MERRILL LYNCH
MUNICIPAL
INTERMEDIATE
TERM FUND
FUND LOGO
Semi-Annual Report
April 30, 1995
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Merrill Lynch
Municipal
Intermediate
Term Fund
Merrill Lynch
Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH MUNICIPAL INTERMEDIATE TERM FUND
Officers and
Trustees
Arthur Zeikel, President and Trustee
Ronald W. Forbes, Trustee
Cynthia A. Montgomery, Trustee
Charles C. Reilly, Trustee
Kevin A. Ryan, Trustee
Richard R. West, Trustee
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Fredrick K. Stuebe, Vice President
Gerald M. Richard, Treasurer
Susan B. Baker, Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
TO OUR SHAREHOLDERS
Increasing signs of slowing economic growth led to higher US stock
and bond prices during the April quarter. Although gross domestic
product was reported to have increased at a revised 5.1% rate during
the final quarter of 1994, declines in other indicators such as new
home sales and durable goods orders registered thus far in 1995 have
led investors to anticipate that the economy is losing enough
momentum to keep inflation under control and preclude further
significant monetary policy tightening by the Federal Reserve Board.
A further indication of a slowing economy was the reported decline
in the Index of Leading Economic Indicators for March.
As US stock and bond markets have risen, the value of the US dollar
has reached new lows relative to the yen and the Deutschemark.
Persistent trade deficits and exports of capital from the United
States have kept the US currency in a decade-long decline relative
to the Japanese and German currencies. Over the longer term, since
the United States has the highest productivity among industrialized
nations and among the lowest labor costs, demand for US dollar-
denominated assets may improve. However, a reduction of the still-
widening US trade deficit may be necessary before the US dollar
appreciates substantially relative to the yen and the Deutschemark.
The first months of 1995 were very positive for the US stock and
bond markets. Continued signs of a moderating expansion and well-
contained inflationary pressures would provide further assurance
that the peak in interest rates is behind us, creating a stronger
foundation for higher stock and bond prices. On the other hand,
indications of reaccelerating growth and further significant
monetary policy tightening by the Federal Reserve Board would be a
decided negative for the US financial markets.
The Municipal Market
During most of the three-month period ended April 30, 1995, the
municipal bond market continued the improvement it began in late
1994. Signs of a weakening domestic economy and ongoing moderate
inflationary pressure have fostered an environment of declining
interest rates. A-rated, uninsured municipal revenue bond yields, as
measured by the Bond Buyer Revenue Bond Index, have declined an
additional 50 basis points (0.50%) to close the three-month period
ended April 30, 1995 at 6.29%. Tax-exempt bond yields fell over 100
basis points since the highs experienced in November 1994 and are
now lower than they were a year ago. US Treasury bond yields have
experienced a similar, but less dramatic, improvement during the
last quarter. During the three months ended April 30, 1995, 30-year
US Treasury bond yields declined approximately 35 basis points to
close the April quarter at 7.33%.
Tax-exempt bond yields have declined more than their taxable
counterparts so far in 1995 largely in response to the significant
decline in new bond issuance in recent quarters. During the April
30, 1995 quarter, less than $30 billion in new long-term municipal
securities were underwritten, a decline of nearly 40% versus the
April 30, 1994 quarter levels. Similarly, over the past six months,
less than $60 billion in municipal bonds were issued, a decline of
approximately 45% versus the com-parable period a year ago. Both
institutional and individual investors saw significant cash inflows
in recent months. These assets were derived from regular coupon
payments, bond maturities and the proceeds from early bond calls and
redemptions. It has been estimated that investors received over $20
billion in principal redemptions and coupon income in January 1995
alone. With monthly issuance in the $10 billion range thus far in
1995, the current supply/demand imbalance has dominated the
municipal market and bond prices rose accordingly. The tax-exempt
bond market's technical position is likely to remain very strong
throughout most of 1995. Investors are expected to receive almost
$40 billion in principal and coupon payments on July 1, 1995.
Investor proceeds from all sources have been estimated to exceed
$200 billion for all of 1995. Estimates of total new bond issuance
for 1995 continue to be lowered with most estimates now in the
$125 billion range. Investors are likely to find it increasingly
difficult to replace existing holdings as they mature and to
reinvest coupon income in such an environment.
The municipal bond market's outperformance thus far this year caused
the tax-exempt market to become temporarily expensive relative to
its taxable counterpart in late April. Investor concerns regarding
the international currency situation and the future impact of
proposed revisions to US taxation policies upon the tax advantage
inherent to municipal bonds have combined to cause tax-exempt bond
yields to increase marginally in recent weeks. Municipal bond yields
have risen approximately 15 basis points from their lows in mid-
April 1995. Long-term US Treasury bond yields have remained
essentially stable.
Such an underperformance by tax-exempt bond yields is likely to be
limited in duration. The recent increase in tax-exempt bond yields
has already begun to attract institutional investors since some
municipal bonds yielding in excess of 85% of US Treasury bond yields
are again available. Also, concerns regarding the implication for
municipal bonds' tax advantage resulting from various proposed tax
law changes (for example, flat-tax, value-added tax, or national
sales tax) are all likely to quickly recede as investors realize
that such, if any, changes are unlikely to be enacted before late
1996 at the earliest. Long-term investors will also recall 1986 when
similar tax proposals were made and tax-exempt bond yields initially
rose and then quickly fell. Investors are likely to view the current
situation as an opportunity to purchase very attractively priced tax-
advantaged products. This should cause municipal bond yields to
quickly return to their more historic relationship.
