MERRILL
LYNCH
MARYLAND
MUNICIPAL
BOND FUND
Semi-Annual Report January 31, 1994
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 Maryland
Municipal Bond Fund
Merrill Lynch Multi-State
Municipal Series Trust
Box 9011
Princeton, New Jersey
08543-9011
TO OUR SHAREHOLDERS
We are pleased to provide you with this first semi-annual report
for Merrill Lynch Maryland Municipal Bond Fund. In this and
future shareholder reports, we will highlight the Fund's
investment performance, describe recent investment activities,
and examine some of the important market developments that helped
shape our investment strategy during the period under review.
Merrill Lynch Maryland Municipal Bond Fund seeks to provide
shareholders with as high a level of income exempt from Federal
and Maryland income taxes as is consistent with prudent
investment management. The Fund invests primarily in a non-
diversified portfolio of long-term, investment-grade
obligations, the interest on which is exempt from Federal and
Maryland income taxes.
<PAGE>
The Environment
As 1993 drew to a close, the US economy showed signs of strong
improvement. The initial estimate for gross domestic product
(GDP) growth in the final quarter of 1993 was +5.9% in real
terms, the strongest quarterly performance since the fourth
quarter of 1987. GDP growth was led by interest rate-sensitive
sectors, such as housing, durable goods orders and business
investment in capital equipment. Consumer confidence also
improved after remaining lackluster throughout most of 1993.
While the exceptionally robust rate of growth may not be
sustainable in the first quarter of 1994 (especially considering
the harsh winter weather experienced by virtually half of the
country in January), this strong showing suggests that the US
economy may at last be gaining momentum. This was supported by
the December increase in the Index of Leading Economic
Indicators, the fifth monthly rise in this indicator of future
economic activity.
At the same time, the rate of inflation remains in check.
Nevertheless, concerns arose late in 1993 that the rate of
business activity might increase inflationary pressures, which
were reflected in an upturn of longer-term interest rates. In
January, Federal Reserve Board Chairman Alan Greenspan indicated
in Congressional testimony that continued strong expansion of
economic activity would lead the central bank to tighten monetary
policy in an effort to contain inflation. On February 4, 1994,
the central bank broke with tradition and publicly announced an
increase in short-term interest rates. In the weeks ahead,
investors will continue to gauge the pace of the economic
expansion and watch for signs of an overheating economy that
could prompt successive Federal Reserve Board actions to raise
short-term interest rates.
The Municipal Market
Yields on tax-exempt securities generally declined over the three
months ended January 31, 1994. Long-term revenue bond yields, as
measured by the Bond Buyer Revenue Bond Index, declined an
additional six basis points (0.06%) to end the quarter at 5.50%.
US Treasury bond yields, however, rose approximately 25 basis
points to end the period at approximately 6.20%. This
outperformance by municipal securities is likely to be the
dominant theme for much of 1994.
<PAGE>
During the January quarter, taxable yields remained volatile in
reaction to the inherent conflicts between the extremely strong
economic recovery seen during the last quarter of 1993 and
continued low inflationary pressures. Tax-exempt bond yields,
however, reflected very positive technical factors. During the 12
months ended January 31, 1994, municipalities issued more than
$288 billion in securities, an increase of more than 21% versus
one year ago. As we have discussed in earlier reports to
shareholders, much of this increase has been the result of
municipalities refinancing existing higher-couponed debt. At
current yield levels, few of these issues remain to be refunded.
This has led to estimates of municipal bond issuance declining to
approximately $175 billion for all of 1994. More than $290
billion in long-term tax-exempt securities was issued in 1993.
In addition to this dramatic decline in issuance, investor demand
is expected to increase in the coming year. Greater demand should
be generated by a number of factors, with the recent increases in
marginal Federal income tax rates the most important. Also, bond
calls and early redemptions are expected to increase significantly
in the coming quarters and last at least into early 1995. The
combination of declining new-issue volume and increasing numbers
of bonds redeemed prior to their stated maturities will eventually
lead to a net decline in the number of bonds outstanding. In such a
scenario, investor demand rises as bondholders are forced to
continually purchase new municipal bonds to replace their previous
holdings.
The outlook for the municipal bond market is very favorable.
While the historic declines in yields seen over the last year are
unlikely to be repeated, the strong technical framework within
the tax-exempt market would support further modest declines in
tax-exempt yields. At the very least, should interest rates rise
in response to continued strong economic growth and a resurgence
in inflationary pressures, we believe that municipal bond price
deterioration will be limited in comparison to taxable investment
alternatives.
