Contract, 5.50%, 07/01/17............. 250,000 233,125
Aa NR Monroe County Industrial Development Agency, Depaul Community Facility (SONYMA
Insured), 6.45%, 02/01/14......................................................... 880,000 925,100
Baa1 BBB+ New York City (GO), 7.20%, 08/15/08................................................. 1,000,000 1,060,000
Baa1 BBB+ New York City (GO), 7.10%, 02/01/09................................................. 500,000 521,875
Baa1 BBB+ New York City (GO), 7.30%, 08/15/10................................................. 150,000 159,937
NR BBB+ New York City (GO), 7.30%, 08/15/10 (Pre-refunded).................................. 100,000 115,500
Baa1 BBB+ New York City (GO)(NC), 0.00%, 08/01/11............................................. 1,000,000 380,000
Baa1 BBB+ New York City (GO), 7.00%, 02/01/19................................................. 500,000 515,625
Baa BBB- New York City Health & Hospital Corporation Revenue, 6.30%, 02/15/20................ 1,500,000 1,421,250
Aa AA New York City Housing Development (FHA Insured), 5.85%, 05/01/26.................... 500,000 481,250
A A- New York City Municipal Water Finance Authority, 6.00%, 06/15/25.................... 500,000 496,875
A A- New York State (GO)(NC), 9.875%, 11/15/05........................................... 1,000,000 1,326,250
Baa1 BBB New York State Dormitory Authority, City University Series C, 6.00%, 07/01/16....... 1,000,000 973,750
NR AAA New York State Dormitory Authority, Jewish Geriatric (FHA Insured), 7.35%,
08/01/29.......................................................................... 500,000 551,875
NR AAA New York State Dormitory Authority, Parkridge, 7.85%, 02/01/29...................... 200,000 216,000
NR AA New York State Dormitory Authority, St. Lukes Home (FHA Insured), 6.375%,
08/01/35.......................................................................... 1,000,000 1,015,000
Baa1 BBB+ New York State Dormitory Authority, State University, 6.25%, 05/15/14............... 1,000,000 1,001,250
Baa1 BBB- New York State Dormitory Authority, Upstate Community College, 6.25%, 07/01/25...... 1,500,000 1,503,750
Aa AA- New York State Environmental Facilities Corporation Pollution Control Series B,
7.50%, 03/15/11................................................................... 400,000 434,500
Aa A- New York State Environmental Facilities Corporation Pollution Control Series E,
6.875%, 06/15/14.................................................................. 1,000,000 1,091,250
Aaa AAA New York State Housing Finance Agency -- State University Series A, 8.00%, 11/01/98
(Pre-refunded).................................................................... 30,000 33,037
Baa1 BBB New York State Housing Finance Agency Service Contract, 6.375%, 09/15/15............ 1,000,000 1,008,750
Baa BBB New York State Medical Care Facilities Financing Agency, 7.35%, 08/15/11............ 1,000,000 1,063,750
Aaa AAA New York State Medical Care Facilities Financing Agency (FHA Insured), 7.70%,
08/15/00
(Pre-refunded).................................................................... 500,000 565,000
Aa NR New York State Medical Care Facilities Finance Agency (SONYMA Insured), 6.00%,
11/15/02.......................................................................... 500,000 522,500
Aa NR New York State Medical Care Facilities Finance Agency (SONYMA Insured), 6.00%,
11/15/03.......................................................................... 500,000 522,500
Aa AAA New York State Medical Care Facilities Finance Agency Series C (FHA Insured), 7.70%,
08/15/98
(Pre-refunded).................................................................... 85,000 92,756
Aaa AAA New York State Medical Care Facilities Finance Agency -- Aurelia Osborn Fox Memorial
Hospital (FSA Insured), 6.50%, 11/01/19........................................... 650,000 673,563
Baa BBB New York State Medical Care Facilities Finance Agency -- Brookdale Hospital Medical
Center, 6.85%, 02/15/17........................................................... 1,000,000 1,023,750
A A New York State Medical Care Facilities Finance Agency -- Good Samaritan Hospital,
7.875%, 11/01/06.................................................................. 10,000 10,487
Baa BBB New York State Medical Care Facilities Finance Agency -- New York Downtown Hospital,
6.80%, 02/15/20................................................................... 500,000 505,625
Aaa AAA New York State Medical Care Facilities Finance Agency -- St. Lukes Hospital (FHA
Insured), 7.45%,
02/15/00 (Pre-refunded)........................................................... 600,000 665,250
Aa NR New York State Mortgage Agency Series B (Pool Insured), 6.45%, 04/01/15............. 1,000,000 1,015,000
Aa NR New York State Mortgage Agency Series BB (FHA Insured), 7.85%, 10/01/08............. 30,000 31,275
Aa NR New York State Mortgage Agency Series E (Pool Insured), 8.10%, 10/01/17............. 35,000 36,487
NR BBB+ New York State Municipal Bond Bank Agency -- Buffalo Series A, 6.875%, 03/15/06..... 1,000,000 1,066,250
Aaa BBB New York State Urban Development Corporation, 7.50%, 04/01/01 (Pre-refunded)........ 1,000,000 1,131,250
Baa1 BBB New York State Urban Development Corporation Correctional Facilities (NC), 0.00%,
01/01/08.......................................................................... 1,000,000 507,500
Aaa AAA New York State Urban Development Series C (AMBAC Insured), 7.75%, 01/01/98
(Pre-refunded).................................................................... 30,000 32,175
Aaa AAA New York State Urban Development Series D (AMBAC Insured), 7.75%, 01/01/98
(Pre-refunded).................................................................... 70,000 75,075
Baa BBB Oneida-Herkimer New York Solid Waste Management Authority, 6.75%, 04/01/14.......... 1,000,000 1,007,500
NR A Onondaga County New York Industrial Revenue Agency, Crouse Irving Co. Series A,
7.90%, 01/01/17................................................................... 2,000,000 2,195,000
Baa1 A Puerto Rico Commonwealth (GO)(NC), 5.10%, 07/01/02.................................. 100,000 101,000
NR BBB- Puerto Rico Educational, Medical & Environmental Control Facilities, 5.70%,
08/01/13.......................................................................... 250,000 229,688
Aaa AAA Puerto Rico Electric Power Authority Power Revenue (FSA Insured), 8.278%,
07/01/23(a)....................................................................... 1,000,000 986,250
Baa1 A- Puerto Rico Electric Power Authority Series N, 5.00%, 07/01/12...................... 750,000 679,687
Baa1 A- Puerto Rico Municipal Finance Agency (GO), 5.70%, 07/01/03.......................... 500,000 513,750
Aa NR Schenectady New York Municipal Housing Authority -- Annie Schaffer Senior Center
(SONYMA Insured), 6.40%, 05/01/14................................................. 650,000 650,813
Aaa AAA South Hampton Village New York Series B (NC) (MBIA Insured), 7.60%, 09/01/03........ 100,000 116,500
</TABLE>

(See Notes to Financial Statements)
<PAGE> 4

PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996

(See Notes to Financial Statements)
<PAGE> 5

STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996

<TABLE>
<S> <C>
ASSETS
Investments, at value (identified cost -- $35,968,859).............................................................. $36,755,269
Cash................................................................................................................ 260,641
Receivables:
Interest.......................................................................................................... 709,220
Manager for expense reimbursement................................................................................. 6,677
Deferred organization expenses...................................................................................... 5,518
Other assets........................................................................................................ 7,150
-----------
Total assets...................................................................................................... 37,744,475
-----------
LIABILITIES
Payables:
Management fee.................................................................................................... 16,506
12b-1 service and distribution fees............................................................................... 8,646
Administrative services fee....................................................................................... 3,001
Fund accounting................................................................................................... 2,600
Transfer agent.................................................................................................... 3,417
-----------
Total liabilities................................................................................................. 34,170
-----------
NET ASSETS.......................................................................................................... $37,710,305
===========
CLASS A:
Net asset value and redemption price per share ($35,532,514 / 3,655,558 shares outstanding)......................... $ 9.72
===========
Maximum offering price per share ($9.72 x 100 / 95.25)*............................................................. $ 10.20
===========
CLASS B:
Net asset value and offering price per share ($2,177,791 / 224,085 shares outstanding)**............................ $ 9.72
===========
NET ASSETS CONSIST OF:
Capital paid-in................................................................................................... $37,044,627
Accumulated net realized loss on investments...................................................................... (179,415)
Accumulated undistributed net investment income................................................................... 58,683
Net unrealized appreciation on investments........................................................................ 786,410
-----------
NET ASSETS.......................................................................................................... $37,710,305
===========
</TABLE>

* On sales of more than $100,000 the offering price is reduced.
** Redemption price per share is equal to the net asset value per share less any
applicable contingent deferred sales charge.

(See Notes to Financial Statements)
<PAGE> 6

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996

<TABLE>
<S> <C> <C>
Investment income
Interest................................................................................................ $2,544,845
----------
Expenses
Management fee.......................................................................................... $222,574
Transfer agent.......................................................................................... 39,932
Administrative services fee............................................................................. 40,468
Custodian fees.......................................................................................... 9,076
Blue Sky fees........................................................................................... 21,311
Auditing and accounting fees............................................................................ 30,077
Shareholder reports..................................................................................... 5,087
Amortization of organization expenses................................................................... 1,994
Fund accounting......................................................................................... 29,975
Trustees' fees.......................................................................................... 4,860
12b-1 service and distribution fees
Class A............................................................................................... 96,899
Class B............................................................................................... 17,083
Legal................................................................................................... 23,931
Other................................................................................................... 6,052
----------
549,319
Expenses reimbursed by manager.......................................................................... (83,090)
Fees paid indirectly.................................................................................... (8,268)
----------
Net expenses.......................................................................................... 457,961
----------
NET INVESTMENT INCOME..................................................................................... 2,086,884
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments........................................................................ 310,443
Net unrealized depreciation during the period on investments............................................ (341,320)
----------
Net loss on investments............................................................................... (30,877)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................................... $2,056,007
==========
</TABLE>

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
DECREASE IN NET ASSETS
Operations:
Net investment income............................................................................... $2,086,884 $ 2,169,541
Net realized gain (loss) on investments............................................................. 310,443 (585,293)
Net unrealized appreciation (depreciation) during the period on investments......................... (341,320) 1,586,449
----------- -----------
Net income resulting from operations.............................................................. 2,056,007 3,170,697
----------- -----------
Class A distributions
From net investment income.......................................................................... (1,940,675) (2,117,451)
In excess of net investment income.................................................................. -- (99,132)
----------- -----------
Total distributions to Class A shareholders....................................................... (1,940,675) (2,216,583)
----------- -----------
Class B distributions
From net investment income.......................................................................... (72,015) (52,090)
In excess of net investment income.................................................................. -- (3,220)
----------- -----------
Total distributions to Class B shareholders....................................................... (72,015) (55,310)
----------- -----------
Fund share transactions (Note 5):
Class A............................................................................................. (4,808,441) (2,914,177)
Class B............................................................................................. 749,118 543,756
----------- -----------
Net decrease resulting from Fund share transactions............................................... (4,059,323) (2,370,421)
----------- -----------
TOTAL DECREASE IN NET ASSETS.......................................................................... (4,016,006) (1,471,617)
NET ASSETS
Beginning of period................................................................................. 41,726,311 43,197,928
----------- -----------
END OF PERIOD....................................................................................... $37,710,305 $41,726,311
=========== ===========
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)................................................ $ 58,683 $ (15,511)
=========== ===========
</TABLE>

(See Notes to Financial Statements)
<PAGE> 7

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
CLASS A FOR THE YEAR ENDED JUNE 30,
---------------------------------------------------------------
SELECTED PER SHARE DATA 1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of the period........................ $ 9.72 $ 9.50 $ 10.10 $ 9.96 $ 9.56
------- ------- ------- ------- -------
Income from investment operations
Net investment income(a)...................................... .51 .48 .56 .58 .51
Net gain (loss) on investments (both realized and
unrealized)................................................. (.02) .24 (.49) .38 .62
------- ------- ------- ------- -------
Total from investment operations............................ .49 .72 .07 .96 1.13
------- ------- ------- ------- -------
Less distributions
From net investment income.................................... .49 .48 .56 .58 .51
In excess of net investment income............................ -- .02 -- -- .09
From net realized gain........................................ -- -- .11 .24 .13
------- ------- ------- ------- -------
Total distributions......................................... .49 .50 .67 .82 .73
------- ------- ------- ------- -------
Net asset value, end of period.................................. $ 9.72 $ 9.72 $ 9.50 $ 10.10 $ 9.96
======= ======= ======= ======= =======
Total return(%)(b).............................................. 5.11 7.93 .58 10.07 12.15
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)........................ $35,533 $40,290 $42,329 $42,187 $32,755
Ratio of expenses to average net assets:
With expense reimbursement and fees paid indirectly(%)(c)..... 1.10 1.10 1.10 1.10 1.10
Without expense reimbursement and fees paid
indirectly(%)(c)............................................ 1.33 1.24 1.21 1.29 1.25
Ratio of net investment income to average net assets(%)(a)...... 5.19 5.12 5.59 5.81 5.66
Portfolio turnover rate(%)...................................... 35 59 44 87 24
</TABLE>

<TABLE>
<CAPTION>
FOR THE PERIOD
APRIL 1, 1994
FOR THE YEAR ENDED (COMMENCEMENT)
CLASS B JUNE 30, TO JUNE 30,
------------------- --------------
SELECTED PER SHARE DATA 1996 1995 1994
------ ------ --------------
<S> <C> <C> <C>
Net asset value, beginning of the period............................................... $ 9.72 $ 9.50 $ 9.65
------ ------ -----
Income from investment operations
Net investment income(a)............................................................. .44 .41 .10
Net gain (loss) on investments (both realized and unrealized)........................ (.02) .24 (.08)
------ ------ -----
Total from investment operations................................................... .42 .65 .02
------ ------ -----
Less distributions
From net investment income........................................................... .42 .41 .14
In excess of net investment income................................................... -- .02 --
From net realized gain............................................................... -- -- .03
------ ------ -----
Total distributions................................................................ .42 .43 .17
------ ------ -----
Net asset value, end of period......................................................... $ 9.72 $ 9.72 $ 9.50
====== ====== ==============
Total return(%)........................................................................ 4.37(b) 7.14(b) .20(d)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)............................................... $2,178 $1,436 $ 869
Ratio of expenses to average net assets:
With expense reimbursement and fees paid indirectly(%)(c)............................ 1.85 1.85 1.85(e)
Without expense reimbursement and fees paid indirectly(%)(c)......................... 2.08 1.99 1.96(e)
Ratio of net investment income to average net assets(%)(a)............................. 4.44 4.37 4.84(e)
Portfolio turnover rate(%)............................................................. 35 59 44
</TABLE>
(a) Net investment income is net of expenses reimbursed by manager.
(b) Total return does not reflect a sales charge.
(c) Beginning in July 1995, total expenses include fees paid indirectly
through an expense offset arrangement.
(d) Total return represents aggregate total return and does not reflect a
sales charge.
(e) Annualized.

