<PAGE> 1
DECEMBER 31, 1996 [MACKENZIE LOGO]
MACKENZIE LIMITED TERM MUNICIPAL FUND
MARKET COMMENTARY:
Overall, fixed income markets in 1996 were marked by unfulfilled
expectations and interest rate volatility. Following a quarter point decrease
in the discount rate in January 1996, there were several indicators pointing to
increased economic growth--increased wage pressure, higher petroleum and grain
prices, a strong dollar and full employment--and bond markets responded by
pushing interest rates higher.
Later in the year, market participants watched guardedly for inflation
to rear its head. However, US Gross Domestic Product (GDP) and the Consumer
Price Index (CPI) continued to reflect moderate growth which resulted in
interest rates coming down, only to rise again by year end.
The municipal bond market also had to contend with interest rate
volatility and inflationary pressures caused by increased economic growth, as
well as first quarter concerns about proposed tax reform. We believe continued
evidence of a moderating economy should, however, keep interest rates in a
trading range and inflation should remain low. But the threat of tax reform
still looms. A Republican-controlled Congress could bring tax reform and
related issues to the forefront once again. The demand for municipal bonds
has, however, remained strong as supply continued to decrease from its high in
1993.
Municipal credit rating agencies have come under fire for not detecting
fiscal problems early enough to warn investors. We believe it will be
important, therefore, to focus on higher credit quality and strong underlying
fundamentals in the coming year.
The Mackenzie Limited Term Municipal Fund maintains its disciplined
investment approach and focus on shorter term, investment grade bonds. With an
average maturity of just more than five years and 84% of the Fund rated A or
better, we believe this Fund should provide conservative tax-free investors with
a good balance of yield and return.
MACKENZIE INVESTMENT MANAGEMENT, INC.
<TABLE>
<S> <C> <C> <C>
BOARD OF TRUSTEES OFFICERS TRANSFER AGENT MANAGER
John S. Anderegg, Jr. Michael G. Landry, Chairman Ivy Mackenzie Mackenzie Investment
Paul H. Broyhill Keith J. Carlson, President Services Corp. Management Inc.
Keith J. Carlson C. William Ferris, P.O. Box 3022 Boca Raton, FL
Stanley Channick Secretary/Treasurer Boca Raton, FL 33431-0922
Frank W. DeFriece, Jr. 1-800-777-6472 DISTRIBUTOR
Roy J. Glauber CUSTODIAN Ivy Mackenzie
Michael G. Landry Brown Brothers Harriman & Co. AUDITORS Distributors, Inc.
Joseph G. Rosenthal Boston, MA Coopers & Lybrand L.L.P. Via Mizner Financial Plaza
J. Brendan Swan Fort Lauderdale, FL 700 South Federal Highway
Boca Raton, FL 33432
LEGAL COUNSEL
Dechert Price & Rhoads
Boston, MA
</TABLE>
<PAGE> 2
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES -- 96.7% PRINCIPAL VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALABAMA -- 1.6%
A2 NR Huntsville Alabama Ind. Rev. (TRW Inc. Project), 12.75%,
08/01/02.................................................. $1,000,000 $ 1,040,689
-----------
ALASKA -- 5.2%
Aaa AAA North Slope Boro Alaska (GO)(NC)(MBIA Insured), 0.00%,
01/01/01.................................................. 4,000,000 3,305,000
-----------
ARIZONA -- 4.3%
Baa1 A Maricopa County Arizona School District (GO)(NC), 0.00%,
07/01/00.................................................. 500,000 425,625
Baa1 A Maricopa County Arizona School District (GO)(NC), 0.00%,
01/01/01.................................................. 750,000 621,562
Baa1 A Maricopa County Arizona School District (GO)(NC), 5.60%,
07/01/03.................................................. 500,000 513,125
Aa AA- Maricopa County Arizona Unified School District (GO)(NC),
7.75%, 07/01/03........................................... 1,000,000 1,165,000
-----------
2,725,312
-----------
CALIFORNIA -- 15.1%
A1 A California State (GO)(NC), 9.25%, 03/01/05.................. 350,000 450,187
A1 AA- Clovis Unified School Series B (GO)(NC), 0.00%, 08/01/02.... 1,000,000 763,750
A A Los Angeles County California Certificate of Participation,
Correctional Facility Improvements, 6.90%, 03/01/01....... 500,000 528,125
A A Los Angeles County California Certificate of Participation,
Disney Parking Project (NC), 0.00%, 09/01/03.............. 250,000 171,250
Aa AA Los Angeles Dept. of Water & Power (NC), 9.00%, 09/01/04.... 500,000 627,500
Aa AA- Los Angeles Dept. of Water & Power (NC), 9.00%, 02/01/02.... 500,000 597,500
Aaa AAA Palomar Pomerado Health System (NC)(MBIA Insured), 0.00%,
11/01/03.................................................. 500,000 360,000
NR A- Pomona California Public Financing Authority (NC), 5.625%,
10/01/03.................................................. 500,000 507,500
NR A- Redwood City California Public Financing Authority, 7.10%.
07/15/01.................................................. 750,000 818,438
A BBB+ San Francisco California Port Revenue (NC), 9.00%,
07/01/03.................................................. 1,000,000 1,213,750
Aaa AAA Santa Clara Certificate of Participation (NC)(MBIA Insured),
7.75%. 02/01/02........................................... 500,000 571,875
A A Southern California Public Power Authority, 6.75%,
07/01/01.................................................. 1,000,000 1,078,750
Aa NR University of California Certificate of Participation (NC),
10.00%, 11/01/03.......................................... 1,500,000 1,942,500
-----------
9,631,125
-----------
COLORADO -- 1.0%
Baa1 NR El Paso County Colorado School District (GO)(NC), 8.25%,
12/15/04.................................................. 500,000 608,750
-----------
CONNECTICUT -- 1.0%
Baa BBB New Haven Connecticut (GO)(NC), 9.50%, 11/15/03............. 500,000 611,875
-----------
FLORIDA -- 8.1%
NR AA East Lee County Florida Water Control District (NC) (Asset
Guaranty Insured), 5.50%, 11/01/03........................ 200,000 206,750
Aaa AAA Hillsborough County Florida Utility (MBIA Insured), 9.75%.
12/01/03.................................................. 150,000 181,687
Aaa AAA Jacksonville Port Authority Rev. (MBIA Insured)(NC), 7.625%,
11/01/02.................................................. 550,000 634,563
Aaa AAA Jacksonville Port Authority Rev. (MBIA Insured)(NC), 7.625%,
11/01/03.................................................. 1,000,000 1,171,250
Aaa AAA Pasco County Florida School Board Certificate of
Participation (FSA Insured)(NC),
6.10%, 08/01/01........................................... 250,000 266,875
Aaa AAA Volusia County School Board (NC)(FSA Insured), 10.00%,
08/01/00.................................................. 2,300,000 2,702,500
-----------
5,163,625
-----------
GEORGIA -- 0.8%
A1 A+ Savannah Georgia Resource Recovery Authority, 5.95%,
12/01/02.................................................. 500,000 526,250
-----------
GUAM -- 1.6%
NR BBB Guam Government (GO), 5.90%, 09/01/05....................... 1,000,000 1,006,250
-----------
HAWAII -- 0.9%
Aa AA Honolulu City & County (GO)(NC), 7.25%, 07/01/00............ 500,000 545,000
-----------
IDAHO -- 1.1%
NR BBB+ Boise Idaho Urban Renewal Agency Parking Revenue, 6.00%,
09/01/02.................................................. 700,000 725,375
-----------
ILLINOIS -- 3.1%
A A- Illinois Health Facilities Authority -- Ill Masonic Medical
Center, 5.20%, 10/01/03................................... 500,000 494,375
A A- Illinois Health, 7.00%, 01/01/04............................ 300,000 306,000
Aaa AAA Metropolitan Pier & Exposition Authority Illinois (NC) (MBIA
Insured), 0.00%, 12/15/01................................. 500,000 395,625
Aaa AAA Will & Kendall Counties Illinois School District (GO)(AMBAC
Insured), 5.45%, 01/01/05................................. 750,000 767,813
-----------
1,963,813
-----------
</TABLE>
(See Notes to Financial Statements)
<PAGE> 3
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES PRINCIPAL VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IOWA -- 0.9%
Aaa AAA Muscatine Iowa Electric, 9.50%, 01/01/04 (Escrowed to
Maturity)................................................. $ 500,000 $ 596,875
-----------
LOUISIANA -- 3.4%
A3 A Louisiana State Offshore Terminal Authority (NC), 6.25%,
09/01/04.................................................. 2,000,000 2,140,000
-----------
MASSACHUSETTS -- 2.5%
A A+ Massachusetts (GO), 6.50%, 07/01/02......................... 500,000 545,625
Baa1 NR Massachusetts State Health & Educational Facilities
Authority Revenue (Holyoke Hospital), 6.25%, 07/01/04....... 1,000,000 1,051,250
-----------
1,596,875
-----------
MINNESOTA -- 1.6%
Baa3 NR International Falls Minnesota
Pollution Control Revenue, 7.15%, 5/15/98................... 500,000 516,875
BBB+ Minneapolis Minnesota Community Development, 7.00%,
NR 12/01/03.................................................. 500,000 528,750
-----------
1,045,625
-----------
MISSISSIPPI -- 2.6%
Aaa AAA Columbus Mississippi (MBIA Insured)(NC), 8.80%, 05/01/02.... 500,000 593,750
A- Mississippi Medical Center Educational Building Corporation,
University of Mississippi
NR Medical Center Project (NC), 7.00%, 12/01/00.............. 1,000,000 1,066,250
-----------
1,660,000
-----------
NEVADA -- 0.9%
Aaa AAA Reno Nevada (GO)(NC)(MBIA Insured), 8.70%, 05/01/99......... 545,000 598,138
-----------
NEW HAMPSHIRE -- 0.6%
Aa AA New Hampshire State (GO)(NC), 0.00%, 07/01/04............... 500,000 351,250
-----------
NEW YORK -- 4.5%
Baa1 A- New York City (GO)(NC), Series A., 7.00%, 08/01/03.......... 500,000 548,125
Baa1 A- New York City (GO)(NC), Series D, 5.70%, 08/01/02........... 750,000 773,437
Baa BBB- New York City Health & Hospital Corporation Revenue, 6.00%,
02/15/05.................................................. 750,000 760,313
Aa NR New York State Medical Care Facilities Financing Agency
(SONYMA Insured), 6.00%, 11/15/02......................... 750,000 798,750
-----------
2,880,625
-----------
NORTH CAROLINA -- 1.5%
NR A- Gastonia North Carolina Housing Corporation, 5.75%,
07/01/04.................................................. 915,000 958,463
-----------
OKLAHOMA -- 0.8%
A A Southern Oklahoma Memorial Hospital (NC), 5.60%, 02/01/00... 500,000 511,250
-----------
OREGON -- 0.4%.
