<PAGE> 1
DECEMBER 31, 1995 [MACKENZIE LOGO]
MACKENZIE NEW YORK MUNICIPAL FUND
SEMI-ANNUAL REPORT
This report and the financial statements contained herein are submitted for
the general information of the shareholders. This report is not authorized
for distribution to prospective investors unless preceded or accompanied by an
effective prospectus.
Mackenzie Investment Management Inc.
Via Mizner Financial Plaza
700 South Federal Hwy.
Boca Raton, FL 33432
1-800-456-5111
Dear Shareholder:
Over the latter part of 1995 the municipal bond market remained
relatively unchanged as the Federal Reserve sought to manage interest rates and
ongoing government budget concerns seemed to dampen investor enthusiasm.
For the most part, longer term municipal bonds tracked the movements
in the U.S. treasury market. There was very little movement in yields, up or
down.
In response to the interest rate environment and bond market
conditions, we extended the average maturity of Mackenzie New York Municipal
Fund. However, we resisted going beyond the intermediate maturity range
because of our conviction that the slightly higher yield of long-term bonds
does not justify the additional interest rate and market risks. By taking an
active management position with the Fund, we followed a disciplined approach
in seeking to balance the pursuit of yield with an acceptable level of risk.
At the same time, we have remained focused on portfolio quality. The
emphasis on investment grade bonds continues.
With respect to 1996 being an election year, we believe that the
municipal market has already taken the issue of tax reform, and its impact,
into consideration. A further point to be made, is that regardless of what
may happen with tax reform most experts feel that it will reflect a more
moderate rather than an extreme adjustment.
We believe that the current interest rate environment, low
inflationary pressures and prospects for economic growth will continue to
provide the municipal market with stability and predictability in the future.
As always we will continue to take an active role in the management
of Mackenzie New York Municipal Fund in order to seek as high a yield as
possible without compromising our commitment to minimizing risk.
Sincerely,
/s/ Michael G. Landry
- ----------------------------
Michael G. Landry
President
MACKENZIE NEW YORK MUNICIPAL FUND IS PRIMARILY INVESTED IN HIGH QUALITY BONDS.
THE MANAGER STRESSES NON-CALLABLE BONDS TO PROVIDE THE FUND WITH CALL
PROTECTION AND REDUCES VOLATILITY THROUGH DIVERSIFICATION OF ISSUE TYPE, LOCAL
GOVERNMENTS AND AGENCY ISSUERS, LOCATION AND PURPOSE.
<TABLE>
<S> <C> <C> <C>
BOARD OF TRUSTEES OFFICERS TRANSFER AGENT MANAGER
John S. Anderegg, Jr. Michael G. Landry, President Mackenzie Ivy Investor Mackenzie Investment
Paul H. Broyhill Keith J. Carlson, Vice President Services Corp. Management Inc.
Stanley Channick C. William Ferris, P.O. Box 3022 Boca Raton, FL
Frank W. DeFriece, Jr. Secretary/Treasurer Boca Raton, FL 33431-0922
Roy J. Glauber 1-800-777-6472 DISTRIBUTOR
Michael G. Landry CUSTODIAN Mackenzie Ivy Funds
Joseph G. Rosenthal Brown Brothers Harriman & Co. AUDITORS Distribution, Inc.
J. Brendan Swan Boston, MA Coopers & Lybrand L.L.P. Via Mizner Financial Plaza
Fort Lauderdale, FL 700 South Federal Highway
LEGAL COUNSEL Boca Raton, FL 33432
Dechert Price & Rhoads
Boston, MA
</TABLE>
<PAGE> 2
MACKENZIE NEW YORK MUNICIPAL FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES -- 97.3% 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 $ 838,375
Aaa AAA Brookhaven New York (GO) (NC) (MBIA Insured), 7.00%, 11/01/04........................ 300,000 354,654
Aaa AAA Broome County New York (GO) (NC) (FGIC Insured), 7.40%, 04/15/03..................... 200,000 236,252
Baa NR Canastota New York Central School District (GO) (NC), 7.10%, 06/15/07................ 215,000 252,049
Baa NR Canastota New York Central School District (GO) (NC), 7.10%, 06/15/08................ 205,000 240,533
NR BBB Guam Power Authority Revenue Series A, 6.625%, 10/01/14.............................. 550,000 578,226
NR BBB Guam Government (GO), 5.375%, 11/15/13............................................... 1,000,000 930,930
Baa1 BBB Metropolitan Transportation Authority Service Contract, 5.50%, 07/01/17.............. 250,000 247,513
Aa NR Monroe County Industrial Development Agency, Depaul Community Facility, 6.45%,
02/01/14........................................................................... 880,000 940,139
Baa1 BBB+ New York City (GO), 7.20%, 08/15/08.................................................. 1,000,000 1,103,580
Baa1 BBB+ New York City (GO), 7.10%, 02/01/09.................................................. 500,000 543,030
Baa1 BBB+ New York City (GO), 7.30%, 08/15/10.................................................. 250,000 281,943
Baa1 BBB+ New York City (GO)(NC), 0.00%, 08/01/11.............................................. 1,000,000 399,700
Baa1 BBB+ New York City (GO), 7.00%, 02/01/19.................................................. 500,000 539,410
Baa BBB- New York City Health & Hospital Corporation Revenue, 6.30%, 02/15/20................. 500,000 507,225
Aa AA New York City Housing Development (FHA Insured), 5.85%, 05/01/26..................... 500,000 502,095
Aaa AAA New York City Municipal Water Finance Authority Series B (MBIA Insured),
7.80%, 06/15/96 (Pre-refunded)..................................................... 10,000 10,394
Aaa A- New York City Municipal Water Finance Authority Series C, 7.375%, 06/15/01
(Pre-refunded)..................................................................... 500,000 582,455
A A- New York City Municipal Water Finance Authority, 6.00%, 06/15/25..................... 500,000 517,590
A A- New York State (GO)(NC), 9.875%, 11/15/05............................................ 500,000 693,375
NR AAA New York State Dormitory Authority (Parkridge), 7.85%, 02/01/29...................... 200,000 219,850
Baa1 BBB New York State Dormitory Authority (City University) Series C, 6.00%, 07/01/16....... 1,000,000 1,005,860
NR AA New York State Dormitory Authority, Menorah Campus (FHA Insured), 7.30%, 08/01/16.... 790,000 892,068
NR AAA New York State Dormitory Authority, Jewish Geriatric (FHA Insured), 7.35%,
08/01/29........................................................................... 500,000 571,480
Baa1 BBB+ New York State Dormitory Authority (State University), 6.25%, 05/15/14............... 1,000,000 1,040,180
NR AA New York State Dormitory Authority (St. Lukes Home) (FHA Insured), 6.375%,
08/01/35........................................................................... 1,000,000 1,061,850
Baa1 BBB- New York State Dormitory Authority, Upstate Community College, 6.25%, 07/01/25....... 1,500,000 1,561,200
Aaa AA- New York State Environmental Facilities Corporation Pollution Control Series B,
7.50%, 03/15/11.................................................................... 400,000 438,364
Aa A- New York State Environmental Facilities Corporation, Pollution Control Revenue,
6.875%, 06/15/14................................................................... 1,000,000 1,134,950
Aaa AAA New York State Housing Finance Agency (State University) Series A,
8.00%, 11/01/98 (Pre-refunded)..................................................... 30,000 33,793
Baa1 BBB New York State Housing Finance Agency Service Contract, 6.375%, 09/15/15............. 1,000,000 1,054,370
NR AAA New York State Medical Care Facilities Finance Agency Series C (FHA Insured),
7.70%, 08/15/98 (Pre-refunded)..................................................... 85,000 94,478
A A New York State Medical Care Facilities Finance Agency (Good Samaritan Hospital),
7.875%, 11/01/06................................................................... 10,000 10,530
Aa NR New York State Mortgage Agency Revenue Series BB (FHA Insured), 7.85%, 10/01/08...... 30,000 32,030
Aa NR New York State Mortgage Agency Revenue Series E, 8.10%, 10/01/17..................... 35,000 37,505
Aa NR New York State Mortgage Agency Revenue (Pool Insured), 6.45%, 04/01/15............... 1,000,000 1,041,300
NR BBB+ New York State Municipal Bond Bank Agency (Buffalo) Series A, 6.875%, 03/15/06....... 1,000,000 1,088,880
Aaa AAA New York State Medical Care Facilities Finance Agency (St. Lukes Hospital) (FHA
Insured),
7.45%, 02/15/00 (Pre-refunded)..................................................... 600,000 685,230
Aaa AAA New York State Medical Care Facilities Finance Agency Series A (FHA Insured),
7.70%, 08/15/00 (Pre-refunded)..................................................... 500,000 582,965
Baa BBB New York State Medical Care Facilities Financing Agency 7.35%, 8/15/11............... 1,000,000 1,079,910
Aaa AAA New York State Medical Care Facilities Finance Agency (FSA Insured), 6.50%,
11/01/19........................................................................... 650,000 704,399
NR BBB New York State Medical Care Facilities Finance Agency, 6.125%, 11/01/16.............. 500,000 491,580
Baa BBB New York State Medical Care Facilities Finance Agency, 6.80%, 02/15/20............... 500,000 529,170
Baa BBB New York State Medical Care Facilities Finance Agency, 6.85%, 02/15/17............... 1,000,000 1,062,350
Aa AA New York State Medical Care Facilities Finance Agency (SONYMA Insured), 6.00%,
11/15/02........................................................................... 500,000 539,620
Aa AA New York State Medical Care Facilities Finance Agency (SONYMA Insured), 6.00%,
11/15/03........................................................................... 500,000 541,295
Aaa AAA New York State Power Authority Series V (MBIA Insured), 7.875%, 01/01/13............. 1,000,000 1,094,890
Aaa AAA New York State Urban Development Corporation Series D (AMBAC Insured),
7.75%, 01/01/98 (Pre-refunded)..................................................... 70,000 76,475
Aaa AAA New York State Urban Development Corporation Series C (AMBAC Insured),
7.75%, 01/01/98 (Pre-refunded)..................................................... 30,000 32,775
Aaa BBB New York State Urban Development Corporation, 7.50%, 04/01/20........................ 1,000,000 1,163,970
Baa1 BBB New York State Urban Development Corporation Correctional Facilities, 0.00%,
01/01/08........................................................................... 1,000,000 529,300
Baa BBB Oneida-Herkimer New York Solid Waste Management Authority, 6.75%, 04/01/14........... 1,000,000 1,039,600
NR A Onondaga County New York Industrial Revenue Agency, Crouse Irving Co. Series A,
7.90%, 01/01/17.................................................................... 2,000,000 2,211,440
Baa1 A- Puerto Rico Electric Power Authority Series N, 5.00%, 07/01/12....................... 750,000 711,998
Aaa AAA Puerto Rico Electric Power Authority Power Revenue (FSA Insured),
5.929% (Inverse Floater), 07/01/23................................................. 1,000,000 1,052,500
NR BBB- Puerto Rico Educational, Medical & Environmental Control Facilities, 5.70%,
08/01/13........................................................................... 250,000 247,523
Baa1 A- Puerto Rico Municipal Finance Agency (GO), 5.70%, 07/01/03........................... 500,000 527,115
</TABLE>
(See Notes to Financial Statements)
<PAGE> 3
MACKENZIE NEW YORK MUNICIPAL FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES PRINCIPAL VALUE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Aa NR Schenectady New York Municipal Housing Authority (Annie Schaffer Senior Center),
6.40%, 05/01/14.................................................................... $ 650,000 $ 675,844
Aaa AAA South Hampton Village New York Series B (NC) (MBIA Insured), 7.60%, 09/01/03......... 100,000 119,414
Aaa AAA Suffolk County New York Series A (GO) (NC) (FGIC Insured), 9.50%, 10/01/00........... 500,000 609,725
A1 A- Triborough Bridge & Tunnel Authority New York Series B, 6.875%, 01/01/15............. 500,000 550,275
Baa BBB+ Ulster County New York Resource Recovery Agency Solid Waste Systems Revenue (GO),
6.00%, 03/01/14.................................................................... 1,000,000 998,800
Aaa AAA Valley Central School District New York (GO)(AMBAC Insured), 7.15%, 06/15/07......... 625,000 755,025
Aaa AAA Watkins Glen New York Central School District (NC) (MBIA Insured), 7.25%, 06/15/04... 165,000 195,459
Aaa AAA Waverly New York (GO)(NC)(MBIA Insured), 9.05%, 06/15/04............................. 110,000 143,525
-----------
TOTAL INVESTMENTS -- 97.3% (COST -- $38,164,431)*.................................... 40,570,328
OTHER ASSETS, LESS LIABILITIES -- 2.7%............................................... 1,112,539
-----------
NET ASSETS -- 100%................................................................... $41,682,867
===========
*Cost is approximately the same for Federal income tax purposes.
FEDERAL INCOME TAX INFORMATION:
At December 31, 1995, net unrealized appreciation based on cost for financial statement and Federal income tax
purposes is as follows:
Gross unrealized appreciation.................................................................... $ 2,656,571
Gross unrealized depreciation.................................................................... (250,674)
-----------
Net unrealized appreciation...................................................................... $ 2,405,897
===========
OTHER INFORMATION:
Purchases and sales of municipal securities aggregated $11,417,540 and $12,475,294, respectively, for the
period ended December 31, 1995.
AMBAC -- AMBAC Indemnity Corporation
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FSA -- Financial Security Association
GO -- General Obligation
MBIA -- Municipal Bond Insurance Association
NC -- Non Callable
SONYMA -- State of New York Mortgage Agency
</TABLE>
(See Notes to Financial Statements)
<PAGE> 4
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments, at value (identified cost -- $38,164,431).............................................................. $40,570,328
Cash................................................................................................................ 365,656
Receivables:
Interest.......................................................................................................... 747,325
Manager for expense reimbursement................................................................................. 17,460
Deferred organization expenses...................................................................................... 6,510
Other assets........................................................................................................ 12,631
-----------
Total assets...................................................................................................... 41,719,910
-----------
LIABILITIES
Payables:
Management fee.................................................................................................... 19,470
12b-1 service and distribution fees............................................................................... 9,867
Administrative services fee....................................................................................... 3,540
Fund accounting................................................................................................... 1,502
Transfer agent.................................................................................................... 2,664
-----------
Total liabilities................................................................................................. 37,043
-----------
NET ASSETS.......................................................................................................... $41,682,867
===========
CLASS A:
Net asset value and redemption price per share ($40,038,075 / 3,989,775 shares outstanding)......................... $ 10.04
===========
Maximum offering price per share ($10.04 x 100 / 95.25)*............................................................ $ 10.54
===========
CLASS B:
Net asset value and offering price per share ($1,644,792 / 163,877 shares outstanding)**............................ $ 10.04
===========
NET ASSETS CONSIST OF:
Capital paid-in................................................................................................... $39,784,994
Accumulated net realized loss on investments...................................................................... (396,045)
Accumulated undistributed net investment loss..................................................................... (111,979)
Net unrealized appreciation on investments........................................................................ 2,405,897
-----------
NET ASSETS.......................................................................................................... $41,682,867
===========
</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 SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest................................................................................................ $1,303,504
----------
EXPENSES
Management fee.......................................................................................... $115,116
Transfer agent.......................................................................................... 19,073
Administrative services fee............................................................................. 20,930
Custodian fees.......................................................................................... 4,367
Blue Sky fees........................................................................................... 13,360
Auditing and accounting fees............................................................................ 20,292
Shareholder reports..................................................................................... 2,824
Amortization of organization expenses................................................................... 1,003
Fund accounting......................................................................................... 13,337
Trustees' fees.......................................................................................... 2,212
12b-1 service and distribution fees
Class A............................................................................................... 50,382
Class B............................................................................................... 7,774
Legal................................................................................................... 16,699
Other................................................................................................... 2,153
----------
289,522
Expenses reimbursed by manager.......................................................................... (49,916)
Fees paid indirectly.................................................................................... (3,559)
----------
Net expenses............................................................................................ 236,047
----------
Net investment income..................................................................................... 1,067,457
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments........................................................................ 141,987
Net unrealized appreciation during the period on investments............................................ 1,278,167
----------
Net gain on investments............................................................................... 1,420,154
----------
Net increase in net assets resulting from operations...................................................... $2,487,611
==========
</TABLE>
(See Notes to Financial Statements)
<PAGE> 5
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
DECEMBER 31, JUNE 30,
------------ -----------
1995* 1995
------------ -----------
<S> <C> <C>
DECREASE IN NET ASSETS
Operations:
Net investment income.............................................................................. $ 1,067,457 $2,169,541
Net realized gain (loss) on investments............................................................ 141,987 (585,293 )
Net unrealized appreciation during the period on investments....................................... 1,278,167 1,586,449
------------ -----------
Net income resulting from operations............................................................. 2,487,611 3,170,697
------------ -----------
CLASS A:
Distributions from
Net investment income.............................................................................. (1,033,424 ) (2,117,451 )
In excess of net investment income................................................................. (93,210 ) (99,132 )
------------ -----------
Total distributions to Class A shareholders...................................................... (1,126,634 ) (2,216,583 )
------------ -----------
CLASS B:
Distributions from
Net investment income.............................................................................. (34,033 ) (52,090 )
In excess of net investment income................................................................. (3,258 ) (3,220 )
------------ -----------
Total distributions to Class B shareholders...................................................... (37,291 ) (55,310 )
------------ -----------
Fund share transactions (Note 10):
Net decrease resulting from Fund share transactions
Class A.......................................................................................... (1,525,168 ) (2,914,177 )
Class B.......................................................................................... 158,038 543,756
------------ -----------
Net decrease resulting from Fund share transactions............................................ (1,367,130 ) (2,370,421 )
------------ -----------
Total decrease in net assets......................................................................... (43,444 ) (1,471,617 )
NET ASSETS
Beginning of period................................................................................ 41,726,311 43,197,928
------------ -----------
End of period...................................................................................... $41,682,867 $41,726,311
============== ============
Accumulated undistributed net investment loss........................................................ $ (111,979 ) $ (15,511 )
============== ============
</TABLE>
* Unaudited.
