MERRILL LYNCH
MUNICIPAL
INTERMEDIATE
TERM FUND
FUND LOGO
Semi-Annual Report
April 30, 1997
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.
Statements and other information herein are as dated and are subject
to change.
<PAGE>
Merrill Lynch Municipal
Intermediate Term Fund
Merrill Lynch Municipal
Series Trust
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
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
William R. Bock, Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Susan B. Baker, Secretary
<PAGE>
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
TO OUR SHAREHOLDERS
The Municipal Market
Environment
Long-term municipal bond yields remained essentially unchanged
during the three months ended April 30, 1997. Bond yields initially
rose as investors became increasingly concerned that the US domestic
economic strength seen thus far in 1997 would continue and that the
increase in short-term interest rates administered by the Federal
Reserve Board (FRB) in late March would be the first in a series of
such moves designed to slow the US economy before any dormant
inflationary pressures were awakened. Long-term tax-exempt bond
yields rose approximately 15 basis points (0.15%) to almost 6.15% by
mid-April. Similarly, long-term US Treasury bond yields rose over 35
basis points over the same period to 7.16%. However, in late April
economic indicators were released showing that despite considerable
economic growth, any inflationary pressures, particularly those
associated with wage increases, were well-contained and of no
immediate concern. Fixed-income bond prices staged a significant
rally during the last week of April with long-term US Treasury bond
yields falling nearly 20 basis points to end the month at 6.95%.
Municipal bond yields, as measured by the Bond Buyer Revenue Bond
Index, declined nearly 15 basis points to stand at 6.01% by April
30, 1997.
As in recent quarters, the relative stability of long-term tax-
exempt bond yields was supported by low levels of new municipal bond
issuance. Over the past six months, approximately $90 billion in
long-term tax-exempt bonds was underwritten, a decline of more than
6% versus the corresponding period a year earlier. During the three
months ended April 30, 1997, $41 billion in new long-term municipal
bonds was issued, also a 6% decline in issuance as compared to the
three-month period ended April 30, 1996. Overall investor demand has
remained strong, particularly from property and casualty insurance
companies and individual retail investors. In recent years, investor
demand has increased whenever tax-exempt bond yields have approached
or exceeded the 6% level as they have in the past few months.
<PAGE>
Additionally, in recent months much of the new bond issuance was
dominated by a number of larger issues. These included $710 million
in New York City water bonds, $600 million in state of California
bonds, $1 billion in New York City general obligation bonds, $435
million in Dade County, Florida water and sewer revenue bonds, $450
million in Puerto Rico Electric Authority issues, and $930 million
in Port Authority of New York and New Jersey issues. These bonds
have typically been issued in states with relatively high state
income taxes and consequently generally were underwritten at yields
that were relatively unattractive to residents in other states. This
has exacerbated the general decline in overall issuance in recent
years, making the decrease in supply even more dramatic for general
market investors.
The present economic situation remains nearly ideal. The domestic
economy continues to grow steadily with little, if any, sign of a
resurgence in inflation. Recent economic growth generated
considerable unexpected tax revenues for the Federal government.
Forecasts for the 1997 Federal fiscal deficit were reduced to under
$100 billion, a level not seen since the early 1980s. Such a reduced
Federal deficit enhances the prospect for a balanced Federal budget.
All of these factors support a scenario of steady, or even falling,
interest rates in the coming years. Present annual estimates of
future municipal bond issuance remain centered around $175 billion,
indicating that the current relative scarcity of tax-exempt bonds
should continue for at least the remainder of the year. Should
interest rates begin to decline later this year, either as the
result of a balanced Federal budget or continued benign inflation,
investors are unlikely to be able to purchase long-term municipal
bonds at their currently attractive levels.
Portfolio Strategy
During the three-month period ended April 30, 1997, we modified our
portfolio strategy to become more defensive as economic data
indicated above-trend growth. This move was appropriate because the
Fund's intermediate-term bonds were likely to be susceptible to
price erosion resulting from any tightening of monetary policy by
the FRB. We implemented this strategy by increasing the Fund's cash
reserves and reducing the average portfolio maturity. Looking ahead,
we expect to maintain our present position until such time as we
believe there are attractive opportunities to re-enter the municipal
bond marketplace.
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.
<PAGE>
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(William R. Bock)
William R. Bock
Vice President and
Portfolio Manager
June 6, 1997
PERFORMANCE DATA
About Fund
Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
<PAGE>
* 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. (There is no initial
sales charge for automatic share conversions.)
