MERRILL LYNCH
CAPITAL FUND, INC.
FUND LOGO
Semi-Annual Report
September 30, 1995
Officers and Directors
Arthur Zeikel, President and Director
Donald Cecil, Director
M. Colyer Crum, Director
Edward H. Meyer, Director
Jack B. Sunderland, Director
J. Thomas Touchton, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Donald C. Burke, Vice President
Ernest S. Watts, Vice President and
Portfolio Manager
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
<PAGE>
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
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
Capital Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
<PAGE>
MERRILL LYNCH CAPITAL FUND, INC.
PORTFOLIO SUMMARY
Security Diversification*
As of September 30, 1995
A pie chart illustrating the following percentages:
US Bond 40.5%
Non-US Bonds 1.9%
Cash & Cash Equivalents 3.1%
US Stocks 45.4%
Non-US Stocks 9.1%
Security Representation*
As a Percentage of Equities
As of September 30, 1995
A pie chart illustrating the following percentages:
Financial 32.1%
Credit Cyclicals 0.3%
Utilities 5.6%
Capital Goods--Technology 4.7%
Consumer Cyclical 8.0%
Consumer Staples 11.6%
Basic Industries 10.5%
Diversified 2.1%
Consumer Services 3.5%
Capital Goods 4.1%
Energy 17.5%
[FN]
*Totals may not equal 100%.
<PAGE>
Geographic Diversification Percent of
As of September 30, 1995 Net Assets
United States* 89.0%
Argentina 4.3
United Kingdom 2.4
France 0.9
Canada 0.8
Netherlands 0.7
Australia 0.5
Spain 0.5
Switzerland 0.4
Singapore 0.2
Colombia 0.1
Hong Kong 0.1
Thailand 0.1
[FN]
*Includes short-term securities.
US Common Stock Investments S&P
As of September 30, 1995 Fund 500*
Average Capitalization (in billions) $10.7 $8.6
Price/Book Value 2.2 3.7
Price/Earnings Ratio** 13.7 16.4
Yield Based on Current Dividend 2.9% 2.3%
[FN]
*An unmanaged broad-based index comprised of common stocks.
**Based on 1995 earnings estimates.
Fixed-Income Investments Merrill Lynch
As of September 30, 1995 Fund D0A0 Index*
Duration 5.8 Years 5.2 Years
Average Maturity 9.4 Years 12.6 Years
Asset Breakdown:
Corporates 51.9% 17.3%
US Treasuries/Agencies 42.0% 56.1%
Mortgage-Backed 2.8% 26.6%
International Governments 3.3% --
<PAGE>
[FN]
*An unmanaged market-weighted corporate, Government and mortgage master
bond index reflecting approximately 97% of total outstanding bonds.
DEAR SHAREHOLDER
After losing momentum through the second calendar
quarter, it now appears that the US economy has
resumed a moderate growth trend. Gross domestic
product growth for the three months ended June 30
was revised to show that the economy expanded
at a 1.1% pace, rather than the 0.5% rate that was
originally reported. The employment report for
August exceeded consensus expectations, although
most of the new jobs created were in the service
sector, reflecting the ongoing sluggishness in manu-
facturing. However, durable goods orders rebounded
somewhat in August, supported by stronger auto-
mobile sales. Reflecting the trend of renewed
economic growth--and continued containment of
inflationary pressures--the Federal Reserve Board
signalled no shift in monetary policy following its
September meeting.
One of the major developments during the Septem-
ber quarter was the strengthening of the US dollar
relative to the yen and the Deutschemark. Improving
interest rate differentials favoring the US currency,
combined with coordinated central bank intervention
and more positive investor sentiment, have helped
to bolster the dollar in foreign exchange markets.
Other factors that appear to be improving the US
dollar's outlook in the near term are a pick-up in
capital flows to the United States and the prospect of
increased capital outflows from Japan. However, it
remains to be seen if the US dollar's strengthening
trend can continue without significant improvements
in the US budget and trade deficits.
In the weeks ahead, investor interest will continue to
focus on US economic activity. Clear signs of a moder-
ate, noninflationary expansion would further benefit
the US stock and bond markets. In addition, should
the current Federal budget deficit reduction efforts
now underway in Washington prove successful, the
implications would likely be positive for the US
financial markets.
<PAGE>
Portfolio Matters
Moderate economic growth and low inflation have
been positive for fixed-income investing in recent
periods. The Federal Government appears to be
attempting to get the Federal budget under better
control at last, as evidenced by both the current
Congress' efforts and by a declining deficit. We take
greater confidence in the historically high real return
that bonds are providing currently over the rate of
inflation, 4.0%, compared to 2.4% over the rate of
inflation on average for the last 43 years. Such a
high real return has often served to slow the rate
of economic growth, thereby reducing the demand
for money. This causes buyer competition for bond
investments, thus raising their prices with the
increase in demand. We remain of the opinion that
bonds currently provide excellent total return oppor-
tunities. As of September 30, 1995, bonds were
near a historically high amount of your capital, at
42.4% of net assets, little changed from the 43.3%
share on June 30, 1995. The average portfolio maturity
increased from 9.0 years to 9.4 years.
Stocks increased in the September quarter to 54.5%
of your portfolio from 54.1% at the end of June, with
short-term investments representing the remaining
1.8%. We try to be fully invested all the time. At
September 30, 1995, the Fund's common stocks, based
on indicated current annual dividend rates, averaged
a 2.9% yield; the short-term holdings were yielding
5.8%; and, the corporate and Government bonds aver-
aged a 6.8% yield. Representing 41% of your bonds in
Merrill Lynch Capital Fund, Inc., US Treasury bonds
provide a ready source of cash, should the need arise,
and an above-historical rate of return relative to the
current rate of inflation, in the interim.
Since the first quarter of 1994, we have been striving
to shift your capital from the more cyclical holdings
to investments with the potential for earnings endur-
ance and progress beyond the current economic
upcycle, where moderate valuations could be found
in companies with managements capable of above-
average achievements for you, the shareholders.
<PAGE>
For example, excellent new products appear to be
under development at Eli Lilly and Company for
introduction in the late 1990s, and the company's
new chief executive officer is expected to continue
making this a more viable competitor. PacifiCare
Health Systems, Inc., Horace Mann Educators Corp.,
Creative Technology, Ltd., Yue Yuen Industrial (Hold-
ings Limited), Mandarin Oriental International Ltd.,
Ruam Pattana Fund II and St. Paul Companies, Inc.
have good growth records in a variety of fields. Three
of the companies provide a greater investment in the
fast-growing Far East. BankAmerica Corp. appears to
be regaining some of its former growth momentum,
aided by cost-cutting and product-sharing with Con-
tinental Banking Corp., acquired nearly a year ago.
Hanson PLC was reacquired at a lower price than
when it was sold in October 1994, when the market
was lower than now, as it has a very high return on
equity and it remains dedicated to increasing the
efficiency of newly acquired companies. Jefferson
Smurfit Group's management remains intent on
acquiring other paper producers at moderate prices
and on keeping downward pressure on costs in its
quest for above-average long-term growth. Giddings
& Lewis, Inc. has proven to be a survivor in the
machine tool industry, which has been eliminating
excess capacity for decades, and the stock appeared
to be inexpensive selling at 1.2 times book value,
0.9 times sales and 12.6 times estimated 1996 earn-
ings. In addition, the company has no debt and it has
a record backlog. We also were attracted to British
Steel PLC selling at 5.4 times estimated 1995 net
earnings per share and yielding 4.4%, with the pros-
pect that lower costs will help the company in 1996
and beyond.
General Motors Corp. was by far the largest new
purchase. The company is clearly cyclical, but this
appeared to be discounted at 2.1 times cash flow,
1.6 times book value, 7.5 times estimated 1995 earn-
ings, and at just 0.22 times sales, compared with 1.9
times for the average stock in the S&P 500 Composite
Index. The stock rose above $40 a share in 1986,
when this 13-year old bull market was not yet four
years old, has sold in the $40s at some time in each
year since and is there again, down from its 1994 high
of $65. Yet, the company now seems to be doing the
job necessary to be a viable long-term competitor.
Costs have been cut, and we expect they will con-
tinue to be reduced. Short-term investments and
cash exceed total debt used by the manufacturing
part of the company, with most debt used by the
more-leveraged finance operations and for investment-
affiliated holdings. Finally, the updraft of this economic
cycle did not lift car sales as much as in previous
cycles, providing the expectation that there will not
be as great a correction in the next down cycle,
setting the stage for a strong rebound following rea-
sonable earnings during the soft economic period.