(See Notes to Financial Statements)
<PAGE> 8

NOTES TO FINANCIAL STATEMENTS

Mackenzie New York Municipal Fund (the Fund) is a series of shares of
Mackenzie Series Trust. The shares of beneficial interest are $.001 par value
and an unlimited number of shares of Class A and Class B are authorized.
Mackenzie Series Trust was organized as a Massachusetts business trust under a
Declaration of Trust dated April 22, 1985 and is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
Preparation of the financial statements includes the use of management
estimates. Actual results could differ from those estimates.

SECURITY VALUATION -- Municipal securities are valued utilizing primarily
the latest bid prices or, if bid prices are not available, on the basis of
valuation based upon a matrix system (which considers factors such as security
prices, yields, maturities and ratings), both as furnished by an independent
pricing service approved by the Board of Trustees (the Board).

SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are
accounted for on the trade date. Interest income is accrued on a daily basis.
Realized gains and losses from securities transactions are calculated on an
identified cost basis.

FEDERAL INCOME TAXES -- The Fund intends to qualify for tax treatment
applicable to regulated investment companies under the Internal Revenue Code, as
amended, and distribute all of its taxable income to its shareholders.
Therefore, no provision has been recorded for Federal income or excise taxes.

The Fund has a net tax-basis capital loss carryforward of approximately
$179,000 as of June 30, 1996 which may be applied against any realized net
taxable gains of each succeeding fiscal year until fully realized or until the
expiration date, whichever occurs first. The carryforward expires $171,000 in
2003 and $8,000 in 2004.

DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income
are declared monthly and net realized capital gains, if any, are declared in
June. An additional distribution may be declared if necessary to avoid the
payment of a four percent Federal excise tax.

On January 1, 1996, under a Plan pursuant to Rule 18f-3 under the Investment
Company Act of 1940, approved by the Fund's Board December 2, 1995, the Fund
discontinued its practice of declaring daily a dividend to Class A shares at the
rate per share of the excess 12b-1 fees of Class B shares over Class A shares.

For the Fund's taxable year ended June 30, 1996, 100% of distributions paid
were exempt interest dividends for Federal income tax purposes.

DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Fund in
connection with its issuing Class B shares have been deferred and are being
amortized on a straight-line basis over a five year period.

RECLASSIFICATIONS -- The timing and characterization of certain income and
net capital gain distributions are determined annually in accordance with
Federal tax regulations which may differ from generally accepted accounting
principles. These differences primarily relate to certain securities sold at a
loss. As a result, Net realized gain (loss) on investments for a reporting
period may differ significantly in amount and character from distributions
during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.

FEES PAID INDIRECTLY -- The Fund has an arrangement whereby a certain
percentage of quarterly cumulative credits resulting from cash balances on
deposit with the custodian are used to offset custody fees, including
transaction and out of pocket expenses. For the year ended June 30, 1996,
custody fees were reduced by $8,268 under this arrangement.

2. RELATED PARTIES

Mackenzie Investment Management, Inc. (MIMI) is the Manager and Investment
Adviser of the Fund. For its services, MIMI receives a fee monthly at the annual
rate of .55% of the Fund's average net assets.

If the Fund's total expenses in any fiscal year (excluding interest, taxes,
brokerage commissions, extraordinary expenses and other expenses subject to
approval by state securities administrators) exceed limits applicable under
state securities laws, MIMI will bear the excess expenses. Currently, MIMI
voluntarily limits the Fund's total operating expenses (excluding taxes, 12b-1
fees, brokerage commissions, interest, litigation and indemnification expenses,
and other extraordinary expenses) to an annual rate of .85% of its average net
assets. The voluntary expense limitation may be terminated or revised at any
time. Expenses reimbursed by manager reflected in the Statement of Operations
consists of a voluntary reimbursement.

MIMI also provides certain administrative, accounting and pricing services
for the Fund. As compensation for those services, the Fund pays MIMI fees plus
certain out-of-pocket expenses. Such fees are reflected as Administrative
services fee and Fund accounting in the Statement of Operations.

Ivy Mackenzie Distributors, Inc. (IMDI), a wholly owned subsidiary of MIMI,
is the underwriter and distributor of the Fund's shares, and as such, purchases
shares from the Fund at net asset value to settle orders from investment
dealers. For the year ended June 30, 1996, the net amount of underwriting
discount retained by IMDI was $5,796.

Under Service and Distribution Plans, the Fund reimburses IMDI for service
fee payments made to brokers at an annual rate not to exceed .25% of its average
net asset value. Class B shares are also subject to an ongoing distribution fee
at an annual rate of .75% of the average net asset value attributable to Class B
shares. IMDI may use such distribution fee for purposes of advertising and
marketing shares of the Fund. Such fees are reflected as 12b-1 service and
distribution fees in the Statement of Operations.

Ivy Mackenzie Services Corp. (IMSC), a wholly owned subsidiary of MIMI, is
the transfer and shareholder servicing agent for the Fund. The Fund pays a
monthly fee and certain out-of-pocket expenses. Such fees and expenses are
reflected as Transfer agent in the Statement of Operations.

3. BOARD'S COMPENSATION

Trustees who are not affiliated with MIMI receive compensation from the
Fund, which is reflected as Trustees' fees in the Statement of Operations.

4. CONCENTRATION OF CREDIT RISK

The Fund primarily invests in debt obligations issued by the State of New
York and its political subdivisions, agencies and public authorities to obtain
funds for various public purposes. The Fund is more susceptible to factors
adversely affecting issuers of New York securities than is a municipal bond fund
that is not concentrated in these issuers to the same extent.
<PAGE> 9

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. FUND SHARE TRANSACTIONS

Fund share transactions for both Class A and Class B were as follows:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995
---------------------- ----------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------------------------------ -------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Sold.......................... 150,497 $ 1,481,105 384,267 $ 3,640,567
Issued on reinvestment of
distributions................ 118,551 1,162,655 131,027 1,233,019
Repurchased................... (758,400) (7,452,201) (828,084) (7,787,763)
-------- ----------- -------- -----------
Net decrease.................. (489,352) $(4,808,441) (312,790) $(2,914,177)
========== ============= ========== =============
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995
---------------------- ----------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------------------------------ -------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Sold.......................... 90,800 $ 891,763 84,053 $ 802,583
Issued on reinvestment of
distributions................ 4,201 41,183 2,532 23,881
Repurchased................... (18,664) (183,828) (30,370) (282,708)
-------- ----------- -------- -----------
Net increase.................. 76,337 $ 749,118 56,215 $ 543,756
========== ============= ========== =============
</TABLE>

- --------------------------------------------------------------------------------

REPORT OF INDEPENDENT ACCOUNTANTS

To The Shareholders and
Board of Trustees of
Mackenzie New York Municipal Fund (the Fund)

We have audited the accompanying statement of assets and liabilities of the
Fund, including the schedule of portfolio investments, as of June 30, 1996, 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 each of the periods indicated. 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 June
30, 1996 by correspondence with the custodian. 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 the
Fund as of June 30, 1996, 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 each of the periods indicated, in
conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Fort Lauderdale, Florida
August 15, 1996

MNYMF-2-896
<PAGE> 10

<TABLE>
<CAPTION>
MACKENZIE

June 30, 1996
<S> <C> <C> <C> <C>
MACKENZIE MARKET COMMENTARY:
NATIONAL
MUNICIPAL During the first six months of the year been supported by a stable US treasury
FUND interest rates trended higher in response to market and high absolute levels of interest
faster than expected economic growth. rates.
Additionally, energy and grain prices went For the twelve months ended June 30,
up because of colder than normal weather 1996, the total return of the Mackenzie
- ------------------- and low inventories of these commodities. National Municipal Fund was 4.69% without
ANNUAL On the labor front, a surprising number of sales charge. This compares with the average
REPORT new jobs were created and unemployment of all General Municipal Debt Funds
- ------------------- declined, leading to an increase in labor tracked by Lipper Analytical Services, Inc.
This report and the costs. Historically, these factors have pre- which was 5.67% for the same period. (For
financial statements saged an increase in inflation and as market the Fund's total return with sales charge and
contained herein are participants fear a repeat of the downturn in performance commentary, please see the
submitted for the general bond prices similar to 1994, the tone of the following page.)
information of the share- fixed income markets has swung dramati- As municipalities continue to focus
holders. This report is cally from complacency to caution. on improving their balance sheets, municipal
not authorized for distrib- Our research indicates the pace of credit fundamentals are enhanced. For
ution to prospective economic growth will moderate in the months example, Standard & Poor's recently increased
investors unless preced- to come as we believe the economy is in the its rating on a new municipal issue from
ed or accompanied by an later stages of a longer term economic California to A+. This reflects the State's
effective prospectus. recovery. This deceleration should allay fears ability to successfully handle its budgetary
of a resurgence of inflation. Additionally, concerns. We believe a stable supply of
Mackenzie Investment the Federal Reserve Board is firmly commit- municipal issuance and increased demand
Management Inc. ted to price stability and we expect that they should allow the municipal board market
Via Mizner Financial will act to defend this mission. Monetary to perform well in the months ahead.
Plaza policy is currently somewhat restrictive
700 South Federal Hwy. which should act as a brake on the economy MACKENZIE INVESTMENT MANAGEMENT, INC.
Boca Raton, FL 33432 over the near future.
1-800-456-5111 The municipal bond market continues
to outperform US treasuries. The most
predominant reason for the strength in the
municipal market is likely explained by a
shift in asset allocation. Equity investors,
who are uncomfortable with the increased
volatility of US stock markets, have been
rotating assets into municipal bond funds.
Should equity markets continue to experi-
ence volatility, we would expect this trend to
persist. The municipal bond market has also
---------------------------------------------------------------------------------------------------
BOARD OF TRUSTEES OFFICERS TRANSFER AGENT MANAGER
John S. Anderegg, Jr. Michael G. Landry, Ivy Mackenzie Mackenzie Investment
Paul H. Broyhill President Services Corp. Management Inc.
Stanley Channick Keith J. Carlson, P.O. Box 3022 Boca Raton, FL
Frank W. DeFriece Vice President Boca Raton, FL
Roy J. Glauber C. William Ferris, 33431-0922 DISTRIBUTOR
Michael G. Landry Secretary/Treasurer 1-800-777-6472 Ivy Mackenzie
Joseph G. Rosenthal Distributors, Inc.
J. Brendan Swan CUSTODIAN AUDITORS Via Mizner Financial Plaza
Brown Brothers Coopers & Lybrand L.L.P. 700 South Federal Highway
LEGAL COUNSEL Harriman & Co. Fort Lauderdale, FL Boca Raton, FL 33432
Dechert Price Boston, MA
& Rhoads [LOGO IVY MACKENZIE]
Boston, MA

</TABLE>

<PAGE> 11

PERFORMANCE COMMENTARY
For the twelve months ended June 30, 1996, the Mackenzie National Municipal Fund
had a total return of 4.69%. This compares with the average of all General
Municipal Debt Funds tracked by Lipper Analytical Services, Inc. which was 5.67%
for the same period. The Fund's underperformance can be attributed to the
manager's decision to extend the average duration of the Fund as a means of
providing a higher level of tax-free income.