* 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).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Average Annual Total
Return" tables as well as the total returns and cumulative total
returns in the "Performance Summary" tables assume reinvestment of
all dividends and capital gains distributions at net asset value on
the payable date. 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.
PERFORMANCE DATA (continued)
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <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
1995 9.52 10.13 -- 0.519 +12.13
1996 10.13 9.99 -- 0.470 + 3.39
1/1/97--4/30/97 9.99 9.87 -- 0.135 + 0.26
------
Total $4.679
<PAGE>
Cumulative total return as of 4/30/97: +69.31%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures 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**
<S> <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
1995 9.52 10.13 -- 0.488 +11.79
1996 10.13 9.99 -- 0.438 + 3.07
1/1/97--4/30/97 9.99 9.87 -- 0.125 + 0.16
------
Total $5.484
Cumulative total return as of 4/30/97: +74.34%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not reflect deduction of any sales charge; results
would be lower if sales charge was deducted.
</TABLE>
<PAGE>
<TABLE>
Performance
Summary--
Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $ 9.70 $ 9.52 -- $0.093 - 0.89%
1995 9.52 10.13 -- 0.493 +11.84
1996 10.13 9.99 -- 0.436 + 3.04
1/1/97--4/30/97 9.99 9.87 -- 0.124 + 0.15
------
Total $1.146
Cumulative total return as of 4/30/97: +14.40%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not reflect deduction of any sales charge; results
would be lower if sales charge was deducted.
</TABLE>
<TABLE>
Performance
Summary--
Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $ 9.70 $ 9.52 -- $0.100 - 0.81%
1995 9.52 10.13 -- 0.509 +12.02
1996 10.13 9.99 -- 0.460 + 3.29
1/1/97--4/30/97 9.99 9.87 -- 0.132 + 0.23
------
Total $1.201
Cumulative total return as of 4/30/97: +15.04%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not include sales charge; results would be lower if
sales charge was included.
</TABLE>
Average Annual
Total Return
<PAGE>
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/97 +4.21% +3.17%
Five Years Ended 3/31/97 +6.03 +5.82
Inception (10/31/88) through 3/31/97 +6.38 +6.26
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/97 +3.88% +2.89%
Five Years Ended 3/31/97 +5.70 +5.70
Ten Years Ended 3/31/97 +5.49 +5.49
[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 % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 3/31/97 +3.97% +2.97%
Inception (10/21/94) through 3/31/97 +5.42 +5.43
[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*
<PAGE>
Year Ended 3/31/97 +4.11% +3.07%
Inception (10/21/94) through 3/31/97 +5.66 +5.22
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
PERFORMANCE DATA (concluded)
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
4/30/97 1/31/97 4/30/96 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $9.87 $9.95 $9.83 +0.41% -0.80%
Class B Shares* 9.87 9.95 9.83 +0.41 -0.80
Class C Shares* 9.87 9.95 9.83 +0.41 -0.80
Class D Shares* 9.87 9.95 9.83 +0.41 -0.80
Class A Shares--Total Return* +5.15(1) +0.26(2)
Class B Shares--Total Return* +4.81(3) +0.19(4)
Class C Shares--Total Return* +4.79(5) +0.18(6)
Class D Shares--Total Return* +5.04(7) +0.24(8)
Class A Shares--Standardized 30-day Yield 4.56%
Class B Shares--Standardized 30-day Yield 4.28%
Class C Shares--Standardized 30-day Yield 4.26%
Class D Shares--Standardized 30-day Yield 4.46%
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
(1)Percent change includes reinvestment of $0.456 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.102 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.425 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.095 per share ordinary
income dividends.
(5)Percent change includes reinvestment of $0.423 per share ordinary
income dividends.
(6)Percent change includes reinvestment of $0.095 per share ordinary
income dividends.
(7)Percent change includes reinvestment of $0.447 per share ordinary
income dividends.
(8)Percent change includes reinvestment of $0.100 per share ordinary
income dividends.
</TABLE>
<PAGE>
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 below and at right.