<PAGE>
Altogether, we added 19 new stocks to your Fund and
increased 68 holdings in size, while we reduced 40
holdings and eliminated 23. We added to our holdings
in Columbia/HCA Healthcare Corp., Tenet Healthcare
Corp., Dairy Farm International Holdings Ltd., most
of the insurance stocks, Federal National Mortgage
Association, Carnival Corp. and real estate invest-
ment trusts, each of which appeared to be moder-
ately priced for growth and income. As valuations
rise and move ahead of corporate progress, your
Fund management team tends to reduce or eliminate
holdings. This was particularly noticeable in your
pharmaceutical holdings, where we increased the
moderately priced Glaxo Holdings PLC position while
some capital was withdrawn from the industry. We
also transferred capital to Pfizer, Inc., which has a
very strong stream of potential new drugs under
research for introduction through the remainder of
the 1990s and into the next century, from Merck &
Co., Inc.
We eliminated ALZA Corp., Ciba-Geigy AG,
AlliedSignal, Inc., Polaroid Corp., USX-Marathon
Group, Inc., English China Clays PLC, Canadian Pacific
Ltd., Sears, Roebuck & Co., Tandy Corp., Universal
Foods Corp., Premark International, Inc., Dean
Witter, Discover & Co. and Wallace Computer
Services, Inc. to take advantage of market strength.
While each of those companies was doing well, Orien-
tal Press Holdings, Canadian Pacific Ltd., Luby's Caf-
eterias, Inc. and Niagara Mohawk Power Corp. were
not measuring up to their potential, in our opinion, so
we sold them.
In Conclusion
We thank you for your continued investment in Merrill
Lynch Capital Fund, Inc., and we look forward to
reviewing our outlook and strategy with you in our
next report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
<PAGE>
(Ernest S. Watts)
Ernest S. Watts
Vice President and Portfolio Manager
October 31, 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 5.25% and bear no ongoing distribu-
tion 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 4% if redeemed during the first
year, decreasing 1% each year thereafter to 0% after the
fourth year. In addition, Class B Shares are subject to a
distribution fee of 0.75% and an account maintenance
fee of 0.25%. These shares automatically convert to
Class D Shares after 8 years.
* Class C Shares are subject to a distribution fee of 0.75%
and an account maintenance fee of 0.25%. 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
5.25% and an account maintenance fee of 0.25% (but no
distribution fee).
Performance data for the Fund's Class A and Class B
Shares are presented in the "Average Annual Total Return"
tables below. The "Results of a $1,000 Investment Since
Inception--Class A Shares" chart on page 5 illustrates
the performance of a $1,000 investment in Class A Shares
made at the Fund's inception (assuming maximum sales
charge of 5.25%) through September 30, 1995. "Aggregate
Total Return" tables for Class C and Class D Shares are
also presented below. Data for all of the Fund's shares
are presented in the "Recent Performance Results" table
on page 5.
<PAGE>
The "Recent Performance Results" table shows invest-
ment results before the deduction of any sales charges
for Class A and Class B Shares for the 12-month and
3-month periods ended September 30, 1995 and for
Class C and Class D Shares for the since inception and
the 3-month periods ended September 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 9/30/95 +22.06% +15.65%
Five Years Ended 9/30/95 +15.03 +13.79
Ten Years Ended 9/30/95 +14.42 +13.80
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/95 +20.85% +16.85%
Five Years Ended 9/30/95 +13.86 +13.86
Inception (10/21/88) through 9/30/95 +11.83 +11.83
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
Aggregate Total Return
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94) through 9/30/95 +21.57% +20.57%
[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 9/30/95 +22.45% +16.03%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
PERFORMANCE DATA (concluded)
Results of a $1,000 Investment Since Inception--Class A Shares
(5.25% sales charge--$947.50 net amount invested; assuming
reinvestment of all dividends and capital gains distributions)
A mountain chart depicting the performance of a $1,000 investment in
the Fund's Class A Shares since inception (11/8/73) through 9/30/95
Beginning and ending values are $947.50 and $13,683.29.
<PAGE>
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
9/30/95 6/30/95 9/30/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
ML Capital Fund, Inc. Class A Shares* $31.11 $29.30 $27.42 +17.44%(1) +6.18%
ML Capital Fund, Inc. Class B Shares* 30.54 28.83 26.97 +17.27(1) +5.93
ML Capital Fund, Inc. Class C Shares* 30.36 28.67 26.81 +17.29(1) +5.89
ML Capital Fund, Inc. Class D Shares* 31.07 29.28 27.27 +17.93(1) +6.11
Dow Jones Industrial Average** 4,789.08 4,556.10 3,843.19 +24.61 +5.11
Standard & Poor's 500 Index** 584.41 544.75 462.69 +26.31 +7.28
ML Capital Fund, Inc. Class A Shares--Total Return* +22.06(2) +6.18
ML Capital Fund, Inc. Class B Shares--Total Return* +20.85(3) +5.93
ML Capital Fund, Inc. Class C Shares--Total Return* +21.57(4) +5.89
ML Capital Fund, Inc. Class D Shares--Total Return* +22.45(5) +6.11
Dow Jones Industrial Average--Total Return** +27.98 +5.76
Standard & Poor's 500 Index--Total Return** +29.74 +7.96
<FN>
*Investment results shown do not reflect sales charges;
results shown would be lower if a sales charge was included.
**An unmanaged broad-based index comprised of common stocks.
Total investment returns for unmanaged indexes are based
on estimates.
++Investment results shown for Class C and Class D Shares are
since inception (10/21/94).
(1)Percent change includes reinvestment of $0.926 per share
capital gains distributions.
(2)Percent change includes reinvestment of $1.073 per share
ordinary income dividends and $0.926 per share capital gains
distributions.
(3)Percent change includes reinvestment of $0.824 per share
ordinary income dividends and $0.926 per share capital gains
distributions.
(4)Percent change includes reinvestment of $0.975 per share
ordinary income dividends and $0.926 per share capital gains
distributions.