Portfolio Strategy
Our concern over the dramatically reduced new issuance of tax-exempt
bonds in 1995 and the excellent relative value offered by municipals
caused us to change investment strategy. Therefore, we moved the
Fund from the defensive investment posture maintained for most of
the January quarter to a more aggressive posture. Additionally, the
weaker-than-anticipated economic data released in the first quarter
of 1995 warranted the continued shift to a more aggressively
invested portfolio in order to seek to take advantage of any drop in
yields that might occur as investors pushed bond prices higher.
Therefore, by mid-February the portfolio had an average maturity of
approximately 12 years (the maximum allowable) and cash reserves of
approximately 2%, which was a substantial change from the 10%--15%
maintained during the January quarter. We expect to maintain this
position in upcoming months, since municipal supply is expected to
remain scarce, or until statistical evidence emerges which would
indicate that the economy is gaining momentum or inflationary
pressure is increasing.
In Conclusion
We thank you for your support of Merrill Lynch Municipal
Intermediate Term Fund, and we look forward to serving your
investment needs in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President and
Portfolio Manager
May 26, 1995
PERFORMANCE DATA
About Fund
Performance
Since October 21, 1994, investors have been able to purchase shares
of the Fund through the Merrill Lynch Select Pricing SM System,
which offers four pricing alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 1% and bear no ongoing distribution or account maintenance
fees. Class A Shares are available only to eligible investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 1% if redeemed during the first year, decreasing 1%
thereafter to 0% after the first year. In addition, Class B Shares
are subject to a distribution fee of 0.10% and an account
maintenance fee of 0.20%. These shares automatically convert to
Class D Shares after approximately 10 years.
* Class C Shares are subject to a distribution fee of 0.10% and an
account maintenance fee of 0.20%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 1% and an
account maintenance fee of 0.10% (but no distribution fee).
Performance data for the Fund's Class A and Class B Shares are
presented in the "Performance Summary", "Recent Performance Results"
and "Average Annual Total Return" tables on pages 4, 5 and 6. Data
for Class C and Class D Shares are also presented in the "Recent
Performance Results" and "Aggregate Total Return" tables on page 5.
The "Recent Performance Results" table shows investment results
before the deduction of any sales charges for Class A and Class B
Shares for the 12-month and 3-month periods ended April 30, 1995 and
for Class C and Class D Shares for the since inception and 3-month
periods ended April 30, 1995. All data in this table assume
imposition of the actual total expenses incurred by each class of
shares during the relevant period.
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/95 +5.08% +4.03%
Five Years Ended 3/31/95 +7.16 +6.95
Inception (10/31/88) through 3/31/95 +6.76 +6.60
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/95 +4.75% +3.76%
Five Years Ended 3/31/95 +6.86 +6.86
Inception (11/26/86) through 3/31/95 +5.61 +5.61
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
Aggregate
Total Return
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94) through 3/31/95 +3.51% +2.51%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Inception (10/21/94) through 3/31/95 +3.63% +2.59%
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
4/30/95 1/31/95 4/30/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $9.76 $9.65 $9.89 -1.31% +1.14%
Class B Shares* 9.75 9.65 9.89 -1.42 +1.04
Class C Shares* 9.75 9.65 9.70 +0.52 +1.04
Class D Shares* 9.75 9.65 9.70 +0.52 +1.04
Class A Shares--Total Return* +4.15(1) +2.57(2)
Class B Shares--Total Return* +3.72(3) +2.39(4)
Class C Shares--Total Return* +3.30(5) +2.40(6)
Class D Shares--Total Return* +3.43(7) +2.44(8)
Class A Shares--Standardized 30-day Yield 4.85%
Class B Shares--Standardized 30-day Yield 4.59%
Class C Shares--Standardized 30-day Yield 4.62%
Class D Shares--Standardized 30-day Yield 4.68%
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
++Investment results shown for Class C and Class D Shares are since
inception (10/21/94).
(1)Percent change includes reinvestment of $0.525 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.138 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.495 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.131 per share ordinary
income dividends.
(5)Percent change includes reinvestment of $0.254 per share ordinary
income dividends.
(6)Percent change includes reinvestment of $0.132 per share ordinary
income dividends.
(7)Percent change includes reinvestment of $0.266 per share ordinary
income dividends.
(8)Percent change includes reinvestment of $0.136 per share ordinary
income dividends.
</TABLE>
PERFORMANCE DATA (concluded)
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/31/88--12/31/88 $ 9.45 $ 9.29 -- $0.117 - 0.45%
1989 9.29 9.41 -- 0.606 + 8.07
1990 9.41 9.31 -- 0.594 + 5.45
1991 9.31 9.73 -- 0.597 +11.28
1992 9.73 9.89 -- 0.582 + 7.88
1993 9.89 10.42 -- 0.538 +11.04
1994 10.42 9.52 -- 0.521 - 3.69
1/1/95--4/30/95 9.52 9.76 -- 0.169 + 4.41
------
Total $3.724
Cumulative total return as of 4/30/95: +52.08%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
include sales charge; results would be lower if sales charge was
included.