AMT Alternative Minimum Tax (subject to)
BAN Bond Anticipation Notes
COP Certificates of Participation
GO General Obligation Bonds
HDA Housing Development Authority
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
RITES Residual Interest Tax-Exempt Securities
UPDATES Unit Priced Demand Adjustable Tax-Exempt Securities
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>
Alabama--1.0% A1+ NR* $ 1,900 Birmingham, Alabama, Medical Clinic Board Revenue Bonds
(U.A.H.S.F.), VRDN, 4.40% due 12/01/2026 (a) $ 1,900
Alaska--2.1% AAA Aaa 4,000 Alaska, Industrial Development and Export Authority,
Refunding (Revolving Fund), AMT, Series A, 5.60% due
4/01/2009 (d) 3,965
Arizona--3.0% Maricopa County, Arizona, Pollution Control Corporation,
PCR, Refunding (Arizona Public Service Co.), VRDN (a):
A1+ P1 3,000 Series B, 4.30% due 5/01/2029 3,000
A1+ P1 600 Series C, 4.35% due 5/01/2029 600
NR* NR* 2,000 Mohave County, Arizona, IDA, IDR (North Star Steel Co.
Project), AMT, 6.70% due 3/01/2020 2,110
<PAGE>
California--13.0% AAA Aaa 2,250 Anaheim, California, Public Financing Authority, Lease
Revenue Bonds (Public Improvements Project), Sub-Series C,
6% due 9/01/2010 (h) 2,395
M-S-R Public Power Agency, California, Revenue Refunding
Bonds (San Juan Project), Series G (d):
AAA Aaa 1,240 5.75% due 7/01/2007 1,304
AAA Aaa 1,200 5.75% due 7/01/2008 1,255
A- Baa3 10,000 Northern California Power Agency, Public Power Revenue
Refunding Bonds (Geothermal Project No.3), Series A, 5.65%
due 7/01/2007 10,121
AAA Aaa 4,000 Oxnard, California, Financing Authority, Solid Waste
Revenue Bonds, AMT, 5.75% due 5/01/2010 (c) 4,027
AAA Aaa 6,000 University of California, Hospital Revenue Bonds (Davis
Medical Center), 5.60% due 7/01/2009 (c) 6,113
Colorado--0.7% A NR* 1,225 Denver, Colorado, Urban Renewal Authority, Tax Increment
Revenue Bonds (Downtown Denver), AMT, Series A, 7.25% due
9/01/2017 1,324
</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>
Florida--3.5% AAA Aaa $ 3,500 Dade County, Florida, Educational Facilities Authority,
Exchangeable Revenue Bonds (University of Miami), 7.65% due
4/01/2010 (d) $ 3,819
AAA Aaa 3,000 Florida State Division Board of Finance Department, General
Services Revenue Bonds (Department of Environmental
Preservation), Series 2000-A, 5.125% due 7/01/2009 (c) 2,950
A1+ VMIG1++ 100 Jacksonville, Florida, PCR, Refunding (Florida Power and
Light Co. Project), VRDN, 4.25% due 5/01/2029 (a) 100
Georgia--2.3% AA+ Aaa 4,000 Georgia State, GO, Series A, 6.25% due 4/01/2007 4,371
Hawaii--2.7% AAA Aaa 5,000 Hawaii State Refunding, GO, 6% due 3/01/2009 (e) 5,295
Illinois--4.7% AAA Aaa 3,000 Chicago, Illinois, Board of Education (Chicago School
Reform), UT, 6.25% due 12/01/2007 (c) 3,223
Illinois Health Facilities Authority Revenue Bonds:
AAA Aaa 2,500 Refunding (Lutheran General Health), Series C, 7% due
4/01/2008 (h) 2,827
NR* VMIG1++ 1,200 (Resurrection Health Care System), VRDN, 4.50% due
5/01/2011 (a) 1,200
AAA Aaa 1,745 University of Illinois, COP, Series A, 7.25% due 8/15/2000 (h) 1,877
<PAGE>
Indiana--2.5% NR* Baa2 1,000 Indiana State Educational Facilities Authority Revenue Bonds