Portfolio Strategy
Since the Fund commenced operations on October 29, 1993, we have
invested its funds gradually in order to buy municipal bonds that
would enhance current yield. With the relatively steep yield
curve, we purchased bonds with maturities longer than 12 years.
This strategy of selectively buying long-term municipal bonds has
benefited total return by providing a competitive yield and net
asset value appreciation. Per share net asset value for Class A
and Class B Shares was $10.18 for each class as of January 31,
1994.
<PAGE>
The Maryland municipal bond market has become strong since the
start of January because of a strong demand for Maryland bonds
and small amounts of new issuance. Merrill Lynch Maryland
Municipal Bond Fund continues to receive new subscriptions. To
keep the Fund's current yield from declining, the Fund has sought
to purchase bonds with yields matching those of bonds already
owned. This strategy has been achieved primarily by purchasing
new issues with maturities greater than 15 years.
We appreciate your ongoing interest in Merrill Lynch Maryland
Municipal Bond Fund, and we look forward to serving your
investment needs and objectives in the months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
March 3, 1994
PERFORMANCE DATA
None of the past results should be considered a representation of future
performance. Investment return and principle value of Class A and Class B
Shares will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost.
<TABLE>
Recent Performance Results*
<CAPTION>
Since Inception 3 Month
1/31/94 10/31/93 10/29/93** % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $10.18 $10.00 $10.00 +1.80% +1.80%
Class B Shares 10.18 10.00 10.00 +1.80 +1.80
Class A Shares--Total Return +2.99(1) +2.99(1)
Class B Shares--Total Return +2.86(2) +2.86(2)
Class A Shares--Standardized 30-day Yield 4.62%
Class B Shares--Standardized 30-day Yield 4.32%
<FN>
*Investment results shown for the 3-month and since inception periods
are before the deduction of any sales charges.
**Commencement of Operations.
(1) Percent change includes reinvestment of $0.107 per share
ordinary income dividends.
(2) Percent change includes reinvestment of $0.094 per share
ordinary income dividends.
</TABLE>
Aggregate Total Return
<PAGE>
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Inception (10/29/93)
through 12/31/93 +1.48% -2.58%
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Inception (10/29/93)
through 12/31/93 +1.38% -2.62%
[FN]
*Maximum contingent deferred sales charge is 4% and is
reduced to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <S> <C> <S> <C>
Maryland--97.9%
A-1 VMIG1 $ 400 Anne Arundel County, Maryland, Economic Development Revenue Bonds (Baltimore
Gas and Electric Company Project), AMT, TECP, 2.20% due 2/08/1994 $ 400
AA+ Aa 400 Anne Arundel County, Maryland, Refunding Bonds, Consolidated Water and Sewer,
5.30% due 4/15/2017 405
AA+ Aaa 500 Baltimore County, Maryland, Refunding Bonds (County Pension Funding), UT, 6.70% due
7/01/2016 556
BBB+ Baa1 500 Baltimore, Maryland, PCR (General Motors Corporation), 5.35% due 4/01/2008 509
AAA Aaa 2,130 Baltimore, Maryland, Revenue Refunding Bonds (Baltimore City Parking System
Facilities), 5% due 7/01/2018 (a) 2,077
NR Aa1 400 Baltimore County, Maryland, Revenue Authority, Lease Revenue Refunding Bonds, 5% due
10/01/2012 391
A A2 500 Calvert County, Maryland, PCR, Refunding (Baltimore Gas and Electric Company Project),
5.55% due 7/15/2014 508
AA- Aa 400 Carroll County, Maryland, Refunding Bonds, UT, 5.25% due 11/01/2012 407
AAA Aaa 500 Cecil County, Maryland, Refunding Bonds, UT, 5.30% due 12/01/2010 (a) 516
AAA Aaa 500 Cumberland County, Maryland, Refunding Bonds, Series A, UT, 5.25% due 5/01/2021 (a) 504
AA- Aa 500 Frederick County, Maryland, Refunding Bonds, Series C, UT, 5.10% due 8/01/2011 504
<PAGE>
A1+ VMIG1 500 Howard County, Maryland, ALEXS, BAN, 1.90% due 7/01/1995 (b) 500
NR Aa 400 Maryland Community Development Administration, M/F Housing, Revenue Refunding
Bonds, Insured Mortgage (Department of Housing and Community Development),
Series H, 5.60% due 5/15/2026 403
Maryland Health and Higher Educational Facilities Authority Revenue Bonds:
NR VMIG1 100 (Pooled Loan Program), Series A, VRDN, 2.15% due 4/01/2035 (b) 100
BBB Baa1 400 Refunding (Howard County General Hospital), 5.50% due 7/01/2013 394
A A 1,400 Refunding (Peninsula Regional Medical Center), 5% due 7/01/2023 1,330
</TABLE>
PORTFOLIO ABBREVIATIONS
To simplify the listings of Merrill Lynch Maryland Municipal
Bond Fund's portfolio holdings in the Schedule of Investments,
we have abbreviated the names of some of the securities
according to the list at right.