(5)Percent change includes reinvestment of $1.046 per share
ordinary income dividends and $0.926 per share capital gains
distributions.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Value Percent of
Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Aerospace 345,000 Lockheed Corp. $ 18,572,642 $ 23,158,125 0.3%
1,270,000 Rockwell International Corporation 45,714,501 60,007,500 0.8
-------------- -------------- ------
64,287,143 83,165,625 1.1
Automobile 882,000 Echlin Inc. 26,170,598 31,531,500 0.4
Equipment
Automotive 250,000 Ford Motor Company 7,258,118 7,781,250 0.1
1,700,000 General Motors Corp. 82,279,918 79,687,500 1.0
-------------- -------------- ------
89,538,036 87,468,750 1.1
Banking 345,000 Banco Bilboa Vizcaya (ADR)* 8,387,944 10,695,000 0.1
1,582,000 Bancorp Hawaii, Inc. 45,636,879 53,392,500 0.7
600,000 Bangkok Bank Company Ltd. 5,935,084 6,746,411 0.1
519,000 BankAmerica Corp. 28,693,688 31,075,125 0.4
2,000,000 Chemical Banking Corp. 72,779,019 121,750,000 1.6
1,000,000 National Australian Bank Ltd. 8,097,725 8,850,944 0.1
2,741,000 NationsBank Corp. 132,129,128 184,332,250 2.4
3,085,000 SouthTrust Corp. 50,406,040 77,125,000 1.0
1,430,000 Union Planters Corp. 17,506,658 42,542,500 0.5
-------------- -------------- ------
369,572,165 536,509,730 6.9
Beverages 3,850,000 Cadbury Schweppes PLC 26,719,845 29,047,911 0.4
Building & 2,498,000 Kumagai Gumi Co., Ltd. (Ordinary) 1,847,519 2,003,260 0.0
Construction
Building Materials 104,000 Medusa Corp. 2,607,889 2,938,000 0.0
900,000 Redland PLC 6,159,850 5,362,637 0.1
-------------- -------------- ------
8,767,739 8,300,637 0.1
Capital Goods 709,000 GATX Capital Corp. 24,583,379 36,690,750 0.5
325,000 Giddings & Lewis, Inc. 5,530,579 5,606,250 0.1
-------------- -------------- ------
30,113,958 42,297,000 0.6
Chemicals 520,000 Albemarle Corp. 7,547,281 9,750,000 0.1
100,000 Dexter Corporation 2,501,813 2,550,000 0.0
520,000 du Pont (E.I.) de Nemours & Co. 29,839,883 35,750,000 0.4
850,000 Engelhard Corp. 14,038,210 21,568,750 0.3
200,000 Goodrich (B.F.) Co. 9,112,824 13,175,000 0.2
1,500,000 Imperial Chemical Industries PLC (ADR)* 72,282,406 76,125,000 1.0
-------------- -------------- ------
135,322,417 158,918,750 2.0
<PAGE>
Computer 630,000 Creative Technology, Ltd. (b) 7,684,955 8,426,250 0.1
Software
Diversified 535,000 Corning Inc. 16,973,450 15,314,375 0.2
Companies 1,920,000 Hanson PLC (Sponsored) (ADR)* 32,525,906 31,200,000 0.4
11,050,000 Hillsdown Holdings PLC 26,411,079 30,912,209 0.4
600,000 Tenneco, Inc. 23,717,597 27,750,000 0.4
1,100,000 United Technologies Corp. 63,816,513 97,212,500 1.2
690,000 Worldtex Inc. (b) 3,003,978 4,053,750 0.1
-------------- -------------- ------
166,448,523 206,442,834 2.7
Drug Stores 281,000 Rite Aid Corp. 6,688,427 7,868,000 0.1
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Value Percent of
Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Electrical 980,000 General Electric Co. $ 49,270,597 $ 62,475,000 0.8%
Equipment 870,000 Philips Electronics N.V. (ADR)* 14,731,303 42,412,500 0.5
-------------- -------------- ------
64,001,900 104,887,500 1.3
Financial 1,000,000 Federal National Mortgage Association 90,637,942 103,500,000 1.3
Services 125,000 Household International, Inc. 5,906,195 7,750,000 0.1
2,944,000 Ruam Pattana Fund II 1,723,736 1,790,112 0.0
-------------- -------------- ------
98,267,873 113,040,112 1.4
Food 16,000,000 Dairy Farm International Holdings Ltd. (Ordinary) 19,416,558 13,920,000 0.2
Distribution 145,000 Fleming Cos., Inc. 3,964,452 3,480,000 0.0
-------------- -------------- ------
23,381,010 17,400,000 0.2
Footware 25,930,000 Yue Yuen Industrial (Holdings Limited) 6,737,213 7,210,976 0.1
Forest Products 401,500 Weyerhaeuser Co. 18,785,774 18,318,438 0.2
Home Builders 270,000 ++++Oriole Homes Corp. (b) 2,499,746 1,755,000 0.0
Hospital 1,285,000 Columbia/HCA Healthcare Corp. 58,454,517 62,483,125 0.8
Management 200,000 PacifiCare Health Systems, Inc. (Class B) (b) 11,128,820 13,550,000 0.2
3,250,000 Tenet Healthcare Corp. (a) (b) 41,757,166 56,468,750 0.7
-------------- -------------- ------
111,340,503 132,501,875 1.7
<PAGE>
Household Products 100,000 Armor All Products Corp. 1,922,203 1,700,000 0.0
Insurance 947,000 Aetna Life & Casualty Co. 55,124,062 69,486,125 0.9
1,960,000 Allstate Corporation 49,216,409 69,335,000 0.9
510,000 American General Corporation 15,073,289 19,061,250 0.2
1,150,000 American International Group, Inc. 72,301,315 97,750,000 1.2
139,000 American National Insurance Co. 8,066,114 8,096,750 0.1
1,190,000 EXEL Ltd. (ADR)* 49,410,136 69,168,750 0.9
1,531,600 ++++Fremont General Corp. 29,766,002 42,310,450 0.5
350,000 Horace Mann Educators Corp. 8,405,702 9,625,000 0.1
282,000 Integon Corp. 4,386,551 4,970,250 0.1
1,660,000 Lowndes Lambert Group Holdings PLC 4,270,490 3,935,445 0.1
300,000 Provident Life & Accident Insurance Co. 7,610,465 8,137,500 0.1
827,000 Safeco Corp. 43,465,451 54,168,500 0.7
439,000 Sphere Drake Holdings Ltd. 6,810,477 6,585,000 0.1
455,000 St. Paul Companies, Inc. 22,292,330 26,560,625 0.3
440,000 TIG Holdings, Inc. 10,048,491 11,825,000 0.2
1,540,000 Travelers Inc. 33,440,510 81,812,500 1.0
183,000 USLIFE Corporation 4,297,385 5,352,750 0.1
-------------- -------------- ------
423,985,179 588,180,895 7.5
Iron & Steel 557,000 Birmingham Steel Corp. 12,412,955 9,747,500 0.1
350,000 British Steel PLC (ADR)* 9,979,232 10,018,750 0.1
1,020,000 ++++Cleveland-Cliffs, Inc. 35,034,934 41,947,500 0.6
-------------- -------------- ------
57,427,121 61,713,750 0.8
Lodging/Hotels 610,000 Carnival Corp. (Class A) 13,709,526 14,640,000 0.2
2,876,000 Mandarin Oriental International Ltd. 2,754,939 2,991,040 0.0
-------------- -------------- ------
16,464,465 17,631,040 0.2
Manufactured 439,000 Fleetwood Enterprises, Inc. 9,270,318 8,725,125 0.1
Housing
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Value Percent of
Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Metals & Basic 347,000 Cameco Corp. $ 7,535,147 $ 10,829,247 0.1%
Materials 1,070,000 Magma Copper Co. 18,441,841 20,062,500 0.3
500,000 Newmont Mining Corp. 18,485,079 21,250,000 0.3
-------------- -------------- ------
44,462,067 52,141,747 0.7
<PAGE>
Natural Gas 1,249,000 Coastal Corp. 34,527,928 41,997,625 0.5
Suppliers 80,000 Consolidated Natural Gas Co. 3,135,118 3,230,000 0.0
305,000 MAPCO, Inc. 16,037,568 15,707,500 0.2
724,000 MetroGas S.A. (ADR)* 8,692,336 6,516,000 0.1
160,000 ONEOK Inc. 2,776,212 3,720,000 0.1
3,694,000 TransCanada Pipelines, Ltd. (ADR)* 54,426,444 48,483,750 0.6
3,845,000 Williams Companies, Inc. 102,345,865 149,955,000 1.9
-------------- -------------- ------
221,941,471 269,609,875 3.4
Oil--Integrated 110,000 Exxon Corp. 7,795,886 7,947,500 0.1
100,000 Mobil Corp. 8,589,628 9,962,500 0.1
1,200,000 Occidental Petroleum Corp. 24,635,409 26,400,000 0.4
2,000,000 Phillips Petroleum Co. 69,200,011 65,000,000 0.8
970,000 Repsol, S.A. (ADR)* 28,307,270 30,498,948 0.4
730,000 Texaco Inc. 48,472,073 47,176,250 0.6
2,417,000 TOTAL S.A. (ADR)* 67,377,607 72,812,125 0.9
10,700,000 YPF S.A. (Sponsored) (ADR)* 223,385,604 192,600,000 2.5
-------------- -------------- ------