</TABLE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
11/26/86--12/31/86 $10.00 $ 9.94 -- $0.030 - 0.10%
1987 9.94 9.27 -- 0.579 - 1.09
1988 9.27 9.29 -- 0.564 + 6.43
1989 9.29 9.41 -- 0.577 + 7.74
1990 9.41 9.31 -- 0.566 + 5.14
1991 9.31 9.73 -- 0.568 +10.94
1992 9.73 9.89 -- 0.552 + 7.55
1993 9.89 10.42 -- 0.507 +10.71
1994 10.42 9.52 -- 0.490 - 3.99
1/1/95--4/30/95 9.52 9.75 -- 0.160 + 4.21
------
Total $4.593
Cumulative total return as of 4/30/95: +57.44%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
Portfolio
Abbreviations
To simplify the listings of Merrill Lynch Municipal Intermediate
Term Fund's portfolio holdings in the Schedule of Investments, we
have abbreviated the names of many of the securities according to
the list at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alaska--2.4% AAA Aaa $ 1,000 Alaska Student Loan Corporation, Student Assistance Loan
Revenue Bonds, AMT, Series A, 5.90% due 7/01/2003 (c) $ 1,013
North Slope Boro, Alaska, Revenue Bonds, UT, Series B (d):
AAA Aaa 2,000 5.73%** due 1/01/2002 1,372
AA Aaa 2,000 5.81%** due 1/01/2003 1,289
Arizona--4.4% AA- Aa 3,000 Maricopa County, Arizona, United School District No. 48
Revenue Bonds (Scottsdale Improvement), UT, 4.40% due 7/01/2013 2,391
NR* NR* 2,000 Mohave County, Arizona, IDA, IDR (North Star Steel Co.
Project), AMT, 6.70% due 3/01/2020 1,993
Tucson, Arizona, Street and Highway User Revenue Bonds,
Series B (g):
A+ NR* 1,000 9.25% due 7/01/2000 1,189
A+ NR* 1,000 9.25% due 7/01/2002 1,243
California-- NR* Aa 1,750 University of California, COP (UCLA Center Chiller
1.3% Cogeneration), 10.75% due 11/01/1998 2,065
Colorado--5.9% AAA Aaa 1,000 Colorado Springs, Colorado, Utilities Revenue Improvement
Bonds, Series A, 9.875% due 11/15/2000 (b) 1,247
Colorado Student Obligation Bond Authority, Student Loan
Revenue Bonds, AMT, Series C:
NR* A 1,000 6.80% due 9/01/2000 1,039
NR* A 1,300 6.90% due 9/01/2001 1,364
A+ A 2,000 Denver, Colorado, City and County Revenue Bonds, COP (School
District Number 001), UT, Series B, 10% due 12/01/1999 2,388
A NR* 1,225 Denver, Colorado, Urban Renewal Authority, Tax Increment
Revenue Bonds (Downtown Denver), AMT, Series A, 7.25% due
9/01/2017 1,264
NR* A 1,470 Larimer County, Colorado, COP (School District Number R-1),
10% due 12/01/2001 1,862
Connecticut-- Connecticut State Clean Water Fund Revenue Bonds:
3.2% AA+ Aa 1,015 6.375% due 6/01/2004 1,092
AA+ Aa 1,805 6.375% due 12/01/2005 1,945
AA+ Aa 1,840 6.375% due 12/01/2006 1,980
Florida--4.1% AAA Aaa 3,500 Dade County, Florida, Educational Facilities Authority,
Exchangeable Revenue Bonds (University of Miami), 7.65%
due 4/01/2010 (d) 3,881
AAA Aaa 2,500 Florida, HFA, M/F (Antigua Club Apartments), AMT, Series
A-1, 6.875% due 8/01/2026 (c) 2,533
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Georgia--4.3% A+ A $ 1,250 Georgia Municipal Electric Authority, Special Obligation
Bonds, Fifth Crossover Series (Project One), 6.40% due
1/01/2009 $ 1,291
AA+ Aaa 2,500 Georgia State, GO, UT, Series D, 6.70% due 8/01/2010 2,790
AAA Aaa 2,180 Henry County, Georgia, School District Revenue Bonds,
UT, 7.50% due 8/01/2004 (d) 2,517
Hawaii--2.8% AAA Aaa 4,000 Hawaii Department of Budget and Finance, Special Purpose
Mortgage Revenue Bonds (Hawaiian Electric Company), AMT,
Series C, 7.375% due 12/01/2020 (e) 4,299