(See Notes to Financial Statements)
<PAGE> 6
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
DECEMBER 31, FOR THE YEAR ENDED JUNE 30,
CLASS A ------------- -----------------------------------------------------------------------
SELECTED PER SHARE DATA 1995* 1995 1994 1993 1992 1991
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of the
period.......................... $ 9.72 $ 9.50 $ 10.10 $ 9.96 $ 9.56 $ 9.55
------------- ------- ------- ------- ------- -------
Income from investment
operations
Net investment income(a)........ .26 .48 .56 .58 .51 .54
Net gain (loss) on investments
(both realized and
unrealized)................... .34 .24 (.49) .38 .62 .15
------------- ------- ------- ------- ------- -------
Total from investment
operations.................. .60 .72 .07 .96 1.13 .69
------------- ------- ------- ------- ------- -------
Less distributions from
Net investment income........... .26 .48 .56 .58 .51 .54
In excess of net investment
income........................ .02 .02 -- -- .09 .10
Net realized gain............... -- -- .11 .24 .13 .04
------------- ------- ------- ------- ------- -------
Total distributions........... .28 .50 .67 .82 .73 .68
------------- ------- ------- ------- ------- -------
Net asset value, end of period.... $ 10.04 $ 9.72 $ 9.50 $ 10.10 $ 9.96 $ 9.56
=============== ======= ======= ======= ======= =======
Total return(%)................... 6.23(b) 7.93(c) .58(c) 10.07(c) 12.15(c) 7.55(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands).................. $40,038 $40,290 $42,329 $42,187 $32,755 $26,207
Ratio of expenses to average
daily net assets:
With expense reimbursement and
fees paid indirectly(%)(e).... 1.10(d) 1.10 1.10 1.10 1.10 1.07
Without expense reimbursement
and fees paid
indirectly(%)(e).............. 1.36(d) 1.24 1.21 1.29 1.25 1.44
Ratio of net investment income to
average daily net
assets(%)(a).................... 5.13(d) 5.12 5.59 5.81 5.66 5.64
Portfolio turnover rate(%)........ 56(d) 59 44 87 24 41
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE APRIL 1, 1994
MONTHS ENDED YEAR ENDED (COMMENCEMENT) TO
DECEMBER 31, JUNE 30, JUNE 30,
CLASS B ------------- ---------- -----------------
SELECTED PER SHARE DATA 1995* 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).............................................. .22 .41 .10
Net gain (loss) on investments (both realized and unrealized).......... .34 .24 (.08)
------ ---------- -----
Total from investment operations..................................... .56 .65 .02
------ ---------- -----
Less distributions from
Net investment income.................................................. .22 .41 .14
In excess of net investment income..................................... .02 .02 --
Net realized gain...................................................... -- -- .03
------ ---------- -----
Total distributions.................................................. .24 .43 .17
------ ---------- -----
Net asset value, end of period........................................... $ 10.04 $ 9.72 $9.50
=============== ============ ===============
Total return(%).......................................................... 5.83(b) 7.14(c) .20(b)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)................................. $ 1,645 $1,436 $ 869
Ratio of expenses to average daily net assets:
With expense reimbursement and fees paid indirectly(%)(e).............. 1.85(d) 1.85 1.85(d)
Without expense reimbursement and fees paid indirectly(%)(e)........... 2.11(d) 1.99 1.96(d)
Ratio of net investment income to average daily net assets(%)(a)......... 4.38(d) 4.37 4.84(d)
Portfolio turnover rate(%)............................................... 56(d) 59 44
(a) Net investment income is net of expenses reimbursed by manager.
(b) Total return represents aggregate total return and does not reflect a sales charge.
(c) Total return does not reflect a sales charge.
(d) Annualized.
(e) Beginning in July 1995, total expenses include fees paid indirectly through an expense offset arrangement.
* Unaudited.
</TABLE>
(See Notes to Financial Statements)
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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.
a. Securities 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).
b. Securities 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.
c. Federal income taxes -- The Fund is a separate taxable entity and
intends to qualify for tax treatment applicable to regulated investment
companies under the Internal Revenue Code, as amended, and, among other things,
is required to make the requisite distributions to its shareholders which will
relieve it from Federal income and excise taxes. Therefore, no provision has
been recorded for Federal income or excise taxes.
The Fund has a net tax-basis capital loss carryforward of approximately
$171,000 as of June 30, 1995 which may be applied against any realized net
taxable gains of each succeeding fiscal year until fully utilized or until the
expiration date, whichever occurs first. The carryforward expires in 2003.
d. Distributions to shareholders -- Normally, distributions from net
investment income are declared monthly and net realized capital gains, if any,
are declared semi-annually. In addition, distributions to Class A shareholders
are declared daily at the rate per share of the excess of 12b-1 fees of Class B
shares over Class A shares. Distributions are paid at the earlier of redemption
or the designated monthly or semi-annual date.
e. 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.
f. 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.
Certain per share amounts in the 1994, 1992 and 1991 financial highlights
have been reclassified to conform with the 1995 presentation.
g. 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 period, custody fees were
reduced by $3,559 under this arrangement.
2. MANAGEMENT AND DISTRIBUTION
The Fund pays Mackenzie Investment Management Inc. (MIMI) a monthly
management fee at the annual rate of .55% of its average daily net assets.
Mackenzie Ivy Funds Distribution, Inc. (MIFDI), 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 six months ended December 31, 1995, the net amount
of underwriting discount retained by MIFDI was $2,980.
If the Fund's total expenses in any fiscal year exceed the permissible
limits applicable to the Fund in any state in which its shares are then
qualified for sale, MIMI will bear the excess expenses. The most restrictive
state expense limitation provision limits a fund's annual expenses (excluding
interest, taxes, brokerage commissions, extraordinary expenses and other
expenses subject to approval by state securities administrators) to 2.5% of the
first $30 million of the average daily net assets; 2.0% of the next $70 million
of the average daily net assets; and 1.5% of the remaining average daily net
assets. 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
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
an annual rate of .85% of its average daily net assets. The voluntary expense
limitation may be terminated or revised at any time. Expenses reimbursed by
manager reflected in the Statement of Operations consist of voluntary
reimbursements of $49,916.
3. ADMINISTRATIVE SERVICES
MIMI provides certain administrative services to the Fund. As compensation
for these services, the Fund pays MIMI a monthly fee at the annual rate of .10%
of its average daily net assets. Such fee is reflected as Administrative
services fee in the Statement of Operations.
4. FUND ACCOUNTING SERVICES
MIMI provides certain accounting and pricing services for the Fund. As
compensation for those services, the Fund pays MIMI a monthly fee plus
telephone, delivery and other out-of-pocket expenses. The monthly fee is based
upon the net assets of the Fund at the preceding month end at the following
rates: $1,000 when net assets are $20 million and under; $1,500 when net assets
are over $20 million to $75 million; $4,000 when net assets are over $75 million
to $100 million; and $6,000 when net assets are over $100 million. Such fee and
expenses are reflected as Fund accounting in the Statement of Operations.
5. TRANSFER AGENCY AND SHAREHOLDER SERVICE
Mackenzie Ivy Investor Services Corp. (MIISC), a wholly owned subsidiary of
MIMI, is the transfer and shareholder servicing agent for the Fund. The Fund
pays a monthly fee at an annual rate of $20.75 per open account and $4.36 per
account that is closed. In addition, the Fund pays certain out-of-pocket
expenses. Such fees and expenses are reflected as Transfer agent in the
Statement of Operations.
6. DISTRIBUTION PLANS
Under Service and Distribution Plans, the Fund reimburses MIFDI for service
fee payments made to brokers at an annual rate of .25% of its average daily net
assets. Class B shares are also subject to an ongoing distribution fee at an
annual rate of .75% of the average daily net asset value of Class B shares.
MIFDI 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.
7. 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.
8. 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.
9. SUBSEQUENT EVENT
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. As a result of this change, the net asset value per share of
Class A and Class B are expected to differ.
10. FUND SHARE TRANSACTIONS
Fund share transactions for both Class A and Class B were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1995 JUNE 30, 1995
---------------------- ----------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------------------------------ -------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Sold.......................... 87,542 $ 860,431 384,267 $ 3,640,567
Issued on reinvestment of
distributions................ 69,048 676,699 131,027 1,233,019
Repurchased................... (311,725) (3,062,298) (828,084) (7,787,763)
-------- ----------- -------- -----------
Net decrease.................. (155,135) $(1,525,168) (312,790) $(2,914,177)
========== ============= ========== =============
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1995 JUNE 30, 1995
------------------- ---------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------------------------------- ------ -------- ------- ---------
<S> <C> <C> <C> <C>
Sold........................... 14,580 $142,895 84,053 $ 802,583
Issued on reinvestment of
distributions................. 1,998 19,600 2,532 23,881
Repurchased.................... (449 ) (4,457) (30,370) (282,708)
------ -------- ------- ---------
Net increase................... 16,129 $158,038 56,215 $ 543,756
======= ========== ======== ===========
</TABLE>
MNYMF-3-296
<PAGE> 9
DECEMBER 31, 1995
[MACKENZIE LOGO]
MACKENZIE NATIONAL MUNICIPAL FUND
SEMI-ANNUAL REPORT
This report and the financial statements contained herein are submitted for the
general information of the shareholders. This report is not authorized for
distribution to prospective investors unless preceded or accompanied by an
effective prospectus.
Mackenzie Investment Management Inc.
Via Mizner Financial Plaza
700 South Federal Hwy.
Boca Raton, FL 33432
1-800-456-5111
Dear Shareholder:
Over the latter part of 1995 the municipal bond market remained
relatively unchanged as the Federal Reserve sought to manage interest rates and
ongoing government budget concerns seemed to dampen investor enthusiasm.
For the most part, longer term municipal bonds tracked the movements
in the U.S. treasury market. There was very little movement in yields, up or
down.
In response to the interest rate environment and bond market
conditions, we extended the average maturity of Mackenzie National Municipal
Fund. However, we resisted going beyond the intermediate maturity range
because of our conviction that the slightly higher yield of long-term bonds
does not justify the additional interest rate and market risks. By taking an
active management position with the Fund, we followed a disciplined approach in
seeking to balance the pursuit of yield with an acceptable level of risk.
At the same time, we have remained focused on portfolio quality. The
emphasis on investment grade bonds continues. As in the past, the Fund manager
avoids the purchase of derivative products.
With respect to 1996 being an election year, we believe that the
municipal market has already taken the issue of tax reform, and its impact,
into consideration. A further point to be made, is that regardless of what may
happen with tax reform, most experts feel that it will reflect a more moderate
rather than an extreme adjustment.
We believe that the current interest rate environment, low
inflationary pressures and prospects for economic growth will continue to
provide the municipal market with stability and predictability in the future.
As always we will continue to take an active role in the management of
Mackenzie National Municipal Fund to seek as high a yield as possible without
compromising our commitment to minimizing risk.
Sincerely,
/s/ Michael G. Landry
Michael G. Landry
President
MACKENZIE NATIONAL MUNICIPAL FUND IS PRIMARILY INVESTED IN HIGH QUALITY BONDS.
THE MANAGER STRESSES NON-CALLABLE BONDS TO PROVIDE THE FUND WITH CALL
PROTECTION AND REDUCES VOLATILITY THROUGH DIVERSIFICATION BY ISSUE TYPE, LOCAL
GOVERNMENTS AND AGENCY ISSUERS, LOCATION AND PURPOSE.
<TABLE>
<S> <C> <C> <C>
BOARD OF TRUSTEES OFFICERS TRANSFER AGENT MANAGER
John S. Anderegg, Jr. Michael G. Landry, President Mackenzie Ivy Investor Mackenzie Investment
Paul H. Broyhill Keith J. Carlson, Vice President Services Corp. Management Inc.
Stanley Channick C. William Ferris, P.O. Box 3022 Boca Raton, FL
Frank W. DeFriece, Jr. Secretary/Treasurer Boca Raton, FL 33431-0922
Roy J. Glauber 1-800-777-6472 DISTRIBUTOR
Michael G. Landry CUSTODIAN Mackenzie Ivy Funds
Joseph G. Rosenthal Brown Brothers Harriman & Co. AUDITORS Distribution, Inc.
J. Brendan Swan Boston, MA Coopers & Lybrand L.L.P. Via Mizner Financial Plaza
Fort Lauderdale, FL 700 South Federal Highway
LEGAL COUNSEL Boca Raton, FL 33432
Dechert Price & Rhoads
Boston, MA
</TABLE>
<PAGE> 10
MACKENZIE NATIONAL MUNICIPAL FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES -- 96.4% PRINCIPAL VALUE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
ARIZONA -- 8.0%
A1 AA Phoenix Arizona Highway Revenue (NC), 9.25%, 07/01/07................................ $ 565,000 $ 784,079
NR AA- Tucson (GO)(NC), 9.75%, 07/01/12 (Escrowed to Maturity).............................. 400,000 601,928
NR AA- Tucson (GO)(NC), 9.75%, 07/01/13 (Escrowed to Maturity).............................. 500,000 761,915
-----------
2,147,922
-----------
CALIFORNIA -- 4.1%
NR BBB California Health Facilities Financing Authority, 7.00%, 6/01/08..................... 250,000 258,725
Baa NR Irwindale California Community Redevelopment Agency, 6.60%, 8/01/18.................. 200,000 213,050
Baa1 A- Los Angeles County California Certificate of Participation (Disney Parking Project)
(NC),
0.00%, 09/01/06.................................................................... 500,000 257,115
Aa AA+ Southern California Public Power Authority (NC), 0.00%, 07/01/14..................... 1,000,000 361,800
-----------
1,090,690
-----------
COLORADO -- 1.4%
Aaa NR Dawson Ridge Colorado (GO)(NC), 0.00%, 10/01/22 (Escrowed to Maturity)............... 2,000,000 379,160
-----------
DISTRICT OF COLUMBIA -- 0.4%
A1 A+ Georgetown University, D.C. (GO) (MBIA Insured), 8.25%, 04/01/18..................... 100,000 110,348
-----------
FLORIDA -- 6.9%
Aa AA Florida State Board of Education (GO), 9.125%, 6/01/14............................... 110,000 161,860
Aa AA Florida State Board of Education (GO), 9.125%, 6/01/14 (Escrowed to Maturity)........ 690,000 1,001,086
Aaa AAA Orlando & Orange County Expressway (NC)(FGIC Insured), 8.25%, 07/01/14............... 500,000 690,560
-----------
1,853,506
-----------
GEORGIA -- 9.0%
Ba1 BB Griffin-Spalding County Georgia Industrial Revenue Authority (Borden, Inc.), 7.20%,
06/01/00........................................................................... 1,000,000 1,033,810
A A+ Municipal Electric Authority Georgia (NC), 10.00%, 01/01/10.......................... 250,000 362,930
Baa BBB+ Savannah Georgia Hospital Authority Revenue (Candler Hospital), 7.00%, 1/01/23....... 1,000,000 1,026,830
-----------
2,423,570
-----------
ILLINOIS -- 17.1%
Aa3 AA- Chicago Illinois Oil & Gas Supply Revenue (Peoples Gas Light & Coke Co.), 8.10%,
05/01/20........................................................................... 500,000 568,440
NR A+ Illinois Educational Facility Authority (Loyola), 7.125%, 7/01/01 (Pre-refunded)..... 680,000 781,517
A1 A+ Illinois Educational Facility Authority (Loyola), 7.125%, 7/01/11.................... 320,000 354,963
Aaa AAA Illinois Health and Education (CGIC Insured), 7.60%, 8/15/10 (Escrowed to
Maturity).......................................................................... 46,000 55,503
Aaa AAA Illinois Health Facility Authority (CGIC Insured), 7.60%, 8/15/10.................... 750,000 847,867
Aa NR Sangamon County Illinois (GO), 7.45%, 11/15/06....................................... 800,000 968,864
Baa BBB Southwestern Illinois Development Authority Medical Facilties Revenue
(Anderson Hospital Project Series A), 7.00%, 8/15/12............................... 1,000,000 1,039,200
-----------
4,616,354
-----------
MAINE -- 0.3%
NR A+ Maine Municipal Bond Bank, 7.65%, 11/01/98 (Pre-refunded)............................ 85,000 94,945
-----------
MASSACHUSETTS -- 4.7%
Aaa AAA Boston Massachusetts Water & Sewer, 10.875%, 01/01/09 (Escrowed to Maturity)......... 500,000 720,340
Baa1 BBB Massachusetts State Health & Educational Facilities Authority, 6.625%, 11/15/22...... 500,000 490,425
NR BBB+ Massachusetts State Housing, Series B, 8.10%, 08/01/23............................... 50,000 52,723
-----------
1,263,488
-----------
MICHIGAN -- 9.9%
Aaa AAA Kent Hospital Finance Authority (Butterworth Hospital) (Butterworth Hospital) (MBIA
Insured), 7.25%, 01/15/13.......................................................... 1,000,000 1,245,470
Baa BBB Pontiac Michigan Hospital Finance Authority, 6.00%, 8/01/23.......................... 1,000,000 905,460
Aaa AAA Romulus, Michigan School Building (GO) (FGIC Insured), 0.00%, 05/01/07
(Pre-refunded)..................................................................... 2,500,000 516,000
-----------
2,666,930
-----------
NEW HAMPSHIRE -- 4.0%
Baa3 BB- New Hampshire Industrial Development Authority Pollution Control (Central Maine Power
Co.), 7.375%, 05/01/14............................................................. 1,000,000 1,072,130
-----------
NEW YORK -- 9.7%
Aaa AAA New York State Urban Development Corporation, 0.00%, 1/01/08......................... 1,000,000 529,300
NR BBB New York State Medical Care Facilities, 6.125%, 11/01/16............................. 500,000 491,580
Baa1 BB New York City (GO), 7.50%, 8/15/02................................................... 500,000 530,880
Baa BBB- New York City Health & Hospital Corporation Revenue, 6.30%, 2/15/20.................. 500,000 507,225
NR A Onondaga County New York Industrial Development Agency, 7.90%, 1/01/17............... 500,000 552,860
-----------
2,611,845
-----------
</TABLE>
(See Notes to Financial Statements)
<PAGE> 11
MACKENZIE NATIONAL MUNICIPAL FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES PRINCIPAL VALUE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA -- 6.6%
Aaa AA Oklahoma County Home Financing Agency (NC), 0.00%, 03/01/06.......................... $2,000,000 $ 643,920
NR BB Tulsa Oklahoma Hospital Authority Revenue (Tulsa Regional Medical Center), 7.20%,
6/01/17............................................................................ 1,000,000 1,140,790
-----------
1,784,710
-----------
PENNSYLVANIA -- 2.2%
NR A- Allegheny County Pennsylvania Hospital Revenue (Allegheny Valley Hospital), 7.00%,
08/01/15........................................................................... 500,000 585,895
-----------
TENNESSEE -- 1.5%
Aaa NR Nashville & Davidson County Tennessee Health & Education Board Revenue,
0.00% (NC), 06/01/21............................................................... 2,000,000 398,640
-----------
TEXAS -- 4.2%
Aaa AAA Texas National Research Lab Lease Revenue, 6.85%, 12/01/20 (Pre-refunded)............ 1,000,000 1,146,440
-----------
UTAH -- 3.9%
Aaa AAA Intermountain Power Agency Utah (MBIA Insured), 6.00%, 07/01/16...................... 1,000,000 1,056,230
-----------
VERMONT -- 1.2%
A1 NR Vermont Housing Finance Agency (FHA/VA Insured), 7.85%, 12/01/29..................... 295,000 312,638
-----------
WASHINGTON -- 1.3%
Aa AA Washington Public Power Supply System, 7.50%, 07/01/15 (Pre-refunded)................ 315,000 347,584
-----------
TOTAL INVESTMENTS -- 96.4% (COST -- $24,087,636)*.................................... 25,963,025
OTHER ASSETS, LESS LIABILITIES -- 3.6%............................................... 984,815
-----------
NET ASSETS -- 100%................................................................... $26,947,840
===========
*Cost is approximately the same for Federal income tax purposes.