PERFORMANCE COMPARISON OF A $10,000
INVESTMENT SINCE INCEPTION OF THE FUND

COMPARISON CHART

All figures mentioned in the Market Commentary and in the chart and table
reflect past results and assume reinvestment of dividends and distributions from
capital gains. Future results will, of course, be different. The principal value
of the Mackenzie National Municipal Fund will fluctuate and at redemption may be
worth more or less than the amount of the original investment.
The Lehman Bros. 5-Year Municipal Bond Index is an unmanaged index of municipal
bonds that assumes reinvestment of dividends and, unlike Fund returns, does not
reflect any fees or expenses.
Please note that Treasury Bills are short-term interest bearing instruments
which are guaranteed as to timely payment of principal and interest by the U.S.
Government.
Performance is calculated for Class A shares of the Fund unless otherwise noted.
Because Class B shares bear the expense of a higher distribution fee it is
expected that the level of performance of the Fund 's Class B shares will be
lower than that of the Fund 's Class A shares.
Total returns in some periods were higher due to reimbursement of the Fund 's
expenses. See Financial Highlights.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
MACKENZIE NATIONAL MUNICIPAL FUND
FOR PERIOD ENDING 6/30/96
Class A*-with sales charge
Average Annual Class B**
Total Return Average Annual Total Return
- --------------------------------------------------------------------------------------------
w/Reimb. w/o Reimb. w/Reimb. w/o Reimb.
- --------------------------------------------------------------------------------------------
w/CDSC w/o CDSC w/CDSC w/o CDSC
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Yr. (.28)% (.69)% (1.12)% 3.88% (1.52)% 3.46%
- --------------------------------------------------------------------------------------------
5 Yr. 5.49% 5.23% -- -- -- --
- --------------------------------------------------------------------------------------------
Since Inception 6.20% 5.10% 3.55% 4.82% 3.22% 4.49%
- --------------------------------------------------------------------------------------------
</TABLE>

- --------------------------------------------------------------------------------
<PAGE> 12

PORTFOLIO OF INVESTMENTS
JUNE 30, 1996

<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ------------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES -- 95.4% PRINCIPAL VALUE

- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ARIZONA -- 8.1%
A1 AA Phoenix Arizona Highway Revenue (NC), 9.25%, 07/01/07............................... $ 565,000 $ 735,913
NR AA Tucson (GO)(NC), 9.75%, 07/01/12 (Escrowed to Maturity)............................. 400,000 562,500
NR AA Tucson (GO)(NC), 9.75%, 07/01/13 (Escrowed to Maturity)............................. 500,000 718,125
-----------
2,016,538
-----------
CALIFORNIA -- 9.9%
NR BBB- Adelanto California Public Financing Authority , 6.30%, 09/01/28.................... 500,000 470,000
NR A- California Health Facilities Authority (Pomona), 7.00%, 01/01/17.................... 1,000,000 1,015,180
Baa NR Irwindale California Industrial Development, 6.60%, 08/01/18........................ 200,000 200,500
A1 NR Kern California High School District, 7.00%, 08/01/10............................... 165,000 183,563
Baa1 A- Los Angeles County California Certificate of Participation (Disney Parking Project)
(NC), 0.00%, 09/01/06............................................................. 500,000 262,500
Aa AA- Southern California Public Power Authority (NC), 0.00%, 07/01/14.................... 1,000,000 333,750
-----------
2,465,493
-----------
COLORADO -- 1.7%
NR AAA Colorado Health Facilities Authority, 0.00%, 07/15/20............................... 500,000 93,750
Aaa NR Dawson Ridge Colorado (GO)(NC), 0.00%, 10/01/22 (Escrowed to Maturity).............. 2,000,000 320,000
-----------
413,750
-----------
CONNECTICUT -- 1.8%
Baa1 NR Connecticut State Health Facilities & Education, 5.75%, 07/01/23.................... 500,000 438,750
-----------
DISTRICT OF COLUMBIA -- 0.4%
A1 A+ Georgetown University, D.C. (MBIA Insured), 8.25%, 04/01/18......................... 100,000 107,250
-----------
FLORIDA -- 7.1%
Aa AA Florida State Board of Education (GO), 9.125%, 06/01/14............................. 110,000 151,800
Aa AA Florida State Board of Education (GO), 9.125%, 06/01/14 (Escrowed to Maturity)...... 690,000 950,475
Aaa AAA Orlando & Orange County Expressway (NC)(FGIC Insured), 8.25%, 07/01/14.............. 500,000 645,625
-----------
1,747,900
-----------
GEORGIA -- 6.5%
A A Municipal Electric Authority of Georgia (NC), 10.00%, 01/01/10...................... 250,000 340,312
Aaa NR Richmond County Georgia Development Authority Revenue, 0.00%, 12/01/21.............. 1,500,000 260,625
Baa BBB+ Savannah Georgia Hospital Authority Revenue, 7.00%, 01/01/23........................ 1,000,000 1,016,250
-----------
1,617,187
-----------
ILLINOIS -- 14.8%
A1 A+ Illinois Educational Facility Authority, 7.125%, 07/01/11........................... 320,000 353,200
Aaa AAA Illinois Health Facility Authority (CGIC Insured), 7.60%, 08/15/10 (Escrowed to
Maturity)......................................................................... 46,000 52,843
Aaa AAA Illinois Health Facility Authority (CGIC Insured), 7.60%, 08/15/10.................. 750,000 829,687
Aa NR Sangamon County Illinois (GO), 7.45%, 11/15/06...................................... 800,000 937,000
Baa BBB Southwestern Illinois Medical Facilties Revenue, 7.00%, 08/15/12.................... 1,000,000 997,500
Aaa AAA Will & Kendall Counties Illinois School District #202, 5.45%, 01/01/05.............. 500,000 504,375
-----------
3,674,605
-----------
MAINE -- 0.4%
NR A Municipal Bond Bank, 7.65%, 11/01/98 (Pre-refunded)................................. 85,000 93,287
-----------
MARYLAND -- 1.8%
Baa NR Prince George County Maryland Medical Hospital Revenue, 6.375%, 01/01/23............ 500,000 458,125
-----------
MASSACHUSETTS -- 4.9%
Aaa AAA Boston Massachusetts Water & Sewer, 10.875%, 01/01/09 (Escrowed to Maturity)........ 500,000 683,750
Baa BBB Massachusetts State Health & Educational Facilities Authority, 6.625%, 11/15/22..... 500,000 486,250
NR BBB+ Massachusetts State Housing, Series B, 8.10%, 08/01/23.............................. 50,000 52,375
-----------
1,222,375
-----------
MICHIGAN -- 10.3%
Aaa AAA Kent Hospital Finance Authority (MBIA Insured), 7.25%, 01/15/13..................... 1,000,000 1,158,750
Baa BBB- Pontiac Michigan Hospital Finance Authority, 6.00%, 08/01/23........................ 1,000,000 891,250
Aaa AAA Romulus, Michigan School Building (GO) (FGIC Insured), 0.00%, 05/01/07
(Pre-refunded).................................................................... 2,500,000 509,375
-----------
2,559,375
-----------
NEW HAMPSHIRE -- 4.2%
Baa3 BB New Hampshire IDA Pollution Control (Central Maine Power Co.), 7.375%, 05/01/14..... 1,000,000 1,047,500
-----------
</TABLE>

(See Notes to Financial Statements)
<PAGE> 13

PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996

<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ------------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES PRINCIPAL VALUE

- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEW YORK -- 8.4%
Baa1 BBB Metropolitan Transit Authority New York Service Facilities, 7.00%, 07/01/04......... $ 500,000 $ 545,000
Baa1 BBB New York State Urban Development Corp., 0.00%, 01/01/08............................. 1,000,000 507,500
Baa BBB- New York City Health & Hospital Corporation, 6.30%, 02/15/20........................ 500,000 473,750
NR A Onondaga County New York Industrial Development Agency, 7.90%, 01/01/17............. 500,000 548,750
-----------
2,075,000
-----------
OHIO -- 5.5%
A A Franklin County Ohio Hospital Revenue, 5.80%, 12/01/05.............................. 500,000 510,625
Baa BBB- Stark City Ohio Hospital Revenue, 6.00%, 04/01/24................................... 1,000,000 855,000
-----------
1,365,625
-----------
PENNSYLVANIA -- 2.2%
NR A- Allegheny County PA Hospital Revenue (Allegheny Valley Hospital), 7.00%, 08/01/15... 500,000 535,625
-----------
PUERTO RICO -- 1.8%
Baa1 A Puerto Rico Commonwealth Public Improvement, 0.00%, 07/01/04........................ 100,000 65,750
Baa1 A Puerto Rico Commonwealth Improvement, 5.10%, 07/01/02............................... 50,000 50,500
Baa1 A Puerto Rico Public Buildings Authority Revenue, 6.60%, 07/01/04..................... 200,000 218,250
Baa1 A- Puerto Rico Municipal Financing Agency, 5.70%, 07/01/03............................. 100,000 102,750
-----------
437,250
-----------
TENNESSEE -- 1.4%
Aaa NR Nashville & Davidson County Tennessee Health & Education Board Revenue (NC),
0.00%, 06/01/21..................................................................... 2,000,000 352,500
-----------
UTAH -- 4.2%
Aa AA- Intermountain Power Agency Utah Power Supply (MBIA Insured), 7.20%, 07/01/16........ 1,000,000 1,043,900
-----------
TOTAL INVESTMENTS -- 95.4%
(Cost -- $23,465,671)*.............................................................. 23,672,035
OTHER ASSETS, LESS LIABILITIES -- 4.6%.............................................. 1,130,197
-----------
NET ASSETS -- 100%.................................................................. $24,802,232
===========
*Cost is approximately the same for Federal income tax purposes.
CGIC - Capital Guaranty Insurance Company
FGIC - Financial Guaranty Insurance Company
GO - General Obligation
MBIA - Municipal Bond Insurance Association
NC - Non Callable
NR - Not Rated
OTHER INFORMATION:
At June 30, 1996, net unrealized appreciation based on cost for financial statement and Federal
income tax purposes is as follows:
Gross unrealized appreciation................................................................ $ 824,818
Gross unrealized depreciation................................................................ (618,454)
-----------
Net unrealized appreciation.......................................................... $ 206,364
===========
Purchases and sales of municipal securities aggregated $14,816,942
and $19,387,005 respectively, for the period ended June 30, 1996.
</TABLE>

(See Notes to Financial Statements)
<PAGE> 14

STATEMENT OF ASSETS AND LIABILITIES
JUNE 30 1996

<TABLE>
<S> <C>
ASSETS
Investments, at value (identified cost -- $23,465,671).............................................................. $23,672,035
Cash................................................................................................................ 547,196
Receivables:
Interest.......................................................................................................... 588,232
Manager for expense reimbursement................................................................................. 9,132
Deferred organization expenses...................................................................................... 4,614
Other assets........................................................................................................ 4,655
-----------
Total assets...................................................................................................... 24,825,864
-----------
LIABILITIES
Payables:
Management fee.................................................................................................... 10,727
12b-1 service and distribution fees............................................................................... 5,505
Administrative services fee....................................................................................... 1,950
Fund accounting................................................................................................... 2,250
Transfer agent.................................................................................................... 2,733
Other accrued expenses and liabilities.............................................................................. 467
-----------
Total liabilities................................................................................................. 23,632
-----------
NET ASSETS.......................................................................................................... $24,802,232
===========
CLASS A:
Net asset value and redemption price per share ($23,673,466 / 2,434,281 shares outstanding)......................... $ 9.73
===========
Maximum offering price per share ($9.73 x 100 / 95.25)*............................................................. $ 10.22
===========
CLASS B:
Net asset value and offering price per share ($1,128,766 / 116,164 shares outstanding)**............................ $ 9.72
===========
NET ASSETS CONSIST OF:
Capital paid-in................................................................................................... $24,870,851
Accumulated net realized loss on investments...................................................................... (303,962)
Accumulated undistributed net investment income................................................................... 28,979
Net unrealized appreciation on investments........................................................................ 206,364
-----------
NET ASSETS.......................................................................................................... $24,802,232
===========
</TABLE>

* On sales of more than $100,000 the offering price is reduced.
** Redemption price per share is equal to the net asset value per share less any
applicable contingent deferred sales charge.

(See Notes to Financial Statements)
<PAGE> 15

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996

<TABLE>
<S> <C> <C>
Investment income
Interest................................................................................................ $1,644,752
----------
Expenses
Management fee.......................................................................................... $146,137
Transfer agent fee...................................................................................... 32,761
Administrative services fee............................................................................. 26,570
Custodian fees.......................................................................................... 9,078
Blue Sky fees........................................................................................... 23,862
Auditing and accounting fees............................................................................ 30,364
Shareholder reports..................................................................................... 4,419
Amortization of organization expenses................................................................... 1,666
Fund accounting......................................................................................... 27,338
Trustees' fees.......................................................................................... 4,860
12b-1 service and distribution fees
Class A............................................................................................... 64,109
Class B............................................................................................... 9,273
Legal................................................................................................... 25,796
Other................................................................................................... 4,788
----------
411,021
Expenses reimbursed by manager.......................................................................... (106,248)
Fees paid indirectly.................................................................................... (5,544)
----------
Net expenses.......................................................................................... 299,229
----------
NET INVESTMENT INCOME..................................................................................... 1,345,523
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments........................................................................ 580,623
Net unrealized depreciation during the period on investments............................................ (653,884)
----------
Net loss on investments............................................................................... (73,261)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................................... $1,272,262
==========
</TABLE>

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
----------- ------------
<S> <C> <C>
DECREASE IN NET ASSETS
Operations:
Net investment income.............................................................................. $ 1,345,523 $ 1,732,616
Net realized gain (loss) on investments............................................................ 580,623 (1,092,548)
Net unrealized appreciation (depreciation) during the period on investments........................ (653,884) 1,549,158
----------- ------------
Net income resulting from operations............................................................. 1,272,262 2,189,226
----------- ------------
Class A distributions
From net investment income......................................................................... (1,264,186) (1,697,682)
In excess of net investment income................................................................. -- (81,064)
----------- ------------
Total distributions to Class A shareholders...................................................... (1,264,186) (1,778,746)
----------- ------------
Class B distributions
From net investment income......................................................................... (39,157) (34,934)
In excess of net investment income................................................................. -- (2,373)
----------- ------------
Total distributions to Class B shareholders...................................................... (39,157) (37,307)
----------- ------------
Fund share transactions (Note 4):
Class A............................................................................................ (4,659,340) (10,413,966)
Class B............................................................................................ 373,973 261,679
----------- ------------
Net decrease resulting from Fund share transactions.............................................. (4,285,367) (10,152,287)
----------- ------------
TOTAL DECREASE IN NET ASSETS......................................................................... (4,316,448) (9,779,114)
NET ASSETS
Beginning of period................................................................................ 29,118,680 38,897,794
----------- ------------
END OF PERIOD...................................................................................... $24,802,232 $ 29,118,680
=========== ============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)............................................... $ 28,979 $ (13,201)
=========== ============
</TABLE>