477,763,488 452,397,323 5.8
Oil Service 1,043,000 Dresser Industries, Inc. 23,316,925 24,901,625 0.3
Paper 1,749,000 Federal Paper Board Co., Inc. 46,023,612 67,117,875 0.9
2,800,000 Jefferson Smurfit Group 8,705,331 8,364,006 0.1
1,220,000 Temple-Inland, Inc. 57,462,584 64,965,000 0.8
-------------- -------------- ------
112,191,527 140,446,881 1.8
Pharmaceuticals 467,000 Block Drug, Inc. (Class A) 14,429,533 17,746,000 0.2
1,350,000 Glaxo Holdings PLC (ADR)* 32,915,916 32,568,750 0.4
360,000 Lilly (Eli) and Company 27,965,917 32,355,000 0.4
1,430,000 Mallinckrodt Group Inc. 45,170,269 56,663,750 0.7
1,450,000 Merck & Co., Inc. 50,332,059 81,200,000 1.0
2,176,000 Pfizer, Inc. 91,942,057 116,144,000 1.5
4,000 Roche Holdings AG 20,363,076 28,235,294 0.4
800,000 Warner-Lambert Co. 62,701,093 76,200,000 1.0
-------------- -------------- ------
345,819,920 441,112,794 5.6
Photography 240,000 Eastman Kodak Co. 12,334,459 14,220,000 0.2
Plastic Recycling 1,108,000 Wellman Inc. 24,273,231 27,146,000 0.3
Printing & 100,000 American Greetings Corp. 2,841,224 3,050,000 0.0
Publishing
Real Estate 1,765,000 RFS Hotel Investors, Inc. 26,722,635 26,033,750 0.3
Investment Trusts 1,283,000 Walden Residential Properties, Inc. 24,384,631 24,216,625 0.3
-------------- -------------- ------
51,107,266 50,250,375 0.6
Retail Trade 1,730,000 Wal-Mart Stores, Inc. 42,725,648 43,033,750 0.6
Savings & Loan 391,000 Ahmanson (H.F.) & Co. 7,367,060 9,921,625 0.1
Associations
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Value Percent of
Industries Held Common Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Services 1,670,000 ++++PHH Corp. $ 62,537,753 $ 75,150,000 0.9%
151,000 Pittston Services Group 3,692,302 4,095,875 0.1
515,000 Rollins, Inc. 12,881,545 12,617,500 0.2
-------------- -------------- ------
79,111,600 91,863,375 1.2
Telecommunications 2,140,000 GTE Corp. 66,987,057 83,995,000 1.1
Tires & Rubber 3,584,000 The Goodyear Tire & Rubber Co. 137,352,540 141,120,000 1.8
Utilities-- 264,000 American Water Works Co., Inc. 6,796,126 8,085,000 0.1
Electric, Gas & 150,000 Central Hudson Gas & Electric Corp. 3,934,566 4,575,000 0.1
Water 480,000 Entergy Corp. 10,960,729 12,540,000 0.2
1,000,000 Illinova Corp. 20,668,814 27,125,000 0.3
177,000 Montana Power Co. 4,076,157 4,093,125 0.1
2,000,000 Pinnacle West Capital Corp. 39,713,673 52,500,000 0.7
86,000 Public Service Company of North Carolina 1,366,521 1,386,750 0.0
1,437,000 Unicom Corp. 31,946,684 43,469,250 0.5
-------------- -------------- ------
119,463,270 153,774,125 2.0
Total Common Stocks 3,536,303,383 4,274,029,453 54.5
Face
Amount Corporate Bonds
Automotive $ 30,000,000 Ford Motor Co., 5.625% due 12/15/1998 29,073,200 29,273,400 0.4
22,000,000 Hertz Corp., 6.70% due 6/15/2002 21,982,500 21,855,020 0.3
-------------- -------------- ------
51,055,700 51,128,420 0.7
<PAGE>
Banking 20,000,000 Banco Rio de la Plata, 8.75% due 12/15/2003 20,060,800 15,200,000 0.2
10,000,000 Bank of Boston Corp., 6.625% due 12/01/2005 8,621,750 9,720,000 0.1
BankAmerica Corp.:
15,000,000 6.875% due 6/01/2003 14,149,050 15,034,950 0.2
25,000,000 6.75% due 9/15/2005 24,588,750 24,715,750 0.3
10,000,000 Bankers Trust Company, 7.50% due 1/15/2002 9,688,700 10,271,100 0.1
The Chase Manhattan Corp.:
30,000,000 6.50% due 8/01/2005 29,105,700 29,164,200 0.4
20,000,000 6.75% due 8/15/2008 17,436,420 19,245,600 0.3
Chemical Bank:
11,400,000 7% due 6/01/2005 11,191,266 11,507,274 0.1
12,000,000 6.50% due 1/15/2009 10,872,840 11,323,560 0.1
First Chicago Corp.:
15,000,000 6.875% due 6/15/2003 13,963,300 14,991,000 0.2
15,000,000 6.375% due 1/30/2009 13,276,092 14,116,200 0.2
6,000,000 First Hawaiian, Inc., 6.25% due 8/15/2000 5,841,600 5,836,920 0.1
First Security Corp.:
5,000,000 5.71% due 2/09/1999 5,000,000 4,880,900 0.1
10,000,000 7% due 7/15/2005 9,978,700 9,977,640 0.1
15,000,000 First USA Bank, Wilmington, 5.75% due 1/15/1999 15,005,550 14,591,700 0.2
13,000,000 Great Western Financial Corp., 6.125%
due 6/15/1998 12,244,010 12,921,220 0.2
NationsBank Corp.:
10,500,000 5.70% due 9/11/2000 9,545,865 10,144,995 0.1
8,000,000 6.20% due 8/15/2003 7,657,280 7,798,480 0.1
25,000,000 6.50% due 8/15/2003 22,104,200 24,342,500 0.3
20,000,000 Union Planters Corp., 6.25% due 11/01/2003 18,756,100 18,776,800 0.2
-------------- -------------- ------
279,087,973 284,560,789 3.6
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Value Percent of
Industries Amount Corporate Bonds Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Broadcasting & $ 30,000,000 News America Holdings, Inc., 7.50% due
Publishing 3/01/2000 $ 29,179,330 $ 30,811,500 0.4%
Capital Goods 5,000,000 Giddings & Lewis, Inc., 7.50% due 10/01/2005 5,000,000 5,000,000 0.1
Chemicals 25,000,000 Union Carbide Corp., 6.79% due 6/01/2025 25,000,000 24,888,750 0.3
Diversified 9,775,000 Crane Co., 7.25% due 6/15/1999 9,619,840 9,907,060 0.1
Companies Grace (W.R.) & Co.:
10,000,000 6.85% due 6/23/1997 9,903,700 10,054,200 0.1
20,000,000 7.40% due 2/01/2000 19,663,100 20,494,800 0.3
10,000,000 8% due 8/15/2004 9,530,100 10,623,600 0.1
15,000,000 Tenneco, Inc., 7.875% due 10/01/2002 14,619,180 15,883,050 0.2
-------------- -------------- ------
63,335,920 66,962,710 0.8
<PAGE>
Electronics 10,000,000 Philips Electronics N.V., 7.125% due 5/15/2025 9,972,650 10,328,600 0.1
Finance 5,000,000 Caterpillar Financial Services Corp.,
5.35% due 11/10/1998 4,924,800 4,844,650 0.1
Chrysler Finance Corp.:
13,000,000 6.50% due 6/15/1998 12,752,820 13,041,210 0.2
12,000,000 5.375% due 10/15/1998 11,439,770 11,645,520 0.2
30,000,000 6.625% due 8/15/2000 29,953,700 29,800,800 0.4
40,000,000 ++GTE Finance Corp., 5.81% due 12/15/1997 40,000,000 39,400,000 0.5
8,000,000 General Electric Capital Corp., 5.13% due 4/01/2004 8,000,000 8,660,000 0.1
General Motors Acceptance Corp.:
10,000,000 6.375% due 9/01/1998 9,983,700 9,998,900 0.1
15,000,000 5.95% due 1/11/1999 13,783,650 14,759,700 0.2
25,000,000 5.875% due 1/12/1999 25,044,500 24,544,250 0.3
48,500,000 5.625% due 2/01/1999 47,273,190 47,301,080 0.6
10,000,000 7.15% due 4/30/1999 9,884,400 10,191,000 0.1
21,000,000 7.375% due 6/22/2000 20,693,890 21,606,690 0.3
30,000,000 6.75% due 6/10/2002 29,520,300 29,979,300 0.4
10,000,000 Greyhound Financial Corp., 6.75% due 3/25/1999 9,694,200 10,011,900 0.1
Household Finance Corp.:
10,000,000 6.13% due 6/19/1998 10,000,000 9,927,100 0.1
15,000,000 7.125% due 4/30/1999 14,356,800 15,292,500 0.2
10,000,000 7.45% due 4/01/2000 9,958,700 10,340,600 0.1
International Lease Finance Corp.:
25,000,000 5.98% due 11/16/1998 24,975,500 24,587,250 0.3
22,500,000 6.05% due 4/30/1999 22,368,375 22,097,025 0.3
5,000,000 7.10% due 6/15/1999 4,930,900 5,075,450 0.1
10,000,000 8.15% due 10/01/2004 9,691,300 10,734,600 0.1
10,000,000 Margaretten Financial Corp., 6.75% due 6/15/2000 9,621,060 10,027,500 0.1
35,000,000 Sears Roebuck Acceptance Corp.,
6.50% due 6/15/2000 34,989,550 34,826,050 0.4
-------------- -------------- ------
413,841,105 418,693,075 5.3
Financial Leasing GATX Corp.:
30,000,000 5.45% due 3/18/1996 30,000,000 29,876,700 0.4
15,000,000 5.48% due 3/22/1996 15,000,000 14,939,250 0.2
10,000,000 6.535% due 6/09/2001 10,000,000 9,846,100 0.1