FEDERAL INCOME TAX INFORMATION:
At December 31, 1995 net unrealized appreciation based on cost for financial statement and Federal income tax
purposes is as follows:
Gross unrealized appreciation........................................................ $ 1,940,844
Gross unrealized depreciation........................................................ (65,455)
-----------
Net unrealized appreciation.......................................................... $ 1,875,389
===========
OTHER INFORMATION:
Purchases and sales of municipal securities aggregated $7,327,510 and $10,719,283, respectively, for the period
ended December 31, 1995.
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
GO -- General Obligation
MBIA -- Municipal Bond Insurance Association
NC -- Non Callable
VA -- Veteran's Administration
</TABLE>
(See Notes to Financial Statements)
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments, at value (identified cost -- $24,087,636).............................................................. $25,963,025
Cash................................................................................................................ 453,441
Receivables
Interest.......................................................................................................... 511,491
Manager for expense reimbursement................................................................................. 24,704
Deferred organization expenses...................................................................................... 5,443
Other assets........................................................................................................ 14,314
-----------
Total assets...................................................................................................... 26,972,418
-----------
LIABILITIES
Payables:
Management fee.................................................................................................... 12,561
12b-1 service and distribution fees............................................................................... 5,618
Administrative services fee....................................................................................... 2,284
Fund accounting................................................................................................... 1,450
Transfer agent.................................................................................................... 2,665
-----------
Total liabilities................................................................................................. 24,578
-----------
NET ASSETS.......................................................................................................... $26,947,840
===========
CLASS A:
Net asset value and redemption price per share ($26,104,711 / 2,575,763 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 ($843,129 / 83,192 shares outstanding)**............................... $ 10.13
===========
NET ASSETS CONSIST OF:
Capital paid-in................................................................................................... $25,965,599
Accumulated net realized loss on investments...................................................................... (810,067)
Accumulated undistributed net investment loss..................................................................... (83,081)
Net unrealized appreciation on investments........................................................................ 1,875,389
-----------
NET ASSETS.......................................................................................................... $26,947,840
===========
</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 SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest................................................................................................. $ 853,250
----------
EXPENSES
Management fee........................................................................................... $76,790
Transfer agent fee....................................................................................... 16,602
Administrative services fee.............................................................................. 13,962
Custodian fees........................................................................................... 7,790
Blue Sky fees............................................................................................ 9,913
Auditing and accounting fees............................................................................. 20,103
Shareholder reports...................................................................................... 2,268
Amortization of organization expenses.................................................................... 837
Fund accounting.......................................................................................... 12,361
Trustees' fees........................................................................................... 2,212
12b-1 service and distribution fees
Class A................................................................................................ 33,885
Class B................................................................................................ 4,082
Legal.................................................................................................... 18,244
Other.................................................................................................... 1,691
----------
220,740
Expenses reimbursed by manager............................................................................. (59,844)
Fees paid indirectly....................................................................................... (4,256)
----------
Net expenses............................................................................................. 156,640
----------
Net investment income...................................................................................... 696,610
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments......................................................................... 94,129
Net unrealized appreciation during the period on investments............................................. 1,015,141
----------
Net gain on investments................................................................................ 1,109,270
----------
Net increase in net assets resulting from operations....................................................... $1,805,880
==========
</TABLE>
(See Notes to Financial Statements)
<PAGE> 13
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
DECEMBER 31, JUNE 30,
------------ ------------
1995* 1995
------------ ------------
<S> <C> <C>
DECREASE IN NET ASSETS
Operations:
Net investment income............................................................................. $ 696,610 $ 1,732,616
Net realized gain (loss) on investments........................................................... 94,129 (1,092,548)
Net unrealized appreciation during the period on investments...................................... 1,015,141 1,549,158
------------ ------------
Net income resulting from operations............................................................ 1,805,880 2,189,226
------------ ------------
CLASS A:
Distributions from
Net investment income............................................................................. (679,215 ) (1,697,682)
In excess of net investment income................................................................ (67,950 ) (81,064)
------------ ------------
Total distributions to Class A shareholders..................................................... (747,165 ) (1,778,746)
------------ ------------
CLASS B:
Distributions from
Net investment income............................................................................. (17,395 ) (34,934)
In excess of net investment income................................................................ (1,930 ) (2,373)
------------ ------------
Total distributions to Class B shareholders..................................................... (19,325 ) (37,307)
------------ ------------
Fund share transactions (Note 9):
Net decrease resulting from Fund share transactions
Class A......................................................................................... (3,253,964 ) (10,413,966)
Class B......................................................................................... 43,734 261,679
------------ ------------
Net decrease resulting from Fund share transactions........................................... (3,210,230 ) (10,152,287)
------------ ------------
Total decrease in net assets........................................................................ (2,170,840 ) (9,779,114)
NET ASSETS
Beginning of period............................................................................... 29,118,680 38,897,794
------------ ------------
End of period..................................................................................... $26,947,840 $ 29,118,680
============== ============
Accumulated undistributed net investment loss....................................................... $ (83,081 ) $ (13,201)
============== ============
</TABLE>
* Unaudited.
(See Notes to Financial Statements)
<PAGE> 14
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
DECEMBER 31, FOR THE YEAR ENDED JUNE 30,
CLASS A ------------- ---------------------------------------------------------------
SELECTED PER SHARE DATA 1995* 1995 1994 1993 1992 1991
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........ $ 9.76 $ 9.60 $ 10.17 $ 9.94 $ 9.60 $ 9.59
------------- ------- ------- ------- ------- -------
Income from investment operations
Net investment income(a).................. .25 .48 .57 .60 .59 .57
Net gain (loss) on investments (both
realized and unrealized)................ .39 .19 (.48) .31 .41 .12
------------- ------- ------- ------- ------- -------
Total from investment operations........ .64 .67 .09 .91 1.00 .69
------------- ------- ------- ------- ------- -------
Less distributions from
Net investment income..................... .25 .48 .57 .60 .59 .57
In excess of net investment income........ .02 .03 -- -- .06 .06
Net realized gain......................... -- -- .09 .08 .01 .05
------------- ------- ------- ------- ------- -------
Total distributions..................... .27 .51 .66 .68 .66 .68
------------- ------- ------- ------- ------- -------
Net asset value, end of period.............. $ 10.13 $ 9.76 $ 9.60 $ 10.17 $ 9.94 $ 9.60
=============== ======= ======= ======= ======= =======
Total return(%)............................. 6.71(b) 7.21(c) .77(c) 9.48(c) 10.76(c) 7.52(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands).... $26,105 $28,351 $38,406 $42,739 $35,995 $21,527
Ratio of expenses to average daily net
assets
With expense reimbursement and
fees paid indirectly(%)(d).............. 1.10(e) 1.10 1.10 1.10 1.10 1.07
Without expense reimbursement and
fees paid indirectly(%)(d).............. 1.56(e) 1.30 1.24 1.31 1.54 2.17
Ratio of net investment income to
average daily net assets(%)(a)............ 5.01(e) 5.08 6.65 6.06 6.00 5.89
Portfolio turnover rate(%).................. 55(e) 65 68 57 62 97
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE FOR THE APRIL 1, 1994
YEAR ENDED YEAR ENDED (COMMENCEMENT) TO
JUNE 30, DECEMBER 31, JUNE 30,
CLASS B ---------- ------------ -----------------
SELECTED PER SHARE DATA 1995* 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)............................................ .21 .41 .11
Net gain (loss) on investments (both realized and unrealized)....... .40 .19 (.06)
---------- ------------ ------
Total from investment operations.................................. .61 .60 .05
---------- ------------ ------
Less distributions from
Net investment income............................................... .21 .41 .11
In excess of net investment income.................................. .03 .03 .03
---------- ------------ ------
Total distributions............................................... .24 .44 .14
---------- ------------ ------
Net asset value, end of period........................................ $ 10.13 $ 9.76 $ 9.60
============ ============== ==============
Total return(%)....................................................... 6.31(b) 6.42(c) .55(b)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands).............................. $ 843 $ 767 $ 492
Ratio of expenses to average daily net assets
With expense reimbursement and fees paid indirectly(%)(d)........... 1.85(e) 1.85 1.85(e)
Without expense reimbursement and fees paid indirectly(%)(d)........ 2.31(e) 2.05 1.99(e)
Ratio of net investment income to average daily net assets(%)(a)...... 4.26(e) 4.33 5.90(e)
Portfolio turnover rate(%)............................................ 55(e) 65 68
(a) Net investment income is net of expenses reimbursed by manager.
(b) Total return represents aggregate total return and does not reflect a sales charge.
(c) Total return does not reflect a sales charge.
(d) Beginning in July 1995, total expenses include fees paid indirectly through an expense offset arrangement.
(e) Annualized.
* Unaudited.
</TABLE>
(See Notes to Financial Statements)
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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
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.
a. Securities 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).
b. Securities 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.
c. Federal income taxes -- The Fund is a separate taxable entity and
intends to qualify for tax treatment applicable to regulated investment
companies under the Internal Revenue Code, as amended, and, among other things,
is required to make the requisite distributions to its shareholders which will
relieve it from Federal income and excise taxes. Therefore, no provision has
been recorded for Federal income or excise taxes.
The Fund has a net tax-basis capital loss carryforward of approximately
$144,000 as of June 30, 1995 which may be applied against any realized net
taxable gains of each succeeding fiscal year until fully utilized or until the
expiration date, whichever occurs first. The carryforward expires $59,000 in
1997 and $85,000 in 2003.
d. Distributions to shareholders -- Normally, distributions from net
investment income are declared monthly and net realized capital gains, if any,
are declared semi-annually. In addition, distributions to Class A shareholders
are declared daily at the rate per share of the excess of 12b-1 fees of Class B
shares over Class A shares. Distributions are paid at the earlier of redemption
or the designated monthly or semi-annual date.
e. 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.
f. 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.
Certain per share amounts in the 1992 and 1991 financial highlights have
been reclassified to conform with the 1995 presentation.
g. 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 period, custody fees were
reduced $4,256 under this arrangement.
2. MANAGEMENT AND DISTRIBUTION
The Fund pays Mackenzie Investment Management Inc. (MIMI) a monthly
management fee at the annual rate of .55% of its average daily net assets.
Mackenzie Ivy Funds Distribution, Inc. (MIFDI), 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 six months ended December 31, 1995, the net amount
of underwriting discount retained by MIFDI was $1,298.
If the Fund's total expenses in any fiscal year exceed the permissible
limits applicable to the Fund in any state in which its shares are then
qualified for sale, MIMI will bear the excess expenses. The most restrictive
state expense limitation provision limits a fund's annual expenses (excluding
interest, taxes, brokerage commissions, extraordinary expenses and other
expenses subject to approval by state securities administrators) to 2.5% of the
first $30 million of the average daily net assets; 2.0% of the next $70 million
of the average daily net assets; and 1.5% of the remaining average daily net
assets. Currently, MIMI voluntarily limits the Fund's
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 daily 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 consist of a voluntary reimbursement of $59,844.
3. ADMINISTRATIVE SERVICES
MIMI provides certain administrative services to the Fund. As compensation
for these services, the Fund pays MIMI a monthly fee at the annual rate of .10%
of its average daily net assets. Such fees is reflected as Administrative
services fee in the Statement of Operations.
4. FUND ACCOUNTING SERVICES
MIMI provides certain accounting and pricing services for the Fund. As
compensation for those services, the Fund pays MIMI a monthly fee plus
telephone, delivery and other out-of-pocket expenses. The monthly fee is based
upon the net assets of the Fund at the preceding month end at the following
rates: $1,000 when net assets are $20 million and under; $1,500 when net assets
are over $20 million to $75 million; $4,000 when net assets are over $75 million
to $100 million; and $6,000 when net assets are over $100 million. Such fee and
expenses are reflected as Fund accounting in the Statement of Operations.
5. TRANSFER AGENCY AND SHAREHOLDER SERVICE
Mackenzie Ivy Investor Services Corp. (MIISC), a wholly owned subsidiary of
MIMI, is the transfer and shareholder servicing agent for the Fund. The Fund
pays a monthly fee at an annual rate of $20.75 per open account and $4.36 per
account that is closed. In addition, the Fund pays certain out-of-pocket
expenses. Such fees and expenses are reflected as Transfer agent in the
Statement of Operations.
6. DISTRIBUTION PLANS
Under Service and Distribution Plans, the Fund reimburses MIFDI for service
fee payments made to brokers at an annual rate of .25% of its average daily net
assets. Class B shares are also subject to an ongoing distribution fee at an
annual rate of .75% of the average daily net asset value of Class B shares.
MIFDI 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.
7. 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.
8. SUBSEQUENT EVENT
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. As a result of this change, the net asset value per share of
Class A and Class B are expected to differ.