Aa AA- Oregon State (GO)(NC), 9.00%, 10/01/00...................... 300,000 348,375
-----------
PENNSYLVANIA -- 4.9%
A NR New Castle PA Area Hospital Authority, 6.20, 11/15/02....... 450,000 473,625
Aaa AAA Pennsylvania Higher Ed. Series A (FGIC Insured)(NC), 6.80%,
12/01/00.................................................. 1,000,000 1,068,750
Ba BBB+ Philadelphia PA Hospitals & Highered Facilities Authority,
6.20%, 07/01/00........................................... 1,000,000 1,032,500
Aa3 AA- Southeastern Pennsylvania Transportation Authority (NC),
6.00%, 06/01/01........................................... 500,000 527,500
-----------
3,102,375
-----------
PUERTO RICO -- 3.7%
Baa1 A- Puerto Rico Commonwealth (NC), 6.60%, 07/01/04.............. 300,000 327,375
Baa1 A- Puerto Rico Electric Power Authority Power Revenue, 6.80%,
07/01/00.................................................. 900,000 959,625
Baa1 A- Puerto Rico Municipal Finance Agency (GO), 5.70%,
07/01/03.................................................. 1,000,000 1,038,750
-----------
2,325,750
-----------
RHODE ISLAND -- 7.7%
Aaa AAA Rhode Island Clean Water (NC)(MBIA Insured), 9.20%,
10/01/02.................................................. 1,400,000 1,702,750
Aaa AAA Rhode Island Clean Water (NC)(MBIA Insured), 9.20%,
10/01/01.................................................. 1,385,000 1,642,956
A NR Rhode Island State Student Loan Authority, 6.55%,
12/01/00.................................................. 1,500,000 1,580,625
-----------
4,926,331
-----------
SOUTH CAROLINA -- 0.6%
Aaa AAA Edgefield County Central School District (FSA
Insured)(GO)(NC),
8.50%, 02/01/02............................................. 300,000 353,625
-----------
</TABLE>
(See Notes to Financial Statements)
<PAGE> 4
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES PRINCIPAL VALUE
<S> <C> <C> <C> <C>
TEXAS -- 11.2%
A A- Austin Texas Water Sewer & Electric (NC),
14.00%, 11/15/01 (Escrowed to Maturity)..................... $ 15,000 $ 18,094
A A- Austin Texas Water Sewer & Electric, 14.00%, 11/15/01
(Pre-refunded)............................................ 985,000 1,245,900
Aaa AAA Denton County Texas (GO)(MBIA Insured), 7.75%, 07/15/02..... 1,000,000 1,153,750
A A- Harris County Texas Health Facs. Dev. (NC), 6.90%,
06/01/02.................................................. 1,000,000 1,077,500
A A- Harris County Texas Health Facs. Dev. (NC), 6.80%,
07/01/04.................................................. 500,000 546,250
Aaa AAA Houston Texas Water Conveyance Cert. Series F
(NC)(AMBAC Insured), 7.20%, 12/15/02........................ 1,000,000 1,132,500
Aaa AAA Irving Texas Independent School District (GO)(NC)(PSFG
Insured), 0.00%, 02/15/02................................. 2,000,000 1,575,000
Aaa AAA Irving Texas Independent School District (GO)(NC)(PSFG
Insured), 0.00%, 02/15/04................................. 500,000 353,750
-----------
7,102,744
-----------
UTAH -- 1.6%
Baa BBB+ Davis County Utah Solid Waste Management and Recovery
Revenue, 5.90%, 06/15/03.................................. 1,000,000 1,003,750
-----------
WASHINGTON -- 3.5%
Aaa AAA Jefferson County Washington Public Hospital (GO)(NC)(FGIC
Insured), 7.50%, 12/01/02................................. 500,000 576,875
Aaa AAA Jefferson County Washington Public Hospital (GO)(NC)(FGIC
Insured), 7.50%, 12/01/03................................. 500,000 585,000
NR AA- Washington State Health Care Facilties Authority (NC),
6.20%, 02/15/01........................................... 500,000 526,875
Aaa AAA Washington State Public Power Supply, 7.50%, 07/01/15
(Pre-refunded)............................................ 485,000 531,075
-----------
2,219,825
-----------
TOTAL INVESTMENTS -- 96.7% (Cost -- $61,053,746)(a)......... 61,574,940
OTHER ASSETS, LESS LIABILITIES -- 3.3%...................... 2,117,916
-----------
NET ASSETS -- 100%.......................................... $63,692,856
===========
(a) Cost is approximately the same for Federal income tax
purposes.
OTHER INFORMATION:
At December 31, 1996, net unrealized appreciation based on cost for Federal income tax
purposes is as follows:
Gross unrealized appreciation............................... $ 1,983,247
Gross unrealized depreciation............................... (1,462,053)
-----------
Net unrealized appreciation................................. $ 521,194
===========
Purchases and sales of municipal securities aggregated $5,312,856 and $13,787,842,
respectively, for the period ended December 31, 1996.
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> 5
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments, at value (identified cost -- $61,053,746)...... $61,574,940
Cash........................................................ 1,140,186
Receivables
Interest.................................................. 1,093,156
Manager for expense reimbursement......................... 17,303
Other assets................................................ 21,717
-----------
Total assets.............................................. 63,847,302
-----------
LIABILITIES
Payables
Distributions to shareholders............................. 213
Fund shares repurchased................................... 87,227
Management fee............................................ 30,089
12b-1 service and distribution fees....................... 14,904
Other payables to related parties......................... 17,052
Accrued expenses............................................ 4,961
-----------
Total liabilities......................................... 154,446
-----------
NET ASSETS.................................................. $63,692,856
===========
CLASS A
Net asset value and redemption price per share ($61,944,558
/ 6,077,355 shares outstanding)........................... $ 10.19
===========
Maximum offering price per share ($10.19 x 100 /97.00)*..... $ 10.51
===========
CLASS B
Net asset value and offering price per share ($1,748,298 /
171,514 shares outstanding)**............................. $ 10.19
===========
NET ASSETS CONSIST OF
Capital paid-in........................................... $64,862,706
Accumulated net realized loss on investments.............. (1,549,282)
Accumulated net investment loss........................... (141,762)
Net unrealized appreciation on investments................ 521,194
-----------
NET ASSETS.................................................. $63,692,856
===========
</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.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................. $1,822,638
----------
EXPENSES
Management fee............................................ $190,267
Transfer agent............................................ 51,041
Administrative services fee............................... 34,594
Custodian fees............................................ 2,949
Blue Sky fees............................................. 7,592
Auditing and accounting fees.............................. 15,963
Shareholder reports....................................... 2,305
Fund accounting........................................... 23,675
Trustees' fees............................................ 2,496
12b-1 service and distribution fees....................... 91,399
Legal..................................................... 13,872
Other..................................................... 8,229
----------
444,382
Expenses reimbursed by manager............................ (131,465)
----------
Net expenses............................................ 312,917
----------
NET INVESTMENT INCOME....................................... 1,509,721
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments.......................... 120,427
Net unrealized appreciation during the period on
investments............................................. 562,961
----------
Net gain on investments................................. 683,388
----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ $2,193,109
==========
</TABLE>
(See Notes to Financial Statements)
<PAGE> 6
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
DECEMBER 31, JUNE 30,
------------ ------------
1996* 1996
------------ ------------
<S> <C> <C>
DECREASE IN NET ASSETS
Operations
Net investment income..................................... $ 1,509,721 $ 4,110,801
Net realized gain on investments.......................... 120,427 535,769
Net unrealized appreciation (depreciation) during the
period on investments................................... 562,961 (112,650)
------------ ------------
Net increase resulting from operations.................. 2,193,109 4,533,920
------------ ------------
Class A distributions
From net investment income................................ (1,472,151) (3,954,375)
In excess of net investment income........................ (184,321) --
------------ ------------
Total distributions to Class A shareholders............. (1,656,472) (3,954,375)
------------ ------------
Class B distributions
From net investment income................................ (37,570) (83,982)
In excess of net investment income........................ (4,616) --
------------ ------------
Total distributions to Class B shareholders............. (42,186) (83,982)
------------ ------------
Fund share transactions (Note 4)
Class A................................................... (10,662,698) (36,365,347)
Class B................................................... (343,676) (283,443)
------------ ------------
Net decrease resulting from Fund share transactions..... (11,006,374) (36,648,790)
------------ ------------
TOTAL DECREASE IN NET ASSETS................................ (10,511,923) (36,153,227)
NET ASSETS
Beginning of period....................................... 74,204,779 110,358,006
------------ ------------
END OF PERIOD............................................. $63,692,856 $ 74,204,779
============ ============
ACCUMULATED NET INVESTMENT INCOME (LOSS).................... $ (141,762) $ 47,175
============ ============
</TABLE>
* Unaudited.
(See Notes to Financial Statements)
<PAGE> 7
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE SIX
CLASS A MONTHS ENDED
DECEMBER 31, FOR THE YEAR ENDED JUNE 30,
------------- -------------------------------------------------------------
1996* 1996 1995 1994 1993 1992
SELECTED PER SHARE DATA ------------- ------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........... $ 10.12 $ 10.11 $ 10.02 $ 10.47 $ 10.41 $ 10.36
------- ------- -------- -------- ------- -------
Income from investment operations
Net investment income (a).................... .22 .44 .43 .62 .63 .63
Net realized and unrealized gain (loss)
on investments............................. .10 .01 .16 (.45) .07 .05
------- ------- -------- -------- ------- -------
Total from investment operations........... .32 .45 .59 .17 .70 .68
------- ------- -------- -------- ------- -------
Less distributions
From net investment income................... .22 .44 .43 .62 .63 .62
In excess of net investment income........... .03 -- .07 -- .01 --
From net realized gain....................... -- -- -- -- -- .01
------- ------- -------- -------- ------- -------
Total distributions........................ .25 .44 .50 .62 .64 .63
------- ------- -------- -------- ------- -------
Net asset value, end of period................. $ 10.19 $ 10.12 $ 10.11 $ 10.02 $ 10.47 $ 10.41
======= ======= ======== ======== ======= =======
Total return(%)(b)............................. 3.22(d) 4.46(b) 6.07(b) 1.56(b) 6.97(b) 6.56(b)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)....... $61,945 $72,126 $108,000 $155,187 $94,460 $30,005
Ratio of expenses to average net assets
With expense reimbursement(%)(c)............. .89(e) .92 .89 .88 .85 .97
Without expense reimbursement(%)(c).......... 1.27(e) 1.32 1.18 1.11 1.20 1.25
Ratio of net investment income to average net
assets(%)(a)................................. 4.38(e) 4.41 4.38 6.06 6.13 6.24
Portfolio turnover rate(%)..................... 8 34 53 36 32 62
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX APRIL 1, 1994
CLASS B MONTHS ENDED FOR THE YEAR (COMMENCEMENT) TO
DECEMBER 31, ENDED JUNE 30, JUNE 30,
------------- ------------------ -----------------
1996* 1996 1995 1994
SELECTED PER SHARE DATA ------------- ------ ------ -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........................ $10.12 $10.11 $10.02 $10.11
------ ------ ------ ------
Income from investment operations
Net investment income(a).................................. .20 .40 .38 .12
Net realized and unrealized gain (loss)
(both realized and unrealized).......................... .09 .01 .16 (.06)
------ ------ ------ ------
Total from investment operations........................ .29 .41 .54 .06
------ ------ ------ ------
Less distributions
From net investment income................................ .20 .40 .38 .12
In excess of net investment income........................ .02 -- .07 .03
------ ------ ------ ------
Total distributions..................................... .22 .40 .45 .15
------ ------ ------ ------
Net asset value, end of period.............................. $10.19 $10.12 $10.11 $10.02
====== ====== ====== ======
Total return(%)............................................. 2.92(d) 3.98(b) 5.54(b) .63(d)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands).................... $1,748 $2,079 $2,358 $1,030
Ratio of expenses to average net assets
With expense reimbursement(%)(c).......................... 1.41(e) 1.42 1.39 1.38(e)
Without expense reimbursement(%)(c)....................... 1.79(e) 1.82 1.68 1.61(e)
Ratio of net investment income to average net
assets(%)(a).............................................. 3.86(e) 3.91 3.88 5.56(e)
Portfolio turnover rate(%).................................. 8 34 53 36
(a) Net investment income is net of expenses reimbursed by
manager.
(b) Total return does not reflect a sales charge.
(c) Beginning in July 1995, total expenses include any fees paid
indirectly. The ratio of expenses to average net assets with
expense reimbursement has been restated for the year ended
June 30, 1996.
(d) Total return represents aggregate total return and does not
reflect a sales charge.
(e) Annualized.
* Unaudited.
</TABLE>
(See Notes to Financial Statements)
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Mackenzie Limited Term Municipal Fund (the Fund) is a diversified 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 an open-end management
investment company.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
Preparation of the financial statements includes the use of management
estimates. Actual results could differ from those estimates.
SECURITY VALUATION -- Municipal securities are valued utilizing primarily
the latest bid prices or, if bid prices are not available, on the basis of
valuation based upon a matrix system (which considers factors such as security
prices, yields, maturities and ratings), both as furnished by an independent
pricing service approved by the Board of Trustees (the Board).
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are
accounted for on the trade date. Interest income is accrued on a daily basis.
Realized gains and losses from securities transactions are calculated on an
identified cost basis.
FEDERAL INCOME TAXES -- The Fund intends to qualify for tax treatment
applicable to regulated investment companies under the Internal Revenue Code, as
amended, and distribute all of its taxable income to its shareholders.
Therefore, no provision has been recorded for Federal income or excise taxes.
The Fund has a net tax-basis capital loss carryforward of approximately
$1,936,000 as of June 30, 1996 which may be applied against any realized net
taxable gains of each succeeding fiscal year until fully realized or until the
expiration date, whichever occurs first. The carryforward expires $606,000 in
1997, $11,000 in 2001, $21,000 in 2002, $560,000 in 2003 and $738,000 in 2004.
DISTRIBUTIONS TO SHAREHOLDERS -- Normally, distributions from net investment
income are declared monthly and net realized capital gains, if any, are declared
semi-annually. An additional distribution may be declared if necessary to avoid
the payment of a four percent Federal excise tax.
