ANNAPOLIS, OCT. 15 -- Maryland officials announced today that they have quietly cut in half the state's holdings on Wall Street recently, selling $2.3 billion of common stocks held by the state's retirement systems and buying about $4 billion of high-grade bonds in what they said may be the largest transaction of its kind.

Comptroller Louis L. Goldstein said the sale of the stocks was completed by Oct. 1, before the market's recent plunge. The move was not prompted by a lack of confidence in the stock market, Goldstein said, nor did the sales "disturb" the market.

"We just felt this was a good time to make a profit," Goldstein told reporters at a news conference.

"We rode the stock market up and now we locked it in" with the bond purchases, said state Treasurer Lucille Maurer.

Changes in investments strategies are not usually announced at news conferences, but this change involved such a large amount of money that state officials decided to make details of the transaction public.

Goldstein said he and members of the trustees of the retirement system believe current returns on high-grade bonds were likely to be higher and more predictable than yields on common stocks, and quietly began selling the stocks on Sept. 23. The bonds are dedicated to the pension payments, and were purchased so that they will mature when the system will most need the money.

"By selling a substantial portion of our common stock and thereby realizing the excellent results we have experienced in recent years, we have been able to establish a program which, all by itself, will fully fund the pensions of our presently retired members," Goldstein said in a prepared statement.

Goldstein said Salomon Brothers Inc., which handled the transaction, believed it to be the largest deal of its kind. Salomon Brothers' commission was not disclosed.

"I certainly haven't heard of any dedication {of bonds for a pension system} bigger than that," agreed Michael Clowes, editor of Pensions and Investments magazine. Clowes said the transaction is "pretty unusual" because of its magnitude, and said it would likely be watched closely by managers of other pension funds.

"There seems to be a renewed interest" in bonds among some managers, he said.

Before the sale, about 60 percent of Maryland's pension funds were in stocks, officials said. That is reduced to 35 percent with this transaction. Goldstein said the state's recent action does not preclude future stock investments.

The benefit of the plan is that it reduces the pension system's "unfunded liabilities" -- deficits caused by changes or improvements made to the pension plan, Goldstein said. For instance, in the 1970s, cost-of-living increases were higher than anticipated and the state did not put enough money into the system to cover the long-range cost of pension payments.

The bonds will take care of the pension costs of current retirees, and reduce the liabilities of the systems by 25 percent, from $7 billion to less than $5.3 billion next year. That should enable the state to spend less on the retirement system, Goldstein said, and protect the state's AAA bond rating.

Maryland's retirement and pension systems cover 160,000 active employes and make monthly payments to 45,000 retirees.