(University Evansville Project), 5.65% due 2/15/2011 962
AAA NR* 3,420 Indianapolis, Indiana, Gas Utility Revenue Bonds, Junior Lien,
7% due 6/01/2008 (g) 3,792
Kentucky--0.1% A1+ VMIG1++ 200 Carroll County, Kentucky, Solid Waste Disposal Facilities
Revenue Bonds (Kentucky Utilities Co. Project), VRDN, AMT,
Series A, 5.15% due 11/01/2024 (a) 200
Maine--2.7% NR* A 2,815 Maine Educational Loan Marketing Corporation, Student Loan
Revenue Refunding Bonds, AMT, Series 1991, 6.90% due
11/01/2003 2,887
Maine State Turnpike Authority, Turnpike Revenue Bonds (d):
AAA Aaa 1,000 7.125% due 7/01/2008 1,158
AAA Aaa 1,000 7.50% due 7/01/2009 1,189
Massachusetts--1.1% AAA Aaa 2,000 Massachusetts State Port Authority Revenue Bonds, AMT,
Series A, 7.375% due 7/01/2010 (e) 2,166
Michigan--1.2% NR* A 1,000 Michigan Higher Education, Student Loan Authority Revenue
Bonds, AMT, Series XIV-A, 6.75% due 10/01/2006 1,050
A A2 1,000 Michigan State Hospital Finance Authority, Revenue Refunding
Bonds (Detroit Medical Center Obligation Group), Series A,
6.375% due 8/15/2009 1,041
NR* P1 300 Michigan State Strategic Fund, PCR, Refunding (Consumers Power
Project), VRDN, Series A, 4.30% due 4/15/2018 (a) 300
New Jersey--0.8% AAA Aaa 1,500 Middletown, New Jersey, Board of Education, UT, 5.70% due
8/01/2010 (d) 1,527
New Mexico--0.9% A1+ P1 900 Farmington, New Mexico, PCR, Refunding (Arizona Public Service
Co.), VRDN, Series B, 4.45% due 9/01/2024 (a) 900
A1+ P1 900 Hurley, New Mexico, PCR (Kennecott Santa Fe), VRDN, 4.35% due
12/01/2015 (a) 900
New York--18.1% New York City, New York, UT:
BBB+ Baa1 5,000 Refunding, Series D, 6.50% due 11/01/2009 5,272
AAA Aaa 1,500 Refunding, Series H, 6% due 8/01/2007 (e) 1,583
AAA Aaa 4,000 Series G, 6% due 10/15/2006 (e) 4,224
BBB+ Baa1 3,120 New York State Dormitory Authority Revenue Bonds (Mental
Health Services Facilities), Series A, 6% due 2/15/2008 3,184
New York State Energy Research and Development Authority,
State Service Contract Revenue Bonds (Western New York
Nuclear Service Center Project), Series A:
BBB Baa1 2,180 6% due 4/01/2006 2,227
BBB Baa1 1,330 6% due 4/01/2007 1,353
A- A2 5,715 New York State, GO, 5.25% due 3/01/2009 5,635
A- A2 1,240 New York State Job Development Authority (State Guaranteed
Special Purpose), Series A, 5.25% due 3/01/2010 1,195
BBB Baa1 2,595 New York State Urban Development Corporation Revenue Bonds
(Correctional Capital Facilities), Series 7, 6% due 1/01/2007 2,662
AAA Aaa 2,510 Port Authority of New York and New Jersey, AMT, Consolidated
108th Series, 5.40% due 7/15/2012 (e) 2,456
AAA Aaa 5,000 Westchester County, New York, IDA, Resource Recovery Revenue
Bonds (Westchester Recovery Company Project), AMT, 6% due
7/01/2008 (c) 5,232
<PAGE>
North Carolina--1.6% AAA Aaa 3,000 North Carolina State, GO, Series A, 5.10% due 3/01/2007 3,014
North Dakota--0.5% NR* Aa 1,000 North Dakota State Student Loan Revenue Refunding Bonds,
Series A, 5.90% due 7/01/1998 1,018
Ohio--2.3% AAA Aaa 4,435 Ohio State Turnpike Commission, Turnpike Revenue Bonds,
Series A, 5.50% due 2/15/2010 (d) 4,435
Oregon--1.9% AAA Aaa 3,790 Port of Portland, Oregon, International Airport Revenue Bonds