(See Notes to Financial Statements)
<PAGE> 16

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
CLASS A FOR THE YEAR ENDED JUNE 30,
-----------------------------------------------------------------------
SELECTED PER SHARE DATA 1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 9.76 $ 9.60 $ 10.17 $ 9.94 $ 9.60
------- ------- ------- ------- -------
Income from investment operations
Net investment income(a).............................. .50 .48 .57 .60 .59
Net gain (loss) on investments (both realized and
unrealized)......................................... (.05) .19 (.48) .31 .41
------- ------- ------- ------- -------
Total from investment operations.................... .45 .67 .09 .91 1.00
------- ------- ------- ------- -------
Less distributions
From net investment income............................ .48 .48 .57 .60 .59
In excess of net investment income.................... -- .03 -- -- .06
From net realized gain................................ -- -- .09 .08 .01
------- ------- ------- ------- -------
Total distributions................................. .48 .51 .66 .68 .66
------- ------- ------- ------- -------
Net asset value, end of period.......................... $ 9.73 $ 9.76 $ 9.60 $ 10.17 $ 9.94
======= ======= ======= ======= =======
Total return(%)(b)...................................... 4.69 7.21 .77 9.48 10.76
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)................ $23,673 $28,351 $38,406 $42,739 $35,995
Ratio of expenses to average net assets
With expense reimbursement(%)(c)...................... 1.10 1.10 1.10 1.10 1.10
Without expense reimbursement(%)(c)................... 1.52 1.30 1.24 1.29 1.30
Ratio of net investment income to average net
assets(%)(a).......................................... 5.09 5.08 6.65 6.06 6.00
Portfolio turnover rate(%).............................. 58 65 68 57 62
</TABLE>

<TABLE>
<CAPTION>
FOR THE PERIOD
APRIL 1, 1994
FOR THE YEAR ENDED (COMMENCEMENT)
CLASS B JUNE 30, TO JUNE 30,
--------------------- --------------
SELECTED PER SHARE DATA 1996 1995 1994
------ ------ --------------
<S> <C> <C> <C>
Net asset value, beginning of period................................................... $ 9.76 $ 9.60 $ 9.69
------ ------ ------
Income from investment operations
Net investment income(a)............................................................. .43 .41 .11
Net gain (loss) on investments (both realized and unrealized)........................ (.05) .19 (.06)
------ ------ ------
Total from investment operations................................................... .38 .60 .05
------ ------ ------
Less distributions
From net investment income........................................................... .42 .41 .11
In excess of net investment income................................................... -- .03 .03
------ ------ ------
Total distributions................................................................ .42 .44 .14
------ ------ ------
Net asset value, end of period......................................................... $ 9.72 $ 9.76 $ 9.60
====== ====== ==========
Total return(%)........................................................................ 3.88(b) 6.42(b) .55(d)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)............................................... $1,129 $ 767 $ 492
Ratio of expenses to average net assets
With expense reimbursement(%)(c)..................................................... 1.85 1.85 1.85(e)
Without expense reimbursement(%)(c).................................................. 2.27 2.05 1.99(e)
Ratio of net investment income to average net assets(%)(a)............................. 4.34 4.33 5.90(e)
Portfolio turnover rate(%)............................................................. 58 65 68

</TABLE>

(a) Net investment income is net of expenses reimbursed by manager.
(b) Total return does not reflect a sales charge.
(c) Beginning in July 1995, total expenses include fees paid indirectly
through an expense offset arrangement.
(d) Total return represents aggregate total return and does not reflect a
sales charge.
(e) Annualized.

(See Notes to Financial Statements)
<PAGE> 17

NOTES TO FINANCIAL STATEMENTS

Mackenzie National Municipal Fund (the Fund) is a series of shares of
Mackenzie Series Trust. The shares of beneficial interest are $.001 par value
and an unlimited number of shares of Class A and Class B are authorized.
Mackenzie Series Trust was organized as a Massachusetts business trust under a
Declaration of Trust dated April 22, 1985 and is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on the trade date. Interest income is accrued on a daily basis.
Realized gains and losses from security transactions are calculated on an
identified cost basis.

The Fund has a net tax-basis capital loss carryforward of approximately
$249,000 as of June 30, 1996 which may be applied against any realized net
taxable gains of each succeeding fiscal year until fully realized or until the
expiration date, whichever occurs first. The carryforward expires $59,000 in
1997, $85,000 in 2003 and $105,000 in 2004.

DISTRIBUTIONS TO SHAREHOLDERS -- Normally, distributions from net investment
income are declared monthly, and net realized capital gains, if any, are
declared in June. An additional distribution may be declared if necessary to
avoid the payment of a four percent Federal excise tax.

For the Fund's taxable year ended June 30, 1996, 100% of the distributions
paid were exempt interest dividends for Federal income tax purposes.

2. RELATED PARTIES

Mackenzie Investment Management Inc. (MIMI) is the Manager and Investment
Adviser of the Fund. For its services, MIMI receives a fee monthly at the annual
rate of .55% on the Fund's average net assets.

If the Fund's total expenses in any fiscal year (excluding interest, taxes,
brokerage commissions, extraordinary expenses and other expenses subject to
approval by state securities administrators) exceed limits applicable under
state securities laws, MIMI will bear the excess expenses. Currently, MIMI
voluntarily limits the Fund's total operating expenses (excluding taxes, 12b-1
fees, brokerage commissions, interest, litigation and indemnification expenses,
and other extraordinary expenses) to an annual rate of .85% of its average net
assets. The voluntary expense limitation may be terminated or revised at any
time on 30 days notice to shareholders. Expenses reimbursed by manager reflected
in the Statement of Operations consists of a voluntary reimbursement.

3. BOARD'S COMPENSATION

Trustees who are not affiliated with MIMI receive compensation from the
Fund, which is reflected as Trustees' fees in the Statement of Operations.
<PAGE> 18

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. FUND SHARE TRANSACTIONS

Fund share transactions for both Class A and Class B were as follows:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995
---------------------- -------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------- -------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Sold....................... 235,088 $ 2,311,839 535,305 $ 5,065,584
Issued on reinvestment of
distributions............. 64,174 632,427 82,259 780,601
Repurchased................ (770,220) (7,603,606) (1,714,631) (16,260,151)
-------- ----------- ---------- ------------
Net decrease............... (470,958) $(4,659,340) (1,097,067) $(10,413,966)
========== ============= ============ ==============
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995
---------------------- -------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- --------------------------- -------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Sold....................... 48,696 $ 485,932 40,698 $ 393,357
Issued on reinvestment of
distributions............. 1,298 12,781 2,030 19,267
Repurchased................ (12,487) (124,740) (15,353) (150,945)
-------- ----------- ---------- ------------
Net increase............... 37,507 $ 373,973 27,375 $ 261,679
========== ============= ============ ==============
</TABLE>

- --------------------------------------------------------------------------------

REPORT OF INDEPENDENT ACCOUNTANTS

To The Shareholders and
Board of Trustees of
Mackenzie National Municipal Fund (the Fund)

COOPERS & LYBRAND L.L.P.

Fort Lauderdale, Florida
August 15, 1996

MNMF-2-896
<PAGE> 19

MACKENZIE

June 30, 1996
<S> <C> <C> <C> <C>
MACKENZIE MARKET COMMENTARY:
CALIFORNIA
MUNICIPAL During the first six months of the year been supported by a stable US treasury
FUND interest rates trended higher in response to market and high absolute levels of interest
faster than expected economic growth. rates.
Additionally, energy and grain prices went For the twelve months ended June 30,
up because of colder than normal weather 1996, the total return of the Mackenzie
- ------------------- and low inventories of these commodities. California Municipal Fund was 5.52% without
ANNUAL On the labor front, a surprising number of sales charge. This compares with the average
REPORT new jobs were created and unemployment of all California Municipal Debt Funds
- ------------------- declined, leading to an increase in labor tracked by Lipper Analytical Services, Inc.
This report and the costs. Historically, these factors have pre- which was 6.25% for the same period. (For
financial statements saged an increase in inflation and as market the Fund's total return with sales charge and
contained herein are participants fear a repeat of the downturn in performance commentary, please see the
submitted for the bond prices similar to 1994, the tone of the following page.)
general information of fixed income markets has swung dramati- As municipalities continue to focus on
the shareholders. This cally from complacency to caution. improving their balance sheets, municipal
report is not authorized Our research indicates the pace of credit fundamentals are enhanced. For
for distribution to economic growth will moderate in the example, Standard & Poor's recently increased
prospective investors months to come as the economy is in the its rating on a new municipal issue from
unless preceded or later stages of a longer term economic California to A+. This reflects the State's
accompanied by an recovery. This deceleration should allay fears ability to successfully handle its budgetary
effective prospectus. of a resurgence of inflation. Additionally, concerns. We believe a stable supply of
the Federal Reserve Board is firmly commit- municipal issuance and increased demand
Mackenzie Investment ted to price stability and we expect that they should allow the municipal bond market to
Management Inc. will act to defend this mission. Monetary perform well in the months ahead.
Via Mizner Financial policy is currently somewhat restrictive
Plaza which should act as a brake on the economy MACKENZIE INVESTMENT MANAGEMENT, INC.
700 South Federal Hwy. over the near future.
Boca Raton, FL 33432 The municipal bond market continues
1-800-456-5111 to outperform US treasuries. The most
predominant reason for the strength in the
municipal market is likely explained by a
shift in asset allocation. Equity investors,
who are uncomfortable with the increased
volatility of US stock markets, have been
rotating assets into municipal bond funds.
Should equity markets continue to experi-
ence volatility, we would expect this trend to
persist. The municipal bond market has also
---------------------------------------------------------------------------------------------------
BOARD OF TRUSTEES OFFICERS TRANSFER AGENT MANAGER
John S. Anderegg, Jr. Michael G. Landry, Ivy Mackenzie Mackenzie Investment
Paul H. Broyhill President Services Corp. Management Inc.
Stanley Channick Keith J. Carlson, P.O. Box 3022 Boca Raton, FL
Frank W. DeFriece Vice President Boca Raton, FL
Roy J. Glauber C. William Ferris, 33431-0922 DISTRIBUTOR
Michael G. Landry Secretary/Treasurer 1-800-777-6472 Ivy Mackenzie
Joseph G. Rosenthal Distributors, Inc.
J. Brendan Swan CUSTODIAN AUDITORS Via Mizner Financial Plaza
Brown Brothers Coopers & Lybrand L.L.P. 700 South Federal Highway
LEGAL COUNSEL Harriman & Co. Fort Lauderdale, FL Boca Raton, FL 33432
Dechert Price Boston, MA
& Rhoads [LOGO IVY MACKENZIE]
Boston, MA

</TABLE>

<PAGE> 20

PERFORMANCE COMMENTARY
For the twelve months ended June 30, 1996, the Mackenzie California Municipal
Fund had a total return of 5.52%. This compares with the average of all
California Municipal Debt Funds tracked by Lipper Analytical Services, Inc.
which was 6.25% for the same period. The Fund's underperformance can be
attributed to the manager's decision to extend the average duration of the Fund
as a means of providing a higher level of tax-free income.