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 make reclassifications among
certain of its capital accounts without impacting the net asset value of the
Fund.
FEES PAID INDIRECTLY -- The Fund has an arrangement whereby a certain
percentage of quarterly cumulative credits resulting from cash balances on
deposit with the custodian are used to offset custody fees, including
transaction and out-of-pocket expenses. For the six months ended December 31,
1996, custody fees were not reduced under this arrangement.
2 RELATED PARTIES
Mackenzie Investment Management Inc. (MIMI) is the Manager and Investment
Adviser of the Fund. For its services, MIMI receives a fee monthly at the annual
rate of .55% on the Fund's average 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 net assets. The voluntary expense limitation may be
terminated or revised at any time on 30 days notice to shareholders.
MIMI also provides certain administrative, accounting and pricing services
for the Fund. For those services, the Fund pays MIMI fees plus certain
out-of-pocket expenses. Such fees are reflected as Administrative services fee
and Fund accounting in the Statement of Operations.
Ivy Mackenzie Distributors, Inc. (IMDI), a wholly owned subsidiary of MIMI,
is the underwriter and distributor of the Fund's shares, and as such, purchases
shares from the Fund at net asset value to settle orders from investment
dealers. For the six months ended December 31, 1996, the net amount of
underwriting discount retained by IMDI was $2,655.
Under Service and Distribution Plans, the Fund reimburses IMDI for service
fee payments made to brokers at an annual rate not to exceed .25% of its average
net asset value. Class B shares are also subject to an ongoing distribution fee
at an annual rate of .50% of the average net asset value attributable to Class B
shares. IMDI may use such distribution fee for purposes of advertising and
marketing shares of the Fund. Such fees of $84,095 and $7,304 for Class A and
Class B, respectively, are reflected as 12b-1 service and distribution fees in
the Statement of Operations.
Ivy Mackenzie Services Corp. (IMSC), a wholly owned subsidiary of MIMI, is
the transfer and shareholder servicing agent for the Fund. For those services,
the Fund pays IMSC a monthly fee plus certain out-of-pocket expenses. Such fees
and expenses of $49,430 and $1,611 for Class A and Class B, respectively, are
reflected as Transfer agent in the Statement of Operations.
3. BOARD'S COMPENSATION
Trustees who are not affiliated with MIMI receive compensation from the
Fund, which is reflected as Trustees' fees in the Statement of Operations.
4. 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, 1996 JUNE 30, 1996
------------------------- -------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold..................... 241,197 $ 2,425,820 670,451 $ 6,832,013
Issued on reinvestment of
distributions........... 101,836 1,031,714 241,989 2,465,947
Repurchased.............. (1,390,353) (14,120,232) (4,468,714) (45,663,307)
---------- ------------ ---------- ------------
Net decrease............. (1,047,320) $(10,662,698) (3,556,274) $(36,365,347)
========== ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1996 JUNE 30, 1996
------------------------- -------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold..................... 2,880 $ 29,139 60,104 $ 617,543
Issued on reinvestment of
distributions........... 2,232 22,613 4,981 50,750
Repurchased.............. (38,988) (395,428) (92,882) (951,736)
---------- ------------ ---------- ------------
Net decrease............. (33,876) $ (343,676) (27,797) $ (283,443)
========== ============ ========== ============
</TABLE>
03MCTMX123196
<PAGE> 9
DECEMBER 31, 1996 [MACKENZIE LOGO]
MACKENZIE CALIFORNIA MUNICIPAL FUND
MARKET COMMENTARY:
Overall, fixed income markets in 1996 were marked by unfulfilled
expectations and interest rate volatility. Following a quarter point decrease
in the discount rate in January 1996, there were several indicators pointing to
increased economic growth--increase wage pressure, higher petroleum and grain
prices, a strong dollar and full employment--and bond markets responded by
pushing interest rates higher.
Later in the year, market participants watched guardedly for inflation
to rear its head. However, US Gross Domestic Product (GDP) and the Consumer
Price Index (CPI) continued to reflect moderate growth which resulted in
interest rates coming down, only to rise again by the year end.
The municipal bond market also had to contend with interest rate
volatility and inflationary pressures caused by increased economic growth, as
well as first quarter concerns about proposed tax reform. We believe continued
evidence of a moderating economy should, however, keep interest rates in a
trading range and inflation should remain low. But the threat of tax reform
still looms. A Republican-controlled Congress could bring tax reform and
related issues to the forefront once again. The demand for municipal bonds has,
however, remained strong as supply continued to decrease from its high in 1993.
Municipal credit rating agencies have come under fire for not detecting
fiscal problems early enough to warn investors. We believe it will be
important, therefore, to focus on higher credit quality and strong underlying
fundamentals in the coming year.
The Mackenzie California Municipal Fund maintains its disciplined
investment approach and focus on investment grade bonds. With an average
maturity of just more than 16 years and broad diversification across many
issuers, we believe this Fund should provide conservative tax-free investors
with a good balance of yield and return.
MACKENZIE INVESTMENT MANAGEMENT, INC.
<TABLE>
<S> <C> <C> <C>
BOARD OF TRUSTEES OFFICERS TRANSFER AGENT MANAGER
John S. Anderegg, Jr. Michael G. Landry, Chairman Ivy Mackenzie Mackenzie Investment
Paul H. Broyhill Keith J. Carlson, President Services Corp. Management Inc.
Keith J. Carlson C. William Ferris, P.O. Box 3022 Boca Raton, FL
Stanley Channick Secretary/Treasurer Boca Raton, FL 33431-0922
Frank W. DeFriece, Jr. 1-800-777-6472 DISTRIBUTOR
Roy J. Glauber CUSTODIAN Ivy Mackenzie
Michael G. Landry Brown Brothers Harriman & Co. AUDITORS Distributors, Inc.
Joseph G. Rosenthal Boston, MA Coopers & Lybrand L.L.P. Via Mizner Financial Plaza
J. Brendan Swan Fort Lauderdale, FL 700 South Federal Highway
Boca Raton, FL 33432
LEGAL COUNSEL
Dechert Price & Rhoads
Boston, MA
</TABLE>
<PAGE> 10
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES -- 97.7% PRINCIPAL VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NR BBB- Adelanto California Public Financing Authority, 6.30%,
09/01/28.................................................. $1,000,000 $ 975,000
A3 A- Bakersfield California Hospital Revenue, 6.50%, 01/01/22.... 2,000,000 2,042,500
Baa BBB+ Berkeley California Health Facilities Revenue, 6.55%,
12/01/22.................................................. 1,000,000 1,013,750
NR A+ California Health Facilities Authority (Pacific Presbyterian
Medical Center), 7.00%, 06/01/08
(Pre-refunded)............................................ 250,000 270,937
NR A- California Health Facilities Authority (Pomona), 7.00%,
01/01/17 (Pre-refunded)................................... 650,000 660,803
NR A- California Health Facilities Authority (Downey Community),
5.30%, 05/15/04 (Pre-refunded)............................ 500,000 501,250
Aa AA- California Housing Finance Authority, 6.90%, 08/01/16....... 100,000 100,964
A2 A+ California Pollution Control Financing Authority, 6.85%,
12/01/08.................................................. 500,000 536,875
A2 A+ California Pollution Control Financing Authority, 7.20%,
09/01/15.................................................. 5,000 5,120
A1 A California State (GO)(NC), 6.75%, 05/01/02.................. 500,000 551,250
A1 A California State (GO)(NC), 9.50%, 05/01/03.................. 500,000 628,750
A1 A+ California State (GO)(NC), 9.50%, 02/01/10.................. 1,000,000 1,396,250
A1 A- California State Public Works Revenue, 7.375%, 04/01/06..... 5,000 5,512
A A- California State Public Works Revenue (NC), 8.35%,
12/01/99.................................................. 500,000 549,375
NR NR Costa Mesa City Hall, 7.50%, 10/01/97 (Pre-refunded)........ 50,000 51,455
Baa BBB Duarte California City of Hope National Medical Center
Certificate of Participation,
6.25%, 04/01/23........................................... 1,000,000 1,006,250
Aaa NR Fontana Redevelopment Agency, 8.00%, 09/01/98
(Pre-refunded)............................................ 20,000 21,700
Baa BBB- Foothill/Eastern Transportation Corridor Agency, California
Toll Road Revenue (NC), 0.00%, 01/01/18................... 750,000 203,438
Baa BBB- Foothill/Eastern Transportation Corridor Agency, California
Toll Road Revenue (NC), 0.00%, 01/01/24................... 1,000,000 183,750
Baa BBB- Foothill/Eastern Transportation Corridor Agency, California
Toll Road Revenue (NC), 6.00%, 01/01/34................... 500,000 496,250
NR BBB Guam Government (GO), 5.375%, 11/15/13...................... 500,000 465,000
NR BBB Guam Power Authority Revenue, 6.625%, 10/01/14.............. 450,000 471,375
NR BBB Hawaiian Gardens California Redevelopment Agency, 0.00%,
12/01/16.................................................. 1,000,000 261,250
NR BBB Inglewood California Redevelopment Agency, 6.125%,
7/01/23................................................... 500,000 500,000
NR A+ Irvine Ranch Water District Power Agency, 7.80%, 02/15/08... 25,000 25,906
Baa NR Irwindale California Community Redevelopment Agency, 6.60%,
08/01/18.................................................. 1,300,000 1,342,250
Aaa AAA Kern High School District (GO)(NC), 9.00%, 08/01/06......... 680,000 894,200
A NR Kern High School District (GO)(NC), 7.00%, 08/01/10......... 165,000 195,319
Aaa AAA Los Angeles Convention & Exhibition Center, 9.00%, 12/01/05
(Pre-refunded)............................................ 5,000 6,506
Baa1 A- Los Angeles County Certificate of Participation, (Disney
Parking Project), (NC), 0.00%, 09/01/06................... 2,000,000 1,122,500
Baa1 A- Los Angeles County Certificate of Participation, (Disney
Parking Project), (NC), 0.00%, 09/01/15................... 1,000,000 297,500
Aa AA Los Angeles Department of Water & Power, 7.625%, 08/01/97
(Pre-refunded)............................................ 20,000 21,072
Aa AA- Los Angeles Department of Water & Power, 9.00%, 09/01/04.... 500,000 627,500
NR AAA Los Angeles Harbor Department Revenue, 7.60%, 10/01/18,
(Escrowed to Maturity).................................... 205,000 250,100
NR AAA Los Angeles State Building Authority, 7.50%, 03/01/11
(Pre-refunded)............................................ 5,000 5,300
Aaa AAA Los Angeles Waste Water System Revenue (NC)(MBIA Insured),
8.80%, 06/01/00........................................... 500,000 569,375
NR AAA Morgan Hill California Redevelopment Agency (FHA Insured),
6.45%, 12/01/27........................................... 1,000,000 1,033,750
A A- Northern California Power Agency (NC), 5.65%, 07/01/97...... 700,000 716,625
Aaa AAA Oakland Redevelopment Agency (AMBAC Insured), 7.40%,
05/01/07.................................................. 100,000 105,625
Aaa AAA Palomar Pomerado California Health System (NC), 0.00%,
11/02/03.................................................. 500,000 360,000
Baa1 NR Perris California High School District Certificate of
Participation, 5.85%, 09/01/11............................ 2,000,000 1,970,000
Aa NR Piedmont Unified School District (GO), 0.00%, 08/01/13...... 1,000,000 378,750
Baa1 A Puerto Rico Commonwealth (GO)(NC), 0.00%, 07/01/04.......... 500,000 343,125
NR BBB- Puerto Rico Educational Facility (Polytechnic University),
5.70%, 08/01/13........................................... 250,000 235,000
Aaa AAA Rancho Cucamonga Redevelopment Agency (FGIC Insured), 7.70%,
05/01/98 (Pre-refunded)................................... 35,000 36,750
NR A Richmond California Joint Powers Financing Authority
Revenue, 5.20%, 05/15/05.................................. 500,000 502,500
Aaa AAA Salinas California Redevelopment Agency (CGIC Insured),
0.00%, 11/01/22........................................... 2,000,000 442,500
Aa3 A+ San Diego Industrial Development Revenue (San Diego Gas &
Electric), 7.875%, 08/01/97
(Pre-refunded)............................................ 35,000 36,592
Aaa AAA Santa Clara Certificate of Participation (NC)(MBIA Insured),
7.75%, 02/01/02........................................... 500,000 571,875
NR AAA Santa Clara County Certificate of Participation (American
Baptist Homes), 8.00%, 03/01/98
(Pre-refunded)............................................ 20,000 21,300
NR A+ Santa Clara Electric Revenue, 7.80%, 07/01/10............... 35,000 36,064
A1 A+ Santa Cruz Hospital Revenue (Dominican), 7.00%, 12/01/13.... 100,000 103,308
</TABLE>
(See Notes to Financial Statements)
<PAGE> 11
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES PRINCIPAL VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NR A Santa Rosa Insured Revenue (Episcopal Homes) (CA Mortgage
Insurance), 7.125%, 06/01/14.............................. $ 250,000 $ 255,515
NR BBB Snowline Joint Unified School District Certificate of
Participation, 7.25%, 04/01/18............................ 750,000 793,125
Aa A+ Southern California Public Power Authority (NC), 0.00%,
07/01/15.................................................. 2,000,000 672,500
NR BBB Tracy Certificates of Participation (I-205 Improvement),
7.00%, 10/01/27........................................... 1,000,000 1,037,500
Aaa AAA University of California Housing System Revenue (NC)(MBIA
Aaa Insured), 8.00%, 11/01/00................................. 500,000 563,125
AAA Walnut Valley USD (MBIA Insured)(GO)(NC), 8.75%, 08/01/10... 1,000,000 1,328,750
Aaa AAA Walnut Valley USD (AMBAC Insured)(GO)(NC), 9.00%,
08/01/06.................................................. 800,000 1,043,000
Baa1 NR Yuba City Unified School District Certificate of
Participation
(Andros Karperos School), 6.70%, 02/01/13................... 650,000 661,375
-----------
TOTAL INVESTMENTS -- 97.7% (Cost -- $30,085,732)*........... 31,504,986
OTHER ASSETS, LESS LIABILITIES -- 2.3%...................... 739,467
-----------
NET ASSETS -- 100%.......................................... $32,244,453
===========
</TABLE>
* Cost is approximately the same for Federal income tax
purposes.