Illinois-- AAA Aaa 2,000 Chicago, Illinois, O'Hare International Airport, Revenue
11.9% Refunding Bonds (General Airport), Second Lien, Series A,
6.375% due 1/01/2012 (d) 2,038
Cook County, Illinois, Revenue Bonds, COP (Community College
District No. 508), UT (e):
AAA Aaa 2,000 8.10% due 1/01/1999 2,211
AAA Aaa 1,000 8.50% due 1/01/2002 1,183
A+ A 2,500 Illinois Health Facilities Authority, Revenue Refunding Bonds
(Lutheran General Health), Series C, 7% due 4/01/2008 2,644
AA- A1 2,000 Illinois State, GO, 6.60% due 6/01/2009 2,093
A+ A1 2,500 Illinois Student Assistance Community, Student Loan Revenue
Bonds, AMT, Series M, 6.60% due 3/01/2007 2,580
AAA Aaa 3,000 Metropolitan Fair and Exposition Authority, Illinois, State
Tax Revenue Bonds, Series A, 7% due 6/01/2011 (h) 3,159
AAA Aaa 2,325 University of Illinois, COP, Series A, 7.25% due 8/15/2000 (f) 2,482
Indiana--0.7% A+ NR* 1,000 Indianapolis, Indiana, Local Public Improvement Refunding
Bonds, Series D, 6.50% due 2/01/2006 1,049
Kentucky-- A1+ VMIG1++ 200 Carroll County, Kentucky, Solid Waste Disposal Facilities
0.1% Revenue Bonds (Kentucky Utilities Co. Project), VRDN, AMT,
Series A, 5.05% due 11/01/2024 (a) 200
Maine--3.5% NR* A 3,080 Maine Educational Loan Marketing Corporation, Student Loan
Revenue Refunding Bonds, AMT, 6.90% due 11/01/2003 3,176
Maine State Turnpike Authority, Turnpike Revenue Bonds (d):
AAA Aaa 1,000 7.125% due 7/01/2008 1,133
AAA Aaa 1,000 7.50% due 7/01/2009 1,171
Massachusetts AAA Aaa 2,500 Massachusetts State Consolidated Loan Revenue Bonds, Series A,
- --5.2% 5.50% due 11/01/2012 (e) 2,342
A+ A1 1,500 Massachusetts State, GO, UT, Series B, 9.25% due 7/01/2000 1,787
AAA Aaa 2,060 Massachusetts State Revenue Bonds (Lowell Building Authority),
Fifth Series A, 5.625% due 11/01/2008 (c) 2,036
AA- Aa 1,850 Massachusetts State Water Pollution Abatement Trust, Revenue
Secured Loan Program, Series A, 6.375% due 2/01/2015 1,884
Michigan--3.4% NR* A 1,000 Michigan Higher Education, Student Loan Authority Revenue
Bonds, AMT, Series XIV-A, 6.75% due 10/01/2006 1,076
Michigan State Hospital Finance Authority, Revenue Refunding
Bonds, Series A:
A- A 1,000 (Detroit Medical Center Obligation Group), 6.375% due
8/15/2009 1,006
NR* A1 3,280 (McLaren Obligation Group), 5.75% due 10/15/2003 3,138
Minnesota-- AA+ Aa 2,250 Minnesota HFA, S/F Mortgage Revenue Bonds, Series E, 6.65%
1.5% due 7/01/2013 2,323
Mississippi Mississippi Higher Education Assistance Corporation, Student
- --2.5% Loan Revenue Refunding Bonds, AMT, Series C:
A NR* 2,370 6.40% due 1/01/2003 2,404
A NR* 1,440 6.50% due 7/01/2004 1,467
Nevada--0.8% AAA Aaa 1,000 Clark County, Nevada, School District Revenue Bonds, Series A,
9.75% due 6/01/2000 (d) 1,208
New Jersey AAA Aaa 2,060 New Jersey Health Care Facilities Financing Authority,
- --3.2% Revenue Refunding Bonds (Hackensack Medical Center), 6.625%
due 7/01/2017 (e) 2,145
AAA Aaa 1,615 New Jersey Housing and Mortgage Finance Agency Revenue Bonds,
AMT, Series F, 7.80% due 10/01/2010 (d) 1,708
AA+ Aa1 1,000 New Jersey State, GO, 7% due 4/01/1999 (g) 1,078
New York--2.6% A- Baa1 2,000 New York City, New York, GO, UT, Series A, 8% due 11/01/1998
(b)(g) 2,206
New York City, New York, Series F, UT:
A- Baa1 1,555 8.10% due 11/15/1999 1,699
A- Baa1 50 8.10% due 11/15/1999 (g) 56