PERFORMANCE COMPARISON OF A $10,000 INVESTMENT
SINCE INCEPTION OF THE FUND

[CHART]

All figures mentioned in the Market Commentary and in the chart and table
reflect past results and assume reinvestment of dividends and distributions from
capital gains. Future results will, of course, be different. The principal value
of the Mackenzie California Municipal Fund will fluctuate and at redemption may
be worth more or less than the amount of the original investment.
The Lehman Bros. 5-Year Municipal Bond Index is an unmanaged index of municipal
bonds that assumes reinvestment of dividends and, unlike Fund returns, does not
reflect any fees or expenses.
Please note that Treasury Bills are short-term interest bearing instruments
which are guaranteed as to timely payment of principal and interest by the U.S.
Government.
Performance is calculated for Class A shares of the Fund unless otherwise noted.
Because Class B shares bear the expense of a higher distribution fee it is
expected that the level of performance of the Fund 's Class B shares will be
lower than that of the Fund 's Class A shares.
Total returns in some periods were higher due to reimbursement of the Fund 's
expenses. See Financial Highlights.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
MACKENZIE CALIFORNIA MUNICIPAL FUND
FOR PERIOD ENDING 6/30/96
Class A*-with sales charge
Average Annual Class B**
Total Return Average Annual Total Return
- --------------------------------------------------------------------------------------------
w/Reimb. w/o Reimb. w/Reimb. w/o Reimb.
- --------------------------------------------------------------------------------------------
w/CDSC w/o CDSC w/CDSC w/o CDSC
--------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Yr. .51% .32% (.30)% 4.70% (.51)% 4.49%
- --------------------------------------------------------------------------------------------
5 Yr. 5.67% 5.54% -- -- -- --
- --------------------------------------------------------------------------------------------
Since Inception 6.65% 5.75% 3.99% 5.25% 3.83% 5.08%
- --------------------------------------------------------------------------------------------
</TABLE>

- --------------------------------------------------------------------------------
<PAGE> 21

PORTFOLIO OF INVESTMENTS
JUNE 30, 1996

<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ------------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES -- 96.0% PRINCIPAL VALUE

- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NR BBB- Adelanto California Public Financing Authority, 6.30%, 09/01/28..................... $1,000,000 $ 940,000
A A- Bakersfield California Hospital Revenue, 6.50%, 01/01/22............................ 2,000,000 2,007,500
Baa BBB+ Berkeley California Health Facilities Revenue, 6.55%, 12/02/22...................... 1,000,000 991,250
NR A+ California Health Facilities Authority (Pacific Presbyterian Medical Center),
7.00%, 06/01/08 (Pre-refunded).................................................... 250,000 255,938
NR AA- California Health Facilities Authority (Stanford University), 7.20%, 11/01/96
(Pre-refunded).................................................................... 5,000 5,158
Aa AA- California Housing Finance Authority, 6.90%, 08/01/16............................... 100,000 101,500
A2 A+ California Pollution Control Financing Authority, 6.85%, 12/01/08................... 500,000 536,875
A2 A+ California Pollution Control Financing Authority, 7.20%, 09/01/15................... 5,000 5,118
A1 A California State (GO)(NC), 6.75%, 05/01/02.......................................... 500,000 546,875
A1 A California State (GO)(NC), 9.50%, 05/01/03.......................................... 500,000 626,250
A1 A+ California State (GO)(NC), 9.50%, 02/01/10.......................................... 1,000,000 1,376,250
A1 A- California State Public Works Revenue, 7.375%, 04/01/06............................. 5,000 5,413
A A- California State Public Works Revenue (NC), 8.35%, 12/01/99......................... 500,000 553,750
A1 AA- Clovis Unified School District (GO)(NC), 10.90%, 08/01/99........................... 475,000 555,156
NR NR Costa Mesa City Hall, 7.50%, 10/01/97 (Pre-refunded)................................ 50,000 52,187
Baa BBB Duarte California City of Hope National Medical Center Certificate of Participation,
6.25%, 04/01/23................................................................... 1,000,000 976,250
Aaa NR Fontana Redevelopment Agency, 8.00%, 09/01/98 (Pre-refunded)........................ 20,000 21,950
Baa BBB- Foothill/Eastern Transportation Corridor Agency, California Toll Road Revenue (NC),
0.00%, 01/01/18................................................................... 750,000 176,250
Baa BBB- Foothill/Eastern Transportation Corridor Agency, California Toll Road Revenue (NC),
0.00%, 01/01/24................................................................... 1,000,000 152,500
Baa BBB- Foothill/Eastern Transportation Corridor Agency, California Toll Road Revenue (NC),
6.00%, 01/01/34................................................................... 500,000 473,750
NR BBB Guam Government (GO), 5.375%, 11/15/13.............................................. 500,000 445,000
NR BBB Guam Power Authority Revenue, 6.625%, 10/01/14...................................... 450,000 459,000
NR BBB Hawaiian Gardens California Redevelopment Agency, 0.00%, 12/01/16................... 1,000,000 238,750
NR BBB Inglewood California Redevelopment Agency, 6.125%, 7/01/23.......................... 500,000 473,125
NR A+ Irvine Ranch Water District Power Agency, 7.80%, 02/15/08........................... 25,000 26,094
Baa NR Irwindale California Community Redevelopment Agency, 6.60%, 08/01/18................ 1,300,000 1,303,250
A NR Kern High School District (GO)(NC), 7.00%, 08/01/06................................. 700,000 798,000
Aaa AAA Kern High School District (GO)(NC), 9.00%, 08/01/06................................. 680,000 884,000
NR BBB Long Beach Aquarium of the Pacific, California, 6.125%, 07/01/23.................... 750,000 697,500
Aaa AAA Los Angeles Convention & Exhibition Center, 9.00%, 12/01/05 (Pre-refunded).......... 5,000 6,444
Baa1 A- Los Angeles County Certificate of Participation (Disney Parking Project) (NC),
0.00%, 09/01/06................................................................... 2,000,000 1,050,000
Baa1 A- Los Angeles County Certificate of Participation (Disney Parking Project) (NC),
0.00%, 09/01/15................................................................... 1,000,000 273,750
Aaa AAA Los Angeles County Certificate of Participation, (Sheriff's Training Academy),
7.75%, 07/01/96 (Pre-refunded).................................................... 25,000 25,500
Aa AA- Los Angeles Department of Water & Power, 7.10%, 01/15/01 (Pre-refunded)............. 600,000 664,500
Aa AA Los Angeles Department of Water & Power, 7.625%, 08/01/97 (Pre-refunded)............ 20,000 21,376
Aa AA- Los Angeles Department of Water & Power, 9.00%, 09/01/04............................ 1,000,000 1,253,750
NR AAA Los Angeles Harbor Department Revenue, 7.60%, 10/01/18, (Escrowed to Maturity)...... 205,000 244,206
NR AAA Los Angeles State Building Authority, 7.50%, 03/01/98 (Pre-refunded)................ 5,000 5,369
Aaa AAA Los Angeles Waste Water System Revenue (NC)(MBIA Insured), 8.80%, 06/01/00.......... 500,000 572,500
A1 A+ Modesto Irrigation District Certificate of Participation, 7.25%, 10/01/15........... 110,000 112,713
NR AAA Morgan Hill California Redevelopment Agency (FHA Insured), 6.45%, 12/01/27.......... 1,000,000 1,018,750
Aaa AAA Oakland Redevelopment Agency (AMBAC Insured), 7.40%, 05/01/07....................... 100,000 106,250
Aaa AAA Palomar Pomerado California Health System (NC), 0.00%, 11/02/03..................... 500,000 342,500
Baa1 NR Perris California High School District Certificate of Participation, 5.85%,
09/01/11.......................................................................... 2,000,000 1,915,000
Aa NR Piedmont Unified School District (GO), 0.00%, 08/01/13.............................. 1,000,000 361,250
Baa1 A Puerto Rico Commonwealth (GO)(NC), 0.00%, 07/01/04.................................. 500,000 328,750
NR BBB- Puerto Rico Educational Facility (Polytechnic University), 5.70%, 08/01/13.......... 250,000 229,687
Baa1 A Puerto Rico Public Buildings Authority, 6.60%, 07/01/04............................. 100,000 109,125
Aaa AAA Rancho Cucamonga Redevelopment Agency (FGIC Insured), 7.70%, 05/01/98
(Pre-refunded).................................................................... 35,000 37,231
NR A Richmond California Joint Powers Financing Authority Revenue, 5.20%, 05/15/05....... 500,000 483,750
A A Riverside County Certificate of Participation, 7.75%, 12/01/03...................... 30,000 30,926
Aaa AAA Salinas California Redevelopment Agency (CGIC Insured), 0.00%, 11/01/22............. 2,000,000 397,500
Aa3 A+ San Diego Industrial Development Revenue (San Diego Gas & Electric), 7.875%,
08/01/97 (Pre-refunded)........................................................... 35,000 37,182
Aaa AAA San Jose Certificate of Participation, 7.875%, 09/01/96 (Pre-refunded).............. 35,000 35,939
Aaa AAA Santa Clara Certificate of Participation (NC)(MBIA Insured), 7.75%, 02/01/02........ 500,000 569,375
NR AAA Santa Clara County Certificate of Participation (American Baptist Homes), 8.00%,
03/01/98 (Pre-refunded)........................................................... 20,000 21,625
NR A+ Santa Clara Electric Revenue, 7.80%, 07/01/10....................................... 35,000 36,204
A1 A+ Santa Cruz Hospital Revenue (Dominican), 7.00%, 12/01/13............................ 100,000 103,625
NR A Santa Rosa Insured Revenue (Episcopal Homes) (CA Mortgage Insurance) 7.125%,
06/01/14.......................................................................... 250,000 256,393
</TABLE>

(See Notes to Financial Statements)
<PAGE> 22

PORTFOLIO OF INVESTMENTS
JUNE 30, 1996

<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ------------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES -- 96.0% PRINCIPAL VALUE

- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NR BBB Snowline Joint Unified School District Certificate of Participation, 7.25%,
04/01/18.......................................................................... $ 750,000 $ 784,687
Aa A+ Southern California Public Power Authority (NC), 0.00%, 07/01/15.................... 2,000,000 627,500
NR BBB Tracy Certificates of Participation (I-205 Improvement), 7.00%, 10/01/27............ 1,000,000 1,021,250
Aaa AAA University of California Housing System Revenue (NC) (MBIA Insured), 8.00%,
11/01/00.......................................................................... 500,000 564,375
NR BBB+ University of California at Los Angeles Parking Revenue, 7.75%, 11/01/96
(Pre-refunded).................................................................... 60,000 61,993
Aaa AAA Walnut Valley USD (MBIA Insured)(GO)(NC), 8.75%, 08/01/10........................... 1,000,000 1,307,500
Aaa AAA Walnut Valley USD (AMBAC Insured)(GO)(NC), 9.00%, 08/01/06.......................... 800,000 1,031,000
Baa1 NR Yuba City Unified School District Certificate of Participation
(Andros Karperos School), 6.70%, 02/01/13......................................... 650,000 653,250
-----------
TOTAL INVESTMENTS -- 96.0% (Cost -- $31,530,428)*................................... 32,387,364
OTHER ASSETS, LESS LIABILITIES -- 4.0%.............................................. 1,350,938
-----------
NET ASSETS -- 100%.................................................................. $33,738,302
===========
*Cost is approximately the same for Federal income tax purposes.
AMBAC - AMBAC Indemnity Corporation
CGIC - Capital Guaranty Insurance Company
FGIC - Financial Guaranty Insurance Company
FHA - Federal Housing Authority
GO - General Obligation
MBIA - Municipal Bond Insurance Association
NC - Non Callable
NR - Not Rated
OTHER INFORMATION:
At June 30, 1996, net unrealized appreciation based on cost for financial statement
and Federal income tax purposes is as follows:
Gross unrealized appreciation................................................................ $ 1,113,295
Gross unrealized depreciation................................................................ (256,359)
-----------
Net unrealized appreciation.......................................................... $ 856,936
===========
Purchases and sales of municipal securities aggregated $12,407,305 and $18,397,056,
respectively, for the period ended June 30, 1996.
</TABLE>

(See Notes to Financial Statements)
<PAGE> 23

STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996

<TABLE>
<S> <C>
ASSETS
Investments, at value (identified cost -- $31,530,428).............................................................. $32,387,364
Cash................................................................................................................ 801,001
Receivables:
Interest.......................................................................................................... 620,098
Manager for expense reimbursement................................................................................. 6,476
Deferred organization expenses...................................................................................... 5,072
Other assets........................................................................................................ 3,774
-----------
Total assets...................................................................................................... 33,823,785
-----------
LIABILITIES
Payables:
Fund shares repurchased........................................................................................... 55,213
Management fee.................................................................................................... 14,834
12b-1 service and distribution fees............................................................................... 7,334
Administrative services fee....................................................................................... 2,697
Fund accounting................................................................................................... 2,600
Transfer agent.................................................................................................... 2,260
Other accrued expenses and liabilities.............................................................................. 545
-----------
Total liabilities................................................................................................. 85,483
-----------
NET ASSETS.......................................................................................................... $33,738,302
===========
CLASS A:
Net asset value and redemption price per share ($32,603,534 / 3,219,952 shares outstanding)......................... $ 10.13
===========
Maximum offering price per share ($10.13 x 100 / 95.25)*............................................................ $ 10.64
===========
CLASS B:
Net asset value and offering price per share ($1,134,768 / 112,129 shares outstanding)**............................ $ 10.12
===========
NET ASSETS CONSIST OF:
Capital paid-in................................................................................................... $32,606,139
Accumulated net realized gain on investments...................................................................... 226,637
Accumulated net investment income................................................................................. 48,590
Net unrealized appreciation on investments........................................................................ 856,936
-----------
NET ASSETS.......................................................................................................... $33,738,302
===========
</TABLE>

* On sales of more than $100,000 the offering price is reduced.
** Redemption price per share is equal to the net asset value per share less any
applicable contingent deferred sales charge.