9. FUND SHARE TRANSACTIONS
Fund share transactions for both Class A and Class B were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1995 JUNE 30, 1995
---------------------- -------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------- -------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Sold....................... 79,375 $ 790,006 535,305 $ 5,065,584
Issued on reinvestment of
distributions............. 37,270 367,674 82,259 780,601
Repurchased................ (446,121) (4,411,644) (1,714,631) (16,260,151)
-------- ----------- ---------- ------------
Net decrease............... (329,476) $(3,253,964) (1,097,067) $(10,413,966)
========== ============= ============ ==============
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1995 JUNE 30, 1995
------------------- -----------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ----------------------------- ------ -------- ------- ---------
<S> <C> <C> <C> <C>
Sold......................... 6,477 $ 63,000 40,698 $ 393,357
Issued on reinvestment of
distributions............... 637 6,288 2,030 19,267
Repurchased.................. (2,579) (25,554) (15,353) (150,945)
------ -------- ------- ---------
Net increase................. 4,535 $ 43,734 27,375 $ 261,679
======= ========== ======== ===========
</TABLE>
MNMF-3-296
<PAGE> 17
DECEMBER 31, 1995 [MACKENZIE LOGO]
MACKENZIE CALIFORNIA MUNICIPAL FUND
SEMI-ANNUAL REPORT
This report and the financial statements contained herein are submitted for the
general information of the shareholders. This report is not authorized for
distribution to prospective investors unless preceded or accompanied by an
effective prospectus.
Mackenzie Investment Management Inc.
Via Mizner Financial Plaza
700 South Federal Hwy.
Boca Raton, FL 33432
1-800-456-5111
Dear Shareholder:
Over the latter part of 1995 the municipal bond market remained
relatively unchanged as the Federal Reserve sought to manage interest rates and
ongoing government budget concerns seemed to dampen investor enthusiasm.
For the most part, longer term municipal bonds tracked the movements
in the U.S. treasury market. There was very little movement in yields, up or
down.
In response to the interest rate environment and bond market
conditions, we extended the average maturity of Mackenzie California Municipal
Fund. However, we resisted going beyond the intermediate maturity range
because of our conviction that the slightly higher yield of long-term bonds
does not justify the additional interest rate and market risks. By taking an
active management position with the Fund, we followed a disciplined approach in
seeking to balance the pursuit of yield with an acceptable level of risk.
At the same time, we have remained focused on portfolio quality. The
emphasis on investment grade bonds continues. As in the past, the Fund manager
avoids the purchase of derivative products.
With respect to 1996 being an election year, we believe that the
municipal market has already taken the issue of tax reform, and its impact,
into consideration. A further point to be made, is that regardless of what may
happen with tax reform most experts feel that it will reflect a more moderate
rather than an extreme adjustment.
We believe that the current interest rate environment, low
inflationary pressures and prospects for economic growth will continue to
provide the municipal market with stability and predictability in the future.
As always we will continue to take an active role in the management of
Mackenzie California Municipal Fund in order to seek as high a yield as possible
without compromising our commitment to minimizing risk.
Sincerely,
/s/ Michael G. Landry
- ---------------------------------------
Michael G. Landry
President
MACKENZIE CALIFORNIA MUNICIPAL FUND IS PRIMARILY INVESTED IN HIGH QUALITY BONDS.
THE MANAGER STRESSES NON-CALLABLE BONDS TO PROVIDE THE FUND WITH CALL
PROTECTION AND REDUCES VOLATILITY THROUGH DIVERSIFICATION BY ISSUE TYPE, LOCAL
GOVERNMENTS AND AGENCY ISSUERS, LOCATION AND PURPOSE.
<TABLE>
<S> <C> <C> <C>
BOARD OF TRUSTEES OFFICERS TRANSFER AGENT MANAGER
John S. Anderegg, Jr. Michael G. Landry, President Mackenzie Ivy Investor Mackenzie Investment
Paul H. Broyhill Keith J. Carlson, Vice President Services Corp. Management Inc.
Stanley Channick C. William Ferris, P.O. Box 3022 Boca Raton, FL
Frank W. DeFriece, Jr. Secretary/Treasurer Boca Raton, FL 33431-0922
Roy J. Glauber 1-800-777-6472 DISTRIBUTOR
Michael G. Landry CUSTODIAN Mackenzie Ivy Funds
Joseph G. Rosenthal Brown Brothers Harriman & Co. AUDITORS Distribution, Inc.
J. Brendan Swan Boston, MA Coopers & Lybrand L.L.P. Via Mizner Financial Plaza
Fort Lauderdale, FL 700 South Federal Highway
LEGAL COUNSEL Boca Raton, FL 33432
Dechert Price & Rhoads
Boston, MA
</TABLE>
<PAGE> 18
MACKENZIE CALIFORNIA MUNICIPAL FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES -- 97.4% PRINCIPAL VALUE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
A A- Bakersfield California Hospital Revenue, 6.50%, 01/01/22............................. $2,000,000 $ 2,076,980
Baa BBB+ Berkeley California Health Facilities Revenue (Alta Bates Medical Center), 6.55%,
12/02/22........................................................................... 1,000,000 1,016,870
NR A- California Health Facilities Authority (Pomona Valley Community Hospital), 7.00%,
01/01/17........................................................................... 1,000,000 1,021,320
NR AA- California Health Facilities Authority (Stanford University), 7.20%, 11/01/96
(Pre-refunded)..................................................................... 5,000 5,248
NR A+ California Health Facilities Authority (Methodist Hospital), 7.25%, 02/01/99
(Pre-refunded)..................................................................... 150,000 166,495
Aa AA- California Housing Finance Authority, 6.90%, 08/01/16................................ 100,000 102,648
A2 A+ California Pollution Control Financing Authority, 7.20%, 09/01/15.................... 5,000 5,175
A2 A+ California Pollution Control Financing Authority, 6.85%, 12/01/08.................... 500,000 535,885
A1 A California State (GO)(NC), 6.75%, 05/01/02........................................... 500,000 562,960
A1 A California State (GO)(NC), 9.50%, 05/01/03........................................... 500,000 648,185
A1 A+ California State (GO)(NC), 9.50%, 02/01/10........................................... 1,000,000 1,410,650
A1 A- California State Public Works Board Revenue, 7.375%, 04/01/06........................ 5,000 5,606
A A- California State Public Works Board Revenue (NC), 8.35%, 12/01/99.................... 500,000 570,220
A1 AA- Clovis Unified School District (GO)(NC), 10.90%, 08/01/99............................ 475,000 580,678
NR NR Costa Mesa City Hall, 7.50%, 10/01/97 (Pre-refunded)................................. 50,000 53,021
Baa BBB Dixon California Redevelopment Agency, 7.30%, 09/01/19............................... 500,000 579,310
Baa BBB Dixon Redevelopment Agency, 7.35%, 09/01/24.......................................... 500,000 580,555
Baa BBB- Foothill/Eastern Transportation Corridor Agency, California Toll Road Revenue (NC),
0.00%, 01/01/24.................................................................... 1,000,000 169,920
Aaa NR Fontana Redevelopment Agency, 8.00%, 09/01/98 (Pre-refunded)......................... 20,000 22,410
NR BBB Guam Government (GO), 5.375%, 11/15/13............................................... 500,000 465,465
NR BBB Guam Power Authority Revenue Series A, 6.625%, 10/01/14.............................. 450,000 473,094
NR BBB Hawaiian Gardens California Redevelopment Agency, 0.00%, 12/01/16.................... 1,000,000 270,560
NR BBB Inglewood California Redevelopment Agency, 6.125%, 07/01/23.......................... 500,000 505,920
NR A+ Irvine Ranch Water District Power Agency, 7.80%, 02/15/08............................ 25,000 26,875
Baa NR Irwindale California Community Redevelopment Agency, 6.60%, 08/01/18................. 1,300,000 1,384,825
A NR Kern High School District (GO)(NC), 7.00%, 08/01/06.................................. 700,000 819,140
A NR Kern High School District (GO)(NC), 7.00%, 08/01/10.................................. 165,000 194,984
Aaa AAA Kern High School District (GO)(NC), 9.00%, 08/01/06.................................. 680,000 912,179
NR BBB Long Beach Aquarium of the Pacific, California, 6.125%, 07/01/23..................... 750,000 751,530
Aaa AAA Los Angeles Convention & Exhibition Center, 9.00%, 12/01/05 (Pre-refunded)........... 5,000 6,737
Aa AA- Los Angeles Department of Water & Power, 9.00%, 02/01/02............................. 500,000 616,245
Aa AA- Los Angeles Department of Water & Power, 9.00%, 09/01/04............................. 1,000,000 1,282,190
Aa AA- Los Angeles Department of Water & Power, 7.10%, 01/15/01 (Pre-refunded).............. 600,000 678,690
Aa AA Los Angeles Department of Water & Power, 7.625%, 08/01/97 (Pre-refunded)............. 20,000 21,638
NR AAA Los Angeles Harbor Department Revenue, 7.60%, 10/01/18, (Escrowed to Maturity)....... 205,000 237,784
NR AAA Los Angeles State Building Authority, 7.50%, 03/01/98 (Pre-refunded)................. 5,000 5,465
Aaa AAA Los Angeles Waste Water System Revenue (NC)(MBIA Insured), 8.80%, 06/01/00........... 500,000 590,725
Aaa AAA Los Angeles Waste Water System Revenue (NC)(MBIA Insured), 8.50%, 06/01/01........... 500,000 598,045
Baa1 A- Los Angeles County Certificate of Participation -- (Disney Parking Project) (NC),
0.00%, 09/01/06.................................................................... 2,000,000 1,028,460
Aaa AAA Los Angeles County Certificate of Participation Sheriff's Training Academy,
7.75%, 07/01/96 (Pre-refunded)..................................................... 25,000 26,000
Baa1 A- Los Angeles County California Certificate of Participation (NC), 0.00%, 09/01/15..... 1,000,000 277,170
A1 A+ Modesto Irrigation District Certificate of Participation, 7.25%, 10/01/15............ 110,000 114,913
NR AAA Morgan Hill California Redevelopment Agency (FHA Insured), 6.45%, 12/01/27........... 1,000,000 1,038,180
Aaa AAA Oakland Redevelopment Agency (AMBAC Insured), 7.40%, 05/01/07........................ 100,000 108,841
Aaa AAA Oxnard Public Facilities Corporation Certificate of Participation (AMBAC Insured),
7.50%, 09/01/99 (Pre-refunded)..................................................... 140,000 155,862
Aaa AAA Palomar Pomerado California Health Systems (NC), 0.00%, 11/01/03..................... 500,000 346,195
Baa1 NR Perris California High School District Certificate of Participation, 5.85%,
09/01/11........................................................................... 2,000,000 2,020,400
Aa NR Piedmont Unified School District (GO), 0.00%, 08/01/13............................... 1,000,000 367,830
Aaa AAA Pleasant Hill California Redevelopment (CGIC Insured), 6.90%, 07/01/21............... 1,000,000 1,099,600
NR AA- Pleasanton School District (GO)(NC), 9.25%, 08/01/99................................. 200,000 233,602
Baa1 A Puerto Rico Commonwealth (GO)(NC), 0.00%, 07/01/04................................... 500,000 333,730
Baa1 A Puerto Rico Public Buildings Authority Revenue, 6.60%, 07/01/04...................... 100,000 110,880
NR BBB- Puerto Rico Educational Facility (Polytechnic University), 5.70%, 08/01/13........... 250,000 247,523
Aaa AAA Rancho Cucamonga Redevelopment Agency (FGIC Insured), 7.70%, 05/01/98
(Pre-refunded)..................................................................... 35,000 37,927
A A Riverside County Certificate of Participation, 7.75%, 12/01/03....................... 30,000 31,572
Aaa AAA Salinas California Redevelopment Agency (CGIC Insured), 0.00%, 11/01/22.............. 2,000,000 395,600
Aa3 A+ San Diego Industrial Development Revenue (San Diego Gas & Electric), 7.625%,
07/01/21........................................................................... 495,000 512,602
</TABLE>
(See Notes to Financial Statements)
<PAGE> 19
MACKENZIE CALIFORNIA MUNICIPAL FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES PRINCIPAL VALUE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Aaa NR San Diego County Certificate of Participation, 7.875%, 08/01/97 (Pre-refunded)....... $ 35,000 $ 37,871
Aaa AAA San Jose Certificate of Participation, 7.875%, 09/01/96 (Pre-refunded)............... 35,000 36,654
Aaa AAA Santa Clara Certificate of Participation (NC)(MBIA Insured), 7.75%, 02/01/02......... 1,000,000 1,173,860
NR A+ Santa Clara Electric Revenue, 7.80%, 07/01/10........................................ 35,000 36,363
NR AAA Santa Clara County Certificate of Participation (American Baptist Homes),
8.00%, 03/01/98 (Pre-refunded)..................................................... 20,000 22,067
A1 A+ Santa Cruz Hospital Revenue (Dominican), 7.00%, 12/01/13............................. 100,000 106,500
NR A Santa Rosa Insured Revenue (Episcopal Homes) (California Mortgage Insurance), 7.125%,
06/01/14........................................................................... 250,000 258,278
NR BBB Snowline Joint Unified School District Certificate of Participation, 7.25%,
04/01/18........................................................................... 750,000 808,972
Aa A+ Southern California Public Power Authority (NC), 0.00%, 07/01/14..................... 2,500,000 904,500
Aa A+ Southern California Public Power Authority (NC), 0.00%, 07/01/15..................... 2,000,000 682,200
Aaa A- Suisun City Redevelopment Agency, 7.25%, 04/01/00 (Pre-refunded)..................... 985,000 1,105,869
NR BBB Tracy Certificates of Participation (I-205 Improvement), 7.00%, 10/01/27............. 1,000,000 1,059,890
Aaa AAA University of California Housing System Revenue (NC) (MBIA Insured), 8.00%,
11/01/00........................................................................... 500,000 581,660
NR BBB+ University of California at Los Angeles Parking Revenue, 7.75%, 11/01/96
(Pre-refunded)..................................................................... 60,000 63,282
Aaa AAA Walnut Valley USD (MBIA Insured)(GO)(NC), 8.75%, 08/01/10............................ 1,000,000 1,391,440
Aaa AAA Walnut Valley USD (AMBAC Insured)(GO)(NC), 9.00%, 08/01/06........................... 800,000 1,076,328
Baa1 NR Yuba City Unified School District Certificate of Participation
(Andros Karperos School), 6.70%, 02/01/13.......................................... 650,000 678,964
-----------
TOTAL INVESTMENTS -- 97.4% (COST -- $35,661,915)*.................................... 38,467,812
OTHER ASSETS, LESS LIABILITIES -- 2.6%............................................... 1,026,126
-----------
NET ASSETS -- 100%................................................................... $39,493,938
===========
*Cost is approximately the same for Federal income tax purposes.
FEDERAL INCOME TAX INFORMATION:
At December 31, 1995, net unrealized appreciation based on cost for financial statement and
Federal income tax purposes is as follows:
Gross unrealized appreciation...................................................... $ 2,820,302
Gross unrealized depreciation...................................................... (14,405)
-----------
Net unrealized appreciation.......................................................... $ 2,805,897
===========
OTHER INFORMATION:
Purchases and sales of municipal securities aggregated $8,737,510 and $9,967,647, respectively, for the period
ended December 31, 1995.
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
</TABLE>
(See Notes to Financial Statements)
<PAGE> 20
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments, at value (identified cost -- $35,661,915).............................................................. $38,467,812
Cash................................................................................................................ 273,058
Receivables
Fund shares sold.................................................................................................. 28,887
Interest.......................................................................................................... 722,520
Manager for expense reimbursement................................................................................. 17,820
Deferred organization expenses...................................................................................... 5,983
Other assets........................................................................................................ 11,924
-----------
Total assets...................................................................................................... 39,528,004
-----------
LIABILITIES
Payables:
Management fee.................................................................................................... 18,371
12b-1 service and distribution fees............................................................................... 9,078
Administrative services fee....................................................................................... 3,340
Fund accounting................................................................................................... 1,500
Transfer agent.................................................................................................... 1,777
-----------
Total liabilities................................................................................................. 34,066
-----------
NET ASSETS.......................................................................................................... $39,493,938
===========
CLASS A:
Net asset value and redemption price per share ($38,345,337 / 3,664,474 shares outstanding)......................... $ 10.46
===========
Maximum offering price per share ($10.46 x 100 / 95.25)*............................................................ $ 10.98
===========
CLASS B:
Net asset value and offering price per share ($1,148,601 / 109,762 shares outstanding)**............................ $ 10.46
===========
NET ASSETS CONSIST OF:
Capital paid-in................................................................................................... $37,078,823
Accumulated net realized loss on investments...................................................................... (288,922)
Accumulated net investment loss................................................................................... (101,860)
Net unrealized appreciation on investments........................................................................ 2,805,897
-----------
NET ASSETS.......................................................................................................... $39,493,938
===========
</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 SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest................................................................................................ $1,229,172
----------
EXPENSES
Management fee.......................................................................................... $110,281
Transfer agent.......................................................................................... 12,273
Administrative services fee............................................................................. 20,051
Custodian fees.......................................................................................... 7,217
Blue Sky fees........................................................................................... 7,865
Auditing and accounting fees............................................................................ 19,972
Shareholder reports..................................................................................... 1,872
Amortization of organization expenses................................................................... 922
Fund accounting......................................................................................... 11,690
Trustees' fees.......................................................................................... 2,212
12b-1 service and distribution fees
Class A............................................................................................... 48,748
Class B............................................................................................... 5,518
Legal................................................................................................... 16,477
Other................................................................................................... 1,698
----------
266,796
Expenses reimbursed by manager.......................................................................... (38,252)
Fees paid indirectly.................................................................................... (3,840)
----------
Net expenses............................................................................................ 224,704
----------
Net investment income..................................................................................... 1,004,468
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments........................................................................ 401,766
Net unrealized appreciation during the period on investments............................................ 1,170,672
----------
Net gain on investments............................................................................... 1,572,438
----------
Net increase in net assets resulting from operations...................................................... $2,576,906
==========
</TABLE>
(See Notes to Financial Statements)
<PAGE> 21
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
DECEMBER 31, JUNE 30,
------------ -----------
1995* 1995
------------ -----------
<S> <C> <C>
DECREASE IN NET ASSETS
Operations:
Net investment income............................................................................ $ 1,004,468 $1,994,895
Net realized gain (loss) on investments.......................................................... 401,766 (809,513)
Net unrealized appreciation during the period on investments..................................... 1,170,672 1,608,795
------------ -----------
Net increase resulting from operations......................................................... 2,576,906 2,794,177
------------ -----------
CLASS A:
Distributions from
Net investment income............................................................................ (980,850) (1,970,835)
In excess of net investment income............................................................... (81,075) (74,599)
------------ -----------
Total distributions to Class A shareholders.................................................... (1,061,925) (2,045,434)
------------ -----------
CLASS B:
Distributions from
Net investment income............................................................................ (23,618) (24,060)
In excess of net investment income............................................................... (2,098) --
------------ -----------
Total distributions to Class B shareholders.................................................... (25,716) (24,060)
------------ -----------
Fund share transactions (Note 10):
Net decrease resulting from Fund share transactions
Class A........................................................................................ (2,064,171) (3,153,266)
Class B........................................................................................ 112,568 847,991
------------ -----------
Net decrease resulting from Fund share transactions.......................................... (1,951,603) (2,305,275)
------------ -----------
Total decrease in net assets....................................................................... (462,338) (1,580,592)
NET ASSETS
Beginning of period.............................................................................. 39,956,276 41,536,868
------------ -----------
End of period.................................................................................... $39,493,938 $39,956,276
============ ===========
Accumulated undistributed net investment loss...................................................... $ (101,860) $ (18,687)
============ ===========
</TABLE>
* Unaudited.