OTHER INFORMATION:
At December 31, 1996, net unrealized appreciation based on
cost for financial statement and Federal income tax purposes
is as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation............................... $ 1,467,784
Gross unrealized depreciation............................... (48,530)
-----------
Net unrealized appreciation................................. $ 1,419,254
===========
</TABLE>
Purchases and sales of municipal securities aggregated
$2,677,553 and $4,369,012 respectively, for the period
ended December 31, 1996.
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
(See Notes to Financial Statements)
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments, at value (identified cost -- $30,085,732)...... $31,504,986
Cash........................................................ 204,997
Receivables
Interest.................................................. 545,656
Manager for expense reimbursement......................... 8,918
Other assets................................................ 14,472
-----------
Total assets.............................................. 32,279,029
-----------
LIABILITIES
Payables
Management fee............................................ 15,140
12b-1 service and distribution fees....................... 7,916
Other payables to related parties......................... 7,899
Other accrued expenses and liabilities...................... 3,621
-----------
Total liabilities......................................... 34,576
-----------
NET ASSETS.................................................. $32,244,453
===========
CLASS A
Net asset value and redemption price per share
($31,013,307 / 3,044,330 shares outstanding).............. $ 10.19
===========
Maximum offering price per share ($10.19 x 100 / 95.25)*.... $ 10.70
===========
CLASS B
Net asset value and offering price per share
($1,231,146 / 120,835 shares outstanding)**............... $ 10.19
===========
NET ASSETS CONSIST OF
Capital paid-in........................................... $30,897,971
Accumulated net realized loss on investments.............. (21,634)
Accumulated net investment loss........................... (51,138)
Net unrealized appreciation on investments................ 1,419,254
-----------
NET ASSETS.................................................. $32,244,453
===========
</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, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................. $1,025,862
----------
EXPENSES
Management fee............................................ $92,063
Transfer agent............................................ 14,644
Administrative services fee............................... 16,739
Custodian fees............................................ 1,658
Blue Sky fees............................................. 5,460
Auditing and accounting fees.............................. 15,963
Shareholder reports....................................... 1,823
Fund accounting........................................... 13,689
Trustees' fees............................................ 2,496
12b-1 service and distribution fees....................... 46,347
Legal..................................................... 13,869
Other..................................................... 3,800
----------
228,551
Expenses reimbursed by manager............................ (39,854)
----------
Net expenses............................................ 188,697
----------
NET INVESTMENT INCOME....................................... 837,165
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments.......................... 151,687
Net unrealized appreciation during the period on
investments............................................. 562,318
----------
Net gain on investments................................. 714,005
----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ $1,551,170
==========
</TABLE>
(See Notes to Financial Statements)
<PAGE> 13
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
DECEMBER 31, JUNE 30,
------------ -----------
1996* 1996
------------ -----------
<S> <C> <C>
DECREASE IN NET ASSETS
Operations
Net investment income..................................... $ 837,165 $ 1,928,681
Net realized gain on investments.......................... 151,687 935,504
Net unrealized appreciation (depreciation) during the
period on investments................................... 562,318 (778,289)
----------- -----------
Net increase resulting from operations.................. 1,551,170 2,085,896
----------- -----------
Class A distributions
From net investment income................................ (811,654) (1,815,075)
In excess of net investment income........................ (96,832) --
From net realized gain.................................... (145,918) --
In excess of net realized gain............................ (239,821) --
----------- -----------
Total distributions to Class A shareholders............. (1,294,225) (1,815,075)
----------- -----------
Class B distributions
From net investment income................................ (25,511) (46,329)
In excess of net investment income........................ (2,896) --
From net realized gain.................................... (5,769) --
In excess of net realized gain............................ (8,450) --
----------- -----------
Total distributions to Class B shareholders............. (42,626) (46,329)
----------- -----------
Fund share transactions (Note 5)
Class A................................................... (1,796,339) (6,579,399)
Class B................................................... 88,171 136,933
----------- -----------
Net decrease resulting from Fund share transactions..... (1,708,168) (6,442,466)
----------- -----------
TOTAL DECREASE IN NET ASSETS................................ (1,493,849) (6,217,974)
NET ASSETS
Beginning of period....................................... 33,738,302 39,956,276
----------- -----------
END OF PERIOD............................................. $32,244,453 $33,738,302
=========== ===========
ACCUMULATED NET INVESTMENT INCOME (LOSS).................... $ (51,138) $ 48,590
=========== ===========
</TABLE>
* Unaudited.
(See Notes to Financial Statements)
<PAGE> 14
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE SIX
CLASS A MONTHS ENDED
DECEMBER 31, FOR THE YEAR ENDED JUNE 30,
------------ -----------------------------------------------------------
1996* 1996 1995 1994 1993 1992
SELECTED PER SHARE DATA ------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 10.13 $ 10.08 $ 9.91 $ 10.44 $ 10.29 $ 9.94
------- ------- ------- ------- ------- -------
Income from investment operations
Net investment income(a)........................ .26 .52 .49 .59 .58 .52
Net realized and unrealized gain (loss) on
investments................................... .21 .03 .19 (.48) .35 .51
------- ------- ------- ------- ------- -------
Total from investment operations.............. .47 .55 .68 .11 .93 1.03
------- ------- ------- ------- ------- -------
Less distributions
From net investment income...................... .26 .50 .49 .59 .60 .52
In excess of net investment income.............. .03 -- .02 -- -- .07
From net realized gain.......................... .05 -- -- .05 .18 .09
In excess of net realized gain.................. .07 -- -- -- -- --
------- ------- ------- ------- ------- -------
Total distributions........................... .41 .50 .51 .64 .78 .68
------- ------- ------- ------- ------- -------
Net asset value, end of period.................... $ 10.19 $ 10.13 $ 10.08 $ 9.91 $ 10.44 $ 10.29
======= ======= ======= ======= ======= =======
Total return(%)................................... 4.75(c) 5.52(b) 7.09(b) .82(b) 9.55(b) 10.80(b)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands).......... $31,013 $32,604 $38,963 $41,423 $47,493 $46,288
Ratio of expenses to average net assets
With expense reimbursement(%)(e)................ 1.10(d) 1.12 1.10 1.10 1.10 1.10
Without expense reimbursement(%)(e)............. 1.34(d) 1.29 1.22 1.18 1.20 1.19
Ratio of net investment income to average net
assets(%)(a).................................... 5.03(d) 5.08 4.94 5.65 5.80 5.66
Portfolio turnover rate(%)........................ 8 34 81 26 91 42
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE APRIL 1, 1994
CLASS B MONTHS ENDED YEAR ENDED (COMMENCEMENT) TO
DECEMBER 31, JUNE 30, JUNE 30,
------------ ---------------------- -----------------
1996* 1996 1995 1994
SELECTED PER SHARE DATA ------------ ------ ---------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........................ $10.12 $10.08 $ 9.91 $9.97
------ ------ ------ -----
Income from investment operations
Net investment income(a).................................. .22 .45 .43 .11
Net realized and unrealized gain (loss) on investments.... .22 .02 .17 (.03)
------ ------ ------ -----
Total from investment operations........................ .44 .47 .60 .08
------ ------ ------ -----
Less distributions
From net investment income................................ .22 .43 .43 .11
In excess of net investment income........................ .03 -- -- --
From net capital gain..................................... .05 -- -- .03
In excess of net realized gain............................ .07 -- -- --
------ ------ ------ -----
Total distributions..................................... .37 .43 .43 .14
------ ------ ------ -----
Net asset value, end of period.............................. $10.19 $10.12 $10.08 $9.91
====== ====== ====== =====
Total return(%)............................................. 4.39(c) 4.70(b) 6.30(b) .82(c)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands).................... $1,231 $1,135 $ 993 $ 114
Ratio of expenses to average net assets
With expense reimbursement(%)(e).......................... 1.85(d) 1.87 1.85 1.85(d)
Without expense reimbursement(%)(e)....................... 2.09(d) 2.04 1.97 1.93(d)
Ratio of net investment income to average net
assets(%)(a).............................................. 4.27(d) 4.33 4.19 4.90(d)
Portfolio turnover rate(%).................................. 8 34 81 26
</TABLE>
(a) Net investment income is net of expenses reimbursed by
manager.
(b) Total return does not reflect a sales charge.
(c) Total return represents aggregate total return and does not
reflect a sales charge.
(d) Annualized.
(e) Beginning in July 1995, total expenses include any fees paid
indirectly. The ratio of expenses to average net assets with
expense reimbursement has been restated for the year ended
June 30, 1996.
* Unaudited.
(See Notes to Financial Statements)
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Mackenzie California Municipal Fund (the Fund) is a diversified 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 an open-end management
investment company.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
Preparation of the financial statements includes the use of management
estimates. Actual results could differ from these estimates.
SECURITY VALUATION -- Municipal securities are valued utilizing primarily
the latest bid prices or, if bid prices are not available, on the basis of
valuation based upon a matrix system (which considers factors such as security
prices, yields, maturities and ratings), both as furnished by an independent
pricing service approved by the Board of Trustees (the Board).
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on the trade date. Interest income is accrued on a daily basis.
Realized gains and losses from security transactions are calculated on an
identified cost basis.
FEDERAL INCOME TAXES -- The Fund intends to qualify for tax treatment
applicable to regulated investment companies under the Internal Revenue Code, as
amended, and distribute all of its taxable income to its shareholders.
Therefore, no provision has been recorded for Federal income or excise taxes.
DISTRIBUTIONS TO SHAREHOLDERS -- Normally, distributions from net
investment income are declared monthly, and net realized capital gains, if any,
are declared semi-annually. An additional distribution may be declared if
necessary to avoid the payment of a four percent Federal excise tax.
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 make reclassifications among
certain of its capital accounts without impacting the net asset value of the
Fund.
FEES PAID INDIRECTLY -- The Fund has an arrangement whereby a certain
percentage of quarterly cumulative credits resulting from cash balances on
deposit with the custodian are used to offset custody fees, including
transaction and out-of-pocket expenses. For the six months ended December 31,
1996, custody fees were not reduced under this arrangement.
2. RELATED PARTIES
Mackenzie Investment Management Inc. (MIMI) is the Manager and Investment
Adviser of the Fund. For its services, MIMI receives a fee monthly at the annual
rate of .55% on its average 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
.85% of its average net assets. The voluntary expense limitation may be
terminated or revised at any time.
MIMI provides certain administrative, accounting and pricing services for
the Fund. For those services, the Fund pays MIMI fees plus certain out-of-pocket
expenses. Such fees are reflected as Administrative services fee and Fund
accounting in the Statement of Operations.
Ivy Mackenzie Distributors, Inc. (IMDI), a wholly owned subsidiary of MIMI,
is the underwriter and distributor of the Fund's shares, and as such, purchases
shares from the Fund at net asset value to settle orders from investment
dealers. For the six months ended December 31, 1996, the net amount of
underwriting discount retained by IMDI was $1,515.