XTRA Corp.:
20,000,000 6.75% due 8/01/2001 19,945,800 20,097,000 0.3
20,000,000 6.68% due 11/30/2001 20,000,000 19,961,800 0.3
-------------- -------------- ------
94,945,800 94,720,850 1.3
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Value Percent of
Industries Amount Corporate Bonds Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Financial $ 10,000,000 American Express Credit Corp.,
Services 6.75% due 6/01/2001 $ 9,987,800 $ 10,115,800 0.1%
10,000,000 Dean Witter, Discover & Co., 6.50% due
11/01/2005 9,803,900 9,681,900 0.1
25,000,000 Finova Capital Corp., 6.45% due 6/01/2000 24,766,550 24,729,750 0.3
McDonnell Douglas Finance Corp.:
10,000,000 6.375% due 7/15/1999 9,869,782 9,911,900 0.1
10,000,000 6.77% due 9/11/2002 9,983,500 10,029,500 0.1
20,000,000 6.965% due 9/12/2005 20,049,200 19,963,200 0.3
Smith Barney Shearson Holdings, Inc.:
20,000,000 6% due 3/15/1997 19,897,700 19,930,200 0.3
20,000,000 7% due 5/15/2000 19,930,000 20,204,200 0.3
-------------- -------------- ------
124,288,432 124,566,450 1.6
Food & Tobacco RJR Nabisco Holding Corp.:
20,000,000 6.70% due 6/15/2002 19,830,000 19,720,400 0.3
10,000,000 6.85% due 6/15/2005 10,000,000 9,808,100 0.1
-------------- -------------- ------
29,830,000 29,528,500 0.4
Foreign Republic of Argentina:
Government 20,000,000 10.95% due 11/01/1999 17,432,330 19,850,000 0.2
Obligations 50,000,000 8.375% due 12/20/2003 36,266,250 37,375,000 0.5
75,000,000 ++6.812% due 3/31/2005 50,225,000 46,500,000 0.6
4,500,000 Republic of Colombia, 7.25% due 2/23/2004 4,145,000 4,201,875 0.1
-------------- -------------- ------
108,068,580 107,926,875 1.4
Hospital Columbia/HCA Healthcare Corp.:
20,000,000 6.125% due 12/15/2000 18,456,800 19,574,400 0.2
20,000,000 6.91% due 6/15/2005 19,919,400 20,063,400 0.3
17,500,000 6.63% due 7/15/2045 17,149,625 17,473,750 0.2
10,000,000 Tenet Healthcare Corp., 9.625% due 9/01/2002 10,000,000 10,575,000 0.1
-------------- -------------- ------
65,525,825 67,686,550 0.8
Insurance 10,625,000 Integon Corp., 8% due 8/15/1999 10,676,019 10,716,056 0.1
10,000,000 NAC Re Corp., 8% due 6/15/1999 10,189,300 10,357,400 0.1
Travelers Inc.:
20,000,000 6.125% due 6/15/2000 18,772,550 19,574,000 0.3
20,000,000 6.875% due 6/01/2025 20,037,200 20,333,600 0.3
-------------- -------------- ------
59,675,069 60,981,056 0.8
<PAGE>
Machinery 15,000,000 Black & Decker Corp., 6.625% due 11/15/2000 14,248,100 14,764,800 0.2
20,000,000 FMC Corp., 6.375% due 9/01/2003 18,940,800 19,059,000 0.2
10,000,000 Harris Corp., 10.375% due 12/01/2018 10,541,400 11,176,900 0.2
10,000,000 TRINOVA Corp., 7.95% due 5/01/1997 9,975,000 10,200,900 0.1
-------------- -------------- ------
53,705,300 55,201,600 0.7
Manufactured 3,000,000 Oakwood Homes Corp., 9.125% due 6/01/2007 3,000,000 3,030,000 0.0
Housing
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Value Percent of
Industries Amount Corporate Bonds Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Natural Gas Coastal Corp.:
Suppliers $ 13,000,000 8.75% due 5/15/1999 $ 13,055,960 $ 13,801,840 0.2%
30,000,000 8.125% due 9/15/2002 29,984,410 31,825,500 0.4
10,000,000 ENSERCH Corporation, 7.125% due 6/15/2005 10,000,000 10,123,600 0.1
-------------- -------------- ------
53,040,370 55,750,940 0.7
Oil--Integrated Occidental Petroleum Corp.:
12,000,000 5.85% due 11/09/1998 11,150,172 11,726,640 0.2
14,475,000 5.90% due 11/09/1998 14,325,907 14,165,235 0.2
18,375,000 6.24% due 11/24/2000 18,135,306 17,877,956 0.2
Union Texas Petroleum Holdings, Inc.:
5,000,000 8.375% due 3/15/2005 5,008,250 5,304,800 0.1
10,000,000 8.50% due 4/15/2007 9,965,800 10,995,500 0.1
20,000,000 YPF S.A., 8% due 2/15/2004 17,158,750 17,100,000 0.2
-------------- -------------- ------
75,744,185 77,170,131 1.0
Oil--Related 20,000,000 Tosco Corporation, 7% due 7/15/2000 19,894,250 19,700,000 0.3
Pharmaceutical 5,750,000 Cardinal Distribution, Inc., 8% due 3/01/1997 5,750,000 5,863,332 0.1
Distribution
Railroads 3,000,000 Burlington Northern, Inc., 7.40% due 5/15/1999 2,993,580 3,073,590 0.0
Services 19,375,000 ADT Operations, 8.25% due 8/01/2000 19,511,125 20,004,687 0.3
Steel 20,000,000 USX Corp., 6.375% due 7/15/1998 19,894,000 19,824,200 0.3
Telecommuni- 25,000,000 AT&T Capital Corp., 6.69% due 5/09/1997 25,000,000 25,211,000 0.3
cations 10,000,000 Bell Atlantic Financial Services, Inc.,
5.47% due 4/27/1998 10,031,400 9,826,900 0.1
-------------- -------------- ------
35,031,400 35,037,900 0.4
<PAGE>
Utilities--Electric, Commonwealth Edison Co.:
Gas & Water 10,000,000 6% due 3/15/1998 10,157,200 9,888,900 0.1
25,000,000 6.40% due 10/15/2005 21,178,955 23,582,250 0.3
25,000,000 Enron Corp., 6.75% due 7/01/2005 24,050,050 24,464,250 0.3
5,000,000 Long Island Lighting Co., 7.625% due 4/15/1998 4,986,210 5,086,450 0.1
Niagara Mohawk Power Corp.:
30,000,000 6.875% due 3/01/2001 29,628,750 29,856,540 0.4
10,000,000 5.875% due 9/01/2002 9,196,500 9,350,600 0.1
PECO Energy Co.:
5,000,000 7.50% due 1/15/1999 5,043,600 5,149,650 0.1
20,000,000 5.625% due 11/01/2001 18,908,800 18,564,000 0.2
10,000,000 7.125% due 9/01/2002 10,020,900 10,056,300 0.1
Texas Utilities Co.:
5,000,000 7.125% due 6/01/1997 4,987,500 5,067,000 0.1
9,500,000 5.75% due 7/01/1998 9,297,135 9,353,985 0.1
United Illuminating Co.:
5,000,000 7.375% due 1/15/1998 5,003,125 5,076,600 0.1
5,000,000 6.20% due 1/15/1999 4,693,050 4,881,350 0.0
-------------- -------------- ------
157,151,775 160,377,875 2.0
Total Corporate Bonds 1,804,522,369 1,832,818,380 23.4
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Face Value Percent of
Amount Collateralized Mortgage Obligations Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Federal Home Loan Mortgage Corp.:
$ 20,000,000 5.80% due 4/15/2006 $ 18,615,625 $ 19,500,000 0.2%
16,482,928 6% due 4/15/2006 16,102,404 16,374,635 0.2
Federal National Mortgage Association:
20,000,000 5.10% due 3/25/2002 19,256,250 19,662,400 0.3
12,000,000 6.50% due 1/25/2008 11,608,125 11,752,440 0.2
10,000,000 5% due 4/25/2014 9,756,250 9,737,500 0.1
16,112,346 Prudential Home Mortgage Security Co.,
5.25% due 12/25/2000 15,422,536 15,603,680 0.2
Total Collateralized Mortgage Obligations 90,761,190 92,630,655 1.2
US Government Obligations
<PAGE>
US Treasury Notes:
175,000,000 6.375% due 8/15/2002 166,602,203 177,597,000 2.3
365,000,000 5.75% due 8/15/2003 353,928,906 355,134,050 4.5
345,000,000 5.875% due 2/15/2004 339,658,594 337,723,950 4.3
400,000,000 7.25% due 5/15/2016 382,781,681 427,564,000 5.5
100,000,000 6.25% due 8/15/2023 94,183,594 95,187,000 1.2
Total US Government Obligations 1,337,154,978 1,393,206,000 17.8
Short-Term Investments
Commercial 50,000,000 Corporate Asset Funding Co. Inc.,
Paper** 5.80% due 11/03/1995 49,726,111 49,726,111 0.6
66,757,000 General Electric Capital Corp.,
6.45% due 10/02/1995 66,733,079 66,733,079 0.9
25,000,000 Xerox Corp., 5.75% due 11/02/1995 24,868,229 24,868,229 0.3
Total Short-Term Investments 141,327,419 141,327,419 1.8
Total Investments $6,910,069,339 7,734,011,907 98.7
==============
Other Assets Less Liabilities 104,085,602 1.3
-------------- ------
Net Assets $7,838,097,509 100.0%
============== ======
<FN>
*American Depositary Receipts (ADR).