ALEXS Adjustable Line Exempt Securities
AMT Alternative Minimum Tax (subject to)
BAN Bond Anticipation Notes
M/F Multi-Family
PCR Pollution Control Revenue Bonds
TECP Tax-Exempt Commercial Paper
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <S> <C> <S> <C>
Maryland (concluded)
NR A $ 315 Northeast Maryland, Waste Disposal Authority, Solid Waste Revenue Bonds (Montgomery
County Resource Recovery Project), Series A, AMT, 6.30% due 7/01/2016 $ 334
AA- A 500 Prince Georges County, Maryland, Consolidated Public Improvement Refunding Bonds,
5.25% due 10/01/2011 510
NR NR 300 Prince Georges County, Maryland, Housing Authority Mortgage Revenue Bonds (Laurel-
Oxford), VRDN, 2.10% due 10/01/2007 (b) 300
AA+ Aa1 400 Rockville, Maryland, Refunding Bonds, UT, 5% due 4/15/2008 404
AA+ Aa 400 University of Maryland, System Auxiliary Facilities and Tuition Revenue Refunding
Bonds, Series C, 5% due 10/01/2011 397
AAA Aaa 500 Washington, District of Columbia, Metropolitan Area Transportation Authority, Gross
Revenue Refunding Bonds, 5.25% due 7/01/2014 (a) 502
<PAGE>
Washington Suburban Sanitation District, Maryland, General Construction Bonds, UT:
AA Aa1 250 7% due 12/01/1994 259
AA Aa1 500 Refunding, 5% due 6/01/2014 494
Puerto Rico--10.1%
A Baa1 400 Puerto Rico Commonwealth, Refunding Bonds, Series A, 6% due 7/01/2014 423
NR Aaa 500 Puerto Rico Industrial, Medical and Environmental Pollution Control Facilities,
Financing Authority Revenue Bonds, 5.10% due 12/01/2018 498
BBB NR 400 Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control
Facilities, Financing Authority, Higher Education Revenue Bonds (Polytechnic
University of Puerto Rico Project), Series A, 5.50% due 8/01/2024 392
Total Investments (Cost--$13,790)--108.0% 14,017
Liabilities in Excess of Other Assets--(8.0%) (1,042)
---------
Net Assets--100.0% $ 12,975
=========
<FN>
(a) FGIC Insured.
(b) The interest rate is subject to change periodically based on prevailing market rates.
The interest rates shown are those in effect at January 31, 1994.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of January 31, 1994
<CAPTION>
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$13,789,798) (Note 1a) $ 14,016,981
Cash 78,767
Receivables:
Beneficial interest sold $ 279,392
Interest 149,208
Investment adviser (Note 2) 41,276 469,876
------------
Deferred organization expenses (Note 1e) 47,600
------------
Total assets 14,613,224
------------
Liabilities: Payables:
Securities purchased 1,551,720
Dividends to shareholders (Note 1f) 10,534
Distributor (Note 2) 4,353 1,566,607
------------
Accrued expenses and other liabilities 71,691
------------
Total liabilities 1,638,298
------------
<PAGE>
Net Assets: Net assets $ 12,974,926
============
Net Assets Class A Shares of beneficial interest, $.10 par value, unlimited number of
Consist of: shares authorized $ 12,272
Class B Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized 115,205
Paid-in capital in excess of par 12,607,654
Undistributed realized capital gains--net 12,612
Unrealized appreciation on investments--net 227,183
------------
Net assets $ 12,974,926
============
Net Asset Value: Class A--Based on net assets of $1,249,147 and 122,724 shares of
beneficial interest outstanding $ 10.18
============
Class B--Based on net assets of $11,725,779 and 1,152,049 shares of
beneficial interest outstanding $ 10.18
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Period
October 29, 1993++
to January 31, 1994
<S> <S> <C>
Investment Income Interest and amortization of premium and discount earned $ 128,492
(Note 1d):
Expenses: Investment advisory fees (Note 2) 15,637
Printing and shareholder reports 13,975
Distribution fees--Class B (Note 2) 12,838
Accounting services (Note 2) 8,528
Professional fees 5,584
Registration fees (Note 1e) 4,727
Transfer agent fees--Class B (Note 2) 2,450
Amortization of organization expenses (Note 1e) 2,436
Custodian fees 1,880
Pricing fees 487
Transfer agent fees--Class A (Note 2) 230
Trustees' fees and expenses 31
Other 948
------------
Total expenses before reimbursement 69,751
Reimbursement of expenses (Note 2) (56,913)
------------
Total expenses after reimbursement 12,838
------------
Investment income--net 115,654
------------
Realized & Realized gain on investments--net 12,612
Unrealized Gains on Unrealized appreciation on investments--net 227,183
Investments--Net ------------
(Notes 1d & 3): Net Increase in Net Assets Resulting from Operations $ 355,449
============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
For the Period
October 29, 1993++
Increase (Decrease) in Net Assets to January 31, 1994
<S> <S> <C>
Operations: Investment income--net $ 115,654
Realized gain on investments--net 12,612
Unrealized appreciation on investments--net 227,183
------------