Under Service and Distribution Plans, the Fund reimburses IMDI for service
fee payments made to brokers at an annual rate not to exceed .25% of its average
net asset value. Class B shares are also subject to an ongoing distribution fee
at an annual rate of .75% of the average net asset value attributable to Class B
shares. IMDI may use such distribution fee for purposes of advertising and
marketing shares of the Fund. Such fees of $40,374 and $5,973 for Class A and
Class B, respectively, are reflected as 12b-1 service and distribution fees in
the Statement of Operations.
Ivy Mackenzie Services Corp. (IMSC), a wholly owned subsidiary of MIMI, is
the transfer and shareholder servicing agent for the Fund. For those services,
the Fund pays IMSC a monthly fee plus certain out-of-pocket expenses. Such fees
and expenses of $14,094 and
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
$550 for Class A and Class B, respectively, are reflected as Transfer agent in
the Statement of Operations.
3. BOARD'S COMPENSATION
Trustees who are not affiliated with MIMI receive compensation from the
Fund, which is reflected as Trustees' fees in the Statement of Operations.
4. CONCENTRATION OF CREDIT RISK
The Fund primarily invests in debt obligations issued by the State of
California and its political subdivisions, agencies and public authorities to
obtain funds for various public purposes. The Fund is more susceptible to
factors adversely affecting issuers of California securities than is a municipal
bond fund that is not concentrated in these issuers to the same extent.
5. FUND SHARE TRANSACTIONS
Fund share transactions for both Class A and Class B were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1996 JUNE 30, 1996
---------------------- ----------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Sold.......................... 55,039 $ 548,385 119,552 $ 1,214,729
Issued on reinvestment of
distributions................ 69,779 705,004 86,484 880,926
Repurchased................... (300,440) (3,049,728) (851,457) (8,675,054)
-------- ----------- -------- -----------
Net decrease.................. (175,622) $(1,796,339) (645,421) $(6,579,399)
======== =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1996 JUNE 30, 1996
---------------------- ----------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Sold.......................... 11,119 $ 112,216 18,173 $ 185,487
Issued on reinvestment of
distributions................ 3,667 37,090 3,777 38,474
Repurchased................... (6,080) (61,135) (8,394) (87,028)
-------- ----------- -------- -----------
Net increase.................. 8,706 $ 88,171 13,556 $ 136,933
======== =========== ======== ===========
</TABLE>
03MCCAX123196
<PAGE> 17
DECEMBER 31, 1996
[MACKENZIE LOGO]
MACKENZIE NATIONAL MUNICIPAL FUND
MARKET COMMENTARY:
Overall, fixed income markets in 1996 were marked by unfulfilled
expectations and interest rate volatility. Following a quarter point decrease
in the discount rate in January 1996, there were several indicators pointing to
increased economic growth--increased wage pressure, higher petroleum and grain
prices, a strong dollar and full employment--and bond markets responded by
pushing interest rates higher.
Later in the year, market participants watched guardedly for inflation
to rear its head. However, US Gross Domestic Product (GDP) and the Consumer
Price Index (CPI) continued to reflect moderate growth which resulted in
interest rates coming down, only to rise again by year end.
The municipal bond market also had to contend with interest rate
volatility and inflationary pressures caused by increased economic growth, as
well as first quarter concerns about proposed tax reform. We believe continued
evidence of a moderating economy should, however, keep interest rates in a
trading range and inflation should remain low. But the threat of tax reform
still looms. A Republican-controlled Congress could bring tax reform and
related issues to the forefront once again. The demand for municipal bonds
has, however, remained strong as supply continued to decrease from its high in
1993.
Municipal credit rating agencies have come under fire for not detecting
fiscal problems early enough to warn investors. We believe it will be
important, therefore, to focus on higher credit quality and strong underlying
fundamentals in the coming year.
The Mackenzie National Municipal Fund maintains its disciplined
investment approach and focus on investment grade bonds. With an aveage
maturity of just more than 18 years and broad diversification across many
issuers, we believe this Fund should provide conservative tax-free investors
with a good balance of yield and return.
MACKENZIE INVESTMENT MANAGEMENT, INC.
<TABLE>
<S> <C> <C> <C>
BOARD OF TRUSTEES OFFICERS TRANSFER AGENT MANAGER
John S. Anderegg, Jr. Michael G. Landry, Chairman Ivy Mackenzie Mackenzie Investment
Paul H. Broyhill Keith J. Carlson, President Services Corp. Management Inc.
Keith J. Carlson C. William Ferris, P.O. Box 3022 Boca Raton, FL
Stanley Channick Secretary/Treasurer Boca Raton, FL 33431-0922
Frank W. DeFriece, Jr. 1-800-777-6472 DISTRIBUTOR
Roy J. Glauber CUSTODIAN Ivy Mackenzie
Michael G. Landry Brown Brothers Harriman & Co. AUDITORS Distributors, Inc.
Joseph G. Rosenthal Boston, MA Coopers & Lybrand L.L.P. Via Mizner Financial Plaza
J. Brendan Swan Fort Lauderdale, FL 700 South Federal Highway
Boca Raton, FL 33432
LEGAL COUNSEL
Dechert Price & Rhoads
Boston, MA
</TABLE>
<PAGE> 18
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES -- 95.4% PRINCIPAL VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ARIZONA -- 5.7%
NR AA Tucson (GO)(NC), 9.75%, 07/01/12 (Escrowed to Maturity)..... $ 400,000 $ 572,500
NR AA Tucson (GO)(NC), 9.75%, 07/01/13 (Escrowed to Maturity)..... 500,000 731,250
-----------
1,303,750
-----------
CALIFORNIA -- 13.3%
NR A- California Health Facilities Authority (Pomona), 7.00%,
01/01/17.................................................. 350,000 355,817
NR A- California Health Facilities Authority (Downey Community),
5.625%, 05/15/28 (Pre-refunded)........................... 500,000 500,000
Baa NR Irwindale California Industrial Development, 6.60%,
08/01/18.................................................. 200,000 206,500
NR BBB Long Beach Aquarium of the Pacific, California, 6.125%,
07/01/23.................................................. 750,000 727,500
Baa1 BBB Los Angeles County California Certificate of Participation
(Disney Parking Project) (NC),
0.00%, 09/01/06........................................... 500,000 280,625
Aa AA Los Angeles Department of Water & Power, 9.00%, 09/01/04.... 500,000 627,500
Aaa AAA Southern California Public Power Authority (NC) (MBIA
Insured), 0.00%, 07/01/14................................. 1,000,000 356,250
-----------
3,054,192
-----------
COLORADO -- 2.0%
NR AAA Colorado Health Facilities Authority, 0.00%, 07/15/20....... 500,000 102,500
Aaa NR Dawson Ridge Colorado (GO)(NC), 0.00%, 10/01/22 (Escrowed to
Maturity)................................................. 2,000,000 352,500
-----------
455,000
-----------
CONNECTICUT -- 2.0%
Baa1 NR Connecticut State Health Facilities & Education, 5.75%,
07/01/23.................................................. 500,000 463,750
-----------
DISTRICT OF COLUMBIA -- 0.5%
A1 A+ Georgetown University, D.C. (MBIA Insured), 8.25%,
04/01/18.................................................. 100,000 106,000
-----------
FLORIDA -- 7.8%
Aa AA Florida State Board of Education (GO), 9.125%, 06/01/14..... 110,000 154,962
Aa AA Florida State Board of Education (GO), 9.125%, 06/01/14
(Escrowed to Maturity).................................... 690,000 970,313
Aaa AAA Orlando & Orange County Expressway (NC)(FGIC Insured),
8.25%, 07/01/14........................................... 500,000 660,000
-----------
1,785,275
-----------
GEORGIA -- 7.2%
A A Municipal Electric Authority of Georgia (NC), 10.00%,
01/01/10.................................................. 250,000 344,687
Aaa NR Richmond County Georgia Development Authority Revenue,
0.00%, 12/01/21........................................... 1,500,000 286,875
Baa BBB+ Savannah Georgia Hospital Authority Revenue, 7.00%,
01/01/23.................................................. 1,000,000 1,035,000
-----------
1,666,562
-----------
ILLINOIS -- 16.0%
A1 A+ Illinois Educational Facility Authority, 7.125%, 07/01/11... 320,000 354,800
Aaa AAA Illinois Health Facility Authority (CGIC Insured), 7.60%,
08/15/10 (Escrowed to Maturity)........................... 46,000 52,440
Aaa AAA Illinois Health Facility Authority (CGIC Insured), 7.60%,
08/15/10.................................................. 750,000 831,562
Baa2 BBB- Illinois Health Facility Authority (Proctor Community
Hospital), 7.00%, 01/01/04................................ 200,000 204,000
Aa NR Sangamon County Illinois (GO), 7.45%, 11/15/06.............. 800,000 950,000
Baa BBB Southwestern Illinois Medical Facilties Revenue, 7.00%,
08/15/12.................................................. 1,000,000 1,035,000
Aaa AAA Will & Kendall Counties Illinois School District #202,
5.45%, 01/01/05........................................... 250,000 255,938
-----------
3,683,740
-----------
MAINE -- 0.4%
NR A Municipal Bond Bank, 7.65%, 11/01/98 (Pre-refunded)......... 85,000 92,225
-----------
MARYLAND -- 4.3%
Baa NR Prince Georges County Maryland Medical Hospital Revenue,
6.375%, 01/01/23.......................................... 1,000,000 988,750
-----------
MASSACHUSETTS -- 2.4%
Baa BBB Massachusetts State Health & Educational Facilities
Authority, 6.625%, 11/15/22............................... 500,000 501,875
NR BBB+ Massachusetts State Housing, Series B, 8.10%, 08/01/23...... 50,000 52,375
-----------
554,250
-----------
MICHIGAN -- 9.2%
Aaa AAA Kent Hospital Finance Authority (MBIA Insured), 7.25%,
01/15/13.................................................. 1,000,000 1,183,750
Baa BBB- Pontiac Michigan Hospital Finance Authority, 6.00%,
08/01/23.................................................. 1,000,000 938,750
-----------
2,122,500
-----------
NEW HAMPSHIRE -- 4.6%
Baa3 BB New Hampshire IDA Pollution Control (Central Maine Power
Co.), 7.375%, 05/01/14.................................... 1,000,000 1,048,750
-----------
</TABLE>
(See Notes to Financial Statements)
<PAGE> 19
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES PRINCIPAL VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEW YORK -- 4.6%
Baa BBB- New York City Health & Hospital Corporation, 6.30%,
02/15/20.................................................. $ 500,000 $ 495,000
NR A Onondaga County New York Industrial Development Agency,
7.90%, 01/01/17........................................... 500,000 551,250
-----------
1,046,250
-----------
OHIO -- 2.2%
A A Franklin County Ohio Hospital Revenue, 5.80%, 12/01/05...... 500,000 518,750
-----------
PENNSYLVANIA -- 6.7%
NR A- Allegheny County PA Hospital Revenue (Allegheny Valley
Hospital), 7.00%, 08/01/15................................ 500,000 553,750
Ba BBB+ Philadelphia PA Hospitals & Highered Facilities Authority,
6.625%, 07/01/21.......................................... 1,000,000 991,250
-----------
1,545,000
-----------
PUERTO RICO -- 0.3%
Baa1 A Puerto Rico Commonwealth Public Improvement, 0.00%,
07/01/04.................................................. 100,000 68,625
-----------
TENNESSEE -- 1.7%
Aaa NR Nashville & Davidson County Tennessee Health & Education
Board Revenue (NC),
0.00%, 06/01/21 (Escrowed to Maturity).................... 2,000,000 387,500
-----------
UTAH -- 4.5%
Aa AA- Intermountain Power Agency Utah Power Supply (MBIA Insured),
7.20%, 07/01/16........................................... 1,000,000 1,033,520
-----------
TOTAL INVESTMENTS -- 95.4% (Cost -- $21,235,829)*........... 21,924,389
OTHER ASSETS, LESS LIABILITIES -- 4.6%...................... 1,065,426
-----------
NET ASSETS -- 100%.......................................... $22,989,815
===========
* Cost is approximately the same for Federal income tax
purposes.
OTHER INFORMATION:
At December 31, 1996, net unrealized appreciation based on cost for financial
statement and Federal income tax purposes is as follows:
Gross unrealized appreciation............................... $ 862,003
Gross unrealized depreciation............................... (173,443)
-----------
Net unrealized appreciation................................. $ 688,560
===========
Purchases and sales of municipal securities aggregated $3,496,760 and $5,884,921
respectively, for the period ended December 31, 1996.