(Portland International Airport), AMT, Series 11, 5.40% due
7/01/2008 (e) 3,764
South Carolina--0.4% NR* P1 700 Charleston County, South Carolina, Industrial Revenue
Refunding Bonds (Massey Coal Terminal Corp.), VRDN, 4.45% due
1/01/2007 (a) 700
Tennessee--1.5% A+ A1 2,960 Tennessee HDA, Mortgage Finance, Refunding, Series A, 5.65%
due 1/01/2007 2,992
Texas--2.3% NR* A 660 Brazos, Texas, Higher Education Authority Inc., Student Loan
Revenue Refunding Bonds, AMT, Series A, 6.70% due 9/01/2001 693
NR* VMIG1++ 1,000 Gulf Coast, Texas, IDA, Solid Waste Disposal Revenue Bonds
(CITGO Petroleum Corp.Project), VRDN, AMT, 4.55% due
5/01/2025 (a) 1,000
A1+ NR* 1,100 Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue onds (Methodist Hospital), VRDN, 4.40% due
1/2025 (a) 1,100
AAA Aaa 1,705 Houston, Texas, Airport System Revenue Bonds (Special
Facilities--Automated People Mover), AMT, Series A, 5.375% due
7/15/2010 (h) 1,648
Utah--0.8% AAA Aaa 1,490 Weber County, Utah, Municipal Building Authority, Lease
Revenue Refunding Bonds, 6% due 12/15/2008 (d) 1,577
Virginia--2.7% AAA Aa2 2,500 Peninsula Ports Authority, Virginia, Port Facility Revenue
Refunding Bonds (Shell Oil Company Project), UPDATES, Series
A, 4.45% due 12/01/2005 (a) 2,500
Virginia State, HDA, Commonwealth Mortgage, Series J, Sub-
Series J-2:
AA+ Aa1 1,365 6.45% due 1/01/2010 1,412
AA+ Aa1 1,300 6.50% due 1/01/2011 1,346
</TABLE>
<PAGE>
<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--12.4% AA+ Aa1 $ 5,000 King County, Washington, GO, Series D, 5.70% due 12/01/2010 $ 5,018
AA+ Aa1 4,000 Port of Seattle, Washington, GO, AMT, 5.80% due 5/01/2009 4,079
AA Aa 5,395 Seattle, Washington, Municipal Light and Power Revenue
Bonds, Series A, 5.75% due 8/01/2008 5,523
AAA Aaa 1,025 Washington State Health Care Facilities Authority, Revenue
Refunding Bonds (Kadlec Medical Center--Richland), 5.75%
due 12/01/2005 (c) 1,054
Washington State Public Power Supply System, Revenue
Refunding Bonds (Nuclear Project No. 3), Series A (c):
AAA Aaa 5,250 5.50% due 7/01/2007 5,311
AAA Aaa 3,015 5.60% due 7/01/2008 3,039
West Virginia--4.0% AAA Aaa 7,360 West Virginia, School Building Authority, Revenue Refunding
Bonds (Capital Improvement), 6% due 7/01/2008 (c) 7,834
Wisconsin--5.0% A+ A1 7,500 Kenosha, Wisconsin, Waterworks Revenue Bonds, BAN, 4.70%
due 12/01/2001 7,466
AA Aa2 2,000 Wisconsin State Housing and Economic Development Authority,
Home Ownership Revenue Bonds, AMT, Series F, 7.40% due
7/01/2013 (b) 2,150
Wyoming--4.0% NR* P1 7,800 Uinta County, Wyoming, PCR, Refunding (Chevron USA Inc.
Project), VRDN, 4.40% due 8/15/2020 (a) 7,800
Puerto Rico--2.0% A1+ Baa1 3,950 Puerto Rico Commonwealth, Highway and Transportation
Authority, Highway Revenue Bonds, RITES, Series X, 6.604% due
7/01/2005 (f) 3,896
Total Investment (Cost--$196,192)--101.8% 197,240
Liabilities in Excess of Other Assets--(1.8%) (3,410)
--------
Net Assets--100.0% $193,830
========
<FN>
(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, 1997.
(b)FHA Insured.
(c)AMBAC Insured.
(d)MBIA Insured.
(e)FGIC Insured.
(f)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at April 30, 1997.
(g)Escrowed to maturity.