Net increase in net assets resulting from operations 355,449
------------
Dividends to Investment income--net:
Shareholders Class A (12,529)
(Note 1f): Class B (103,125)
------------
Net decrease in net assets resulting from dividends to shareholders (115,654)
------------
Beneficial Interest Net increase in net assets derived from beneficial interest transactions 12,635,131
Transactions ------------
(Note 4):
Net Assets: Net increase in net assets 12,874,926
Beginning of period 100,000
------------
End of period $ 12,974,926
============
<FN>
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived For the Period
from information provided in the financial statements. October 29, 1993++ to
January 31, 1994
Increase (Decrease) in Net Asset Value: Class A Class B
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 10.00 $ 10.00
Operating ------------ ------------
Performance: Investment income--net .12 .10
Realized and unrealized gain on investments--net .18 .18
------------ ------------
Total from investment operations .30 .28
------------ ------------
Less dividends from investment income--net (.12) (.10)
------------ ------------
Net asset value, end of period $ 10.18 $ 10.18
============ ============
<PAGE>
Total Investment Based on net asset value per share 2.99%+++ 2.86%+++
Return:** ============ ============
Ratios to Expenses, excluding distribution fees and net of reimbursement .00%* .00%*
Average ============ ============
Net Assets: Expenses, net of reimbursement .00%* .50%*
============ ============
Expenses 1.99%* 2.50%*
============ ============
Investment income--net 4.54%* 4.02%*
============ ============
Supplemental Net assets, end of period (in thousands) $ 1,249 $ 11,726
Data: ============ ============
Portfolio turnover 12.70% 12.70%
============ ============
<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 Maryland Municipal Bond Fund (the "Fund") is part
of Merrill Lynch Multi-State Municipal Series Trust (the
"Trust"). The Fund is registered under the Investment Company Act
of 1940 as a non-diversified, open-end management investment
company. Prior to commencement of operations on October 29, 1993,
the Fund had no operations other than those relating to
organizational matters and the issuance of 5,000 Class A Shares
of beneficial interest and 5,000 Class B Shares of beneficial
interest of the Fund to Fund Asset Management, L.P. ("FAM") for
$100,000. The Fund offers both Class A and Class B Shares. Class
A Shares are sold with a front-end sales charge. Class B Shares
may be subject to a contingent deferred sales charge. Both
classes of shares have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that
Class B Shares bear certain expenses related to the distribution
of such shares and have exclusive voting rights with respect to
matters relating to such distribution expenditures. The following
is a summary of significant accounting policies followed by the
Fund.
<PAGE>
(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 from one or more
dealers that make markets in the securities. Financial futures
contracts and options thereon, which are traded on exchanges, are
valued at their settlement prices as of the close of such
exchanges. Options, which are traded on exchanges, are valued at
their last sale price as of the close of such exchanges or,
lacking any sales, at the last available bid price. 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 Trust, including
valuations furnished by a pricing service retained by the Trust,
which may utilize a matrix system for valuations. The procedures
of the pricing service and its valuations are reviewed by the
officers of the Trust under the general supervision of the
Trustees.
(b) 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
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.
<PAGE>
(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. Original issue discounts and market premiums
are amortized into interest income. Realized gains and losses on
security transactions are determined on the identified cost
basis.
NOTES TO FINANCIAL STATEMENTS (concluded)
(e) Deferred organization expenses and prepaid registration
fees--Deferred organization expenses are charged to expense on a
straight-line basis over a five-year period. 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
FAM. Effective January 1, 1994, the investment advisory business
of FAM was reorganized from a corporation to a limited
partnership. Both prior to and after the reorganization, ultimate
control of FAM was vested with Merrill Lynch & Co., Inc. ("ML &
Co."). The general partner of FAM is Princeton Services, Inc., an
indirect wholly-owned subsidiary of ML & Co. The limited partners
are ML & Co. and Merrill Lynch Investment Management, Inc.