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guaranty Insurance Company
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, 1996 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments, at value (identified cost -- $21,235,829)...... $21,924,389
Cash........................................................ 542,888
Receivables
Interest.................................................. 524,912
Manager for expense reimbursement......................... 10,334
Other assets................................................ 14,476
-----------
Total assets.............................................. 23,016,999
-----------
LIABILITIES
Payables
Distributions to shareholders............................. 162
Management fee............................................ 10,659
12b-1 service and distribution fees....................... 5,793
Other payables to related parties......................... 6,996
Other accrued expenses and liabilities...................... 3,574
-----------
Total liabilities......................................... 27,184
-----------
NET ASSETS.................................................. $22,989,815
===========
CLASS A
Net asset value and redemption price per share ($21,788,762
/ 2,192,869 shares outstanding)........................... $ 9.94
===========
Maximum offering price per share ($9.94 x 100 / 95.25)*..... $ 10.44
===========
CLASS B
Net asset value and offering price per share ($1,201,053 /
120,953 shares outstanding)**............................. $ 9.93
===========
NET ASSETS CONSIST OF
Capital paid-in........................................... $22,550,955
Accumulated net realized loss on investments.............. (205,805)
Accumulated undistributed net investment loss............. (43,895)
Net unrealized appreciation on investments................ 688,560
-----------
NET ASSETS.................................................. $22,989,815
===========
</TABLE>
* On sales of more than $100,000 the offering price is reduced.
** Redemption price per share is equal to the net asset value per share less any
applicable contingent deferred sales charge.
(See Notes to Financial Statements)
<PAGE> 21
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................. $ 745,427
----------
EXPENSES
Management fee............................................ $65,513
Transfer agent............................................ 16,413
Administrative services fee............................... 11,911
Custodian fees............................................ 1,442
Blue Sky fees............................................. 6,432
Auditing and accounting fees.............................. 15,963
Shareholder reports....................................... 1,891
Fund accounting........................................... 12,258
Trustees' fees............................................ 2,496
12b-1 service and distribution fees....................... 34,247
Legal..................................................... 13,869
Other..................................................... 3,898
----------
186,333
Expenses reimbursed by manager.............................. (50,787)
----------
Net expenses.............................................. 135,546
----------
NET INVESTMENT INCOME....................................... 609,881
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments.......................... 98,157
Net unrealized appreciation during the period on
investments............................................. 482,196
----------
Net gain on investments................................. 580,353
----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ $1,190,234
==========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
DECEMBER 31, JUNE 30,
------------ -----------
1996* 1996
------------ -----------
<S> <C> <C>
DECREASE IN NET ASSETS
Operations
Net investment income..................................... $ 609,881 $ 1,345,523
Net realized gain on investments.......................... 98,157 580,623
Net unrealized appreciation (depreciation) during the
period on investments................................... 482,196 (653,884)
----------- -----------
Net income resulting from operations.................... 1,190,234 1,272,262
----------- -----------
Class A distributions
From net investment income................................ (583,418) (1,264,186)
In excess of net investment income........................ (69,917) --
----------- -----------
Total distributions to Class A shareholders............. (653,335) (1,264,186)
----------- -----------
Class B distributions
From net investment income................................ (26,463) (39,157)
In excess of net investment income........................ (2,957) --
----------- -----------
Total distributions to Class B shareholders............. (29,420) (39,157)
----------- -----------
Fund share transactions (Note 4)
Class A................................................... (2,367,132) (4,659,340)
Class B................................................... 47,236 373,973
----------- -----------
Net decrease resulting from Fund share transactions..... (2,319,896) (4,285,367)
----------- -----------
TOTAL DECREASE IN NET ASSETS................................ (1,812,417) (4,316,448)
NET ASSETS
Beginning of period....................................... 24,802,232 29,118,680
----------- -----------
END OF PERIOD............................................. $22,989,815 $24,802,232
=========== ===========
ACCUMULATED NET INVESTMENT INCOME (LOSS).................... $ (43,895) $ 28,979
=========== ===========
</TABLE>
* Unaudited
(See Notes to Financial Statements)
<PAGE> 22
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE SIX
CLASS A MONTHS ENDED
DECEMBER 31, FOR THE YEAR ENDED JUNE 30,
------------- -----------------------------------------------------------
1996* 1996 1995 1994 1993 1992
SELECTED PER SHARE DATA ------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............. $ 9.73 $ 9.76 $ 9.60 $ 10.17 $ 9.94 $ 9.60
------- ------- ------- ------- ------- -------
Income from investment operations
Net investment income(a)....................... .26 .50 .48 .57 .60 .59
Net realized and unrealized gain (loss) on
investments.................................. .24 (.05) .19 (.48) .31 .41
------- ------- ------- ------- ------- -------
Total from investment operations............. .50 .45 .67 .09 .91 1.00
------- ------- ------- ------- ------- -------
Less distributions
From net investment income..................... .26 .48 .48 .57 .60 .59
In excess of net investment income............. .03 -- .03 -- -- .06
From net realized gain......................... -- -- -- .09 .08 .01
------- ------- ------- ------- ------- -------
Total distributions.......................... .29 .48 .51 .66 .68 .66
------- ------- ------- ------- ------- -------
Net asset value, end of period................... $ 9.94 $ 9.73 $ 9.76 $ 9.60 $ 10.17 $ 9.94
======= ======= ======= ======= ======= =======
Total return(%).................................. 5.16(d) 4.69(b) 7.21(b) .77(b) 9.48(b) 10.76(b)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)......... $21,789 $23,673 $28,351 $38,406 $42,739 $35,995
Ratio of expenses to average net assets
With expense reimbursement(%)(c)............... 1.10(e) 1.12 1.10 1.10 1.10 1.10
Without expense reimbursement(%)(c)............ 1.53(e) 1.52 1.30 1.24 1.29 1.30
Ratio of net investment income to average net
assets(%)(a)................................... 5.15(e) 5.09 5.08 6.65 6.06 6.00
Portfolio turnover rate(%)....................... 15 58 65 68 57 62
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX APRIL 1, 1994
CLASS B MONTHS ENDED FOR THE YEAR ENDED (COMMENCEMENT) TO
DECEMBER 31, JUNE 30, JUNE 30,
------------- -------------------- -----------------
1996* 1996 1995 1994
SELECTED PER SHARE DATA ------------- ------- ------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 9.72 $ 9.76 $ 9.60 $ 9.69
------- ------- ------- --------
Income from investment operations
Net investment income(a).................................. .22 .43 .41 .11
Net realized and unrealized gain (loss) on investments.... .24 (.05) .19 (.06)
------- ------- ------- --------
Total from investment operations........................ .46 .38 .60 .05
------- ------- ------- --------
Less distributions
From net investment income................................ .22 .42 .41 .11
In excess of net investment income........................ .03 -- .03 .03
------- ------- ------- --------
Total distributions..................................... .25 .42 .44 .14
------- ------- ------- --------
Net asset value, end of period.............................. $ 9.93 $ 9.72 $ 9.76 $ 9.60
======= ======= ======= ========
Total return(%)............................................. 4.75(d) 3.88(b) 6.42(b) .55(d)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands).................... $ 1,201 $ 1,129 $ 767 $ 492
Ratio of expenses to average net assets
With expense reimbursement(%)(c).......................... 1.80(e) 1.87 1.85 1.85(e)
Without expense reimbursement(%)(c)....................... 2.23(e) 2.27 2.05 1.99(e)
Ratio of net investment income to average net
assets(%)(a).............................................. 4.46(e) 4.34 4.33 5.90(e)
Portfolio turnover rate(%).................................. 15 58 65 68
(a) Net investment income is net of expenses reimbursed by
manager.
(b) Total return does not reflect a sales charge.
(c) Beginning in July 1995, total expenses include any fees paid
indirectly. The ratio of expenses to average net assets with
expense reimbursement has been restated for the year ended
June 30, 1996.
(d) Total return represents aggregate total return and does not
reflect a sales charge.
(e) Annualized.
* Unaudited.
</TABLE>
(See Notes to Financial Statements)
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Mackenzie National Municipal Fund (the Fund) is a diversified 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 an open-end management
investment company.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
Preparation of the financial statements includes the use of management
estimates. Actual results could differ from those estimates.
SECURITY VALUATION -- Municipal securities are valued utilizing primarily
the latest bid prices or, if bid prices are not available, on the basis of
valuation based upon a matrix system (which considers factors such as security
prices, yields, maturities and ratings), both as furnished by an independent
pricing service approved by the Board of Trustees (the Board).
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on the trade date. Interest income is accrued on a daily basis.
Realized gains and losses from security transactions are calculated on an
identified cost basis.
FEDERAL INCOME TAXES -- The Fund intends to qualify for tax treatment
applicable to regulated investment companies under the Internal Revenue Code, as
amended, and distribute all of its taxable income to its shareholders.
Therefore, no provision has been recorded for Federal income or excise taxes.
The Fund has a net tax-basis capital loss carryforward of approximately
$249,000 as of June 30, 1996 which may be applied against any realized net
taxable gains of each succeeding fiscal year until fully realized or until the
expiration date, whichever occurs first. The carryforward expires $59,000 in
1997, $85,000 in 2003 and $105,000 in 2004.
DISTRIBUTIONS TO SHAREHOLDERS -- Normally, distributions from net
investment income are declared monthly, and net realized capital gains, if any,
are declared semi-annually. An additional distribution may be declared if
necessary to avoid the payment of a four percent Federal excise tax.
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 make reclassifications among
certain of its capital accounts without impacting the net asset value of the
Fund.
FEES PAID INDIRECTLY -- The Fund has an arrangement whereby a certain
percentage of quarterly cumulative credits resulting from cash balances on
deposit with the custodian are used to offset custody fees, including
transaction and out-of-pocket expenses. For the six months ended December 31,
1996, custody fees were not reduced under this arrangement.
2. RELATED PARTIES
Mackenzie Investment Management Inc. (MIMI) is the Manager and Investment
Adviser of the Fund. For its services, MIMI receives a fee monthly at the annual
rate of .55% on its average 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
.85% of its average net assets. The voluntary expense limitation may be
terminated or revised at any time on 30 days notice to shareholders.
MIMI also provides certain administrative, accounting and pricing services
for the Fund. For those services, the Fund pays MIMI fees plus certain
out-of-pocket expenses. Such fees are reflected as Administrative services fee
and Fund accounting in the Statement of Operations.
Ivy Mackenzie Distributors, Inc. (IMDI), a wholly owned subsidiary of MIMI,
is the underwriter and distributor of the Fund's shares, and as such, purchases
shares from the Fund at net asset value to settle orders from investment
dealers. For the six months ended December 31, 1996, the net amount of
underwriting discount retained by IMDI was $402.
Under Service and Distribution Plans, the Fund reimburses IMDI for service
fee payments made to brokers at an annual rate not to exceed .25% of its average
net asset value. Class B shares are also subject to an ongoing distribution fee
at an annual rate of .75% of the average net asset value attributable to Class B
shares. IMDI may use such distribution fee for purposes of advertising and
marketing shares of the Fund. Such fees of $28,310 and $5,937 for Class A and
Class B, respectively, are reflected as 12b-1 service and distribution fees in
the Statement of Operations.
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Ivy Mackenzie Services Corp. (IMSC), a wholly owned subsidiary of MIMI, is
the transfer and shareholder servicing agent for the Fund. For those services,
the Fund pays a monthly fee plus certain out-of-pocket expenses. Such fees and
expenses of $15,908 and $505 for Class A and Class B, respectively, are
reflected as Transfer agent in the Statement of Operations.
3. BOARD'S COMPENSATION
Trustees who are not affiliated with MIMI receive compensation from the
Fund, which is reflected as Trustees' fees in the Statement of Operations.
4. 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, 1996 JUNE 30, 1996
------------------------- ----------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------- -------- -------------- -------- -----------
<S> <C> <C> <C> <C>
Sold....................... 157,676 $ 1,549,180 235,088 $ 2,311,839
Issued on reinvestment of
distributions............. 34,863 341,820 64,174 632,427
Repurchased................ (433,951) (4,258,132) (770,220) (7,603,606)
-------- -------------- -------- -----------
Net decrease............... (241,412) $ (2,367,132) (470,958) $(4,659,340)
======== ============== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1996 JUNE 30, 1996
------------------------- ----------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------- -------- -------------- -------- -----------
<S> <C> <C> <C> <C>
Sold....................... 8,731 $ 85,952 48,696 $ 485,932
Issued on reinvestment of
distributions............. 990 9,713 1,298 12,781
Repurchased................ (4,932) (48,429) (12,487) (124,740)
-------- -------------- -------- -----------
Net increase............... 4,789 $ 47,236 37,507 $ 373,973
======== ============== ======== ===========
</TABLE>
03MCNMX123196
<PAGE> 25
DECEMBER 31, 1996 [MACKENZIE LOGO]
MACKENZIE NEW YORK MUNICIPAL FUND
MARKET COMMENTARY:
Overall, fixed income markets in 1996 were marked by unfulfilled
expectations and interest rate volatility. Following a quarter point decrease
in the discount rate in January 1996, there were several indicators pointing to
increased economic growth--increased wage pressure, higher petroleum and grain
prices, a strong dollar and full employment--and bond markets responded by
pushing interest rates higher.