(See Notes to Financial Statements)
<PAGE> 22
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
DECEMBER 31, FOR THE YEAR ENDED JUNE 30,
CLASS A ------------ -----------------------------------------------------------------------
SELECTED PER SHARE DATA 1995* 1995 1994 1993 1992 1991
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 10.08 $ 9.91 $ 10.44 $ 10.29 $ 9.94 $ 9.90
------------ ------- ------- ------- ------- -------
Income from investment operations
Net investment income(a)......... .26 .49 .59 .58 .52 .54
Net gain (loss) on investments
(both realized and
unrealized).................... .40 .19 (.48) .35 .51 .19
------------ ------- ------- ------- ------- -------
Total from investment
operations................... .66 .68 .11 .93 1.03 .73
------------ ------- ------- ------- ------- -------
Less distributions from
Net investment income............ .26 .49 .59 .60 .52 .54
In excess of net investment
income......................... .02 .02 -- -- .07 .06
Net realized gain................ -- -- .05 .18 .09 .09
------------ ------- ------- ------- ------- -------
Total distributions............ .28 .51 .64 .78 .68 .69
------------ ------- ------- ------- ------- -------
Net asset value, end of period..... $ 10.46 $ 10.08 $ 9.91 $ 10.44 $ 10.29 $ 9.94
============== ======= ======= ======= ======= =======
Total return(%).................... 6.66(b) 7.09(c) .82(c) 9.55(c) 10.80(c) 7.58(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)....................... $ 38,345 $38,963 $41,423 $47,493 $46,288 $30,556
Ratio of expenses to average
daily net assets
With expense reimbursement and
fees paid indirectly(%)(e)..... 1.10(d) 1.10 1.10 1.10 1.10 1.07
Without expense reimbursement and
fees paid indirectly(%)(e)..... 1.31(d) 1.22 1.18 1.20 1.19 1.34
Ratio of net investment income to
average daily net assets(%)(a)... 5.03(d) 4.94 5.65 5.80 5.66 5.73
Portfolio turnover rate(%)......... 45(d) 81 26 91 42 55
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE APRIL 1, 1994
MONTHS ENDED YEAR ENDED (COMMENCEMENT) TO
DECEMBER 31, JUNE 30, JUNE 30,
CLASS B ------------ ---------- -----------------
SELECTED PER SHARE DATA 1995* 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)............................................ .22 .43 .11
Net gain (loss) on investments (both realized and unrealized)....... .40 .17 (.03)
------ ---------- -----
Total from investment operations.................................. .62 .60 .08
------ ---------- -----
Less distributions from
Net investment income............................................... .22 .43 .11
In excess of net investment income.................................. .02 -- --
Net realized gain................................................... -- -- .03
------ ---------- -----
Total distributions............................................... .24 .43 .14
------ ---------- -----
Net asset value, end of period........................................ $10.46 $10.08 $9.91
============== ============ =================
Total return(%)....................................................... 6.26(b) 6.30(c) .82(b)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands).............................. $1,149 $ 993 $ 114
Ratio of expenses to average daily net assets
With expense reimbursement and fees paid indirectly(%)(e)........... 1.85(d) 1.85 1.85(d)
Without expense reimbursement and fees paid indirectly(%)(e)........ 2.06(d) 1.97 1.93(d)
Ratio of net investment income to average daily net assets(%)(a)...... 4.28(d) 4.19 4.90(d)
Portfolio turnover rate(%)............................................ 45(d) 81 26
(a) Net investment income is net of expenses reimbursed by manager.
(b) Total return represents aggregate total return and does not reflect a sales charge.
(c) Total return does not reflect a sales charge.
(d) Annualized.
(e) Beginning in July 1995, total expenses include fees paid indirectly through an expense offset arrangement.
* Unaudited.
</TABLE>
(See Notes to Financial Statements)
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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
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.
a. Securities 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).
b. Securities 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.
c. Federal income taxes -- The Fund is a separate taxable entity and
intends to qualify for tax treatment applicable to regulated investment
companies under the Internal Revenue Code, as amended, and, among other things,
is required to make the requisite distributions to its shareholders which will
relieve it from Federal income and excise taxes. Therefore, no provision has
been recorded for Federal income or excise taxes.
The Fund has a net tax-basis capital loss carryforward of approximately
$445,000 as of June 30, 1995 which may be applied against any realized net
taxable gains of each succeeding fiscal year until fully utilized or until the
expiration date, whichever occurs first. The carryforward expires in 2003.
d. Distributions to shareholders -- Normally, distributions from net
investment income are declared monthly and net realized capital gains, if any,
are declared semi-annually. In addition, distributions to Class A shareholders
are declared daily at the rate per share of the excess of 12b-1 fees of Class B
shares over Class A shares. Distributions are paid at the earlier of redemption
or the designated monthly or semi-annual date.
e. 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.
f. 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.
Certain per share amounts in the 1994, 1992 and 1991 financial highlights
have been reclassified to conform with the 1995 presentation.
g. 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 period, custody fees were
reduced by $3,840 under this arrangement.
2. MANAGEMENT AND DISTRIBUTION
The Fund pays Mackenzie Investment Management Inc. (MIMI) a monthly
management fee at the annual rate of .55% of its average daily net assets.
Mackenzie Ivy Funds Distribution, Inc. (MIFDI), 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 six months ended December 31, 1995, the net amount
of underwriting discount retained by MIFDI was $776.
If the Fund's total expenses in any fiscal year exceed the permissible
limits applicable to the Fund in any state in which its shares are then
qualified for sale, MIMI will bear the excess expenses. The most restrictive
state expense limitation provision limits a fund's annual expenses (excluding
interest, taxes, brokerage commissions, extraordinary expenses and other
expenses subject to approval by state securities administrators) to 2.5% of the
first $30 million of the average daily net assets; 2.0% of the next $70 million
of the average daily net assets; and 1.5% of the remaining average daily net
assets. 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
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
an annual rate of .85% of its average daily net assets. The voluntary expense
limitation may be terminated or revised at any time. Expenses reimbursed by
manager reflected in the Statement of Operations consist of voluntary
reimbursements of $38,252.
3. ADMINISTRATIVE SERVICES
MIMI provides certain administrative services to the Fund. As compensation
for these services, the Fund pays MIMI a monthly fee at the annual rate of .10%
of its average daily net assets. Such fee is reflected as Administrative
services fee in the Statement of Operations.
4. FUND ACCOUNTING SERVICES
MIMI provides certain accounting and pricing services for the Fund. As
compensation for those services, the Fund pays MIMI a monthly fee plus
telephone, delivery and other out-of-pocket expenses. The monthly fee is based
upon the net assets of the Fund at the preceding month end at the following
rates: $1,000 when net assets are $20 million and under; $1,500 when net assets
are over $20 million to $75 million; $4,000 when net assets are over $75 million
to $100 million; and $6,000 when net assets are over $100 million. Such fee and
expenses are reflected as Fund accounting in the Statement of Operations.
5. TRANSFER AGENCY AND SHAREHOLDER SERVICE
Mackenzie Ivy Investor Services Corp. (MIISC), a wholly owned subsidiary of
MIMI, is the transfer and shareholder servicing agent for the Fund. The Fund
pays a monthly fee at an annual rate of $20.75 per open account and $4.36 per
account that is closed. In addition, the Fund pays certain out-of-pocket
expenses. Such fees and expenses are reflected as Transfer agent in the
Statement of Operations.
6. DISTRIBUTION PLANS
Under Service and Distribution Plans, the Fund reimburses MIFDI for service
fee payments made to brokers at an annual rate of .25% of its average daily net
assets. Class B shares are also subject to an ongoing distribution fee at an
annual rate of .75% of the average daily net asset value of Class B shares.
MIFDI 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.
7. 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.
8. 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.
9. SUBSEQUENT EVENT
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. As a result of this change, the net asset value per share of
Class A and Class B are expected to differ.
10. FUND SHARE TRANSACTIONS
Fund share transactions for both Class A and Class B were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1995 JUNE 30, 1995
---------------------- -------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------- -------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Sold....................... 57,641 $ 581,680 669,257 $ 6,416,826
Issued on reinvestment of
distributions............. 51,144 520,483 94,364 925,974
Repurchased................ (309,684) (3,166,334) (1,079,814) (10,496,066)
-------- ----------- ---------- ------------
Net decrease............... (200,899) $(2,064,171) (316,193) $ (3,153,266)
========== ============= ============ ==============
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1995 JUNE 30, 1995
-------------------- ----------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------- ------ -------- ------- ---------
<S> <C> <C> <C> <C>
Sold........................ 9,597 $ 96,423 95,956 $ 938,462
Issued on reinvestment of
distributions.............. 2,070 21,079 1,929 18,233
Repurchased................. (478 ) (4,934) (10,797) (108,704)
------ -------- ------- ---------
Net increase................ 11,189 $112,568 87,088 $ 847,991
======= ========== ======== ===========
</TABLE>
MCAMF-3-296
<PAGE> 25
DECEMBER 31, 1995 [MACKENZIE LOGO]
MACKENZIE LIMITED TERM MUNICIPAL FUND
SEMI-ANNUAL REPORT
This report and the financial statements contained herein are submitted for the
general information of the shareholders. This report is not authorized for
distribution to prospective investors unless preceded or accompanied by an
effective prospectus.
Mackenzie Investment Management Inc.
Via Mizner Financial Plaza
700 South Federal Hwy.
Boca Raton, FL 33432
1-800-456-5111
Dear Shareholder:
Over the latter part of 1995 the municipal bond market remained
relatively unchanged as the Federal Reserve sought to manage interest rates and
ongoing government budget concerns seemed to dampen investor enthusiasm.
With time, the spread has narrowed between short-term municipal yields
and short-term treasury yields.
Against this backdrop, Mackenzie Limited Term Municipal Fund has
continued to maintain its short-term position. By taking an active management
position with the Fund, we followed a disciplined approach in seeking to
balance the pursuit of yield with an acceptable level of risk.
At the same time, we have remained focused on portfolio quality. The
emphasis on investment grade bonds continues. As in the past, the Fund manager
avoids the purchase of derivative products.
With respect to 1996 being an election year, we believe that the
municipal market has already taken the issue of tax reform, and its impact,
into consideration. A further point to be made, is that regardless of what may
happen with tax reform most experts feel that it will reflect a more moderate
rather than an extreme adjustment.
We believe that the current interest rate environment, low
inflationary pressures and prospects for economic growth will continue to
provide the municipal markets with stability and predictability in the future.
As always we will continue to take an active role in the management of
Mackenzie Limited Term Municipal Fund in order to seek as high a yield as
possible without compromising our commitment to minimizing risk.
Sincerely,
/s/ Michael G. Landry
- -------------------------------
Michael G. Landry
President
MACKENZIE LIMITED TERM MUNICIPAL FUND IS PRIMARILY INVESTED IN HIGH QUALITY
SHORT-TERM BONDS. THE MANAGER STRESSES NON-CALLABLE BONDS TO PROVIDE THE FUND
WITH CALL PROTECTION AND REDUCES VOLATILITY THROUGH DIVERSIFICATION OF PRODUCTS
BY ISSUE TYPE, LOCAL GOVERNMENTS AND AGENCY ISSUERS, LOCATION AND PURPOSE.
<TABLE>
<S> <C> <C> <C>
BOARD OF TRUSTEES OFFICERS TRANSFER AGENT MANAGER
John S. Anderegg, Jr. Michael G. Landry, President Mackenzie Ivy Investor Mackenzie Investment
Paul H. Broyhill Keith J. Carlson, Vice President Services Corp. Management Inc.
Stanley Channick C. William Ferris, P.O. Box 3022 Boca Raton, FL
Frank W. DeFriece, Jr. Secretary/Treasurer Boca Raton, FL 33431-0922
Roy J. Glauber 1-800-777-6472 DISTRIBUTOR
Michael G. Landry CUSTODIAN Mackenzie Ivy Funds
Joseph G. Rosenthal Brown Brothers Harriman & Co. AUDITORS Distribution, Inc.