(h)FSA Insured.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
<PAGE>
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of April 30, 1997
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$196,191,548) (Note 1a) $197,240,351
Cash 12,777
Receivables:
Securities sold $ 5,769,499
Interest 2,821,640
Beneficial interest sold 208,903 8,800,042
------------
Prepaid registration fees and other assets (Note 1e) 121,428
------------
Total assets 206,174,598
------------
Liabilities: Payables:
Securities purchased 11,172,320
Beneficial interest redeemed 652,955
Dividends to shareholders (Note 1f) 214,278
Investment adviser (Note 2) 88,229
Distributor (Note 2) 30,406 12,158,188
------------
Accrued expenses and other liabilities 186,014
------------
Total liabilities 12,344,202
------------
Net Assets: Net assets $193,830,396
============
Net Assets Class A Shares of beneficial interest, $.10 par value, unlimited
Consist of: number of shares authorized $ 455,903
Class B Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 1,018,709
Class C Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 54,804
Class D Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized 434,695
Paid-in capital in excess of par 195,109,330
Accumulated realized capital losses on investments--net (Note 5) (4,291,848)
Unrealized appreciation on investments--net 1,048,803
------------
Net assets $193,830,396
============
<PAGE>
Net Asset Class A--Based on net assets of $44,996,641 and 4,559,027 shares
Value: of beneficial interest outstanding $ 9.87
============
Class B--Based on net assets of $100,534,008 and 10,187,088 shares
of beneficial interest outstanding $ 9.87
============
Class C--Based on net assets of $5,406,774 and 548,036 shares
of beneficial interest outstanding $ 9.87
============
Class D--Based on net assets of $42,892,973 and 4,346,955 shares
of beneficial interest outstanding $ 9.87
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended April 30, 1997
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 5,509,062
Income (Note 1d):
Expenses: Investment advisory fees (Note 2) $ 568,021
Account maintenance and distribution fees--Class B (Note 2) 197,312
Transfer agent fees--Class B (Note 2) 79,740
Registration fees (Note 1e) 47,550
Printing and shareholder reports 35,256
Professional fees 24,900
Accounting services (Note 2) 24,172
Transfer agent fees--Class A (Note 2) 19,272
Transfer agent fees--Class D (Note 2) 15,824
Account maintenance fees--Class D (Note 2) 15,265
Account maintenance and distribution fees--Class C (Note 2) 10,538
Trustees' fees and expenses 7,905
Custodian fees 6,813
Pricing fees 5,183
Transfer agent fees--Class C (Note 2) 5,015
Other 5,293
------------
Total expenses 1,068,059
------------
Investment income--net 4,441,003
------------
<PAGE>
Realized & Realized gain on investments--net 2,326,712
Unrealized Change in unrealized appreciation on investments--net (3,601,699)
Gain (Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 3,166,016
(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
April 30, October 31,
Increase (Decrease) in Net Assets: 1997 1996
<S> <S> <C> <C>
Operations: Investment income--net $ 4,441,003 $ 10,224,192
Realized gain on investments--net 2,326,712 154,528
Change in unrealized appreciation/depreciation on investments--net (3,601,699) (1,703,506)
------------ ------------
Net increase in net assets resulting from operations 3,166,016 8,675,214
------------ ------------
Dividends to Investment income--net:
Shareholders Class A (848,091) (1,611,220)
(Note 1f): Class B (2,770,074) (7,875,619)
Class C (147,151) (341,198)
Class D (675,687) (396,155)
------------ ------------
Net decrease in net assets resulting from dividends to
shareholders (4,441,003) (10,224,192)
------------ ------------
Beneficial Interest Net decrease in net assets derived from beneficial interest
Transactions transactions (21,376,618) (12,064,882)
(Note 4): ------------ ------------
Net Assets: Total decrease in net assets (22,651,605) (13,613,860)
Beginning of period 216,482,001 230,095,861
------------ ------------
End of period $193,830,396 $216,482,001
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A
The following per share data and ratios have
been derived from information provided in the For the Six
financial statements. Months Ended
April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1997 1996 1995 1994 1993
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.94 $ 10.00 $ 9.62 $ 10.39 $ 9.70
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .22 .48 .53 .52 .54
Realized and unrealized gain (loss) on
investments--net (.07) (.06) .38 (.77) .69
-------- -------- -------- -------- --------
Total from investment operations .15 .42 .91 (.25) 1.23
-------- -------- -------- -------- --------
Less dividends from investment income--net (.22) (.48) (.53) (.52) (.54)
-------- -------- -------- -------- --------
Net asset value, end of period $ 9.87 $ 9.94 $ 10.00 $ 9.62 $ 10.39
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 1.55%+++ 4.27% 9.69% (2.49%) 13.01%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses .81%* .81% .81% .76% .75%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 4.53%* 4.79% 5.36% 5.19% 5.35%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 44,996 $ 30,353 $ 34,970 $ 27,653 $ 24,173