North Dakota NR* Aa 1,000 North Dakota State, Student Loan Revenue Refunding Bonds, Series
- --0.7% A, 5.90% due 7/01/1998 1,019
Ohio--2.0% AAA Aaa 1,000 Lakota, Ohio, Local School District Revenue Bonds, UT, 7% due
12/01/2007 (c) 1,145
AA Aa 1,860 Ohio State Infrastructure Improvement Revenue Bonds, GO, UT,
6.20% due 8/01/2012 1,928
Pennsylvania A+ VMIG1++ 3,000 Philadelphia, Pennsylvania, Hospital and Higher Education
- --1.9% Facilities Authority, Hospital Revenue Bonds (Children's
Hospital of Philadelphia Project), VRDN, 4.85% due 3/01/2027 (a) 3,000
Rhode Island AAA Aaa 1,000 Rhode Island State Refunding Bonds, Series A, 6.20% due
- --0.7% 6/15/2004 (e) 1,055
South Carolina NR* VMIG1++ 1,200 Orangeburg County, South Carolina, Solid Waste Disposal
- --0.8% Facilities Revenue Bonds (South Carolina Electric & Gas),
VRDN, AMT, 5.20% due 11/01/2024 (a) 1,200
Texas--11.3% AAA Aaa 3,205 Austin, Texas, Utility System Revenue Bonds, Series A, 9.50%
due 5/15/2000 (b) 3,840
NR* A 720 Brazos, Texas, Higher Education Authority, Student Loan Revenue
Refunding Bonds, AMT, Series A, 6.70% due 9/01/2001 747
AAA Aaa 2,250 Harris County, Texas, Toll Road Tax and Sub-Lien Revenue
Bonds, UT, 10.375% due 2/01/1998 (b) 2,567
AAA Aaa 1,950 San Antonio, Texas, Electric and Gas Revenue Refunding Bonds,
Series A, 5.51%** due 2/01/2002 (c) 1,350
AA Aa 1,375 San Antonio, Texas, GO, Revenue Bonds, 8.625% due 8/01/1999 1,571
AA Aa 2,700 Texas State Public Financing Authority Revenue Bonds, Series
C, 9% due 10/01/1999 3,141
AA+ Aa1 3,545 University of Texas, Revenue Refunding Bonds (Permanent
University Fund), 9.50% due 7/01/2000 4,268
Virginia Virginia State Housing Development Authority, Commonwealth
- --3.4% Mortgage Revenue Bonds:
AA+ Aa1 2,585 Series H, 6.50% due 7/01/2007 2,675
AA+ Aa1 1,365 Series J, Sub-Series J-2, 6.45% due 1/01/2010 1,375
AA+ Aa1 1,300 Series J, Sub-Series J-2, 6.50% due 1/01/2011 1,310
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Washington AAA Aaa $ 1,500 Snohomish County, Washington, Public Utilities Electric
- --10.2% Revenue Bonds (District No. 001), Series B, 9.75% due
1/01/1999 (e) $ 1,733
AAA Aaa 5,000 Tacoma, Washington, Electric System Revenue Refunding Bonds,
Series B, 5.90% due 1/01/2005 (c) 5,150
Washington Public Power Supply System, Revenue Refunding Bonds:
AA Aa 3,295 (Nuclear Project No. 1), Series A, 7.50% due 7/01/2015 3,552
AA Aa 1,500 (Nuclear Project No. 3), Series B, 7.375% due 7/01/2004 1,628
AA Aa 1,070 (Nuclear Project No. 3), Series B, 7% due 7/01/2009 1,142
AA Aa 2,400 Washington State, GO, Series A, 6.70% due 2/01/2006 2,644
Wisconsin-- AA Aa 2,000 Wisconsin State Housing and Economic Development Authority,
1.4% Home Ownership Revenue Bonds, AMT, Series F, 7.40% due
7/01/2013 (i) 2,120
Puerto Rico A Baa1 3,000 Puerto Rico Commonwealth, Highway and Transportation Authority,
- --1.8% Highway Revenue Refunding Bonds, Series X, 5.50% due 7/01/2015 2,757
Total Investments (Cost--$149,715)--98.0% 151,646
Variation Margin on Financial Futures Contracts***--0.1% 60
Other Assets Less Liabilities--1.9% 2,992
--------
Net Assets--100.0% $154,698
========
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at April 30, 1995.
(b)Prerefunded.
(c)AMBAC Insured.
(d)MBIA Insured.
(e)FGIC Insured.
(f)Capital Guaranty.
(g)Escrowed to maturity.
(h)BIGI Insured.
(i)FHA Insured.
*Not Rated.