J. Brendan Swan Boston, MA Coopers & Lybrand L.L.P. Via Mizner Financial Plaza
Fort Lauderdale, FL 700 South Federal Highway
LEGAL COUNSEL Boca Raton, FL 33432
Dechert Price & Rhoads
Boston, MA
</TABLE>
<PAGE> 26
MACKENZIE LIMITED TERM MUNICIPAL FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES -- 104.8% PRINCIPAL VALUE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
ALABAMA -- 1.2%
A2 NR Huntsville Alabama Industrial Revenue (TRW Inc. Project), 12.75%, 08/01/02........... $1,000,000 $ 1,122,750
-----------
ALASKA -- 4.4%
Aaa AAA North Slope Boro Alaska (GO)(NC)(MBIA Insured), 0.00%, 01/01/01...................... 5,000,000 4,003,150
-----------
ARIZONA -- 3.0%
Baa1 A Maricopa County Arizona School District (GO)(NC), 5.60%, 07/01/03.................... 500,000 523,035
Baa1 A Maricopa County Arizona School District (GO)(NC), 0.00%, 07/01/01.................... 750,000 596,077
Baa1 A Maricopa County Arizona School District (GO)(NC), 0.00%, 07/01/00.................... 500,000 407,485
Aa AA- Maricopa County Arizona Unified School District (GO)(NC), 7.75%, 07/01/03............ 1,000,000 1,203,800
-----------
2,730,397
-----------
CALIFORNIA -- 25.5%
A NR California Educational Facilities Authority Revenue -- Mills College (NC), 6.30%,
09/01/00........................................................................... 450,000 484,933
A1 A California State (GO)(NC), 7.25%, 08/01/03........................................... 1,500,000 1,752,330
A1 A California State Revenue (NC) Series B, 8.00%, 12/01/02.............................. 1,000,000 1,203,050
A1 A California State (GO)(NC), 6.75%, 05/01/02........................................... 500,000 562,960
A1 A California State (GO)(NC), 7.10%, 09/01/02........................................... 500,000 575,070
A1 A+ California State (GO)(NC), 8.00%, 10/01/02........................................... 1,000,000 1,199,390
A1 A California State (GO)(NC), 9.25%, 03/01/05........................................... 350,000 461,972
Aaa NR California State (GO)(NC)(FGIC Insured), 0.00%, 08/01/03............................. 1,000,000 698,740
A1 AA- Clovis Unified School (GO)(NC), Series A, 10.90%, 08/01/99........................... 250,000 305,620
A1 AA- Clovis Unified School (GO)(NC), Series B, 0.00%, 08/01/02............................ 1,000,000 733,950
Aaa AAA Industry California (GO)(FGIC Insured), 8.00%, 07/01/99.............................. 1,000,000 1,125,100
Aaa AAA Las Virgenes California Municipal Water District, Certificate of Participation
(NC)(MBIA Insured), 9.00%, 11/01/99................................................ 1,000,000 1,170,000
Aa AA Los Angeles Department of Water & Power (NC), 9.00%, 07/15/98........................ 500,000 641,095
Aa AA Los Angeles Department of Water & Power (NC), 9.00%, 07/15/98........................ 400,000 447,196
A1 AA- Los Angeles County Transit Authority (NC), Series A, 5.10%, 07/01/03................. 620,000 641,874
A A Los Angeles County California Certificate of Participation --
Disney Parking Project (NC), 0.00%, 09/01/03....................................... 250,000 156,142
A A Los Angeles County California Certificate of Participation,
Correctional Facility Improvements, 6.90%, 03/01/01................................ 500,000 530,120
Aaa AAA Monterey California Regional Wastewater Financing Authority (NC) (FSA Insured),
0.00%, 06/01/01.................................................................... 1,500,000 1,168,215
NR A- Mount San Antonio California Community College District (NC), 5.20%, 04/01/00........ 500,000 501,850
NR NR Orange County California Community Facilities, 7.40%, 08/15/03....................... 500,000 574,190
Aaa AAA Palomar Pomerado Health System (NC)(MBIA Insured), 0.00%, 11/01/00................... 1,000,000 809,100
Aaa AAA Palomar Pomerado Health System (NC)(MBIA Insured), 0.00%, 11/01/03................... 500,000 346,195
Aaa AAA Panama-Buena Vista (GO)(NC)(MBIA Insured), 9.00%, 08/01/00........................... 375,000 448,358
NR A- Pomona California Public Financing Authority (NC), 5.625%, 10/01/03.................. 500,000 525,090
NR A Richmond California Power Financing Authority (NC), 5.20%, 05/15/05.................. 500,000 504,775
A A- Sacramento California Municipal Utility District (NC), 5.20%, 05/15/02............... 500,000 515,835
A BBB+ San Francisco California Port Revenue (NC), 9.00%, 07/01/03.......................... 1,000,000 1,262,810
A A Southern California Public Power Authority, 6.75%, 07/01/01.......................... 1,000,000 1,112,890
A NR Templeton California Unified School District Certificate of Participation, 5.20%,
03/01/05........................................................................... 500,000 504,270
Aa NR University of California Regents Certificate of Participation (NC), 10.00%,
11/01/03........................................................................... 1,500,000 2,009,070
-----------
22,972,190
-----------
COLORADO -- 0.7%
Baa1 NR El Paso County Colorado School District (GO)(NC), 8.25%, 12/15/04.................... 500,000 601,350
-----------
CONNECTICUT -- 0.7%
Baa BBB New Haven Connecticut (GO)(NC), 9.50%, 11/15/03...................................... 500,000 621,165
-----------
FLORIDA -- 8.4%
A1 A+ Dade County School District (GO)(NC), 7.00%, 07/01/99................................ 450,000 492,826
NR AA East Lee County Florida Water Control District (NC) (Asset Guaranty Insured), 5.50%,
11/01/03........................................................................... 200,000 209,842
Aaa AAA Hillsborough County Florida Utility (MBIA Insured), 9.75%, 12/01/03.................. 100,000 127,523
Aaa AAA Jacksonville Port Authority Revenue (NC)(MBIA Insured), 7.625%, 11/01/02............. 550,000 653,691
Aaa AAA Jacksonville Port Authority Revenue (NC)(MBIA Insured), 7.625%, 11/01/03............. 1,000,000 1,204,340
Aaa AAA Kissimmee Florida Suburban Water & Sewer System Revenue (AMBAC Insured), 5.80%,
10/01/02........................................................................... 250,000 268,918
</TABLE>
(See Notes to Financial Statements)
<PAGE> 27
MACKENZIE LIMITED TERM MUNICIPAL FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES PRINCIPAL VALUE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Aaa AAA Lee County, Solid Waste (MBIA Insured), 6.80%, 10/01/02.............................. $ 800,000 $ 904,704
Aaa AAA Orange County Florida Tourist Development Tax Revenue (AMBAC Insured),
7.25%, 10/01/00 (Pre-refunded)..................................................... 300,000 345,093
Aaa AAA Pasco County Florida School Board Certificate of Participation (NC) (FSA Insured),
6.10%, 08/01/01.................................................................... 250,000 272,913
Aaa AAA Port St. Lucie Florida Stormwater Utility Revenue, 7.40%, 11/01/00 (Pre-refunded).... 250,000 285,623
Aaa AAA Volusia County School Board (NC)(FSA Insured), 10.00%, 08/01/00...................... 2,300,000 2,841,627
-----------
7,607,100
-----------
GEORGIA -- 0.6%
A1 A+ Savannah Georgia Resource Recovery Authority, 5.95%, 12/01/02........................ 500,000 530,700
-----------
GUAM -- 1.1%
NR BBB Guam Government (GO), 5.90%, 09/01/05................................................ 1,000,000 1,010,920
-----------
HAWAII -- 0.6%
Aa AA Honolulu City & County (GO)(NC), 7.25%, 07/01/00..................................... 500,000 561,505
-----------
IDAHO -- 0.8%
NR BBB+ Boise Idaho Urban Renewal Agency Parking Revenue, 6.00%, 09/01/02.................... 700,000 728,371
-----------
ILLINOIS -- 3.7%
Aaa AAA Chicago Public Building Commission (NC)(FGIC Insured), 7.50%, 01/01/99 (Escrowed to
Maturity).......................................................................... 800,000 877,600
Aaa AAA Metropolitan Pier & Exposition Authority Illinois (NC)(MBIA Insured), 0.00%,
12/15/01........................................................................... 500,000 380,315
Aaa AAA Will & Kendall Counties Illinois School District (GO)(AMBAC Insured), 5.45%,
01/01/05........................................................................... 2,000,000 2,063,980
-----------
3,321,895
-----------
IOWA -- 0.7%
Aaa AAA Muscatine Iowa Electric, 9.50%, 01/01/04 (Escrowed to Maturity)...................... 500,000 640,465
-----------
KANSAS -- 0.6%
Aaa AA+ Shawnee County Kansas (GO), 7.30%, 09/01/01 (Pre-refunded)........................... 500,000 575,565
-----------
KENTUCKY -- 1.5%
Aaa AAA Owensboro Kentucky Electric Light & Power Revenue (NC)(AMBAC Insured), 0.00%,
01/01/04........................................................................... 2,000,000 1,378,300
-----------
LOUISIANA -- 3.1%
Aaa AAA Louisiana Gas & Fuels (FGIC Insured), 7.25%, 11/15/00................................ 500,000 561,150
A3 A Louisiana State Offshore Terminal Authority (NC), 6.25%, 09/01/04.................... 2,000,000 2,205,080
-----------
2,766,230
-----------
MAINE -- 1.9%
NR A+ Maine Municipal Bond Bank, 7.30%, 11/01/99 (Pre-refunded)............................ 1,500,000 1,689,885
-----------
MASSACHUSETTS -- 2.6%
A1 A- Massachusetts State Industrial Finance Agency -- Mass. Biomedical (NC), 0.00%,
08/01/00........................................................................... 1,000,000 799,010
Baa1 NR Massachusetts State Health & Educational Facilities Authority Revenue -- Holyoke
Hospital,
6.25%, 07/01/04.................................................................... 1,000,000 1,018,330
A A+ Massachusetts (GO), 6.50%, 07/01/02.................................................. 500,000 556,155
-----------
2,373,495
-----------
MINNESOTA -- 1.2%
Baa3 NR International Falls Minnesota Pollution Control Revenue, 7.15%, 05/15/98............. 500,000 526,530
NR BBB+ Minneapolis Minnesota Community Development, 7.00%, 12/01/03......................... 500,000 530,485
-----------
1,057,015
-----------
MISSISSIPPI -- 1.9%
Aaa AAA Columbus Mississippi Water and Sewer Revenue (NC)(MBIA Insured), 8.80%, 05/01/02..... 500,000 616,015
NR AAA Mississippi Medical Center Educational Building Corporation, University of
Mississippi
Medical Center Project (NC), 7.00%, 12/01/00....................................... 1,000,000 1,095,840
-----------
1,711,855
-----------
NEVADA -- 2.5%
Aaa AAA Clark County Nevada Las Vegas Convention (GO)(MBIA Insured), 5.00%, 07/01/04......... 1,000,000 1,024,350
Aaa AAA Reno Nevada (GO)(NC)(MBIA Insured), 8.70%, 05/01/99.................................. 545,000 620,046
Aaa AAA Reno Nevada (GO)(NC)(MBIA Insured), 9.50%, 05/01/98.................................. 500,000 559,110
-----------
2,203,506
-----------
</TABLE>
(See Notes to Financial Statements)
<PAGE> 28
MACKENZIE LIMITED TERM MUNICIPAL FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES PRINCIPAL VALUE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE -- 0.4%
Aa AA New Hampshire State (GO)(NC), 0.00%, 07/01/04........................................ $ 500,000 $ 330,970
-----------
NEW YORK -- 5.5%
Baa1 BBB Metropolitan Transportation Authority New York Service Contract, 7.00%, 07/01/02..... 1,000,000 1,116,100
Baa1 BBB Metropolitan Transportation Authority New York Service Contract, 7.00%, 07/01/04..... 500,000 548,885
Baa1 A- New York City (GO)(NC), Series A, 7.00%, 08/01/03.................................... 500,000 545,990
Baa1 A- New York City (GO)(NC), Series D, 5.70%, 08/01/02.................................... 750,000 764,377
Baa BBB- New York City Health & Hospital Corporation Revenue, 6.00%, 02/15/05................. 750,000 758,865
A A- New York State (GO)(NC), 9.875%, 11/15/05............................................ 500,000 693,375
Aa NR New York State Medical Care Facilities Financing Agency (SONYMA Insured), 6.00%,
11/15/02........................................................................... 500,000 539,620
-----------
4,967,212
-----------
NORTH CAROLINA -- 1.1.%
NR A- Gastonia North Carolina Housing Corporation, 5.75%, 07/01/04......................... 1,000,000 1,027,040
-----------
NORTH DAKOTA -- 0.9%
Aaa AAA Bismarck North Dakota Hospital Revenue -- St. Alexius (NC)(AMBAC Insured), 0.00%,
05/01/01........................................................................... 1,000,000 784,050
-----------
OREGON -- 1.2%
Aa AA- Oregon State (GO)(NC), 11.25%, 04/01/98.............................................. 600,000 692,922
Aa AA- Oregon State (GO)(NC), 9.00%, 10/01/00............................................... 300,000 361,890
-----------
1,054,812
-----------
PENNSYLVANIA -- 1.8%
Aaa AAA Pennsylvania Higher Education -- Series A (NC) (FGIC Insured), 6.80%, 12/01/00....... 1,000,000 1,086,520
Aa3 AA- Southeastern Pennsylvania Transit Authority (NC), 6.00%, 06/01/01.................... 500,000 537,200
-----------
1,623,720
-----------
PUERTO RICO -- 4.1%
Baa1 A Puerto Rico Commonwealth (GO)(NC), 0.00%, 07/01/03................................... 1,000,000 702,010
Baa1 A Puerto Rico Commonwealth (GO)(NC), 0.00%, 07/01/04................................... 400,000 266,984
Baa1 A Puerto Rico Commonwealth (GO)(NC), 5.10%, 07/01/02................................... 400,000 411,360
Baa1 A- Puerto Rico Electric Power Authority Power Revenue, 6.80%, 07/01/00.................. 900,000 982,278
Baa1 A- Puerto Rico Municipal Finance Agency -- Series A (GO), 5.70%, 07/01/03............... 1,250,000 1,317,788
-----------
3,680,420
-----------
RHODE ISLAND -- 3.9%
Aaa AAA Rhode Island Clean Water (NC)(MBIA Insured), 9.20%, 10/01/02......................... 1,400,000 1,774,808
Aaa AAA Rhode Island Clean Water (NC)(MBIA Insured), 9.20%, 10/01/01......................... 1,385,000 1,714,852
-----------
3,489,660
-----------
SOUTH CAROLINA -- 2.2%
Aaa AAA Charleston County, South Carolina (NC), 8.25%, 07/01/00.............................. 500,000 578,630
Aaa AAA Edgefield County Central School District (GO)(NC)(FSA Insured), 8.50%, 02/01/02...... 300,000 362,652
A BBB Piedmont South Carolina Municipal Power Agency (NC), 6.05%, 01/01/04................. 1,000,000 1,025,470
-----------
1,966,752
-----------
TEXAS -- 12.8%
Aaa AAA Austin Texas Utility System, 10.75%, 05/15/00 (Pre-refunded)......................... 500,000 628,150
A A- Austin Texas Water Sewer & Electric (NC), 14.00%, 11/15/01 (Escrowed to Maturity).... 15,000 19,660
A A- Austin Texas Water Sewer & Electric, 14.00%, 11/15/01 (Pre-refunded)................. 20,000 27,358
A A- Austin Texas Water Sewer & Electric, 14.00%, 11/15/01 (Pre-refunded)................. 965,000 1,346,590
Aaa NR Channelview Texas Independent School District (GO)(NC), 7.00%, 08/15/02.............. 500,000 571,840
Aaa AAA Denton County Texas (GO)(NC)(MBIA Insured), 7.75%, 07/15/02.......................... 1,000,000 1,182,010
A A- Harris County Texas Health Facilities Development (NC), 6.90%, 6.90%, 06/01/02....... 1,000,000 1,101,490
Aaa AAA Houston Texas Water Conveyance Certificate (NC)(AMBAC Insured), Series F, 7.20%,
12/15/02........................................................................... 1,000,000 1,166,960
Aaa AAA Irving Texas Independent School District (GO)(NC)(PSFG Insured), 0.00%. 02/15/02..... 2,000,000 1,509,580
Aaa AAA Irving Texas Independent School District (GO)(NC)(PSFG Insured), 0.00%, 02/15/04..... 500,000 337,625
Aaa AAA Plano Texas Independent School District (GO)(NC)(PSFG Insured), 0.00%, 02/15/01...... 1,000,000 794,300
Aaa NR Waxahachie Texas Independent School District (GO)(NC)(PSFG Insured), 0.00%,
02/15/01........................................................................... 2,500,000 1,985,750
Aaa NR Wichita Falls Texas Independent School District (NC)(PSFG Insured), 0.00%,
02/01/00........................................................................... 1,000,000 836,980
-----------
11,508,293
-----------
</TABLE>
(See Notes to Financial Statements)
<PAGE> 29
MACKENZIE LIMITED TERM MUNICIPAL FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES PRINCIPAL VALUE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
UTAH -- 1.1%
Baa BBB+ Davis County Utah Solid Waste Management and Recovery Revenue, 5.90%, 06/15/03....... $1,000,000 $ 1,010,170
-----------
VIRGINIA -- 0.6%
A1 A+ Roanoke IDA Memorial Hospital (NC), 6.90%, 07/01/99.................................. 500,000 539,020
-----------
WASHINGTON -- 2.5%
Aaa AAA Jefferson County Washington Public Hospital (GO)(NC)(FGIC Insured), 7.50%,
12/01/03........................................................................... 500,000 595,520
Aaa AAA Jefferson County Washington Public Hospital (GO)(NC)(FGIC Insured), 7.50%,
12/01/02........................................................................... 500,000 588,510
NR AA- Washington State Health Care Facilty Authority (NC), 6.20%, 02/15/01................. 500,000 537,560
Aaa AAA Washington State Public Power Supply, 7.50%, 07/01/15 (Pre-refunded)................. 485,000 547,090
-----------
2,268,680
-----------
TOTAL INVESTMENTS -- 104.8% (COST -- $91,966,018)*................................... 94,458,608
OTHER ASSETS, LESS LIABILITIES -- (4.8)%............................................. (4,297,575)
-----------
NET ASSETS -- 100%................................................................... $90,161,033
===========
*Cost for Federal income tax purposes is $91,565,826.
FEDERAL INCOME TAX INFORMATION:
At December 31, 1995, net unrealized appreciation based on cost for Federal income tax purposes is
as follows:
Gross unrealized appreciation........................................................ $ 3,597,660
Gross unrealized depreciation........................................................ (704,878)
-----------
Net unrealized appreciation.......................................................... $ 2,892,782
===========
OTHER INFORMATION:
Purchases and sales of municipal securities aggregated $23,546,382 and $38,100,706, respectively, for the
period ended December 31, 1995.