Later in the year, market participants watched guardedly for inflation
to rear its head. However, US Gross Domestic Product (GDP) and the Consumer
Price Index (CPI) continued to reflect moderate growth which resulted in
interest rates coming down, only to rise again by year end.
The municipal bond market also had to contend with interest rate
volatility and inflationary pressures caused by increased economic growth, as
well as first quarter concerns about proposed tax reform. We believe continued
evidence of a moderating economy should, however, keep interest rates in a
trading range and inflation should remain low. But the threat of tax reform
still looms. A Republican-controlled Congress could bring tax reform and
related issues to the forefront once again. The demand for municipal bonds
has, however, remained strong as supply continued to decrease from its high in
1993.
Municipal credit rating agencies have come under fire for not detecting
fiscal problems early enough to warn investors. We believe it will be
important, therefore, to focus on higher credit quality and strong underlying
fundamentals in the coming year.
The Mackenzie New York Municipal Fund maintains its disciplined
investment aproach and focus on investment grade bonds. With an average
maturity of just more than 16 years and broad diversification across many
issuers, we believe this Fund should provide conservative tax-free investors
with a good balance of yield and return.
MACKENZIE INVESTMENT MANAGEMENT, INC.
<TABLE>
<S> <C> <C> <C>
BOARD OF TRUSTEES OFFICERS TRANSFER AGENT MANAGER
John S. Anderegg, Jr. Michael G. Landry, Chairman Ivy Mackenzie Mackenzie Investment
Paul H. Broyhill Keith J. Carlson, President Services Corp. Management Inc.
Keith J. Carlson C. William Ferris, P.O. Box 3022 Boca Raton, FL
Stanley Channick Secretary/Treasurer Boca Raton, FL 33431-0922
Frank W. DeFriece, Jr. 1-800-777-6472 DISTRIBUTOR
Roy J. Glauber CUSTODIAN Ivy Mackenzie
Michael G. Landry Brown Brothers Harriman & Co. AUDITORS Distributors, Inc.
Joseph G. Rosenthal Boston, MA Coopers & Lybrand L.L.P. Via Mizner Financial Plaza
J. Brendan Swan Fort Lauderdale, FL 700 South Federal Highway
Boca Raton, FL 33432
LEGAL COUNSEL
Dechert Price & Rhoads
Boston, MA
</TABLE>
<PAGE> 26
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES -- 97.6% 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 $ 822,500
Aaa AAA Brookhaven New York Series A (MBIA Insured)(GO)(NC), 7.00%,
11/01/06.................................................. 300,000 341,625
Baa NR Canastota New York Central School District (GO) (NC), 7.10%,
06/15/07.................................................. 215,000 245,638
Baa NR Canastota New York Central School District (GO) (NC), 7.10%,
06/15/08.................................................. 205,000 234,212
NR BBB Guam Government (GO), 5.375%, 11/15/13...................... 1,000,000 930,000
NR BBB Guam Power Authority Revenue, 6.625%, 10/01/14.............. 550,000 576,125
Baa1 BBB Metropolitan Transportation Authority Service Contract,
5.50%, 07/01/04........................................... 500,000 544,375
Baa1 BBB Metropolitan Transportation Authority Service Contract,
5.15%, 07/01/17........................................... 250,000 240,625
Aa NR Monroe County Industrial Development Agency, Depaul
Community Facility (SONYMA Insured), 6.45%, 02/01/14...... 880,000 944,900
Baa1 BBB+ New York City (GO), 7.20%, 08/15/08......................... 1,000,000 1,095,000
Baa1 BBB+ New York City (GO), 7.10%, 02/01/09......................... 500,000 539,375
Baa1 BBB+ New York City (GO), 7.30%, 08/15/10......................... 150,000 163,688
Baa1 BBB+ New York City (GO), 7.30%, 08/15/10 (Pre-refunded).......... 100,000 116,875
Baa1 BBB+ New York City (GO), 7.00%, 02/01/19......................... 500,000 531,875
Baa BBB- New York City Health & Hospital Corporation Revenue, 6.30%,
02/15/20.................................................. 1,500,000 1,485,000
Aa AA New York City Housing Development (FHA Insured), 5.85%,
05/01/26.................................................. 500,000 495,625
A A- New York City Municipal Water Finance Authority, 6.00%,
06/15/25.................................................. 500,000 506,875
A A- New York State (GO)(NC), 9.875%, 11/15/05................... 1,000,000 1,345,000
Baa1 BBB New York State Dormitory Authority -- City University Series
C, 6.00%, 07/01/16........................................ 1,000,000 1,002,500
NR AAA New York State Dormitory Authority, Jewish Geriatric (FHA
Insured), 7.35%, 08/01/29................................. 500,000 560,000
NR AAA New York State Dormitory Authority -- Parkridge, 7.85%,
02/01/29.................................................. 200,000 214,500
NR AA New York State Dormitory Authority, St. Lukes Home (FHA
Insured), 6.375%, 08/01/35................................ 1,000,000 1,037,500
Baa1 BBB+ New York State Dormitory Authority, State University, 6.25%,
05/15/14.................................................. 1,000,000 1,025,000
Baa1 BBB- New York State Dormitory Authority, Upstate Community
College, 6.25%, 07/01/25.................................. 1,500,000 1,516,875
Aa AA- New York State Environmental Facilities Corporation
Pollution Control Series B, 7.50%, 03/15/11............... 400,000 432,500
Aa A- New York State Environmental Facilities Corporation
Pollution Control Series E, 6.875%, 06/15/14.............. 1,000,000 1,107,500
Aaa AAA New York State Housing Finance Agency -- State University
Series A, 8.00%, 11/01/98
(Pre-refunded)............................................ 30,000 32,625
Baa1 BBB New York State Housing Finance Agency Service Contract,
6.375%, 09/15/15.......................................... 1,000,000 1,026,250
Baa BBB New York State Medical Care Facilities Financing Agency
7.35%, 08/15/11........................................... 1,000,000 1,072,500
Aaa AAA New York State Medical Care Facilities Financing Agency (FHA
Insured), 7.70%, 08/15/00
(Pre-refunded)............................................ 500,000 565,000
Aa NR New York State Medical Care Facilities Finance Agency
(SONYMA Insured), 6.00%, 11/02/02......................... 250,000 266,250
Aa NR New York State Medical Care Facilities Finance Agency
(SONYMA Insured), 6.00%, 11/15/03......................... 500,000 534,375
Aa AAA New York State Medical Care Facilities Finance Agency Series
C (FHA Insured), 7.70%, 08/15/98 (Pre-refunded)........... 85,000 91,694
Aaa AAA New York State Medical Care Facilities Finance
Agency -- Aurelia Osborn Fox Memorial Hospital (FSA
Insured), 6.50%, 11/01/19................................. 650,000 688,187
Baa BBB New York State Medical Care Facilities Finance
Agency -- Brookdale Hospital Medical Center,
6.85%, 02/15/17........................................... 1,000,000 1,046,250
A A New York State Medical Care Facilities Finance
Agency -- Good Samaritan Hospital, 7.875%, 11/01/06....... 10,000 10,408
Baa BBB New York State Medical Care Facilities Finance Agency -- New
York Downtown Hospital, 6.80%, 02/15/20................... 500,000 516,875
Aaa AAA New York State Medical Care Facilities Finance Agency -- St.
Lukes Hospital (FHA Insured),
7.45%, 02/15/00 (Pre-refunded)............................ 600,000 665,250
Aa NR New York State Mortgage Agency Series B (Pool Insured),
6.45%, 04/01/15........................................... 1,000,000 1,025,000
Aa NR New York State Mortgage Agency Series BB (FHA Insured),
7.85%, 10/01/08........................................... 30,000 31,160
Aa NR New York State Mortgage Agency Series E (Pool Insured),
8.10%, 10/01/17........................................... 35,000 36,313
NR BBB+ New York State Municipal Bond Bank Agency -- Buffalo Series
A, 6.875%, 03/15/06....................................... 1,000,000 1,073,750
Baa1 BBB New York State Urban Development Corporation Correctional
Facilities (NC), 0.00%, 01/01/08.......................... 2,000,000 1,072,500
Aaa AAA New York State Urban Development Series C (AMBAC Insured),
7.75%, 01/01/98 (Pre-refunded)............................ 30,000 31,759
Aaa AAA New York State Urban Development Series D (AMBAC Insured),
7.75%, 01/01/98 (Pre-refunded)............................ 70,000 74,105
Baa BBB Oneida-Herkimer New York Solid Waste Management Authority,
6.75%, 04/01/14........................................... 1,000,000 1,030,000
NR A Onondaga County New York Industrial Revenue Agency, Crouse
Irving Series A, 7.90%, 01/01/17.......................... 2,000,000 2,205,000
NR BBB- Puerto Rico Educational, Medical & Environmental Control
Facilities, 5.70%, 08/01/13............................... 250,000 235,000
Baa1 A Puerto Rico Commonwealth Capital Appreciation, 0.00%,
07/01/04.................................................. 400,000 274,500
Baa1 A- Puerto Rico Electric Power Authority Series N, 5.00%,
07/01/12.................................................. 750,000 700,312
Aa NR Schenectady NY Municipal Housing Authority -- Annie Schaffer
Senior Center
(SONYMA Insured), 6.40%, 05/01/14......................... 650,000 658,937
Aaa AAA South Hampton Village New York Series B (NC) (MBIA Insured),
7.60%, 09/01/03........................................... 100,000 117,250
A1 A- Triborough Bridge & Tunnel Authority New York Series B,
6.875%, 01/01/15.......................................... 500,000 536,875
</TABLE>
(See Notes to Financial Statements)
<PAGE> 27
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
(UNAUDITED)
RATINGS
- ----------------
MOODY'S/S&P MUNICIPAL BONDS AND NOTES PRINCIPAL VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Baa BBB+ Ulster County New York Resource Recovery Agency, 6.00%,
03/01/14.................................................. $1,000,000 $ 976,250
Aaa AAA Valley Central School District New York (GO)(NC)(AMBAC
Insured), 7.15%, 06/15/07................................. 625,000 733,594
Aaa AAA Watkins Glen New York Central School District (NC) (MBIA
Insured), 7.25%, 06/15/04................................. 165,000 190,988
Aaa AAA Waverly New York (GO)(NC)(MBIA Insured), 9.05%, 06/15/04.... 110,000 140,525
-----------
TOTAL INVESTMENTS -- 97.6% (Cost -- $34,413,426)*........... 35,715,170
OTHER ASSETS, LESS LIABILITIES -- 2.4%...................... 896,036
-----------
NET ASSETS -- 100%.......................................... $36,611,206
===========
</TABLE>
* Cost is approximately the same for Federal income tax
purposes.
OTHER INFORMATION:
At December 31, 1996, net unrealized appreciation based on
cost for financial statement and Federal income tax
purposes is as follows:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation............................... $ 1,609,802
Gross unrealized depreciation............................... (308,058)
-----------
Net unrealized appreciation................................. $ 1,301,744
===========
</TABLE>
Purchases and sales of municipal securities aggregated
$2,368,110 and $4,088,780, respectively, for the period
ended December 31, 1996.