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996

<TABLE>
<S> <C> <C>
Investment income
Interest................................................................................................ $2,356,051
----------
Expenses
Management fee.......................................................................................... $209,516
Transfer agent.......................................................................................... 25,659
Administrative services fee............................................................................. 38,094
Custodian fees.......................................................................................... 9,789
Blue Sky fees........................................................................................... 18,677
Auditing and accounting fees............................................................................ 29,731
Shareholder reports..................................................................................... 3,753
Amortization of organization expenses................................................................... 1,833
Fund accounting......................................................................................... 26,765
Trustees' fees.......................................................................................... 4,860
12b-1 service and distribution fees
Class A............................................................................................... 92,452
Class B............................................................................................... 11,122
Legal................................................................................................... 23,113
Other................................................................................................... 5,139
----------
500,503
Expenses reimbursed by manager.......................................................................... (66,721)
Fees paid indirectly.................................................................................... (6,412)
----------
Net expenses.......................................................................................... 427,370
----------
NET INVESTMENT INCOME..................................................................................... 1,928,681
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments........................................................................ 935,504
Net unrealized depreciation during the period on investments............................................ (778,289)
----------
Net gain on investments............................................................................... 157,215
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................................... $2,085,896
==========
</TABLE>

(See Notes to Financial Statements)
<PAGE> 24

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
DECREASE IN NET ASSETS
Operations:
Net investment income........................................................................... $ 1,928,681 $ 1,994,895
Net realized gain (loss) on investments......................................................... 935,504 (809,513)
Net unrealized appreciation (depreciation) during the period on investments..................... (778,289) 1,608,795
----------- -----------
Net increase resulting from operations........................................................ 2,085,896 2,794,177
----------- -----------
Class A distributions
From net investment income...................................................................... (1,815,075) (1,970,835)
In excess of net investment income.............................................................. -- (74,599)
----------- -----------
Total distributions to Class A shareholders................................................... (1,815,075) (2,045,434)
----------- -----------
Class B distributions
From net investment income...................................................................... (46,329) (24,060)
----------- -----------
Total distributions to Class B shareholders................................................... (46,329) (24,060)
----------- -----------
Fund share transactions (Note 5):
Class A......................................................................................... (6,579,399) (3,153,266)
Class B......................................................................................... 136,933 847,991
----------- -----------
Net decrease resulting from Fund share transactions........................................... (6,442,466) (2,305,275)
----------- -----------
TOTAL DECREASE IN NET ASSETS...................................................................... (6,217,974) (1,580,592)
NET ASSETS
Beginning of period............................................................................. 39,956,276 41,536,868
----------- -----------
END OF PERIOD................................................................................... $33,738,302 $39,956,276
============ ============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)............................................ $ 48,590 $ (18,687)
============ ============
</TABLE>

(See Notes to Financial Statements)
<PAGE> 25

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
CLASS A FOR THE YEAR ENDED JUNE 30,
-------------------------------------------------------
SELECTED PER SHARE DATA 1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................................... $ 10.08 $ 9.91 $ 10.44 $ 10.29 $ 9.94
------- ------- ------- ------- -------
Income from investment operations
Net investment income(a).............................................. .52 .49 .59 .58 .52
Net gain (loss) on investments (both realized and unrealized)......... .03 .19 (.48) .35 .51
------- ------- ------- ------- -------
Total from investment operations.................................... .55 .68 .11 .93 1.03
------- ------- ------- ------- -------
Less distributions
From net investment income............................................ .50 .49 .59 .60 .52
In excess of net investment income.................................... -- .02 -- -- .07
From net realized gain................................................ -- -- .05 .18 .09
------- ------- ------- ------- -------
Total distributions................................................. .50 .51 .64 .78 .68
------- ------- ------- ------- -------
Net asset value, end of period.......................................... $ 10.13 $ 10.08 $ 9.91 $ 10.44 $ 10.29
======= ======= ======= ======= =======
Total return(%)(b)...................................................... 5.52 7.09 .82 9.55 10.80
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)................................ $32,604 $38,963 $41,423 $47,493 $46,288
Ratio of expenses to average net assets
With expense reimbursement and fees paid indirectly(%)(e)............. 1.10 1.10 1.10 1.10 1.10
Without expense reimbursement and fees paid indirectly(%)(e).......... 1.29 1.22 1.18 1.20 1.19
Ratio of net investment income to average net assets(%)(a).............. 5.08 4.94 5.65 5.80 5.66
Portfolio turnover rate(%).............................................. 34 81 26 91 42
</TABLE>

<TABLE>
<CAPTION>
FOR THE PERIOD
APRIL 1, 1994
FOR THE YEAR (COMMENCEMENT)
CLASS B ENDED JUNE 30, TO JUNE 30,
--------------------- --------------
SELECTED PER SHARE DATA 1996 1995 1994
------ ------ --------------
<S> <C> <C> <C>
Net asset value, beginning of period............................................... $10.08 $ 9.91 $ 9.97
------ ------ -----
Income from investment operations
Net investment income(a)......................................................... .45 .43 .11
Net (gain) loss on investments (both realized and unrealized).................... .02 .17 (.03)
------ ------ -----
Total from investment operations............................................... .47 .60 .08
------ ------ -----
Less distributions
From net investment income....................................................... .43 .43 .11
From net capital gain............................................................ -- -- .03
------ ------ -----
Total distributions............................................................ .43 .43 .14
------ ------ -----
Net asset value, end of period..................................................... $10.12 $10.08 $ 9.91
====== ====== ==========
Total return(%).................................................................... 4.70(b) 6.30(b) .82(c)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)........................................... $1,135 $ 993 $ 114
Ratio of expenses to average net assets
With expense reimbursement and fees paid indirectly(%)(e)........................ 1.85 1.85 1.85(d)
Without expense reimbursement and fees paid indirectly(%)(e)..................... 2.04 1.97 1.93(d)
Ratio of net investment income to average net assets(%)(a)......................... 4.33 4.19 4.90(d)
Portfolio turnover rate(%)......................................................... 34 81 26
</TABLE>

(a) Net investment income is net of expenses reimbursed by manager.
(b) Total return does not reflect a sales charge.
(c) Total return represents aggregate total return and does not reflect a
sales charge.
(d) Annualized.
(e) Beginning in July 1995, total expenses include fees paid indirectly
through an expense offset arrangement.

(See Notes to Financial Statements)
<PAGE> 26

NOTES TO FINANCIAL STATEMENTS

Mackenzie California Municipal Fund (the Fund) is a series of shares of
Mackenzie Series Trust. The shares of beneficial interest are $.001 par value
and an unlimited number of shares of Class A and Class B are authorized.
Mackenzie Series Trust was organized as a Massachusetts business trust under a
Declaration of Trust dated April 22, 1985 and is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

For the Fund's taxable year ended June 30, 1996, 100% of the distributions
paid were exempt interest dividends for Federal income tax purposes.

2. RELATED PARTIES

MIMI provides certain administrative, accounting and pricing services for
the Fund. As compensation for those services, the Fund pays MIMI fees plus
certain out-of-pocket expenses. Such fees are reflected as Administrative
services fee and Fund accounting in the Statement of Operations.

3. BOARD'S COMPENSATION

Trustees who are not affiliated with MIMI receive compensation from the
Fund, which is reflected as Trustees' fees in the Statement of Operations.

4. CONCENTRATION OF CREDIT RISK

The Fund primarily invests in debt obligations issued by the State of
California and its political subdivisions, agencies and public authorities to
obtain funds for various public purposes. The Fund is more susceptible to
factors adversely affecting issuers of California securities than is a municipal
bond fund that is not concentrated in these issuers to the same extent.

5. FUND SHARE TRANSACTIONS

Fund share transactions for both Class A and Class B were as follows:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995
---------------------- -------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------- -------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Sold....................... 119,552 $ 1,214,729 669,257 $ 6,416,826
Issued on reinvestment of
distributions............. 86,484 880,926 94,364 925,974
Repurchased................ (851,457) (8,675,054) (1,079,814) (10,496,066)
-------- ----------- ---------- ------------
Net decrease............... (645,421) $(6,579,399) (316,193) $ (3,153,266)
========== ============= ============ ==============
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995
---------------------- -------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- --------------------------- -------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Sold....................... 18,173 $ 185,487 95,956 $ 938,462
Issued on reinvestment of
distributions............. 3,777 38,474 1,929 18,233
Repurchased................ (8,394) (87,028) (10,797) (108,704)
-------- ----------- ---------- ------------
Net increase............... 13,556 $ 136,933 87,088 $ 847,991
========== ============= ============ ==============
</TABLE>
<PAGE> 27

REPORT OF INDEPENDENT ACCOUNTANTS

To The Shareholders and
Board of Trustees of
Mackenzie California Municipal Fund (the Fund)

COOPERS & LYBRAND L.L.P.

Fort Lauderdale, Florida
August 15, 1996

MCAMF-2-896
<PAGE> 28

MACKENZIE

June 30, 1996
<S> <C> <C> <C> <C>
MACKENZIE MARKET COMMENTARY:
LIMITED TERM
MUNICIPAL During the first six months of the year been supported by a stable US treasury
FUND interest rates trended higher in response to market and high absolute levels of interest
faster than expected economic growth. rates.
Additionally, energy and grain prices went For the twelve months ended June 30,
up because of colder than normal weather 1996, the total return of the Mackenzie Limited
- ------------------- and low inventories of these commodities. Term Municipal Fund was 4.46% without
ANNUAL On the labor front, a surprising number of sales charge. This compares with the average
REPORT new jobs were created and unemployment of all Intermediate Municipal Debt Funds
- ------------------- declined, leading to an increase in labor tracked by Lipper Analytical Services, Inc.
This report and the costs. Historically, these factors have pre- which was 4.86% for the same period. (For
financial statements saged an increase in inflation and as market the Fund's total return with sales charge and
contained herein are participants fear a repeat of the downturn in performance commentary, please see the
submitted for the bond prices similar to 1994, the tone of the following page.)
general information of fixed income markets has swung dramati- As municipalities continue to focus on
the shareholders. This cally from complacency to caution. improving their balance sheets, municipal
report is not authorized Our research indicates the pace of credit fundamentals are enhanced. We
for distribution to economic growth will moderate in the believe a stable supply of municipal issuance
prospective investors months to come as the economy is in the and increased demand should allow the
unless preceded or later stages of a longer term economic municipal bond market to perform well in
accompanied by an recovery. This deceleration should allay fears the months ahead.
effective prospectus. of a resurgence of inflation. Additionally,
the Federal Reserve Board is firmly commit- MACKENZIE INVESTMENT MANAGEMENT, INC.
Mackenzie Investment ted to price stability and we expect that they
Management Inc. will act to defend this mission. Monetary
Via Mizner Financial policy is currently somewhat restrictive
Plaza which should act as a brake on the economy
700 South Federal Hwy. over the near future.
Boca Raton, FL 33432 The municipal bond market continues
1-800-456-5111 to outperform US treasuries. The most
predominant reason for the strength in the
municipal market is likely explained by a
shift in asset allocation. Equity investors,
who are uncomfortable with the increased
volatility of US stock markets, have been
rotating assets into municipal bond funds.
Should equity markets continue to experi-
ence volatility, we would expect this trend to
persist. The municipal bond market has also
---------------------------------------------------------------------------------------------------
BOARD OF TRUSTEES OFFICERS TRANSFER AGENT MANAGER
John S. Anderegg, Jr. Michael G. Landry, Ivy Mackenzie Mackenzie Investment
Paul H. Broyhill President Services Corp. Management Inc.
Stanley Channick Keith J. Carlson, P.O. Box 3022 Boca Raton, FL
Frank W. DeFriece Vice President Boca Raton, FL
Roy J. Glauber C. William Ferris, 33431-0922 DISTRIBUTOR
Michael G. Landry Secretary/Treasurer 1-800-777-6472 Ivy Mackenzie
Joseph G. Rosenthal Distributors, Inc.
J. Brendan Swan CUSTODIAN AUDITORS Via Mizner Financial Plaza
Brown Brothers Coopers & Lybrand L.L.P. 700 South Federal Highway
LEGAL COUNSEL Harriman & Co. Fort Lauderdale, FL Boca Raton, FL 33432
Dechert Price Boston, MA
& Rhoads [LOGO IVY MACKENZIE]
Boston, MA

</TABLE>

<PAGE> 29

PERFORMANCE COMMENTARY
For the twelve months ended June 30, 1996, the Mackenzie Limited Term Municipal
Fund had a total return of 4.46%. This compares with the average of all
Intermediate Municipal Debt Funds tracked by Lipper Analytical Services, Inc.
which was 4.86% for the same period. The Fund's underperformance can be
attributed to the manager's decision to extend the average duration of the Fund
as a means of providing a higher level of tax-free income.

PERFORMANCE COMPARISON OF A $10,000
INVESTMENT SINCE INCEPTION OF THE FUND+

[CHART]

+ Previous periods during which the Fund was advised by Zweig/Glaser Advisors
are not shown.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
MACKENZIE LIMITED TERM MUNICIPAL FUND
FOR PERIOD ENDING 6/30/96
Class A*-with sales charge
Average Annual Class B**
Total Return Average Annual Total Return
- -------------------------------------------------------------------------------------------
w/Reimb. w/o Reimb. w/Reimb. w/o Reimb.
- -------------------------------------------------------------------------------------------
w/CDSC w/o CDSC w/CDSC w/o CDSC
----------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Yr. 1.32% .93% .98% 3.98% .58% 3.58%
- ------------------------------------------------------------------------------------------
Since Inception 4.44% 4.14% 3.67% 4.51% 3.27% 4.11%
- ------------------------------------------------------------------------------------------
</TABLE>

*Class A performance figures include the maximum sales charge of 3.00%.
**Class B performance figures are calculated with and without the applicable
Contingent Deferred Sales Charge (CDSC) up to a maximum of 3%.

All figures mentioned in the Market Commentary and in the chart and table
reflect past results and assume reinvestment of dividends and distributions from
capital gains. Future results will, of course, be different. The principal value
of the Mackenzie Limited Term Municipal Fund will fluctuate and at redemption
may be worth more or less than the amount of the original investment.
The Lehman Bros. 5-Year Municipal Bond Index is an unmanaged index of municipal
bonds that assumes reinvestment of dividends and, unlike Fund returns, does not
reflect any fees or expenses.
Please note that Treasury Bills are short-term interest bearing instruments
which are guaranteed as to timely payment of principal and interest by the U.S.
Government.
Performance is calculated for Class A shares of the Fund unless otherwise noted.
Because Class B shares bear the expense of a higher distribution fee it is
expected that the level of performance of the Fund 's Class B shares will be
lower than that of the Fund 's Class A shares.
Total returns in some periods were higher due to reimbursement of the Fund 's
expenses. See Financial Highlights.