**Represents the yield to maturity on this zero coupon issue.
***Financial futures contracts sold as of April 30, 1995 were as
follows:
Value
Number of Expiration (Notes 1a & 1b)
Contracts Issue Date (in thousands)
320 US Treasury Notes June 1995 $(33,700)
(Total Contract Price--$32,950) $(33,700)
========
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of April 30, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$149,714,598)(Note 1a) $151,645,536
Cash 119,868
Receivables:
Interest $ 3,158,152
Beneficial interest sold 685,986
Variation margin (Note 1b) 60,000 3,904,138
------------
Prepaid registration fees and other assets (Note 1e) 120,447
------------
Total assets 155,789,989
------------
Liabilities: Payables:
Beneficial interest redeemed 800,796
Dividends to shareholders (Note 1f) 136,238
Investment adviser (Note 2) 65,687
Distributor (Note 2) 29,647 1,032,368
------------
Accrued expenses and other liabilities 60,023
------------
Total liabilities 1,092,391
------------
Net Assets: Net assets $154,697,598
============
Net Assets Class A Shares of beneficial interest, $.10 par value, unlimited
Consist of: number of shares authorized $ 259,270
Class B Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 1,299,722
Class C Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 110
Class D Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 26,781
Paid-in capital in excess of par 166,123,900
Accumulated realized capital losses on investments--net (Note 5) (14,193,123)
Unrealized appreciation on investments--net 1,180,938
------------
Net assets $154,697,598
============
Net Asset Class A--Based on net assets of $25,293,317 and 2,592,695
Value: shares of beneficial interest outstanding $ 9.76
============
Class B--Based on net assets of $126,781,455 and 12,997,224
shares of beneficial interest outstanding $ 9.75
============
Class C--Based on net assets of $10,726 and 1,100 shares of
beneficial interest outstanding $ 9.75
============
Class D--Based on net assets of $2,612,100 and 267,808 shares
of beneficial interest outstanding $ 9.75
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended April 30, 1995
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount $ 5,050,831
Income (Note 1d):
Expenses: Investment advisory fees (Note 2) $ 430,172
Distribution fees--Class B (Note 2) 193,271
Professional fees 46,556
Registration fees (Note 1e) 44,524
Printing and shareholder reports 43,063
Transfer agent fees--Class B (Note 2) 38,704
Accounting services (Note 2) 22,215
Trustees' fees and expenses 7,713
Transfer agent fees--Class A (Note 2) 6,533
Pricing fees 6,028
Custodian fees 3,887
Account maintenance fees--Class D (Note 2) 800
Transfer agent fees--Class D (Note 2) 406
Distribution fees--Class C (Note 2) 10
Transfer agent fees--Class C (Note 2) 6
Other 5,575
------------
Total expenses 849,463
------------
Investment income--net 4,201,368
------------
Realized & Realized loss on investments--net (4,580,145)
Unrealized Gain Change in unrealized appreciation/depreciation on investments--net 6,601,730
(Loss) on ------------
Investments Net Increase in Net Assets Resulting from Operations $ 6,222,953
- --Net (Notes 1b, ============
1d & 3):
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: April 30, 1995 Oct. 31, 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 4,201,368 $ 8,954,704
Realized gain (loss) on investments--net (4,580,145) 1,875,751
Change in unrealized appreciation/depreciation on invest-
ments--net 6,601,730 (15,766,315)
------------ ------------
Net increase (decrease) in net assets resulting from
operations 6,222,953 (4,935,860)
------------ ------------
Dividends to Investment income--net:
Shareholders Class A (730,742) (1,583,774)
(Note 1f): Class B (3,425,952) (7,370,849)
Class C (256) (1)
Class D (44,418) (80)
------------ ------------
Net decrease in net assets resulting from dividends
to shareholders (4,201,368) (8,954,704)
------------ ------------
Beneficial Net increase (decrease) in net assets derived from
Interest beneficial interest transactions (17,199,622) 1,531,744
Transactions ------------ ------------
(Note 4):
Net Assets: Total decrease in net assets (15,178,037) (12,358,820)
Beginning of period 169,875,635 182,234,455
------------ ------------
End of period $154,697,598 $169,875,635
============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A
The following per share data and ratios For the
have been derived from information provided Six Months
in the financial statements. Ended
April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.62 $ 10.39 $ 9.70 $ 9.61 $ 9.24
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .27 .52 .54 .59 .60
Realized and unrealized gain (loss) on
investments--net .14 (.77) .69 .09 .37
-------- -------- -------- -------- --------
Total from investment operations .41 (.25) 1.23 .68 .97
-------- -------- -------- -------- --------
Less dividends from investment income--net (.27) (.52) (.54) (.59) (.60)
-------- -------- -------- -------- --------
Net asset value, end of period $ 9.76 $ 9.62 $ 10.39 $ 9.70 $ 9.61
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 4.33%+++ (2.49%) 13.01% 7.16% 10.90%
Return:** ======== ======== ======== ======== ========
Ratios to Expenses .83%* .76% .75% .86% .85%
Average ======== ======== ======== ======== ========
Net Assets: Investment income--net 5.63%* 5.19% 5.35% 5.97% 6.34%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 25,293 $ 27,653 $ 24,173 $ 14,068 $ 6,546
Data: ======== ======== ======== ======== ========
Portfolio turnover 34.78% 52.56% 83.66% 74.20% 129.85%
======== ======== ======== ======== ========
<CAPTION>
Class B
The following per share data and ratios For the
have been derived from information provided Six Months
in the financial statements. Ended
April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.62 $ 10.39 $ 9.69 $ 9.61 $ 9.24
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .25 .49 .51 .56 .57
Realized and unrealized gain (loss) on
investments--net .13 (.77) .70 .08 .37
-------- -------- -------- -------- --------
Total from investment operations .38 (.28) 1.21 .64 .94
-------- -------- -------- -------- --------
Less dividends from investment income--net (.25) (.49) (.51) (.56) (.57)
-------- -------- -------- -------- --------
Net asset value, end of period $ 9.75 $ 9.62 $ 10.39 $ 9.69 $ 9.61
======== ======== ======== ======== ========