AMBAC -- AMBAC Indemnity Corporation
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
(See Notes to Financial Statements)
<PAGE> 28
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments, at value (identified cost -- $34,413,426)...... $35,715,170
Cash........................................................ 331,127
Receivables
Fund shares sold.......................................... 3,121
Interest.................................................. 668,061
Manager for expense reimbursement......................... 10,153
Other assets................................................ 15,068
-----------
Total assets.............................................. 36,742,700
-----------
LIABILITIES
Payables
Distributions to shareholders............................. 399
Fund shares repurchased................................... 90,799
Management fee............................................ 17,273
12b-1 service and distribution fees....................... 9,747
Other payables to related parties......................... 9,487
Other accrued expenses...................................... 3,789
-----------
Total liabilities......................................... 131,494
-----------
NET ASSETS.................................................. $36,611,206
===========
CLASS A
Net asset value and redemption price per share ($34,145,073
/ 3,463,320 shares outstanding)........................... $ 9.86
===========
Maximum offering price per share ($9.86 x 100 / 95.25)*..... $ 10.35
===========
CLASS B
Net asset value and offering price per share ($2,466,133 /
250,106 shares outstanding)**............................. $ 9.86
===========
NET ASSETS CONSIST OF:
Capital paid-in........................................... $35,404,554
Accumulated net realized loss on investments.............. (50,907)
Accumulated net investment loss........................... (44,185)
Net unrealized appreciation on investments................ 1,301,744
-----------
NET ASSETS.................................................. $36,611,206
===========
</TABLE>
* On sales of more than $100,000 the offering price is reduced.
** Redemption price per share is equal to the net asset value per share less any
applicable contingent deferred sales charge.
(See Notes to Financial Statements)
<PAGE> 29
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................. $1,178,724
----------
EXPENSES
Management fee............................................ $103,979
Transfer agent............................................ 22,645
Administrative services fee............................... 18,905
Custodian fees............................................ 2,037
Blue Sky fees............................................. 6,933
Auditing and accounting fees.............................. 15,963
Shareholder reports....................................... 2,947
Fund accounting........................................... 15,360
Trustees' fees............................................ 2,496
12b-1 service and distribution fees....................... 56,245
Legal..................................................... 13,869
Other..................................................... 4,341
----------
265,720
Expenses reimbursed by manager............................ (48,702)
----------
Net expenses............................................ 217,018
----------
NET INVESTMENT INCOME....................................... 961,706
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments.......................... 128,508
Net unrealized appreciation during the period on
investments............................................. 515,334
----------
Net gain on investments................................. 643,842
----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ $1,605,548
==========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
DECEMBER 31, JUNE 30,
------------ -----------
1996* 1996
------------ -----------
<S> <C> <C>
DECREASE IN NET ASSETS
Operations
Net investment income..................................... $ 961,706 $ 2,086,884
Net realized gain on investments.......................... 128,508 310,443
Net unrealized appreciation (depreciation) during the
period on investments................................... 515,334 (341,320)
----------- -----------
Net income resulting from operations.................... 1,605,548 2,056,007
----------- -----------
Class A distributions
From net investment income................................ (908,938) (1,940,675)
In excess of net investment income........................ (97,546) --
----------- -----------
Total distributions to Class A shareholders............. (1,006,484) (1,940,675)
----------- -----------
Class B distributions
From net investment income................................ (52,768) (72,015)
In excess of net investment income........................ (5,322) --
----------- -----------
Total distributions to Class B shareholders............. (58,090) (72,015)
----------- -----------
Fund share transactions (Note 5)
Class A................................................... (1,894,330) (4,808,441)
Class B................................................... 254,257 749,118
----------- -----------
Net decrease resulting from Fund share transactions..... (1,640,073) (4,059,323)
----------- -----------
TOTAL DECREASE IN NET ASSETS................................ (1,099,099) (4,016,006)
NET ASSETS
Beginning of period....................................... 37,710,305 41,726,311
----------- -----------
END OF PERIOD............................................. $36,611,206 $37,710,305
=========== ===========
ACCUMULATED NET INVESTMENT INCOME (LOSS).................... $ (44,185) $ 58,683
=========== ===========
</TABLE>
* Unaudited.
(See Notes to Financial Statements)
<PAGE> 30
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE SIX
CLASS A MONTHS ENDED
DECEMBER 31, FOR THE YEAR ENDED JUNE 30,
------------- -----------------------------------------------------------
1996* 1996 1995 1994 1993 1992
SELECTED PER SHARE DATA ------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of the period........... $ 9.72 $ 9.72 $ 9.50 $ 10.10 $ 9.96 $ 9.56
------- ------- ------- ------- ------- -------
Income from investment operations
Net investment income(a)......................... .25 .51 .48 .56 .58 .51
Net realized and unrealized gain (loss) on
investments.................................... .17 (.02) .24 (.49) .38 .62
------- ------- ------- ------- ------- -------
Total from investment operations............... .42 .49 .72 .07 .96 1.13
------- ------- ------- ------- ------- -------
Less distributions
From net investment income....................... .25 .49 .48 .56 .58 .51
In excess of net investment income............... .03 -- .02 -- -- .09
From net realized gain........................... -- -- -- .11 .24 .13
------- ------- ------- ------- ------- -------
Total distributions............................ .28 .49 .50 .67 .82 .73
------- ------- ------- ------- ------- -------
Net asset value, end of period..................... $ 9.86 $ 9.72 $ 9.72 $ 9.50 $ 10.10 $ 9.96
======= ======= ======= ======= ======= =======
Total return(%)(b)................................. 4.39(d) 5.11(b) 7.93(b) .58(b) 10.07(b) 12.15(b)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands)........... $34,145 $35,533 $40,290 $42,329 $42,187 $32,755
Ratio of expenses to average net assets
With expense reimbursement(%)(c)................. 1.10(e) 1.12 1.10 1.10 1.10 1.10
Without expense reimbursement(%)(c).............. 1.36(e) 1.33 1.24 1.21 1.29 1.25
Ratio of net investment income to average net
assets(%)(a)..................................... 5.13(e) 5.19 5.12 5.59 5.81 5.66
Portfolio turnover rate(%)......................... 6 35 59 44 87 24
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE APRIL 1, 1994
CLASS B MONTHS ENDED YEAR ENDED (COMMENCEMENT) TO
DECEMBER 31, JUNE 30, JUNE 30,
------------- ---------------------- -----------------
1996* 1996 1995 1994
SELECTED PER SHARE DATA ------------- ------ ---------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of the period.................... $ 9.72 $ 9.72 $ 9.50 $9.65
------ ------ ------ -----
Income from investment operations
Net investment income(a).................................. .22 .44 .41 .10
Net realized and unrealized gain (loss) on investments.... .16 (.02) .24 (.08)
------ ------ ------ -----
Total from investment operations........................ .38 .42 .65 .02
------ ------ ------ -----
Less distributions
From net investment income................................ .22 .42 .41 .14
In excess of net investment income........................ .02 -- .02 --
From net realized gain.................................... -- -- -- .03
------ ------ ------ -----
Total distributions..................................... .24 .42 .43 .17
------ ------ ------ -----
Net asset value, end of period.............................. $ 9.86 $ 9.72 $ 9.72 $9.50
====== ====== ====== =====
Total return(%)............................................. 3.96(d) 4.37(b) 7.14(b) .20(d)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands).................... $2,466 $2,178 $1,436 $ 869
Ratio of expenses to average net assets
With expense reimbursement(%)(c).......................... 1.81(e) 1.87 1.85 1.85(e)
Without expense reimbursement(%)(c)....................... 2.07(e) 2.08 1.99 1.96(e)
Ratio of net investment income to average net 4.44
assets(%)(a).............................................. 4.42(e) 4.37 4.84(e)
Portfolio turnover rate(%).................................. 6 35 59 44
</TABLE>
(a) Net investment income is net of expenses reimbursed by
manager.
(b) Total return does not reflect a sales charge.
(c) Beginning in July 1995, total expenses include any fees paid
indirectly. The ratio of expenses to average net assets with
expense reimbursement has been restated for the year ended
June 30, 1996.
(d) Total return represents aggregate total return and does not
reflect a sales charge.
(e) Annualized.
* Unaudited.
(See Notes to Financial Statements)
<PAGE> 31
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Mackenzie New York Municipal Fund (the Fund) is a diversified 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 an open-end management
investment company.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
Preparation of the financial statements includes the use of management
estimates. Actual results could differ from those estimates.
SECURITY VALUATION -- Municipal securities are valued utilizing primarily
the latest bid prices or, if bid prices are not available, on the basis of
valuation based upon a matrix system (which considers factors such as security
prices, yields, maturities and ratings), both as furnished by an independent
pricing service approved by the Board of Trustees (the Board).
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are
accounted for on the trade date. Interest income is accrued on a daily basis.
Realized gains and losses from securities transactions are calculated on an
identified cost basis.
FEDERAL INCOME TAXES -- The Fund intends to qualify for tax treatment
applicable to regulated investment companies under the Internal Revenue Code, as
amended, and distribute all of its taxable income to its shareholders.
Therefore, no provision has been recorded for Federal income or excise taxes.
The Fund has a net tax-basis capital loss carryforward of approximately
$179,000 as of June 30, 1996 which may be applied against any realized net
taxable gains of each succeeding fiscal year until fully realized or until the
expiration date, whichever occurs first. The carryforward expires $171,000 in
2003 and $8,000 in 2004.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income
are declared monthly and net realized capital gains, if any, are declared in
June and December. An additional distribution may be declared if necessary to
avoid the payment of a four percent Federal excise tax.
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 make reclassifications among
certain of its capital accounts without impacting the net asset value of the
Fund.
FEES PAID INDIRECTLY -- The Fund has an arrangement whereby a certain
percentage of quarterly cumulative credits resulting from cash balances on
deposit with the custodian are used to offset custody fees, including
transaction and out-of-pocket expenses. For the six months ended December 31,
1996, custody fees were not reduced under this arrangement.
2. RELATED PARTIES
Mackenzie Investment Management, Inc. (MIMI) is the Manager and Investment
Adviser of the Fund. For its services, MIMI receives a fee monthly at the annual
rate of .55% of the Fund's average net assets.
Currently, MIMI voluntarily limits the Fund's total operating expenses
(excluding taxes, 12b-1 fees, brokerage commissions, interest, litigation and
indemnification expenses, and other extraordinary expenses) to an annual rate of
.85% of its average net assets. The voluntary expense limitation may be
terminated or revised at any time.
MIMI also provides certain administrative, accounting and pricing services
for the Fund. For those services, the Fund pays MIMI fees plus certain
out-of-pocket expenses. Such fees are reflected as Administrative services fee
and Fund accounting in the Statement of Operations.
Ivy Mackenzie Distributors, Inc. (IMDI), a wholly owned subsidiary of MIMI,
is the underwriter and distributor of the Fund's shares, and as such, purchases
shares from the Fund at net asset value to settle orders from investment
dealers. For the six months ended December 31, 1996, the net amount of
underwriting discount retained by IMDI was $3,242.
Under Service and Distribution Plans, the Fund reimburses IMDI for service
fee payments made to brokers at an annual rate not to exceed .25% of its average
net asset value. Class B shares are also subject to an ongoing distribution fee
at an annual rate of .75% of the average net asset value attributable to Class B
shares. IMDI may use such distribution fee for purposes of advertising and
marketing shares of the Fund. Such fees of $44,301 and $11,944 for Class A and
Class B, respec-
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
tively, are reflected as 12b-1 service and distribution fees in the Statement of
Operations.
Ivy Mackenzie Services Corp. (IMSC), a wholly owned subsidiary of MIMI, is
the transfer and shareholder servicing agent for the Fund. For those services,
the Fund pays a monthly fee plus certain out-of-pocket expenses. Such fees and
expenses of $21,649 and $996 for Class A and Class B, respectively, are
reflected as Transfer agent in the Statement of Operations.
3. BOARD'S COMPENSATION
Trustees who are not affiliated with MIMI receive compensation from the
Fund, which is reflected as Trustees' fees in the Statement of Operations.
4. CONCENTRATION OF CREDIT RISK
The Fund primarily invests in debt obligations issued by the State of New
York and its political subdivisions, agencies and public authorities to obtain
funds for various public purposes. The Fund is more susceptible to factors
adversely affecting issuers of New York securities than is a municipal bond fund
that is not concentrated in these issuers to the same extent.
5. 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, 1996 JUNE 30, 1996
---------------------- ----------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Sold.......................... 106,539 $ 1,031,597 150,497 $ 1,481,105
Issued on reinvestment of
distributions................ 62,437 610,104 118,551 1,162,655
Repurchased................... (361,214) (3,536,031) (758,400) (7,452,201)
-------- ----------- -------- -----------
Net decrease.................. (192,238) $(1,894,330) (489,352) $(4,808,441)
======== =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1996 JUNE 30, 1996
---------------------- ----------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Sold.......................... 27,654 $ 270,588 90,800 $ 891,763
Issued on reinvestment of
distributions................ 3,827 37,426 4,201 41,183
Repurchased................... (5,460) (53,757) (18,664) (183,828)
-------- ----------- -------- -----------
Net increase.................. 26,021 $ 254,257 76,337 $ 749,118
======== =========== ======== ===========
</TABLE>
03MCNYX123196