**Commercial Paper is traded on a
discount basis; the interest rates
shown are the discount rates paid at
the time of purchase by the Fund.
(a)Formerly National Medical
Enterprises, Inc.
(b)Non-income producing security.
++Restricted security as to resale. The value of the Fund's
investments in restricted securities was approximately
$85,900,000, representing 1.1% of net assets.
<CAPTION>
Acquisition Value
Issue Date(s) Cost (Note 1a)
<S> <C> <C> <C>
GTE Finance Corp., 5.81% due 12/15/1997 5/25/1993 $40,000,000 $39,400,000
Republic of Argentina, 6.812% 5/15/1995--
due 3/31/2005 5/23/1995 50,225,000 46,500,000
Total $90,225,000 $85,900,000
=========== ===========
<PAGE>
++++Investments in companies 5% or more of whose outstanding
securities are held by the Fund (such companies are defined
as "Affiliated Companies" in section 2(a)(3) of the
Investment Company Act of 1940) are as follows:
Net Share Net Dividend
Industry Affiliate Activity Cost Income
<S> <S> <C> <C> <C>
Home Builders Oriole Homes Corp. -- -- --
Insurance Fremont General Corp. 81,600 $ (961,918) $ 638,000
Iron & Steel Cleveland--Cliffs, Inc. (39,000) (1,429,415) 689,650
Services PHH Corp. -- -- 1,102,200
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL INFORMATION
<CAPTION>
Statement of Assets and Liabilities as of September 30, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$6,910,069,339) (Note 1a) $7,734,011,907
Cash 16,611,152
Foreign cash (Note 1c) 487,846
Receivables:
Securities sold $ 56,849,990
Interest 49,555,027
Capital shares sold 21,781,365
Dividends 9,332,729 137,519,111
--------------
Prepaid registration fees and other assets (Note 1f) 66,763
--------------
Total assets 7,888,696,779
--------------
<PAGE>
Liabilities: Payables:
Securities purchased 31,537,856
Capital shares redeemed 11,990,082
Distributor (Note 2) 3,640,391
Investment adviser (Note 2) 2,479,433 49,647,762
--------------
Accrued expenses and other liabilities 951,508
--------------
Total liabilities 50,599,270
--------------
Net Assets: Net assets $7,838,097,509
==============
Net Assets Class A Shares of Common Stock, $0.10 par value, 300,000,000 shares
Consist of: authorized $ 9,379,906
Class B Shares of Common Stock, $0.10 par value, 300,000,000 shares
authorized 14,512,578
Class C Shares of Common Stock, $0.10 par value, 200,000,000 shares
authorized 446,609
Class D Shares of Common Stock, $0.10 par value, 200,000,000 shares
authorized 1,133,782
Paid-in capital in excess of par 6,529,222,433
Undistributed investment income--net 92,783,440
Undistributed realized capital gains on investments and foreign
currency transactions--net 366,679,937
Unrealized appreciation on investments and foreign currency
transactions--net 823,938,824
--------------
Net assets $7,838,097,509
==============
Net Asset Value: Class A--Based on net assets of $2,918,131,777 and 93,799,060 shares
outstanding $ 31.11
==============
Class B--Based on net assets of $4,432,071,245 and 145,125,781 shares
outstanding $ 30.54
==============
Class C--Based on net assets of $135,603,805 and 4,466,089 shares
outstanding $ 30.36
==============
Class D--Based on net assets of $352,290,682 and 11,337,822 shares
outstanding $ 31.07
==============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL INFORMATION (continued)
<CAPTION>
Statement of Operations for the Six Months Ended September 30, 1995
<S> <S> <C> <C>
Investment Interest and discount earned $ 108,760,994
Income Dividends (net of $1,503,138 foreign withholding tax) 60,335,211
(Notes 1d & 1e): Other 66,320
--------------
Total income 169,162,525
--------------
Expenses: Account maintenance and distribution fees--Class B (Note 2) $ 20,310,992
Investment advisory fees (Note 2) 14,452,481
Transfer agent fees--Class B (Note 2) 3,100,545
Transfer agent fees--Class A (Note 2) 1,774,360
Account maintenance and distribution fees--Class C (Note 2) 449,819
Account maintenance fees--Class D (Note 2) 337,202
Printing and shareholder reports 331,558
Custodian fees 206,818
Transfer agent fees--Class D (Note 2) 175,854
Registration fees (Note 1f) 117,179
Transfer agent fees--Class C (Note 2) 72,639
Professional Fees 36,720
Directors' fees and expenses 18,360
Pricing fees 3,240
Other 36,180
--------------
Total expenses 41,423,947
--------------
Investment income--net 127,738,578
--------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net 382,785,433
(Loss) on Foreign currency transactions--net (260,437) 382,524,996
Investments & --------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net 470,983,918
(Notes 1b, 1c, 1e & 3): Foreign currency transactions--net (1,811) 470,982,107
-------------- --------------
Net realized and unrealized gain on investments and foreign
currency transactions 853,507,103
--------------
Net Increase in Net Assets Resulting from Operations $ 981,245,681
==============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL INFORMATION (continued)
<CAPTION>
Statements of Changes in Net Assets
For the Six For the Year
Months Ended Ended
Increase (Decrease) in Net Assets: Sept. 30, 1995 March 31, 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 127,738,578 $ 184,513,108
Realized gain on investments and foreign currency
transactions--net 382,524,996 229,679,961
Change in unrealized appreciation/depreciation on investments and
foreign currency transactions--net 470,982,107 156,181,613
-------------- --------------
Net increase in net assets resulting from operations 981,245,681 570,374,682
-------------- --------------
Dividends & Investment income--net:
Distributions to Class A (42,326,837) (79,657,527)
Shareholders Class B (48,879,309) (80,336,105)
(Note 1g): Class C (1,194,209) (186,349)
Class D (3,977,279) (1,531,830)
Realized gain on investments--net:
Class A (30,878,646) (132,046,243)
Class B (46,812,936) (188,065,461)
Class C (1,002,451) (321,434)
Class D (3,027,886) (2,472,719)
-------------- --------------
Net decrease in net assets resulting from dividends
and distributions to shareholders (178,099,553) (484,617,668)
-------------- --------------
Capital Share Net increase in net assets derived from capital share transactions 644,831,448 987,538,601
Transactions -------------- --------------
(Note 4):
Net Assets: Total increase in net assets 1,447,977,576 1,073,295,615
Beginning of period 6,390,119,933 5,316,824,318
-------------- --------------
End of period* $7,838,097,509 $6,390,119,933
============== ==============
<FN>
*Undistributed investment income--net $ 92,783,440 $ 61,422,496
============== ==============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL INFORMATION (continued)
<CAPTION>
Financial Highlights Class A
For the Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
Sept. 30, For the Year Ended March 31,
Increase (Decrease) in Net Asset Value: 1995 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 27.74 $ 27.46 $ 27.89 $ 26.90 $ 25.38
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .60 1.01 .97 .87 1.02
Realized and unrealized gain on
investments and foreign currency
transactions--net 3.57 1.77 .50 1.99 2.12
---------- ---------- ---------- ---------- ----------
Total from investment operations 4.17 2.78 1.47 2.86 3.14
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.46) (.94) (.95) (.87) (1.02)
Realized gain on investments--net (.34) (1.56) (.95) (1.00) (.60)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.80) (2.50) (1.90) (1.87) (1.62)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 31.11 $ 27.74 $ 27.46 $ 27.89 $ 26.90
========== ========== ========== ========== ==========
Total Based on net asset value per share 15.20%+++ 10.95% 5.39% 11.33% 12.96%
Investment ========== ========== ========== ========== ==========
Return:**
Ratios to Expenses .55%* .57% .53% .55% .56%
Average ========== ========== ========== ========== ==========
Net Assets: Investment income--net 4.16%* 3.81% 3.52% 3.56% 4.21%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $2,918,132 $2,507,767 $2,237,492 $2,056,023 $1,533,530
Data: ========== ========== ========== ========== ==========
Portfolio turnover 44% 89% 86% 55% 59%
========== ========== ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL INFORMATION (continued)
<CAPTION>
Financial Highlights (continued) Class B
For the Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
Sept. 30, For the Year Ended March 31,
Increase (Decrease) in Net Asset Value: 1995 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 27.28 $ 27.04 $ 27.49 $ 26.58 $ 25.14
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .44 .74 .70 .65 .80
Realized and unrealized gain on
investments and foreign currency
transactions--net 3.51 1.72 .48 1.89 2.05
---------- ---------- ---------- ---------- ----------
Total from investment operations 3.95 2.46 1.18 2.54 2.85
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.35) (.66) (.68) (.63) (.81)
Realized gain on investments--net (.34) (1.56) (.95) (1.00) (.60)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.69) (2.22) (1.63) (1.63) (1.41)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 30.54 $ 27.28 $ 27.04 $ 27.49 $ 26.58