- --------------------------------------------------------------------------------
<PAGE> 30

PORTFOLIO OF INVESTMENTS
JUNE 30, 1996

<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ------------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES -- 93.7% PRINCIPAL VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALABAMA -- 1.5%
A2 NR Huntsville Alabama Ind. Rev. (TRW Inc. Project), 12.75%, 08/01/02................... $1,000,000 $ 1,072,460
-----------
ALASKA -- 4.3%
Aaa AAA North Slope Boro Alaska (GO)(NC)(MBIA Insured), 0.00%, 01/01/01..................... 4,000,000 3,205,000
-----------
ARIZONA -- 3.6%
Baa1 A Maricopa County Arizona School District (GO)(NC), 0.00%, 07/01/00................... 500,000 411,250
Baa1 A Maricopa County Arizona School District (GO)(NC), 0.00%, 01/01/01................... 750,000 599,062
Baa1 A Maricopa County Arizona School District (GO)(NC), 5.60%, 07/01/03................... 500,000 505,000
Aa AA- Maricopa County Arizona Unified School District (GO)(NC), 7.75%, 07/01/03........... 1,000,000 1,158,750
-----------
2,674,062
-----------
CALIFORNIA -- 17.4%
A NR California Educational Facilities Authority (NC), 6.30%, 09/01/00................... 450,000 474,750
NR A- California Health Facilities Financing Authority -- Downey Community Hospital,
5.30%, 05/15/04................................................................... 500,000 488,750
A1 A California State (GO)(NC), 6.75%, 05/01/02.......................................... 500,000 546,875
A1 A California State (GO)(NC), 7.10%, 09/01/02.......................................... 500,000 556,875
A1 A California State (GO)(NC), 9.25%, 03/01/05.......................................... 350,000 446,250
A1 AA- Clovis Unified School Series A (GO)(NC),10.90%, 08/01/99............................ 250,000 292,187
A1 AA- Clovis Unified School Series B (GO)(NC), 0.00%, 08/01/02............................ 1,000,000 732,500
A A Los Angeles County California Certificate of Participation, Correctional Facility
Improvements, 6.90%, 03/01/01..................................................... 500,000 522,500
A A Los Angeles County California Certificate of Participation, Disney Parking Project
(NC), 0.00%, 09/01/03............................................................. 250,000 162,188
Aa AA Los Angeles Dept. of Water & Power (NC), 9.00%, 07/15/98............................ 500,000 626,875
Aa AA- Los Angeles Dept. of Water & Power (NC), 9.00%, 02/01/02............................ 500,000 599,375
NR A-p Mount San Antonio California Community College (NC), 5.20%, 04/01/00................ 500,000 498,125
Aaa AAA Palomar Pomerado Health System (NC)(MBIA Insured), 0.00%, 11/01/03.................. 500,000 342,500
NR A- Pomona California Public Financing Authority (NC), 5.625%, 10/01/03................. 500,000 500,000
NR A- Redwood City California Public Financing Authority, 7.10%, 07/15/01................. 750,000 816,563
A A San Bernardino California Joint Powers Financing Authority (NC), 4.90%, 12/01/03.... 500,000 486,875
A BBB+ San Francisco California Port Revenue (NC), 9.00%, 07/01/03......................... 1,000,000 1,212,500
Aaa AAA Santa Clara Certificate of Participation (NC)(MBIA Insured), 7.75%. 02/01/02........ 500,000 569,375
A A Southern California Public Power Authority, 6.75%, 07/01/01......................... 1,000,000 1,073,750
Aa NR University of California Certificate of Participation (NC), 10.00%, 11/01/03........ 1,500,000 1,942,500
-----------
12,891,313
-----------
COLORADO -- 0.8%
Baa1 NR El Paso County Colorado School District (GO)(NC), 8.25%, 12/15/04................... 500,000 602,500
-----------
CONNECTICUT -- 0.8%
Baa BBB New Haven Connecticut (GO)(NC), 9.50%, 11/15/03..................................... 500,000 608,125
-----------
FLORIDA -- 7.4%
NR AA East Lee County Florida Water Control District (NC) (Asset Guaranty Insured), 5.50%,
11/01/03.......................................................................... 200,000 204,250
Aaa AAA Hillsborough County Florida Utility (MBIA Insured), 9.75%, 12/01/03................. 150,000 184,125
Aaa AAA Jacksonville Port Authority Rev. (MBIA Insured)(NC), 7.625%, 11/01/02............... 550,000 633,875
Aaa AAA Jacksonville Port Authority Rev. (MBIA Insured)(NC), 7.625%, 11/01/03............... 1,000,000 1,166,250
Aaa AAA Pasco County Florida School Board Certificate of Participation (FSA Insured)(NC),
6.10%, 08/01/01................................................................... 250,000 265,000
Aaa AAA Port St. Lucie Florida Stormwater Utility Revenue, 7.40%, 11/01/00 (Pre-refunded)... 250,000 277,188
Aaa AAA Volusia County School Board (NC)(FSA Insured), 10.00%, 08/01/00..................... 2,300,000 2,739,875
-----------
5,470,563
-----------
GEORGIA -- 0.7%
A1 A+ Savannah Georgia Resource Recovery Authority, 5.95%, 12/01/02....................... 500,000 519,375
-----------
GUAM -- 1.3%
NR BBB Guam Government (GO), 5.90%, 09/01/05............................................... 1,000,000 991,250
-----------
HAWAII -- 0.7%
Aa AA Honolulu City & County (GO)(NC), 7.25%, 07/01/00.................................... 500,000 546,250
-----------
IDAHO -- 1.0%
NR BBB+ Boise Idaho Urban Renewal Agency Parking Revenue, 6.00%, 09/01/02................... 700,000 719,250
-----------
ILLINOIS -- 1.8%
A A- Illinois Health Facilities Authority -- Illinois Masonic Medical Center, 5.20%,
10/01/03.......................................................................... 500,000 484,375
Aaa AAA Metropolitan Pier & Exposition Authority Illinois (NC) (MBIA Insured), 0.00%,
12/15/01.......................................................................... 500,000 380,000
Aaa AAA Will & Kendall Counties Illinois School District (GO)(AMBAC Insured), 5.45%,
01/01/05.......................................................................... 500,000 504,375
-----------
1,368,750
-----------
</TABLE>

(See Notes to Financial Statements)
<PAGE> 31

PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996

<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ------------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES PRINCIPAL VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IOWA -- 0.8%
Aaa AAA Muscatine Iowa Electric, 9.50%, 01/01/04 (Escrowed to Maturity)..................... $ 500,000 $ 604,375
-----------
LOUISIANA -- 3.6%
Aaa AAA Louisiana Gas & Fuels (FGIC Insured), 7.25%, 11/15/00............................... 500,000 545,625
A3 A Louisiana State Offshore Terminal Authority (NC), 6.25%, 09/01/04................... 2,000,000 2,102,500
-----------
2,648,125
-----------
MAINE -- 2.2%
NR A+ Maine Muni Bond Bank, 7.30%, 11/01/99 (Pre-refunded)................................ 1,500,000 1,651,875
-----------
MARYLAND -- 2.1%
Aa AA Maryland State Individual Development Financing Authority -- Holy Cross (NC), 5.50%,
12/01/01.......................................................................... 1,500,000 1,533,750
-----------
MASSACHUSETTS -- 3.2%
A A+ Massachusetts (GO), 6.50%, 07/01/02................................................. 500,000 540,625
Baa1 NR Massachusetts State Health & Educational Facilities Authority Revenue (Holyoke
Hospital), 6.25%, 07/01/04........................................................ 1,000,000 1,032,500
A1 A- Massachusetts State Industrial Finance Agency (NC)(Mass Biomedical), 0.00%,
08/01/00.......................................................................... 1,000,000 820,000
-----------
2,393,125
-----------
MINNESOTA -- 1.4%
Baa3 NR International Falls Minnesota Pollution Control Revenue, 7.15%, 5/15/98............. 500,000 520,000
NR BBB+ Minneapolis Minnesota Community Development, 7.00%, 12/01/03........................ 500,000 521,250
-----------
1,041,250
-----------
MISSISSIPPI -- 2.2%
Aaa AAA Columbus Mississippi (MBIA Insured)(NC), 8.80%, 05/01/02............................ 500,000 593,750
NR A- Mississippi Medical Center Educational Building Corporation, University of
Mississippi Medical Center Project (NC), 7.00%, 12/01/00.......................... 1,000,000 1,060,000
-----------
1,653,750
-----------
NEVADA -- 0.8%
Aaa AAA Reno Nevada (GO)(NC)(MBIA Insured), 8.70%, 05/01/99................................. 545,000 604,269
-----------
NEW HAMPSHIRE -- 0.5%
Aa AA New Hampshire State (GO)(NC), 0.00%, 07/01/04....................................... 500,000 333,125
-----------
NEW YORK -- 5.4%
Aaa AAA Brookhaven New York Series A (MBIA Insured)(GO)(NC), 7.00%, 11/01/04................ 300,000 339,750
Baa1 BBB Metropolitan Transportation Authority New York Service Contract, 7.00%, 07/01/02.... 1,000,000 1,090,000
Baa1 A- New York City (GO)(NC), Series A, 7.00%, 08/01/03................................... 500,000 530,625
Baa1 A- New York City (GO)(NC), Series D, 5.70%, 08/01/02................................... 750,000 749,062
Baa BBB- New York City Health & Hospital Corporation Revenue, 6.00%, 02/15/05................ 750,000 745,312
Aa NR New York State Medical Care Facilities Financing Agency (SONYMA Insured), 6.00%,
11/15/02.......................................................................... 500,000 522,500
-----------
3,977,249
-----------
NORTH CAROLINA -- 1.4%
NR A- Gastonia North Carolina Housing Corporation, 5.75%, 07/01/04........................ 1,000,000 1,038,750
-----------
OKLAHOMA -- 0.7%
A A Southern Oklahoma Memorial Hospital (NC), 5.60%, 02/01/00........................... 500,000 508,125
-----------
OREGON -- 0.5%
Aa AA- Oregon State (GO)(NC), 9.00%, 10/01/00.............................................. 300,000 350,250
-----------
PENNSYLVANIA -- 2.2%
Aaa AAA Pennsylvania Higher Ed. Series A (FGIC Insured)(NC), 6.80%, 12/01/00................ 1,000,000 1,071,250
Aa3 AA- Southeastern Pennsylvania Transportation Authority (NC), 6.00%, 06/01/01............ 500,000 523,125
-----------
1,594,375
-----------
PUERTO RICO -- 4.5%
Baa1 A Puerto Rico Commonwealth (GO)(NC), 0.00%, 07/01/03.................................. 1,000,000 697,500
Baa1 A Puerto Rico Commonwealth (GO)(NC), 0.00%, 07/01/04.................................. 400,000 263,000
Baa1 A Puerto Rico Commonwealth (GO)(NC), 5.10%, 07/01/02.................................. 400,000 404,000
Baa1 A- Puerto Rico Electric Power Authority Power Revenue, 6.80%, 07/01/00................. 900,000 967,500
Baa1 A- Puerto Rico Municipal Finance Agency (GO), 5.70%, 07/01/03.......................... 1,000,000 1,027,500
-----------
3,359,500
-----------
RHODE ISLAND -- 4.5%
Aaa AAA Rhode Island Clean Water (NC)(MBIA Insured), 9.20%, 10/01/02........................ 1,400,000 1,702,750
Aaa AAA Rhode Island Clean Water (NC)(MBIA Insured), 9.20%, 10/01/01........................ 1,385,000 1,649,881
-----------
3,352,631
-----------
</TABLE>

(See Notes to Financial Statements)
<PAGE> 32

PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1996

<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ------------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES PRINCIPAL VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SOUTH CAROLINA -- 2.6%
Aaa AAA Charleston County SC (NC), 8.25%, 07/01/00.......................................... $ 500,000 $ 558,750
Aaa AAA Edgefield County Central School District (FSA Insured)(GO)(NC), 8.50%, 02/01/02..... 300,000 353,625
A BBB Piedmont South Carolina Municipal Power Agency, 6.05%, 01/01/04..................... 1,000,000 1,033,750
-----------
1,946,125
-----------
TEXAS -- 9.5%
A A- Austin Texas Water Sewer & Electric (NC), 14.00%, 11/15/01 (Escrowed to Maturity)... 15,000 19,631
A A- Austin Texas Water Sewer & Electric, 14.00%, 11/15/01 (Pre-refunded)................ 985,000 1,281,731
Aaa NR Channelview Texas Independent School District (GO)(NC), 7.00%, 08/15/02............. 500,000 556,250
Aaa AAA Denton County Texas (GO)(MBIA Insured), 7.75%, 07/15/02............................. 1,000,000 1,150,000
A A- Harris County Texas Health Facs. Dev. (NC), 6.90%, 06/01/02......................... 1,000,000 1,067,500
Aaa AAA Houston Texas Water Conveyance Cert. Series F (NC)(AMBAC Insured), 7.20%,
12/15/02.......................................................................... 1,000,000 1,120,000
Aaa AAA Irving Texas Independent School District (GO)(NC)(PSFG Insured), 0.00%, 02/15/02.... 2,000,000 1,512,500
Aaa AAA Irving Texas Independent School District (GO)(NC)(PSFG Insured), 0.00%, 02/15/04.... 500,000 338,750
-----------
7,046,362
-----------
UTAH -- 1.3%
Baa BBB+ Davis County Utah Solid Waste Management and Recovery Revenue, 5.90%, 06/15/03...... 1,000,000 978,750
-----------
WASHINGTON -- 3.0%
Aaa AAA Jefferson County Washington Public Hospital (GO)(NC)(FGIC Insured), 7.50%,
12/01/02.......................................................................... 500,000 573,750
Aaa AAA Jefferson County Washington Public Hospital (GO)(NC)(FGIC Insured), 7.50%,
12/01/03.......................................................................... 500,000 580,000
NR AA- Washington State Health Care Facilities Authority (NC), 6.20%, 02/15/01............. 500,000 523,125
Aaa AAA Washington State Public Power Supply, 7.50%, 07/01/15 (Pre-refunded)................ 485,000 534,714
-----------
2,211,589
-----------
TOTAL INVESTMENTS -- 93.7%
(Cost -- $69,538,015)*.............................................................. 69,496,248
OTHER ASSETS, LESS LIABILITIES -- 6.3%.............................................. 4,708,531
-----------
NET ASSETS -- 100%.................................................................. $74,204,779
===========
*Cost for Federal income tax purposes is $69,272,102.
AMBAC - AMBAC Indemnity Corporation
FGIC - Financial Guaranty Insurance Company
FSA - Financial Security Association
GO - General Obligation
MBIA - Municipal Bond Insurance Association
NC - Non Callable
NR - Not Rated
PSFG - Permanent School Fund Guaranty
SONYMA - State of New York Mortgage Agency
OTHER INFORMATION:
At June 30, 1996, net unrealized depreciation based on cost for Federal income tax
purposes is as follows:
Gross unrealized appreciation................................................................ $ 783,071
Gross unrealized depreciation................................................................ (558,925)
-----------
Net unrealized depreciation......................................................... $ 224,146
===========
Purchases and sales of municipal securities aggregated $30,788,167 and $68,201,377,
respectively, for the period ended June 30, 1996.
</TABLE>