Total Based on net asset value per share 4.06%+++ (2.79%) 12.78% 6.72% 10.56%
Investment ======== ======== ======== ======== ========
Return:**
Ratios to Expenses, excluding distribution fees .84%* .77% .76% .86% .88%
Average ======== ======== ======== ======== ========
Net Assets: Expenses 1.14%* 1.07% 1.06% 1.16% 1.18%
======== ======== ======== ======== ========
Investment income--net 5.32%* 4.87% 5.07% 5.68% 6.05%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $126,782 $142,152 $158,061 $124,802 $ 97,998
Data: ======== ======== ======== ======== ========
Portfolio turnover 34.78% 52.56% 83.66% 74.20% 129.85%
======== ======== ======== ======== ========
<CAPTION>
Class C Class D
The following per share data and ratios For the Six For the For the Six For the
have been derived from information Months Period Months Period
provided in the financial statements. Ended Oct. 21, 1994++ Ended Oct. 21, 1994++
April 30, to Oct. 31 April 30, to Oct. 31
Increase (Decrease) in Net Asset Value: 1995 1994 1995 1994
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.62 $ 9.70 $ 9.62 $ 9.70
Operating -------- -------- -------- --------
Performance: Investment income--net .25 .01 .26 .01
Realized and unrealized gain (loss) on invest-
ments--net .13 (.08) .13 (.08)
-------- -------- -------- --------
Total from investment operations .38 (.07) .39 (.07)
-------- -------- -------- --------
Less dividends from investment income--net (.25) (.01) (.26) (.01)
-------- -------- -------- --------
Net asset value, end of period $ 9.75 $ 9.62 $ 9.75 $ 9.62
======== ======== ======== ========
Total Investment Based on net asset value per share 4.03%+++ (.71%)+++ 4.17%+++ (.71%)+++
Return:** ======== ======== ======== ========
Ratios to Expenses, excluding account maintenance and
Average distribution fees .91%* .88%* .83%* .87%*
Net Assets: ======== ======== ======== ========
Expenses 1.11%* 1.18%* .93%* .97%*
======== ======== ======== ========
Investment income--net 5.36%* 4.92%* 5.55%* 5.20%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 11 $ 1 $ 2,612 $ 70
Data: ======== ======== ======== ========
Portfolio turnover 34.78% 52.56% 34.78% 52.56%
======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Municipal Intermediate Term Fund (the "Fund") is
presently the only series of Merrill Lynch Municipal Series Trust
(the "Trust"). The Fund is registered under the Investment Company
Act of 1940 as a diversified, open-end management investment
company. These unaudited financial statements reflect all
adjustments which are, in the opinion of management, necessary to a
fair statement of the results for the interim period presented. All
such adjustments are of a normal recurring nature. The Fund offers
four classes of shares under the Merrill Lynch Select Pricing SM
System. Shares of Class A and Class D are sold with a front-end
sales charge. Shares of Class B and Class C may be subject to a
contingent deferred sales charge. All classes of shares have
identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Class B, Class C and Class D
Shares bear certain expenses related to the account maintenance of
such shares, and Class B and Class C Shares also bear certain
expenses related to the distribution of such shares. Each class has
exclusive voting rights with respect to matters relating to its
account maintenance and distribution expenditures. The following is
a summary of significant accounting policies followed by the Fund.
(a) Valuation of investments--Municipal bonds and other portfolio
securities in which the Fund invests are traded primarily in the
over-the-counter municipal bond and money markets and are valued at
the last available bid price in the over-the-counter market or on
the basis of yield equivalents as obtained by the Fund's pricing
service from one or more dealers that make markets in the
securities. Financial futures contracts, which are traded on
exchanges, are valued at their last sale price as of the close of
such exchanges. Options on financial futures contracts on US
Government securities, which are traded on exchanges, are valued at
their last bid price in the case of options purchased and their last
asked price in the case of options written. Short-term investments
with a remaining maturity of sixty days or less are valued at
amortized cost, which approximates market value. Securities and
assets for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the
direction of the Board of Trustees of the Fund, including valuations
furnished by a pricing service retained by the Fund, which may
utilize a matrix system for valuations. The procedures of the
pricing service and its valuations are reviewed by the officers of
the Fund under the general supervision of the Trustees.
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the counter-
party does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell interest
rate futures contracts and options on such futures contracts for the
purpose of hedging the market risk on existing securities or the
intended purchase of securities. Futures contracts are contracts for
delayed delivery of securities at a specific future date and at a
specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(f) Dividends and distributions--Dividends from net investment
income are declared daily and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Merrill Lynch Asset Management, L.P. ("MLAM"). The general partner
of MLAM is Princeton Services, Inc. ("PSI"), an indirect wholly-
owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is
the limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
MLAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee of 0.55% on the average daily
value of the Fund's net assets.
The Investment Advisory Agreement obligates MLAM to reimburse the
Fund to the extent that expenses (excluding interest, taxes,
distribution fees, brokerage fees and commissions, and extraordinary
items) exceed 2.5% of the Fund's first $30 million of average daily
net assets, 2.0% of the Fund's next $70 million of average daily net
assets and 1.5% of the average daily net assets in excess thereof.
MLAM's obligation to reimburse the Fund is limited to the amount of
the management fee. No fee payment will be made to MLAM during any
fiscal year which will cause such expenses to exceed the expense
limitation applicable at the time of such payment.