========== ========== ========== ========== ==========
Total Based on net asset value per share 14.62%+++ 9.81% 4.36% 10.16% 11.81%
Investment ========== ========== ========== ========== ==========
Return:**
Ratios to Expenses, excluding account maintenance
Average and distribution fees .57%* .59% .55% .56% .58%
Net Assets: ========== ========== ========== ========== ==========
Expenses 1.57%* 1.59% 1.55% 1.56% 1.58%
========== ========== ========== ========== ==========
Investment income--net 3.14%* 2.79% 2.50% 2.53% 3.14%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $4,432,071 $3,664,250 $3,079,332 $2,694,774 $1,582,065
Data: ========== ========== ========== ========== ==========
Portfolio turnover 44% 89% 86% 55% 59%
========== ========== ========== ========== ==========
<PAGE>
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL INFORMATION (concluded)
<CAPTION>
Financial Highlights (concluded) Class C Class D
For the For the
For the Six Period For the Six Period
Months Oct. 21, Months Oct. 21,
The following per share data and ratios have been derived Ended 1994++ to Ended 1994++ to
from information provided in the financial statements. Sept. 30, March 31, Sept. 30, March 31,
Increase (Decrease) in Net Asset Value: 1995 1995 1995 1995
<S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 27.17 $ 26.81 $ 27.72 $ 27.27
Operating -------- -------- -------- --------
Performance: Investment income--net .41 .49 .54 .48
Realized and unrealized gain on investments
and foreign currency transactions--net 3.52 1.03 3.59 1.15
-------- -------- -------- --------
Total from investment operations 3.93 1.52 4.13 1.63
-------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.40) (.43) (.44) (.45)
Realized gain on investments--net (.34) (.73) (.34) (.73)
-------- -------- -------- --------
Total dividends and distributions (.74) (1.16) (.78) (1.18)
-------- -------- -------- --------
Net asset value, end of period $ 30.36 $ 27.17 $ 31.07 $ 27.72
======== ======== ======== ========
Total Based on net asset value per share 14.61%+++ 6.07%+++ 15.07%+++ 6.42%+++
Investment ======== ======== ======== ========
Return:**
<PAGE>
Ratios to Expenses, excluding account maintenance and
Average distribution fees .58%* .64%* .55%* .62%*
Net Assets: ======== ======== ======== ========
Expenses 1.58%* 1.64%* .80%* .87%*
======== ======== ======== ========
Investment income--net 3.13%* 3.22%* 3.91%* 3.94%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $135,604 $ 46,902 $352,291 $171,201
Data: ======== ======== ======== ========
Portfolio turnover 44% 89% 44% 89%
======== ======== ======== ========
<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 Capital Fund, Inc. (the "Fund") is regis-
tered under the Investment Company Act of 1940 as a
diversified, open-end management investment company.
These unaudited financial statements reflect all adjust-
ments which are, in the opinion of management, neces-
sary 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 ex-
penses 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 distri-
bution expenditures. The following is a summary of
significant accounting policies followed by the Fund.
<PAGE>
(a) Valuation of investments--Portfolio securities which
are traded on stock exchanges are valued at the last
sale price on the exchange on which such securities are
traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the
last available bid price. Securities traded in the over-
the-counter market are valued at the last available bid
price prior to the time of valuation. In cases where
securities are traded on more than one exchange, the
securities are valued on the exchange designated by or
under the authority of the Board of Directors as the
primary market. Securities which are traded both in the
over-the-counter market and on a stock exchange are
valued according to the broadest and most representa-
tive market. Options written are valued at the last sale
price in the case of exchange-traded options or, in the
case of options traded in the over-the-counter market,
the last asked price. Options purchased are valued at
the last sale price in the case of exchange-traded options
or, in the case of options traded in the over-the-counter
market, the last bid price. Short-term securities are
valued at amortized cost, which approximates market
value. Securities and assets for which market quotations
are not available are valued at fair value as determined
in good faith by or under the direction of the Fund's
Board of Directors.
(b) Derivative financial instruments--The Fund may
engage in various portfolio strategies to seek to increase
its return by hedging its portfolio against adverse move-
ments in the equity, debt and currency markets. Losses
may arise due to changes in the value of the contract
or if the counterparty does not perform under the con-
tract.
* Options--The Fund is authorized to write covered call
options and purchase put options. When the Fund writes
an option, an amount equal to the premium received
by the Fund is reflected as an asset and an equivalent
liability. The amount of the liability is subsequently
marked to market to reflect the current market value of
the option written. When a security is purchased or sold
through an exercise of an option, the related premium
paid (or received) is added to (or deducted from) the
basis of the security acquired or deducted from (or
added to) the proceeds of the security sold. When an
option expires (or the Fund enters into a closing trans-
action), the Fund realizes a gain or loss on the option to
the extent of the premiums received or paid (or gain or
loss to the extent the cost of the closing transaction
exceeds the premium paid or received).
<PAGE>
Written and purchased options are non-income pro-
ducing investments.
(c) Foreign currency transactions--Transactions denomi-
nated in foreign currencies are recorded at the exchange
rate prevailing when recognized. Assets and liabilities
denominated in foreign currencies are valued at the
exchange rate at the end of the period. Foreign currency
transactions are the result of settling (realized) or
valuing (unrealized) assets or liabilities expressed in
foreign currencies into US dollars. Realized and unreal-
ized gains or losses from investments include the effects
of foreign exchange rates on investments.
(d) 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 pro-
vision is required. Under the applicable foreign tax law,
a withholding tax may be imposed on interest, divi-
dends, and capital gains at various rates.
(e) Security transactions and investment income--
Security transactions are recorded on the dates the trans-
actions are entered into (the trade dates). Dividend
income is recorded on the ex-dividend date, except that
if the ex-dividend date has passed, certain dividends
from foreign securities are recorded as soon as the Fund
is informed of the ex-dividend date. Interest income
(including amortization of discount) is recognized on
the accrual basis. Realized gains and losses on security
transactions are determined on the identified cost basis.
(f) Prepaid registration fees--Prepaid registration
fees are charged to expense as the related shares are
issued.
(g) Dividends and distributions--Dividends and
distributions paid by the Fund 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 sub-
sidiary 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.
<PAGE>
MLAM is responsible for the management of the Fund's
portfolio and provides the necessary personnel, facili-
ties, 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: 0.50%
of the Fund's average daily net assets not exceeding
$250 million; 0.45% of average daily net assets in excess
of $250 million but not exceeding $300 million; 0.425%
of average daily net assets in excess of $300 million but
not exceeding $400 million; and 0.40% of average daily
net assets in excess of $400 million. The Investment
Advisory Agreement obligates MLAM to reimburse the
Fund to the extent the Fund's 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. No fee payment will be made to MLAM during any
fiscal year which will cause such expenses to exceed the
most restrictive expense limitation 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 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 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
Pursuant to a sub-agreement with the Distributor,
Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"),
a subsidiary of ML & Co., also provides account main-
tenance and distribution services to the Fund. The
ongoing account maintenance fee compensates the Dis-
tributor and MLPF&S for providing account maintenance
services to Class B, Class C and Class D shareholders.
The ongoing distribution fee compensates the Dis-
tributor and MLPF&S for providing shareholder and
distribution-related services to Class B and Class C
shareholders.