("MLIM"), which is also an indirect wholly-owned subsidiary of ML
& Co. The Fund has also entered into Distribution Agreements and
a Distribution Plan with Merrill Lynch Funds Distributor, Inc.
("MLFD" or "Distributor"), a wholly-owned subsidiary of MLIM.
FAM 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 based upon the
average daily value of the Fund's net assets at the following
annual rates: 0.55% of the Fund's average daily net assets not
exceeding $500 million; 0.525% of average daily net assets in
excess of $500 million but not exceeding $1 billion; and 0.50% of
average daily net assets in excess of $1 billion. For the period
October 29, 1993 to January 31, 1994, FAM earned fees of $15,637,
all of which were voluntarily waived. FAM also reimbursed the
Fund additional expenses of $41,276.
<PAGE>
Pursuant to a distribution plan (the "Distribution Plan") adopted
by the Fund in accordance with Rule 12b-1 under the Investment
Company Act of 1940, the Fund pays the Distributor an ongoing
account maintenance fee and distribution fee relating to Class B
Shares, which are accrued daily and paid monthly at the annual
rates of 0.25% and 0.25%, respectively, of the average daily net
assets of the Class B Shares of the Fund. Pursuant to a sub-
agreement with the Distributor, Merrill Lynch also provides
account maintenance and distribution services to the Fund. As
authorized by the Plan, the Distributor has entered into an
agreement with Merrill Lynch, Pierce, Fenner & Smith Inc.
("MLPF&S"), an affiliate of FAM, which provides for the
compensation of MLPF&S for providing distribution-related
services to the Fund. For the period October 29, 1993 to January
31, 1994, MLFD earned underwriting discounts of $707, and MLPF&S
earned dealer concessions of $38,604 on sales of the Fund's Class
A Shares.
MLPF&S also received contingent deferred sales charges of $1,046
relating to Class B Share transactions during the period.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary
of ML &Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, MLIM, MLFD, FDS, MLPF&S, and/or ML &Co.
3. Investments:
Purchases and sales of investments, excluding short-term
securities, for the period ended January 31, 1994 were
$13,131,213 and $910,811, respectively.
Net realized and unrealized gains as of January 31, 1994 were as
follows:
Realized Unrealized
Gains Gains
Long-term investments $ 10,614 $ 226,509
Short-term investments 213 674
Financial futures contracts 1,785 --
---------- -----------
Total $ 12,612 $ 227,183
========== ===========
As of January 31, 1994, net unrealized appreciation for Federal
income tax purposes aggregated $227,183, of which $229,552
related to appreciated securities and $2,369 related to
depreciated securities. The aggregate cost of investments at
January 31, 1994 for Federal income tax purposes was $13,789,798.
<PAGE>
4. Beneficial Interest Transactions:
Net increase in net assets derived from beneficial interest
transactions was $12,635,131 for the period ended January 31,
1994.
Transactions in shares of beneficial interest for Class A and
Class B Shares were as follows:
Class A Shares for the Period Dollar
Oct. 29, 1993++ to Jan. 31, 1994 Shares Amount
Shares sold 125,103 $ 1,247,657
Shares issued to shareholders
in reinvestment of dividends
and distributions 419 4,201
---------- -----------
Total issued 125,522 1,251,858
Shares redeemed (7,798) (77,560)
---------- -----------
Net increase 117,724 $ 1,174,298
========== ===========
[FN]
++Prior to October 29, 1993 (commencement of operations), the
Fund issued 5,000 shares to FAM for $50,000.
Class B Shares for the Period Dollar
Oct. 29, 1993++ to Jan. 31, 1994 Shares Amount
Shares sold 1,204,281 $12,027,962
Shares issued to shareholders
in reinvestment of dividends
and distributions 4,008 40,234
---------- -----------
Total issued 1,208,289 12,068,196
Shares redeemed (61,240) (607,363)
---------- -----------
Net increase 1,147,049 $11,460,833
========== ===========
[FN]
++Prior to October 29, 1993 (commencement of operations), the
Fund issued 5,000 shares to FAM for $50,000.
OFFICERS AND TRUSTEES
<PAGE>
Arthur Zeikel, President and Trustee
Kenneth S. Axelson, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Jerry Weiss, Secretary
Custodian
National Westminster Bank NJ
10 Exchange Place
Jersey City, New Jersey 07302
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