AMBAC -- AMBAC Indemnity Corporation
FGIC -- Financial Guaranty Insurance Company
FSA -- Financial Security Association
GO -- General Obligation
MBIA -- Municipal Bond Insurance Association
NC -- Non Callable
PSFG -- Permanent School Fund Guaranty
SONYMA -- State of New York Mortgage Agency
</TABLE>
(See Notes to Financial Statements)
<PAGE> 30
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments, at value (identified cost -- $91,966,018).............................................................. $94,458,608
Cash................................................................................................................ 100,000
Receivables:
Fund shares sold.................................................................................................. 694
Interest.......................................................................................................... 1,541,185
Manager for expense reimbursement................................................................................. 52,275
Deferred organization expenses...................................................................................... 15,991
Other assets........................................................................................................ 29,350
-----------
Total assets...................................................................................................... 96,198,103
-----------
LIABILITIES
Payables:
Fund shares repurchased........................................................................................... 218,870
Management fee.................................................................................................... 45,899
12b-1 service and distribution fees............................................................................... 21,789
Administrative services fee....................................................................................... 8,345
Fund accounting................................................................................................... 4,064
Transfer agent.................................................................................................... 7,515
Due to custodian.................................................................................................... 5,730,588
-----------
Total liabilities................................................................................................. 6,037,070
-----------
NET ASSETS.......................................................................................................... $90,161,033
===========
CLASS A:
Net asset value and redemption price per share ($87,984,543 / 8,516,325 shares outstanding)......................... $ 10.33
===========
Maximum offering price per share ($10.33 x 100 / 97.00)*............................................................ $ 10.65
===========
CLASS B:
Net asset value and offering price per share ($2,176,490 / 210,657 shares outstanding)**............................ $ 10.33
===========
NET ASSETS CONSIST OF:
Capital paid-in................................................................................................... $91,145,502
Accumulated net realized loss on investments...................................................................... (3,632,595)
Accumulated undistributed net investment loss..................................................................... (230,194)
Net unrealized appreciation on investments........................................................................ 2,878,320
-----------
NET ASSETS.......................................................................................................... $90,161,033
===========
</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> 31
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest................................................................................................ $2,782,509
----------
EXPENSES
Management fee.......................................................................................... $288,936
Transfer agent.......................................................................................... 54,411
Administrative services fee............................................................................. 52,534
Custodian fees.......................................................................................... 45,537
Blue Sky fees........................................................................................... 15,320
Auditing and accounting fees............................................................................ 21,477
Shareholder reports..................................................................................... 3,492
Amortization of organization expenses................................................................... 5,227
Fund accounting......................................................................................... 44,975
Trustees' fees.......................................................................................... 2,212
12b-1 service and distribution fees
Class A............................................................................................... 128,466
Class B............................................................................................... 8,606
Legal................................................................................................... 18,368
Other................................................................................................... 6,102
----------
695,663
Expenses reimbursed by manager.......................................................................... (215,186)
Fees paid indirectly.................................................................................... (7,213)
----------
Net expenses............................................................................................ 473,264
----------
Net investment income..................................................................................... 2,309,245
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments........................................................................ 13,444
Net unrealized appreciation during the period on investments............................................ 2,421,707
----------
Net gain on investments............................................................................... 2,435,151
----------
Net increase in net assets resulting from operations...................................................... $4,744,396
==========
</TABLE>
(See Notes to Financial Statements)
<PAGE> 32
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
DECEMBER 31, JUNE 30,
------------ ------------
1995* 1995
------------ ------------
<S> <C> <C>
DECREASE IN NET ASSETS
Operations:
Net investment income............................................................................. $ 2,309,245 $ 6,092,576
Net realized gain (loss) on investments........................................................... 13,444 (3,702,309)
Net unrealized appreciation during the period on investments...................................... 2,421,707 5,286,010
------------ ------------
Net increase resulting from operations.......................................................... 4,744,396 7,676,277
------------ ------------
CLASS A:
Distributions from
Net investment income............................................................................. (2,264,415 ) (6,013,129)
In excess of net investment income................................................................ (200,576 ) (891,631)
------------ ------------
Total distributions to Class A shareholders..................................................... (2,464,991 ) (6,904,760)
------------ ------------
CLASS B:
Distributions from
Net investment income............................................................................. (44,830 ) (79,447)
In excess of net investment income................................................................ (4,349 ) (11,782)
------------ ------------
Total distributions to Class B shareholders..................................................... (49,179 ) (91,229)
------------ ------------
Fund share transactions (Note 9):
Net decrease resulting from Fund share transactions
Class A......................................................................................... (22,197,392 ) (47,921,734)
Class B......................................................................................... (229,807 ) 1,381,678
------------ ------------
Net decrease resulting from Fund share transactions........................................... (22,427,199 ) (46,540,056)
------------ ------------
Total decrease in net assets........................................................................ (20,196,973 ) (45,859,768)
NET ASSETS
Beginning of period............................................................................... 110,358,006 156,217,774
------------ ------------
End of period..................................................................................... $90,161,033 $110,358,006
============== ============
Accumulated undistributed net investment loss....................................................... $ (230,194 ) $ (25,269)
============== ============
</TABLE>
* Unaudited.
(See Notes to Financial Statements)
<PAGE> 33
FINANCIAL HIGHLIGHTS(A)
<TABLE>
<CAPTION>
FOR THE
FOR THE SIX SIX MONTHS FOR THE
MONTHS ENDED ENDED YEAR ENDED
CLASS A DECEMBER 31, FOR THE YEAR ENDED JUNE 30, JUNE 30, DECEMBER 31,
SELECTED PER ------------ ------------------------------------------------------ ---------- ------------
SHARE DATA 1995* 1995 1994 1993 1992 1991 1990
------------ -------- -------- ------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset
value,
beginning of
period....... $ 10.11 $ 10.02 $ 10.47 $ 10.41 $ 10.36 $ 10.28 $ 10.33
------------ -------- -------- ------- ------- ---------- ------------
Income from
investment
operations
Net
investment
income..... .23(b) .43(b) .62(b) .63(b) .63(b) .29 .65
Net gain
(loss) on
investments
(both
realized
and
unrealized)... .24 .16 (.45) .07 .05 .10 (.05)
------------ -------- -------- ------- ------- ---------- ------------
Total from
investment
operations.. .47 .59 .17 .70 .68 .39 .60
------------ -------- -------- ------- ------- ---------- ------------
Less
distributions
from
Net
investment
income..... .23 .43 .62 .63 .62 .29 .65
In excess of
net
investment
income..... .02 .07 -- .01 -- -- --
Net realized
gain....... -- -- -- -- .01 .02 --
------------ -------- -------- ------- ------- ---------- ------------
Total
distributions... .25 .50 .62 .64 .63 .31 .65
------------ -------- -------- ------- ------- ---------- ------------
Net asset
value, end of
period....... $ 10.33 $ 10.11 $ 10.02 $ 10.47 $ 10.41 $ 10.36 $ 10.28
============= ======== ======== ======= ======= =========== =============
Total
return(%).... 4.67(c) 6.07(d) 1.56(d) 6.97(d) 6.56(d) 7.58(c) 5.81(d)
RATIOS/SUPPLEMENTAL
DATA
Net assets,
end of period
(in
thousands)... $ 87,985 $108,000 $155,187 $94,460 $30,005 $ 22,568 $ 25,883
Ratio of
expenses to
average
daily net
assets
With expense
reimbursement
and fees
paid
indirectly(%)(f)... .89(e) .89 .88 .85 .97 -- --
Without
expense
reimbursement
and fees
paid
indirectly(%)(f)... 1.31(e) 1.18 1.11 1.20 1.25 1.81(e) 1.23
Ratio of net
investment
income to
average daily
net
assets(%).... 4.41(b)(e) 4.38(b) 6.06(b) 6.13(b) 6.24(b) 5.71(e) 6.32
Portfolio
turnover
rate(%)...... 46(e) 53 36 32 62 27(e) 75
</TABLE>
(See Notes to Financial Statements)
<PAGE> 34
FINANCIAL HIGHLIGHTS(A) (CONTINUED)
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE APRIL 1, 1994
MONTHS ENDED YEAR ENDED (COMMENCEMENT) TO
DECEMBER 31, JUNE 30, JUNE 30,
CLASS B ------------ ---------- -----------------
SELECTED PER SHARE DATA 1995* 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(b)................................................ .20 .38 .12
Net gain (loss) on investments (both realized and unrealized)........... .24 .16 (.06)
------ ---------- ------
Total from investment operations...................................... .44 .54 .06
------ ---------- ------
Less distributions from
Net investment income................................................... .20 .38 .12
In excess of net investment income...................................... .02 .07 .03
------ ---------- ------
Total distributions................................................... .22 .45 .15
------ ---------- ------
Net asset value, end of period............................................ $10.33 $10.11 $ 10.02
============== ============ =================
Total return(%)........................................................... 4.41(c) 5.54(d) .63(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands).................................. $2,176 $2,358 $ 1,030
Ratio of expenses to average daily net assets
With expense reimbursement and fees paid indirectly(%)(f)............... 1.39(e) 1.39 1.38(e)
Without expense reimbursement and fees paid indirectly(%)(f)............ 1.81(e) 1.68 1.61(e)
Ratio of net investment income to average daily net assets(%)(b).......... 3.91(e) 3.88 5.56(e)
Portfolio turnover rate(%)................................................ 46(e) 53 36
(a) From commencement until August 2, 1991 this fund (formerly Limited Term Portfolio of the Zweig Tax-Free Fund, Inc.) was
managed by Zweig/Glaser Advisors. Effective August 2, 1991, the Fund is being managed by Mackenzie Investment Management
Inc. (MIMI) with the same investment objectives.
(b) Net investment income is net of expenses reimbursed by manager.
(c) Total return represents aggregate total return and does not reflect a sales charge.
(d) Total return does not reflect a sales charge.
(e) Annualized.
(f) Beginning in July 1995, total expenses include fees paid indirectly through an expense offset arrangement.
* Unaudited.
</TABLE>
(See Notes to Financial Statements)
<PAGE> 35
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 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.
a. Securities 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).
b. Securities 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.
c. Federal income taxes -- The Fund is a separate taxable entity and
intends to qualify for tax treatment applicable to regulated investment
companies under the Internal Revenue Code, as amended, and, among other things,
is required to make the requisite distributions to its shareholders which will
relieve it from Federal income and excise taxes. Therefore, no provision has
been recorded for Federal income or excise taxes.
The Fund has a net tax-basis capital loss carryforward of approximately
$1,626,000 as of June 30, 1995 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 $428,000 in
1996, $606,000 in 1997, $11,000 in 2001, $21,000 in 2002 and $560,000 in 2003.
d. Distributions to shareholders -- Normally, distributions from net
investment income are declared monthly and net realized capital gains, if any,
are declared semi-annually. In addition, distributions to Class A shareholders
are declared daily at the rate per share of the excess of 12b-1 fees of Class B
shares over Class A shares. Distributions are paid at the earlier of redemption
or the designated monthly or semi-annual date.
e. Deferred organization expenses -- Expenses incurred by the Fund in
connection with its organization have been deferred and are being amortized on a
straight-line basis over a five year period.
f. 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.
Certain per share amounts in the 1994 and 1993 financial highlights have
been reclassified to conform to the 1995 presentation.
g. 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 period, custody fees were
reduced by $7,213 under this arrangement.
2. MANAGEMENT AND DISTRIBUTION
The Fund pays Mackenzie Investment Management Inc. (MIMI) a monthly
management fee at the annual rate of .55% of its average daily net assets.
Mackenzie Ivy Funds Distribution, Inc. (MIFDI), a wholly owned subsidiary
of MIMI, is the principal underwriter and national 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 six months ended December 31, 1995, the
net amount of underwriting discount retained by MIFDI was $4,374.
If the Fund's total expenses in any fiscal year exceed the permissible
limits applicable to the Fund in any state in which its shares are then
qualified for sale, MIMI will bear the excess expenses. The most restrictive
state expense limitation provision limits a fund's annual expenses (excluding
interest, taxes, brokerage commissions, extraordinary expenses and other
expenses subject to approval by state securities administrators) to 2.5% of the
first $30 million of the average daily net assets; 2.0% of the next $70 million
of the average daily net assets; and 1.5% of the remaining average daily net
<PAGE> 36
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
assets. 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 daily 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
voluntary reimbursements of $215,186.
3. ADMINISTRATIVE SERVICES
MIMI provides certain administrative services to the Fund. As compensation
for these services, the Fund pays MIMI a monthly fee at the annual rate of .10%
of its average daily net assets. Such fee is reflected as Administrative
services fee in the Statement of Operations.
4. FUND ACCOUNTING SERVICES
MIMI provides certain accounting and pricing services for the Fund. As
compensation for those services, the Fund pays MIMI a monthly fee plus
telephone, delivery and other out-of-pocket expenses. The monthly fee is based
upon the net assets of the Fund at the preceding month end at the following
rates: $1,000 when net assets are $20 million and under; $1,500 when net assets
are over $20 million to $75 million; $4,000 when net assets are over $75 million
to $100 million; and $6,000 when net assets are over $100 million. Such fee and
expenses are reflected as Fund accounting in the Statement of Operations.
5. TRANSFER AGENCY AND SHAREHOLDER SERVICE
Mackenzie Ivy Investor Services Corp. (MIISC), a wholly owned subsidiary of
MIMI, is the transfer and shareholder servicing agent for the Fund. The Fund
pays a monthly fee at an annual rate of $20.75 per open account and $4.36 per
account that is closed. In addition, the Fund pays certain out-of-pocket
expenses. Such fees and expenses are reflected as Transfer agent in the
Statement of Operations.
6. DISTRIBUTION PLANS
Under Service and Distribution Plans, the Fund reimburses MIFDI for service
fee payments made to brokers at an annual rate of .25% of its average daily net
assets. Class B shares are also subject to an ongoing distribution fee at an
annual rate of .50% of the average daily net asset value of Class B shares.
MIFDI 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.
7. 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.
8. SUBSEQUENT EVENT
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. As a result of this change, the net asset value per share of
Class A and Class B are expected to differ.
9. FUND SHARE TRANSACTIONS
Fund share transactions for both Class A and Class B were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1995 JUNE 30, 1995
------------------------- -------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold..................... 343,551 $ 3,503,031 2,084,010 $ 20,459,375
Issued on reinvestment of
distributions........... 154,076 1,569,035 418,632 4,149,371
Repurchased.............. (2,662,251) (27,269,458) (7,316,999) (72,530,480)
---------- ------------ ---------- ------------
Net decrease............. (2,164,624) $(22,197,392) (4,814,357) $(47,921,734)
============ ============== ============ ==============
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1995 JUNE 30, 1995
------------------------- -------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold..................... 29,960 $ 307,614 189,520 $1,974,377
Issued on reinvestment of
distributions........... 2,942 29,956 5,698 56,431
Repurchased.............. (55,432) (567,377) (64,904) (649,130)
---------- ------------ ---------- ------------
Net increase (decrease).. (22,530) $(229,807) 130,314 $1,381,678
============ ============== ============ ==============
</TABLE>
MLTMF-3-296
<PAGE> 37
DECEMBER 31, 1995 [MACKENZIE LOGO]
MACKENZIE
FLORIDA
LIMITED TERM
MUNICIPAL
FUND
SEMI-ANNUAL
REPORT
This report and the financial statements contained herein are submitted for the
general information of the share-holders. This report is not authorized for
distribution to prospective investors unless preceded or accompanied by an
effective prospectus.
Mackenzie Investment
Management Inc.
Via Mizner Financial Plaza
700 South Federal Hwy.
Boca Raton, FL 33432
1-800-456-5111
[PHOTO]
Throughout the
centuries,
the castle keep has
been a source
of long-range vision
and strategic
advantage.
Dear Shareholder:
Over the latter part of 1995 the municipal bond market remained relatively
unchanged as the Federal Reserve sought to manage interest rates and ongoing
government budget concerns seemed to dampen investor enthusiasm.
With time, the spread has narrowed between short-term municipal yields and
short-term treasury yields.
Against this backdrop, Mackenzie Florida Limited Term Municipal Fund has
continued to maintain its short-term position. By taking an active management
position with the Fund, we followed a disciplined approach in seeking to
balance the pursuit of yield with an acceptable level of risk.
At the same time, we have remained focused on portfolio quality. The
emphasis on investment grade bonds continues. As in the past, the Fund manager
avoids the purchase of derivative products.
With respect to 1996 being an election year, we believe that the municipal
market has already taken the issue of tax reform, and its impact, into
consideration. A further point to be made, is that regardless of what may
happen with tax reform most experts feel that it will reflect a more moderate
rather than an extreme adjustment.
We believe that the current interest rate environment, low inflationary
pressures and prospects for economic growth will continue
MACKENZIE FLORIDA LIMITED TERM
MUNICIPAL FUND IS PRIMARILY INVESTED
IN HIGH QUALITY SHORT-TERM BONDS.
THE MANAGER STRESSES NON-CALLABLE
BONDS TO PROVIDE THE FUND WITH CALL
PROTECTION AND REDUCES VOLATILITY
THROUGH DIVERSIFICATION BY ISSUE TYPE,
LOCAL GOVERNMENTS AND AGENCY ISSUERS,
LOCATION AND PURPOSE.
to provide the municipal markets with stability and predictability in the
future.
As always we will continue to take an active role in the management of
Mackenzie Florida Limited Term Municipal Fund in order to seek as high a yield
as possible without compromising our commitment to minimizing risk.
Sincerely,
/s/ Michael G. Landry
Michael G. Landry
President
BOARD OF TRUSTEES
John S. Anderegg, Jr.
Paul H. Broyhill
Stanley Channick
Frank W. DeFriece, Jr.
Roy J. Glauber
Michael G. Landry
Joseph G. Rosenthal
J. Brendan Swan
LEGAL COUNSEL
Dechert Price & Rhoads
Boston, MA
OFFICERS
Michael G. Landry, President
Keith J. Carlson, Vice President
C. William Ferris,
Secretary/Treasurer
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
TRANSFER AGENT
Mackenzie Ivy Investor
Services Corp.
P.O. Box 3022
Boca Raton, FL 33431-0922
1-800-777-6472
AUDITORS
Coopers & Lybrand L.L.P.