<PAGE>
For the six months ended September 30, 1995, MLFD
earned underwriting discounts and commissions 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 $38,560 $ 566,023
Class D $90,530 $1,372,637
For the six months ended September 30, 1995, MLPF&S
received contingent deferred sales charges of $2,101,341
and $23,179 relating to transactions in Class B and
Class C Shares, respectively.
In addition, MLPF&S received $398,942 in commissions
on the execution of portfolio security transactions for
the six months ended September 30, 1995.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"),
a wholly-owned subsidiary of ML & Co., is the Fund's
transfer agent.
Certain officers and/or directors of the Fund are officers
and/or directors of MLAM, PSI, MLPF&S, MLFDS, MLFD,
and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-
term securities, for the six months ended September 30,
1995 were $3,608,123,679 and $3,013,353,866,
respectively.
NOTES TO FINANCIAL STATEMENTS (concluded)
Net realized and unrealized gains (losses) as of
September 30, 1995 were as follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Long-term investments $382,615,379 $823,942,568
Short-term investments (4,627) --
Paydowns 174,681 --
Foreign currency
transactions (260,437) (3,744)
------------ ------------
Total $382,524,996 $823,938,824
============ ============
<PAGE>
As of September 30, 1995, net unrealized appreciation
for Federal income tax purposes aggregated $823,942,568,
of which $904,070,395 related to appreciated securities
and $80,127,827 related to depreciated securities. At
September 30, 1995, the aggregate cost of investments for
Federal income tax purposes was $6,910,069,339.
4. Capital Share Transactions:
Net increase in net assets derived from capital share
transactions was $644,831,448 and $987,538,601 for the
six months ended September 30, 1995 and the year
ended March 31, 1995, respectively.
Transactions in capital shares for each class were as
follows:
Class A Shares for the
Six Months Ended Dollar
September 30, 1995 Shares Amount
Shares sold 8,525,051 $ 257,943,356
Shares issued to shareholders
in reinvestment of dividends &
distributions 2,249,475 60,610,579
------------ ---------------
Total issued 10,774,526 318,553,935
Shares redeemed (7,381,890) (219,099,000)
------------ ---------------
Net increase 3,392,636 $ 99,454,935
============ ===============
Class A Shares for the
Year Ended Dollar
March 31, 1995 Shares Amount
Shares sold 17,286,503 $ 471,481,609
Shares issued to shareholders
in reinvestment of dividends &
distributions 7,424,496 192,734,824
------------ ---------------
Total issued 24,710,999 664,216,433
Shares redeemed (15,776,697) (427,291,645)
------------ ---------------
Net increase 8,934,302 $ 236,924,788
============ ===============
<PAGE>
Class B Shares for the Six Months Dollar
Ended September 30, 1995 Shares Amount
Shares sold 21,709,169 $ 655,330,588
Shares issued to shareholders
in reinvestment of dividends &
distributions 2,942,023 61,787,737
------------ ---------------
Total issued 24,651,192 717,118,325
Shares redeemed (12,047,761) (351,272,728)
Automatic conversion
of shares (1,805,828) (51,978,095)
------------ ---------------
Net increase 10,797,603 $ 313,867,502
============ ===============
Class B Shares for the Year Dollar
Ended March 31, 1995 Shares Amount
Shares sold 35,795,347 $ 958,699,323
Shares issued to shareholders
in reinvestment of dividends &
distributions 9,333,565 239,011,925
------------ ---------------
Total issued 45,128,912 1,197,711,248
Shares redeemed (20,872,708) (557,090,978)
Automatic conversion
of shares (3,804,492) (100,075,150)
------------ ---------------
Net increase 20,451,712 $ 540,545,120
============ ===============
Class C Shares for the Six Months Dollar
Ended September 30, 1995 Shares Amount
Shares sold 2,978,272 $ 86,474,148
Shares issued to shareholders
in reinvestment of dividends &
distributions 67,945 1,958,187
------------ ---------------
Total issued 3,046,217 88,432,335
Shares redeemed (306,328) (8,951,312)
------------ ---------------
Net increase 2,739,889 $ 79,481,023
============ ===============
Class C Shares for the Period Dollar
Oct. 21, 1994++ to Mar. 31, 1995 Shares Amount
Shares sold 1,868,357 $ 49,114,822
Shares issued to shareholders
in reinvestment of dividends &
distributions 18,191 452,606
------------ ---------------
Total issued 1,886,548 49,567,428
Shares redeemed (160,348) (4,186,298)
------------ ---------------
Net increase 1,726,200 $ 45,381,130
============ ===============
<PAGE>
[FN]
++Commencement of Operations.
Class D Shares for the Six Months Dollar
Ended September 30, 1995 Shares Amount
Shares sold 4,281,016 $ 118,922,392
Automatic conversion
of shares 1,776,166 51,978,095
Shares issued to shareholders
in reinvestment of dividends &
distributions 212,355 6,249,617
------------ ---------------
Total issued 6,269,537 177,150,104
Shares redeemed (1,107,384) (25,122,116)
------------ ---------------
Net increase 5,162,153 $ 152,027,988
============ ===============
Class D Shares for the Period Dollar
Oct. 21, 1994++ to Mar. 31, 1995 Shares Amount
Shares sold 2,621,771 $ 69,784,869
Automatic conversion
of shares 3,740,107 100,075,150
Shares issued to shareholders
in reinvestment of dividends &
distributions 140,100 3,548,731
------------ ---------------
Total issued 6,501,978 173,408,750
Shares redeemed (326,309) (8,721,187)
------------ ---------------
Net increase 6,175,669 $ 164,687,563
============ ===============
[FN]
++Commencement of Operations.
5. Commitments:
At September 30, 1995, the Fund had entered into
forward exchange contracts under which it had agreed to
buy various foreign currencies with a value of $1,088,873.
6. Loaned Securities:
At September 30, 1995, the Fund held US Treasury Notes
having an aggregate value of approximately $54,990,156
as collateral for portfolio securities loaned having a
market value of approximately $50,831,250.
<PAGE>
PORTFOLIO INFORMATION
Ten Largest Percent of
Stock Holdings Net Assets
YPF S.A. (Sponsored) (ADR) 2.5%
NationsBank Corp 2.4
Williams Companies, Inc. 1.9
The Goodyear Tire & Rubber Co. 1.8
Chemical Banking Corp. 1.6
Pfizer, Inc. 1.5
Federal National Mortgage Association 1.3
American International Group, Inc. 1.2
United Technologies Corp. 1.2
GTE Corp. 1.1
Ten Largest Percent of
Industries Net Assets*
Banking 10.5%
Insurance 8.3
Oil--Integrated 6.8
Pharmaceuticals 5.6
Finance 5.3
Natural Gas Suppliers 4.1
Utilities--Electric, Gas & Water 4.0
Diversified Companies 3.5
Financial Services 3.0
Chemicals 2.3
[FN]
*Based on total holdings in common stocks and bonds.
<PAGE>
Stock Portfolio Changes
For the Quarter Ended September 30, 1995
Additions
American National
Insurance Co.
BankAmerica Corp.
British Steel PLC (ADR)
Consolidated Natural Gas Co.
Creative Technology, Ltd.
Dexter Corporation
*El Paso Natural Gas Co.
General Motors Corp.
Giddings & Lewis, Inc.
Hanson PLC (Sponsored)
(ADR)
Horace Mann Educators Corp.
Jefferson Smurfit
Lilly (Eli) and Company
*MEMC Electronic Material, Inc.
Mandarin Oriental
International Ltd.
PacifiCare Health Systems,
Inc. (Class B)
Ruam Pattana Fund II
St. Paul Companies, Inc.
Yue Yuen Industrial (Holdings Limited)
Deletions
ALZA Corp.
ARCO Chemical Company
AlliedSignal, Inc.
Canadian Pacific Ltd.
Ciba-Geigy AG
Conrail, Inc.
Dean Witter, Discover & Co.
*El Paso Natural Gas Co.
English China Clays PLC
(Ordinary)
General Motors Corp. (Class H)
Luby's Cafeterias, Inc.
*MEMC Electronic Material, Inc.
Niagara Mohawk Power Corp.
Oriental Press Holdings
(Ordinary)
Polaroid Corp.
Premark International, Inc.
Sears, Roebuck & Co.
Tandy Corp.
Texas Utilities Company
USX-Marathon Group, Inc.
Union Carbide Corp.
Universal Foods Corp.
Wallace Computer Services,
Inc.
<PAGE>
[FN]
*Added and deleted in
the same quarter.