Pursuant to the distribution plans ("the Distribution Plans")
adopted by the Fund in accordance with Rule 12b-1 under the
Investment Company Act of 1940, the Fund pays the Distributor
ongoing account maintenance and distribution fees. The Distributor
voluntarily did not collect any Class C distribution fees for the
six months ended April 30, 1995. The fees are accrued daily and paid
monthly at annual rates based upon the average daily net assets of
the shares as follows:
Account Distribution
Maintenance Fee Fee
Class B 0.20% 0.10%
Class C 0.20% 0.10%
Class D 0.10% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the six months ended April 30, 1995, MLFD earned underwriting
discounts and MLPF&S earned dealer concessions on sales of the
Fund's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $ 53 $ 798
Class D $ 408 $6,303
For the six months ended April 30, 1995, MLPF&S received contingent
deferred sales charges of $156,572 relating to transactions in Class
B Shares.
Merrill Lynch Financial Data Services, Inc. ("FDS"), an indirect
wholly-owned subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of MLAM, PSI, MLFD, FDS, MLPF&S and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 1995 were $51,343,575 and
$61,091,429, respectively.
Net realized and unrealized gains (losses) as of April 30, 1995 were
as follows:
Unrealized
Realized Gains
Losses (Losses)
Long-term investments $ (4,271,898) $ 1,930,938
Short-term investments (50,053) --
Financial futures contracts (258,194) (750,000)
------------ -----------
Total $ (4,580,145) $ 1,180,938
============ ===========
As of April 30, 1995, net unrealized appreciation for Federal income
tax purposes aggregated $1,930,938, of which $3,226,029 related to
appreciated securities and $1,295,091 related to depreciated
securities. The aggregate cost of investments at April 30, 1995 for
Federal income tax purposes was $149,714,598.
4. Beneficial Interest Transactions:
Net increase (decrease) in net assets derived from beneficial
interest transactions was $(17,199,622) and $1,531,744 for the six
months ended April 30, 1995 and the year ended October 31, 1994,
respectively.
NOTES TO FINANCIAL STATEMENTS (concluded)
Transactions in shares of beneficial interest for each class were as
follows:
Class A Shares for the Six Months Dollar
Ended April 30, 1995 Shares Amount
Shares sold 368,415 $ 3,564,974
Shares issued to shareholders
in reinvestment of dividends 37,560 362,004
----------- ------------
Total issued 405,975 3,926,978
Shares redeemed (688,045) (6,629,222)
----------- ------------
Net decrease (282,070) $ (2,702,244)
=========== ============
Class A Shares for the Year Dollar
Ended October 31, 1994 Shares Amount
Shares sold 1,950,875 $ 19,905,075
Shares issued to shareholders
in reinvestment of dividends 84,928 849,553
----------- ------------
Total issued 2,035,803 20,754,628
Shares redeemed (1,486,841) (14,764,667)
----------- ------------
Net increase 548,962 $ 5,989,961
=========== ============
Class B Shares for the Six Months Dollar
Ended April 30, 1995 Shares Amount
Shares sold 769,967 $ 7,386,492
Shares issued to shareholders
in reinvestment of dividends 160,508 1,546,314
----------- ------------
Total issued 930,475 8,932,806
Shares redeemed (2,713,215) (25,917,839)
----------- ------------
Net decrease (1,782,740) $(16,985,033)
=========== ============
Class B Shares for the Year Dollar
Ended October 31, 1994 Shares Amount
Shares sold 4,312,670 $ 43,164,248
Shares issued to shareholders
in reinvestment of dividends 355,440 3,565,166
----------- ------------
Total issued 4,668,110 46,729,414
Shares redeemed (5,098,388) (51,259,175)
----------- ------------
Net decrease (430,278) $ (4,529,761)
=========== ============
Class C Shares for the Six Months Dollar
Ended April 30, 1995 Shares Amount
Shares sold 964 $ 9,051
Shares issued to shareholders
in reinvestment of dividends 26 247
----------- ------------
Net increase 990 $ 9,298
=========== ============
Class C Shares for the Period
October 21, 1994++ to Dollar
October 31, 1994 Shares Amount
Shares sold 110 $ 1,067
----------- ------------
Total issued 110 $ 1,067
=========== ============
[FN]
++Commencement of Operations.
Class D Shares for the Six Months Dollar
Ended April 30, 1995 Shares Amount
Shares sold 418,033 $ 4,000,010
Shares issued to shareholders
in reinvestment of dividends 2,617 25,269
----------- ------------
Total issued 420,650 4,025,279
Shares redeemed (160,108) (1,546,922)
----------- ------------
Net increase 260,542 $ 2,478,357
=========== ============
Class D Shares for the Period
October 21, 1994++ to Dollar
October 31, 1994 Shares Amount
Shares sold 7,265 $ 70,467
Shares issued to shareholders
in reinvestment of dividends 1 10
----------- ------------
Total issued 7,266 $ 70,477
=========== ============
[FN]
++Commencement of Operations.
5. Capital Loss Carryforward:
At October 31, 1994, the Fund had a net capital loss carryforward of
approximately $9,270,000, of which $1,038,000 expires in 1995,
$6,982,000 expires in 1996, $455,000 expires in 1997, and $795,000
expires in 1998. This amount will be available to offset like
amounts of any future taxable gains.