Fort Lauderdale, FL
MANAGER
Mackenzie Investment Management Inc.
Boca Raton, FL
DISTRIBUTOR
Mackenzie Ivy Funds
Distribution, Inc.
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, FL 33432
<PAGE> 38
MACKENZIE FLORIDA LIMITED TERM MUNICIPAL FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES -- 91.6% PRINCIPAL VALUE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Aa3 AA- Dade County Florida Educational Facility Authority (St. Thomas University) (NC), 5.25%,
01/01/03............................................................................. $200,000 $ 209,417
A1 A+ Dade County Florida School District (GO)(NC), 7.00%, 07/01/99.......................... 250,000 273,792
Aaa AA Florida State Board of Education (GO), 0.00%, 06/01/00 (Pre-refunded).................. 150,000 54,306
Aaa AAA Florida State Board of Education (GO), 7.25%, 06/01/00 (Pre-refunded).................. 250,000 285,505
Aaa AAA Hillsborough County Florida Port Authority Revenue (NC) (FSA Insured), 5.10%,
06/01/03............................................................................. 250,000 260,487
Aaa AAA Hillsborough County Florida Utility Revenue (MBIA Insured), 9.75%, 12/01/03 (Escrowed
to Maturity)......................................................................... 150,000 191,285
Aa1 AA Jacksonville Florida Electric Authority Revenue, 7.40%, 10/01/01....................... 250,000 267,307
Aaa AAA Jacksonville Florida Port Authority (NC)(MBIA Insured), 7.625%, 11/01/02............... 200,000 237,706
Aaa AAA Kissimmee Florida Water and Sewer System Revenue (AMBAC Insured) 5.80%, 10/01/02....... 250,000 268,917
Aaa AAA Lee County Florida Solid Waste System (MBIA Insured), 6.80%, 10/01/02.................. 200,000 226,176
Aaa AAA Leon County Florida Capital Improvement Revenue (MBIA Insured) 5.75%,
10/01/03 (Escrowed to Maturity)...................................................... 50,000 54,391
Aaa AAA Orange County Florida (AMBAC Insured), 7.25%, 10/01/00 (Pre-refunded).................. 200,000 230,062
Aaa AAA Pasco County Florida School Board (NC) (FSA Insured), 6.10%, 08/01/01.................. 250,000 272,912
Aaa AAA Port St. Lucie Florida Stormwater Utility, 7.40%, 11/01/00 (Pre-refunded).............. 200,000 228,498
Baa1 A Puerto Rico Commonwealth (GO)(NC), 5.10%, 07/01/02..................................... 200,000 205,680
Baa1 A Puerto Rico Commonwealth (GO)(NC), 0.00%, 07/01/04..................................... 100,000 66,746
Baa1 A- Puerto Rico Electric Power Authority, 6.80%, 07/01/00.................................. 250,000 272,855
Baa1 A- Puerto Rico Municipal Finance Agency (GO), 5.70%, 07/01/03............................. 250,000 263,558
Baa1 A Puerto Rico Public Buildings Authority Revenue, 6.60%, 07/01/04........................ 200,000 221,760
Aaa AAA Sunrise Florida Utility System Revenue (AMBAC Insured), 10.25%, 10/01/13............... 200,000 251,822
Aaa AAA Volusia County Florida School Board (NC) (FSA Insured), 10.00%, 08/01/00............... 200,000 247,098
----------
TOTAL INVESTMENTS -- 91.6% (COST -- $4,459,755)*....................................... 4,590,280
OTHER ASSETS, LESS LIABILITIES -- 8.4%................................................. 423,206
----------
NET ASSETS -- 100%..................................................................... $5,013,486
==========
*Cost is approximately the same for Federal income tax purposes.
FEDERAL INCOME TAX INFORMATION:
At December 31, 1995, net unrealized appreciation based on cost for financial statement and Federal income tax
purposes is as follows:
Gross unrealized appreciation..................................................................... $ 187,968
Gross unrealized depreciation..................................................................... (57,443)
----------
Net unrealized appreciation....................................................................... $ 130,525
==========
OTHER INFORMATION:
Purchases and sales of municipal securities aggregated $1,291,560 and $2,973,852, respectively, for the period
ended December 31, 1995.
AMBAC -- AMBAC Indemnity Corporation
FSA -- Financial Security Association
GO -- General Obligations
MBIA -- Municipal Bond Insurance Association
NC -- Non Callable
</TABLE>
(See Notes to Financial Statements)
<PAGE> 39
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments, at value (identified cost -- $4,459,755)................................................................ $4,590,280
Cash................................................................................................................. 296,649
Receivables
Interest........................................................................................................... 85,346
Manager for expense reimbursement.................................................................................. 18,635
Deferred organization expenses....................................................................................... 33,799
----------
Total assets....................................................................................................... 5,024,709
----------
LIABILITIES
Payables:
Distributions to shareholders...................................................................................... 4,571
Management fee..................................................................................................... 2,374
12b-1 service and distribution fees................................................................................ 1,805
Administrative services fee........................................................................................ 432
Fund accounting.................................................................................................... 1,001
Transfer agent..................................................................................................... 425
Other accrued expenses and liabilities............................................................................... 615
----------
Total liabilities.................................................................................................. 11,223
----------
NET ASSETS........................................................................................................... $5,013,486
==========
CLASS A:
Net asset value and redemption price per share ($3,365,205 / 327,320 shares outstanding)............................. $ 10.28
==========
Maximum offering price per share ($10.28 x 100 / 97.00)*............................................................. $ 10.60
==========
CLASS B:
Net asset value and offering price per share ($1,648,281 / 160,307 shares outstanding)**............................. $ 10.28
==========
NET ASSETS CONSIST OF:
Capital paid-in.................................................................................................... $4,877,200
Accumulated net realized gain on investments....................................................................... 8,906
Accumulated undistributed net investment loss...................................................................... (3,145)
Net unrealized appreciation on investments......................................................................... 130,525
----------
NET ASSETS........................................................................................................... $5,013,486
==========
</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> 40
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest................................................................................................... $138,583
--------
EXPENSES
Management fee............................................................................................. $15,683
Transfer agent............................................................................................. 3,045
Administrative services fee................................................................................ 2,851
Custodian fees............................................................................................. 1,860
Blue Sky fees.............................................................................................. 7,908
Auditing and accounting fees............................................................................... 14,622
Shareholder reports........................................................................................ 1,558
Amortization of organization expenses...................................................................... 4,858
Fund accounting............................................................................................ 6,643
Trustees' fees............................................................................................. 2,212
12b-1 service and distribution fees
Class A.................................................................................................. 4,596
Class B.................................................................................................. 7,599
Legal...................................................................................................... 16,262
Other...................................................................................................... 391
--------
90,088
Expenses reimbursed by manager............................................................................. (57,786)
Fees paid indirectly....................................................................................... (1,860)
--------
Net expenses............................................................................................... 30,442
--------
Net investment income........................................................................................ 108,141
--------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments........................................................................... 44,284
Net unrealized appreciation during the year on investments................................................. 73,513
--------
Net gain on investments.................................................................................. 117,797
--------
Net increase in net assets resulting from operations......................................................... $225,938
========
</TABLE>
(See Notes to Financial Statements)
<PAGE> 41
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
DECEMBER 31, JUNE 30,
------------ ----------
1995* 1995
------------ ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income............................................................................. $ 108,141 $ 280,554
Net realized gain on investments.................................................................. 44,284 46,024
Net unrealized appreciation during the period on investments...................................... 73,513 64,764
------------ ----------
Net increase resulting from operations.......................................................... 225,938 391,342
------------ ----------
CLASS A:
Distributions from
Net investment income............................................................................. (71,624 ) (182,316 )
Net realized gain................................................................................. (33,038 ) (25,987 )
------------ ----------
Total distributions to Class A shareholders..................................................... (104,662 ) (208,303 )
------------ ----------
CLASS B:
Distributions from
Net investment income............................................................................. (33,670 ) (98,238 )
Net realized gain................................................................................. (17,063 ) (15,726 )
------------ ----------
Total distributions to Class B shareholders..................................................... (50,733 ) (113,964 )
------------ ----------
Fund share transactions (Note 10):
Net increase (decrease) resulting from Fund share transactions
Class A......................................................................................... (845,963 ) 1,775,916
Class B......................................................................................... (681,819 ) 742,095
------------ ----------
Net increase (decrease) resulting from Fund share transactions................................ (1,527,782 ) 2,518,011
------------ ----------
Total increase (decrease) in net assets............................................................. (1,457,239 ) 2,587,086
NET ASSETS
Beginning of period............................................................................... 6,470,725 3,883,639
------------ ----------
End of period..................................................................................... $ 5,013,486 $6,470,725
============== ============
Accumulated undistributed net investment loss....................................................... $ (3,145 ) $ (5,992 )
============== ============
</TABLE>
* Unaudited.
(See Notes to Financial Statements)
<PAGE> 42
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE APRIL 1, 1994
MONTHS ENDED YEAR ENDED (COMMENCEMENT) TO
DECEMBER 31, JUNE 30, JUNE 30,
CLASS A ------------ ---------- -----------------
SELECTED PER SHARE DATA 1995* 1995 1994
------------ ---------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period...................................... $10.16 $10.10 $ 10.00
------ ---------- ------
Income from investment operations
Net investment income(a)................................................ .21 .47 .11
Net gain on investments (both realized and unrealized).................. .21 .13 .10
------ ---------- ------
Total from investment operations...................................... .42 .60 .21
------ ---------- ------
Less distributions from
Net investment income................................................... .21 .47 .11
Net realized gain....................................................... .09 .07 --
------ ---------- ------
Total distributions................................................... .30 .54 .11
------ ---------- ------
Net asset value, end of period............................................ $10.28 $10.16 $ 10.10
=============== ============ ==================
Total return(%)........................................................... 4.05(b) 6.14(c) 2.12(b)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands).................................. $3,365 $4,166 $ 2,331
Ratio of expenses to average daily net assets
With expense reimbursement and fees paid indirectly(%)(e)............... .89(d) .89 .89(d)
Without expense reimbursement and fees paid indirectly(%)(e)............ 2.98(d) 2.09 2.87(d)
Ratio of net investment income to average daily net assets(%)(a).......... 3.97(d) 4.56 4.40(d)
Portfolio turnover rate(%)................................................ 48(d) 164 0(d)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE APRIL 1, 1994
MONTHS ENDED YEAR ENDED (COMMENCEMENT) TO
DECEMBER 31, JUNE 30, JUNE 30,
CLASS B ------------ ---------- -----------------
SELECTED PER SHARE DATA 1995* 1995 1994
------------ ---------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period...................................... $10.16 $10.10 $ 10.00
------ ---------- ------
Income from investment operations
Net investment income(a)................................................ .19 .42 .10
Net gain on investments (both realized and unrealized).................. .20 .13 .10
------ ---------- ------
Total from investment operations...................................... .39 .55 .20
------ ---------- ------
Less distributions from
Net investment income................................................... .19 .42 .10
Net realized gain....................................................... .08 .07 --
------ ---------- ------
Total distributions................................................... .27 .49 .10
------ ---------- ------
Net asset value, end of period............................................ $10.28 $10.16 $ 10.10
=============== ============ ==================
Total return(%)........................................................... 3.79(b) 5.61(c) 2.01(b)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands).................................. $1,648 $2,305 $ 1,553
Ratio of expenses to average daily net assets
With expense reimbursement and fees paid indirectly(%)(e)............... 1.39(d) 1.39 1.39(d)
Without expense reimbursement and fees paid indirectly(%)(e)............ 3.48(d) 2.59 3.37(d)
Ratio of net investment income to average daily net assets(%)(a).......... 3.47(d) 4.06 3.90(d)
Portfolio turnover rate(%)................................................ 48(d) 164 0(d)
(a) Net investment income is net of expenses reimbursed by manager.
(b) Total return represents aggregate total return and does not reflect a sales charge.
(c) Total return does not reflect a sales charge.
(d) Annualized.
(e) Beginning in July 1995, total expenses include fees paid indirectly through an expense offset arrangement.
* Unaudited.
</TABLE>
(See Notes to Financial Statements)
<PAGE> 43
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Mackenzie Florida 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 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.
a. Securities 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).
b. Securities 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.
c. Federal income taxes -- The Fund is a separate taxable entity and
intends to qualify for tax treatment applicable to regulated investment
companies under the Internal Revenue Code, as amended, and, among other things,
is required to make the requisite distributions to its shareholders which will
relieve it from Federal income and excise taxes. Therefore, no provision has
been recorded for Federal income or excise taxes.
d. Distributions to shareholders -- Normally, distributions from net
investment income are declared monthly and net realized capital gains, if any,
are declared semi-annually. In addition, distributions to Class A shareholders
are declared daily at the rate per share of the excess of 12b-1 fees of Class B
shares over Class A shares. Distributions are paid at the earlier of redemption
or the designated monthly or semi-annual date.
e. Deferred organization expenses -- Expenses incurred by the Fund in
connection with its organization have been deferred and are being amortized on a
straight-line basis over a five year period.
f. 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.
g. 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 period, custody fees were
reduced by $1,860 under this arrangement.
2. MANAGEMENT AND DISTRIBUTION
The Fund pays Mackenzie Investment Management Inc. (MIMI) a monthly
management fee at the annual rate of .55% of its average daily net assets.
Mackenzie Ivy Funds Distribution, Inc. (MIFDI), 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 six months ended December 31, 1995, the net amount
of underwriting discount retained by MIFDI was $569.
If the Fund's total expenses in any fiscal year exceed the permissible
limits applicable to the Fund in any state in which its shares are then
qualified for sale, MIMI will bear the excess expenses. The most restrictive
state expense limitation provision limits a fund's annual expenses (excluding
interest, taxes, brokerage commissions, extraordinary expenses and other
expenses subject to approval by state securities administrators) to 2.5% of the
first $30 million of the average daily net assets; 2.0% of the next $70 million
of the average daily net assets; and 1.5% of the remaining average daily net
assets. 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 daily 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 required and voluntary reimbursements of
$6,614 and $51,172, respectively.
<PAGE> 44
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
3. ADMINISTRATIVE SERVICES
MIMI provides certain administrative services to the Fund. As compensation
for these services, the Fund pays MIMI a monthly fee at the annual rate of .10%
of its average daily net assets. Such fee is reflected as Administrative
services fee in the Statement of Operations.
4. FUND ACCOUNTING SERVICES
MIMI provides certain accounting and pricing services for the Fund. As
compensation for those services, the Fund pays MIMI a monthly fee plus
telephone, delivery and other out-of-pocket expenses. The monthly fee is based
upon the net assets of the Fund at the preceding month end at the following
rates: $1,000 when net assets are $20 million and under; $1,500 when net assets
are over $20 million to $75 million; $4,000 when net assets are over $75 million
to $100 million; and $6,000 when net assets are over $100 million. Such fee and
expenses are reflected as Fund accounting in the Statement of Operations.
5. TRANSFER AGENCY AND SHAREHOLDER SERVICE
Mackenzie Ivy Investor Services Corp. (MIISC), a wholly owned subsidiary of
MIMI, is the transfer and shareholder servicing agent for the Fund. The Fund
pays a monthly fee at an annual rate of $20.75 per open account and $4.36 per
account that is closed. In addition, the Fund pays certain out-of-pocket
expenses. Such fees and expenses are reflected as Transfer agent in the
Statement of Operations.
6. DISTRIBUTION PLANS
Under Service and Distribution Plans, the Fund reimburses MIFDI for service
fee payments made to brokers at an annual rate of .25% of its average daily net
assets. Class B shares are also subject to an ongoing distribution fee at an
annual rate of .50% of the average daily net asset value of Class B shares.
MIFDI 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.
7. 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.
8. CONCENTRATION OF CREDIT RISK
The Fund primarily invests in debt obligations issued by the State of
Florida 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 Florida securities than is a municipal
bond fund that is not concentrated in these issuers to the same extent.
9. SUBSEQUENT EVENT
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. As a result of this change, the net asset value per share of
Class A and Class B are expected to differ.
10. FUND SHARE TRANSACTIONS
Fund share transactions for both Class A and Class B were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1995 JUNE 30, 1995
---------------------- ----------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------------------------------ -------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Sold.......................... 16,115 $ 164,844 359,438 $ 3,570,311
Issued on reinvestment of
distributions................ 6,426 65,658 13,013 129,513
Repurchased................... (105,194) (1,076,465) (193,314) (1,923,908)
-------- ----------- -------- -----------
Net increase (decrease)....... (82,653) $ (845,963) 179,137 $ 1,775,916
========== ============= ========== =============
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1995 JUNE 30, 1995
-------------------- ---------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- -------------------------------- ------- --------- ------- ----------
<S> <C> <C> <C> <C>
Sold............................ -- $ -- 154,143 $1,547,909
Issued on reinvestment of
distributions.................. 1,889 19,321 3,666 36,516
Repurchased..................... (68,419) (701,140) (84,751) (842,330)
------- --------- ------- ----------
Net increase (decrease)......... (66,530) $(681,819) 73,058 $ 742,095
======== =========== ======== ============
</TABLE>
MFLTMF-2-296