(See Notes to Financial Statements)
<PAGE> 33

STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996

<TABLE>
<S> <C>
ASSETS
Investments, at value (identified cost -- $69,538,015).............................................................. $69,496,248
Cash................................................................................................................ 3,496,585
Receivables:
Fund shares sold.................................................................................................. 2,475
Interest.......................................................................................................... 1,212,711
Manager for expense reimbursement................................................................................. 36,181
Deferred organization expenses...................................................................................... 9,670
Other assets........................................................................................................ 20,358
-----------
Total assets...................................................................................................... 74,274,228
-----------
LIABILITIES
Payables:
Management fee.................................................................................................... 33,236
12b-1 service and distribution fees............................................................................... 15,754
Administrative services fee....................................................................................... 6,043
Fund accounting................................................................................................... 6,250
Transfer agent.................................................................................................... 8,166
-----------
Total liabilities................................................................................................. 69,449
-----------
NET ASSETS.......................................................................................................... $74,204,779
===========
CLASS A:
Net asset value and redemption price per share ($72,125,863/7,124,675 shares outstanding)........................... $ 10.12
===========
Maximum offering price per share ($10.12 X 100/97.00)*.............................................................. $ 10.43
===========
CLASS B:
Net asset value and offering price per share ($2,078,916/205,390 shares outstanding)**.............................. $ 10.12
===========
NET ASSETS CONSIST OF:
Capital paid-in................................................................................................... $75,869,080
Accumulated net realized loss on investments...................................................................... (1,669,709)
Accumulated undistributed net investment income................................................................... 47,175
Net unrealized depreciation on investments........................................................................ (41,767)
-----------
NET ASSETS.......................................................................................................... $74,204,779
===========
</TABLE>

* On sales of more than $25,000 the offering price is reduced.
** Redemption price per share is equal to the net asset value per share less any
applicable contingent deferred sales charge.

(See Notes to Financial Statements)
<PAGE> 34

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996

<TABLE>
<S> <C> <C>
Investment income
Interest................................................................................................ $4,953,127
----------
Expenses
Management fee.......................................................................................... $513,762
Transfer agent.......................................................................................... 107,108
Administrative services fee............................................................................. 93,411
Custodian fees.......................................................................................... 77,277
Blue Sky fees........................................................................................... 22,023
Auditing and accounting fees............................................................................ 31,867
Shareholder reports..................................................................................... 7,249
Amortization of organization expenses................................................................... 11,548
Fund accounting......................................................................................... 83,991
Trustees' fees.......................................................................................... 4,860
12b-1 service and distribution fees
Class A............................................................................................... 228,045
Class B............................................................................................... 16,450
Legal................................................................................................... 30,196
Other................................................................................................... 15,019
----------
1,242,806
Expenses reimbursed by manager.......................................................................... (373,984)
Fees paid indirectly.................................................................................... (26,496)
----------
Net expenses.......................................................................................... 842,326
----------
NET INVESTMENT INCOME..................................................................................... 4,110,801
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments........................................................................ 535,769
Net unrealized depreciation during the period on investments............................................ (112,650)
----------
Net gain on investments............................................................................... 423,119
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................................... $4,533,920
==========
</TABLE>

(See Notes to Financial Statements)
<PAGE> 35

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
DECREASE IN NET ASSETS
Operations:
Net investment income............................................................................. $ 4,110,801 $ 6,092,576
Net realized gain (loss) on investments........................................................... 535,769 (3,702,309)
Net unrealized appreciation (depreciation) during the period on investments....................... (112,650) 5,286,010
------------ ------------
Net increase resulting from operations.......................................................... 4,533,920 7,676,277
------------ ------------
Class A distributions
From net investment income........................................................................ (3,954,375) (6,013,129)
In excess of net investment income................................................................ -- (891,631)
------------ ------------
Total distributions to Class A shareholders..................................................... (3,954,375) (6,904,760)
------------ ------------
Class B distributions
From net investment income........................................................................ (83,982) (79,447)
In excess of net investment income................................................................ -- (11,782)
------------ ------------
Total distributions to Class B shareholders..................................................... (83,982) (91,229)
------------ ------------
Fund share transactions (Note 4):
Class A........................................................................................... (36,365,347) (47,921,734)
Class B........................................................................................... (283,443) 1,381,678
------------ ------------
Net decrease resulting from Fund share transactions............................................. (36,648,790) (46,540,056)
------------ ------------
TOTAL DECREASE IN NET ASSETS........................................................................ (36,153,227) (45,859,768)
NET ASSETS
Beginning of period............................................................................... 110,358,006 156,217,774
------------ ------------
END OF PERIOD..................................................................................... $ 74,204,779 $110,358,006
============ ============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME (LOSS).............................................. $ 47,175 $ (25,269)
============ ============
</TABLE>

(See Notes to Financial Statements)
<PAGE> 36

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
CLASS A FOR THE YEAR ENDED JUNE 30,
-----------------------------------------------------------------
SELECTED PER SHARE DATA 1996 1995 1994 1993 1992
------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......................... $ 10.11 $ 10.02 $ 10.47 $ 10.41 $ 10.36
------- -------- -------- ------- -------
Income from investment operations
Net investment income(a).................................... .44 .43 .62 .63 .63
Net gain (loss) on investments (both realized and
unrealized)............................................... .01 .16 (.45) .07 .05
------- -------- -------- ------- -------
Total from investment operations.......................... .45 .59 .17 .70 .68
------- -------- -------- ------- -------
Less distributions
From net investment income.................................. .44 .43 .62 .63 .62
In excess of net investment income.......................... -- .07 -- .01 --
From net realized gain...................................... -- -- -- -- .01
------- -------- -------- ------- -------
Total distributions....................................... .44 .50 .62 .64 .63
------- -------- -------- ------- -------
Net asset value, end of period................................ $ 10.12 $ 10.11 $ 10.02 $ 10.47 $ 10.41
======= ======== ======== ======= =======
Total return(%)(b)............................................ 4.46 6.07 1.56 6.97 6.56
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)...................... $72,126 $108,000 $155,187 $94,460 $30,005
Ratio of expenses to average net assets
With expense reimbursement and fees paid indirectly(%)(c)... .89 .89 .88 .85 .97
Without expense reimbursement and fees paid
indirectly(%)(c).......................................... 1.32 1.18 1.11 1.20 1.25
Ratio of net investment income to average net assets(%)(a).... 4.41 4.38 6.06 6.13 6.24
Portfolio turnover rate(%).................................... 34 53 36 32 62
</TABLE>

<TABLE>
<CAPTION>
FOR THE PERIOD
APRIL 1, 1994
FOR THE YEAR ENDED (COMMENCEMENT)
CLASS B JUNE 30, TO JUNE 30,
--------------------- --------------
SELECTED PER SHARE DATA 1996 1995 1994
------ ------ --------------
<S> <C> <C> <C>
Net asset value, beginning of period................................................... $10.11 $10.02 $10.11
------ ------ ------
Income from investment operations
Net investment income(a)............................................................. .40 .38 .12
Net gain (loss) on investments (both realized and unrealized)........................ .01 .16 (.06)
------ ------ ------
Total from investment operations................................................... .41 .54 .06
------ ------ ------
Less distributions
From net investment income........................................................... .40 .38 .12
In excess of net investment income................................................... -- .07 .03
------ ------ ------
Total distributions................................................................ .40 .45 .15
------ ------ ------
Net asset value, end of period......................................................... $10.12 $10.11 $10.02
====== ====== ==============
Total return(%)........................................................................ 3.98(b) 5.54(b) .63(d)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)............................................... $2,079 $2,358 $1,030
Ratio of expenses to average net assets
With expense reimbursement and fees paid indirectly(%)(c)............................ 1.39 1.39 1.38(e)
Without expense reimbursement and fees paid indirectly(%)(c)......................... 1.82 1.68 1.61(e)
Ratio of net investment income to average net assets(%)(a)............................. 3.91 3.88 5.56(e)
Portfolio turnover rate(%)............................................................. 34 53 36
</TABLE>
(a) Net investment income is net of expenses reimbursed by manager.
(b) Total return does not reflect a sales charge.
(c) Beginning in July 1995, total expenses include fees paid indirectly
through an expense offset arrangement.
(d) Total return represents aggregate total return and does not reflect a
sales charge.
(e) Annualized.

(See Notes to Financial Statements)
<PAGE> 37

NOTES TO FINANCIAL STATEMENTS

Mackenzie Limited Term Municipal Fund (the Fund) is a series of shares of
Mackenzie Series Trust. The shares of beneficial interest are $.001 par value
and an unlimited number of shares of Class A and Class B are authorized.
Mackenzie Series Trust was organized as a Massachusetts business trust under a
Declaration of Trust dated April 22, 1985 and is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Fund has a net tax-basis capital loss carryforward of approximately
$1,936,000 as of June 30, 1996 which may be applied against any realized net
taxable gains of each succeeding fiscal year until fully realized or until the
expiration date, whichever occurs first. The carryforward expires $606,000 in
1997, $11,000 in 2001, $21,000 in 2002, $560,000 in 2003 and $738,000 in 2004.

DISTRIBUTIONS TO SHAREHOLDERS -- Normally, distributions from net investment
income are declared monthly and net realized capital gains, if any, are declared
in June. An additional distribution may be declared if necessary to avoid the
payment of a four percent Federal excise tax.

For the Fund's taxable year ended June 30, 1996, 100% of distributions paid
were exempt interest dividends for Federal income tax purposes.

FEES PAID INDIRECTLY -- The Fund has an arrangement whereby a certain
percentage of quarterly cumulative credits resulting from cash balances on
deposit with the custodian are used to offset custody fees, including
transaction and out-of-pocket expenses. For the year ended June 30, 1996,
custody fees were reduced by $26,496 under this arrangement.

2. RELATED PARTIES

If the Fund's total expenses in any fiscal year (excluding interest, taxes,
brokerage commissions, extraordinary expenses and other expenses subject to
approval by state securities administrators) exceed limits applicable under
state securities laws, MIMI will bear the excess expenses. Currently, MIMI
voluntarily limits the Fund's total operating expenses (excluding taxes, 12b-1
fees, brokerage commissions, interest, litigation and indemnification expenses,
and other extraordinary expenses) to an annual rate of .64% of its average net
assets. The voluntary expense limitation may be terminated or revised at any
time on 30 days notice to shareholders. Expenses reimbursed by manager reflected
in the Statement of Operations consists of a voluntary reimbursement.

Under Service and Distribution Plans, the Fund reimburses IMDI for service
fee payments made to brokers at an annual rate not to exceed .25% of its average
net asset value. Class B shares are also subject to an ongoing distribution fee
at an annual rate of .50% of the average net asset value attributable to Class B
shares. IMDI may use such distribution fee for purposes of advertising and
marketing shares of the Fund. Such fees are reflected as 12b-1 service and
distribution fees in the Statement of Operations.

3. BOARD'S COMPENSATION

Trustees who are not affiliated with MIMI receive compensation from the
Fund, which is reflected as Trustees' fees in the Statement of Operations.

4. FUND SHARE TRANSACTIONS

Fund share transactions for both Class A and Class B were as follows:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995
------------------------- -------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold..................... 670,451 $ 6,832,013 2,084,010 $ 20,459,375
Issued on reinvestment of
distributions........... 241,989 2,465,947 418,632 4,149,371
Repurchased.............. (4,468,714) (45,663,307) (7,316,999) (72,530,480)
---------- ------------ ---------- ------------
Net decrease............. (3,556,274) $(36,365,347) (4,814,357) $(47,921,734)
============ ============== ============ ==============
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995
------------------------- -------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold..................... 60,104 $ 617,543 189,520 $ 1,974,377
Issued on reinvestment of
distributions........... 4,981 50,750 5,698 56,431
Repurchased.............. (92,882) (951,736) (64,904) (649,130)
---------- ------------ ---------- ------------
Net increase (decrease).. (27,797) $ (283,443) 130,314 $ 1,381,678
============ ============== ============ ==============
</TABLE>
<PAGE> 38

REPORT OF INDEPENDENT ACCOUNTANTS

To The Shareholders and
Board of Trustees of
Mackenzie Limited Term Municipal Fund (the Fund)

COOPERS & LYBRAND L.L.P.

Fort Lauderdale, Florida
August 15, 1996

MLTMF-2-896