Data: ======== ======== ======== ======== ========
Portfolio turnover 75.67% 146.82% 115.78% 52.56% 83.66%
======== ======== ======== ======== ========
<CAPTION>
Class B
The following per share data and ratios have
been derived from information provided in the For the Six
financial statements. Months Ended
April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1997 1996 1995 1994 1993
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.93 $ 10.00 $ 9.62 $ 10.39 $ 9.69
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .21 .44 .50 .49 .51
Realized and unrealized gain (loss) on
investments--net (.06) (.07) .38 (.77) .70
-------- -------- -------- -------- --------
Total from investment operations .15 .37 .88 (.28) 1.21
-------- -------- -------- -------- --------
Less dividends from investment income--net (.21) (.44) (.50) (.49) (.51)
-------- -------- -------- -------- --------
Net asset value, end of period $ 9.87 $ 9.93 $ 10.00 $ 9.62 $ 10.39
======== ======== ======== ======== ========
<PAGE>
Total Investment Based on net asset value per share 1.49%+++ 3.84% 9.34% (2.79%) 12.78%
Return:** ======== ======== ======== ======== ========
Ratios to Average Expenses 1.12%* 1.13% 1.13% 1.07% 1.06%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 4.21%* 4.47% 5.05% 4.87% 5.07%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $100,534 $169,441 $181,640 $142,152 $158,061
Data: ======== ======== ======== ======== ========
Portfolio turnover 75.67% 146.82% 115.78% 52.56% 83.66%
======== ======== ======== ======== ========
<CAPTION>
Class C
For the For the
The following per share data and ratios have Six Period
been derived from information provided in the Months Oct. 21,
financial statements. Ended For the Year Ended 1994++ to
April 30, October 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.93 $ 10.00 $ 9.62 $ 9.70
Operating -------- -------- -------- --------
Performance: Investment income--net .21 .44 .50 .01
Realized and unrealized gain (loss) on investments
--net (.06) (.07) .38 (.08)
-------- -------- -------- --------
Total from investment operations .15 .37 .88 (.07)
-------- -------- -------- --------
Less dividends from investment income--net (.21) (.44) (.50) (.01)
-------- -------- -------- --------
Net asset value, end of period $ 9.87 $ 9.93 $ 10.00 $ 9.62
======== ======== ======== ========
Total Investment Based on net asset value per share 1.48%+++ 3.82% 9.36% (.71%)+++
Return:** ======== ======== ======== ========
Ratios to Average Expenses 1.14%* 1.15% 1.01% 1.18%*
Net Assets: ======== ======== ======== ========
Investment income--net 4.19%* 4.44% 4.76% 4.92%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 5,407 $ 8,313 $ 6,485 $ 1
Data: ======== ======== ======== ========
Portfolio turnover 75.67% 146.82% 115.78% 52.56%
======== ======== ======== ========
<PAGE>
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Class D
For the For the
The following per share data and ratios have Six Period
been derived from information provided in the Months Oct. 21,
financial statements. Ended For the Year Ended 1994++ to
April 30, October 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.94 $ 10.00 $ 9.62 $ 9.70
Operating -------- -------- -------- --------
Performance: Investment income--net .22 .47 .52 .01
Realized and unrealized gain (loss) on investments
--net (.07) (.06) .38 (.08)
-------- -------- -------- --------
Total from investment operations .15 .41 .90 (.07)
-------- -------- -------- --------
Less dividends from investment income--net (.22) (.47) (.52) (.01)
-------- -------- -------- --------
Net asset value, end of period $ 9.87 $ 9.94 $ 10.00 $ 9.62
======== ======== ======== ========
Total Investment Based on net asset value per share 1.50%+++ 4.17% 9.58% (.71%)+++
Return:** ======== ======== ======== ========
Ratios to Average Expenses .91%* .91% .90% .97%*
Net Assets: ======== ======== ======== ========
Investment income--net 4.43%* 4.68% 5.12% 5.20%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 42,893 $ 8,375 $ 7,000 $ 70
Data: ======== ======== ======== ========
Portfolio turnover 75.67% 146.82% 115.78% 52.56%
======== ======== ======== ========
<PAGE>
<FN>
*Annualized.
**Total investment returns exclude the effects 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 Board of Trustees.
<PAGE>
(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
counterparty 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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
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.
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 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, 1997, MLFD earned underwriting
discounts and MLPF&S earned dealer concessions on sales of the
Fund's Class A and Class D Shares as follows:
<PAGE>
MLFD MLPF&S
Class A $ 77 $1,053
Class D $147 $1,500
For the six months ended April 30, 1997, MLPF&S received contingent
deferred sales charges of $281,123 and $1,596 relating to
transactions in Class B and Class C Shares, respectively.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of MLAM, PSI, MLFD, MLFDS, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 1997 were $147,092,303 and
$175,237,368, respectively.
Net realized and unrealized gains as of April 30, 1997, were as
follows:
Realized Unrealized
Gains Gains
Long-term investments $ 2,326,712 $ 1,048,803
----------- -----------
Total $ 2,326,712 $ 1,048,803
=========== ===========
As of April 30, 1997, net unrealized appreciation for Federal income
tax purposes aggregated $1,048,803, of which $1,881,545 related to
appreciated securities and $832,742 related to depreciated
securities. The aggregate cost of investments at April 30, 1997 for
Federal income tax purposes was $196,191,548.
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest
transactions was $21,376,618 and $12,064,882 for the six months
ended April 30, 1997 and for the year ended October 31, 1996,
respectively.
Transactions in shares of beneficial interest for each class were as
follows:
<PAGE>
Class A Shares for the Six Dollar
Months Ended April 30, 1997 Shares Amount
Shares sold 3,110,815 $30,947,693
Shares issued to shareholders
in reinvestment of dividends 43,898 436,566
----------- -----------
Total issued 3,154,713 31,384,259
Shares redeemed (1,650,810) (16,424,210)
----------- -----------
Net increase 1,503,903 $14,960,049
=========== ===========
Class A Shares for the Year Dollar
Ended October 31, 1996 Shares Amount
Shares sold 716,582 $ 7,149,811
Shares issued to shareholders
in reinvestment of dividends 83,630 831,199
----------- -----------
Total issued 800,212 7,981,010
Shares redeemed (1,241,561) (12,339,524)
----------- -----------
Net decrease (441,349) $(4,358,514)
=========== ===========
Class B Shares for the Six Dollar
Months Ended April 30, 1997 Shares Amount
Shares sold 580,741 $ 5,783,933
Shares issued to shareholders
in reinvestment of dividends 168,450 1,678,914
------------ ------------
Total issued 749,191 7,462,847
Automatic conversion of shares (3,772,346) (37,654,980)
Shares redeemed (3,846,807) (38,262,648)
------------ ------------
Net decrease (6,869,962) $(68,454,781)
============ ============
Class B Shares for the Year Dollar
Ended October 31, 1996 Shares Amount
<PAGE>
Shares sold 2,647,311 $ 26,325,018
Shares issued to shareholders
in reinvestment of dividends 463,232 4,602,453
------------ ------------
Total issued 3,110,543 30,927,471
Automatic conversion of shares (68,180) (673,631)
Shares redeemed (4,149,275) (41,273,703)
------------ ------------
Net decrease (1,106,912) $(11,019,863)
============ ============
Class C Shares for the Six Dollar
Months Ended April 30, 1997 Shares Amount
Shares sold 60,476 $ 601,493
Shares issued to shareholders
in reinvestment of dividends 11,917 118,758
----------- -----------
Total issued 72,393 720,251
Shares redeemed (361,398) (3,597,679)
----------- -----------
Net decrease (289,005) $(2,877,428)
=========== ===========
Class C Shares for the
Year Ended Dollar
October 31, 1996 Shares Amount
Shares sold 404,511 $ 4,024,375
Shares issued to shareholders
in reinvestment of dividends 27,533 273,233
----------- -----------
Total issued 432,044 4,297,608
Shares redeemed (243,648) (2,423,566)
----------- -----------
Net increase 188,396 $ 1,874,042
=========== ===========
<PAGE>
Class D Shares for the
Six Months Ended Dollar
April 30, 1997 Shares Amount
Shares sold 109,881 $ 1,094,677
Shares issued to shareholders
in reinvestment of dividends 31,184 309,887
Automatic conversion of shares 3,772,346 37,654,980
----------- -----------
Total issued 3,913,411 39,059,544
Shares redeemed (409,337) (4,064,002)
----------- -----------
Net increase 3,504,074 $34,995,542
=========== ===========
Class D Shares for the
Year Ended Dollar
October 31, 1996 Shares Amount
Shares sold 390,259 $ 3,907,908
Shares issued to shareholders
in reinvestment of dividends 21,768 216,202
Automatic conversion of shares 68,171 673,631
----------- -----------
Total issued 480,198 4,797,741
Shares redeemed (337,194) (3,358,288)
----------- -----------
Net increase 143,004 $ 1,439,453
=========== ===========
5. Capital Loss Carryforward:
At October 31, 1996, the Fund had a net capital loss carryforward of
approximately $5,174,000, of which $456,000 expires in 1997,
$795,000 expires in 1998, $3,654,000 expires in 2003, and $269,000
expires in 2004. This amount will be available to offset like
amounts of any future taxable gains.
